EXHIBIT 4(c)
PEOPLES SAVINGS BANK OF TROY
1995 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE
The purpose of this Plan is to advance the long-term interests
of Peoples Savings Bank of Troy by (i) motivating executive and other personnel
by means of long-term incentive compensation, (ii) furthering the identity of
interests of participants with those of the shareholders of the Company through
the ownership and performance of the Common Stock of the Company and (iii)
permitting the Company to attract and retain directors and executive personnel
upon whose judgment the successful conduct of the business of the Company
largely depends. Toward this objective, the Committee may grant stock options,
stock appreciation fights, restricted stock awards, phantom stock and/or
performance shares to Key Employees of the Company, and shall grant stock
options to non-employee directors of the Company, on the terms and subject to
the conditions set forth in the Plan.
SECTION 2. DEFINITIONS
2.1. "Administrative Policies" means the administrative
policies and procedures adopted and amended from time to time by the Committee
to administer the Plan.
2.2. "Applicable Market" means the over the counter market
("OTC") or, if the Common Stock is no longer traded in the OTC, then the
principal national securities exchange, if any, on which the Common Stock is
traded as determined by the Committee, or if the Common Stock is no longer
traded in the OTC or on any national securities exchange, then such other market
price reporting system pursuant to which the Common Stock is traded or quoted as
designated by the Committee.
2.3. "Award" means any form of stock option, stock
appreciation right, restricted stock award, phantom stock or performance share
granted under the Plan, whether singly, in combination, or in tandem, granted,
made or awarded to a Participant by the Committee pursuant to such terms,
conditions, restrictions and limitations, if any, as the Committee may establish
by the Award Agreement or otherwise.
2.4. "Award Agreement" means a written agreement with respect
to an Award between the Company and a Participant establishing the terms,
conditions, restrictions and limitations applicable to an Award. To the extent
an Award Agreement is inconsistent with the terms of the Plan, the Plan shall
govern the rights of the Participant thereunder.
2.5. "Board of Directors" or "Board" means the directors of
the Company, as a group, serving as such from time to time.
2.6. "Change in Control" means (a) the acquisition after the
effective date of this Plan by any "Person" (defined for the purposes of this
Section to mean any person within the meaning of Section 13(d) of the Exchange
Act, other than the Company, or an employee benefit plan created by the Board of
Directors of the Company), either directly or indirectly, of the beneficial
ownership (determined under Rule 13d-3 of the Regulations promulgated by the
Securities and Exchange Commission ("SEC') under Section 13(d) of the Exchange
Act) of any securities issued by the Company if, after such acquisition, such
Person is the beneficial owner of securities issued by the Company having 20% or
more of the voting power in the election of Directors at the next meeting of the
holders of voting securities to be held for such purpose of all of the voting
securities issued by the Company, if such person acquired such beneficial
ownership without the prior consent of the Board of Directors; (b) the
commencement (determined under Rule 14d-2 of the Regulations promulgated by the
SEC under Section 14(d) of the Exchange Act) after the effective date of this
Plan by any Person of a tender offer subject to the provisions of Section 14(d)
of the Exchange Act if, after consummation of such tender offer, such Person
would, directly or indirectly, be the beneficial owner of securities issued by
the Company having 20% or more of the voting power in the election of Directors
at the next meeting of the holders of voting securities to be held for such
purpose of all of the voting securities issued by the Company, if such Person
commenced such tender offer without the prior written consent of the Directors;
(c) the election of a majority of the Directors, elected at any meeting of the
holders of voting securities of the Company, who were not nominated for such
election by the Board of Directors or a duly constituted committee of the Board
of Directors; or (d) the merger or consolidation with or transfer of
substantially all of the assets of the Company to another person if the Board of
Directors does not adopt a resolution, before the Company enters into any
agreement for such merger, consolidation or transfer, determining that it is not
a Change in Control.
2.7. "Change in Control Price" means the higher of (i) the
mean of the high and low closing prices for the Company's Common Stock on the
Applicable Market on the date of determination of the Change in Control, or (ii)
the highest price per share actually paid for the Common Stock in connection
with the Change in Control.
2.8. "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
2.9. "Committee" means the Compensation Committee of the Board
of Directors or such other committee designated by the Board to administer the
Plan under Section 3 hereof.
2.10. "Common Stock" means the Common Stock, $1.00 par value,
of the Company.
2.11. "Company" means Peoples Savings Bank of Troy, an Ohio
chartered savings and loan association.
2.12. "Derivative Security" means any of the "derivative
securities" as defined in Rule 16a-1 under the Exchange Act as such rule may be
amended or superseded from time to time.
2.13. "Director" means a member of the Board of Directors.
2.14. "Exchange Act" means the Securities Exchange Act of
1934, as amended.
2.15. "Key Employee" means an employee of the Company or a
Subsidiary who holds a position of responsibility in an executive, managerial,
administrative or professional capacity, and whose performance, as determined by
the Committee in the exercise of its sole and absolute discretion, can have an
effect on the growth, profitability and success of the Company.
2.16. "Participant" means any individual to whom an Award has
been granted by the Committee under this Plan.
2.17. "Plan" means this Peoples Savings Bank of Troy, 1995
Stock Incentive Plan, as the same may be amended from time to time.
2.18. "Qualified Domestic Relations Order" means a qualified
domestic relations order as defined by the Code or the rules thereunder if so
defined therein, and, if not, as defined by Title I of the Employment Retirement
Income Security Act of 1974 ("ERISA"), or the rules thereunder.
2.19. "Section 16 Officer" means any Participant who is an
"officer" of the Company within the meaning of Rule 16a-1 under the Exchange Act
as such rule may be amended or superseded from time to time.
2.20. "Subsidiary" means a corporation or other business
entity in which the Company directly or indirectly has an ownership interest of
fifty-one percent or more.
2.21. "Termination" means the termination of the Participant's
relationship with the Company including termination of the Participant's
employment and status as a Director. A Participant who is absent from employment
or other relationship with the Company for a reason or purpose and for a period
of time approved by the Committee, in its sole discretion, shall not for the
period of such absence be deemed, solely because of such absence, to have
suffered a Termination, unless and until the Committee otherwise determines.
SECTION 3. ADMINISTRATION
The Plan shall be administered under the supervision of the
Committee composed of not less than three Directors each of whom shall be a
"disinterested person" under Rule 16b-3 under the Exchange Act as such rule may
be amended or superseded from time to time and an "outside director" under
Section 162(m) of the Code and the regulations thereunder.
-2-
Members of the Committee shall serve at the pleasure of the
Board of Directors, and may resign by written notice filed with the Chairman of
the Board, President or Secretary of the Company. A vacancy in the membership of
the Committee shall be filled by the appointment of a successor member by the
Board of Directors. Until such vacancy is filled, the remaining members shall
constitute a quorum and the action at any meeting of a majority of the entire
Committee, or an action unanimously approved in writing by all Committee
members, shall constitute action of the Committee. Subject to the express
provisions of this Plan, the Committee shall have exclusive and final authority
to: (i) construe and interpret the Plan and any Award Agreement entered into
hereunder; (ii) establish, amend and rescind Administrative Policies for the
administration of the Plan; and (iii) determine the "fair market value" of the
Common Stock of the Company (based on the Applicable Market, if any, for the
Common Stock). The Committee shall have such additional authority as the Board
of Directors may from time to time determine to be necessary or desirable.
Employees, agents and independent contractors of the Company or the Committee
may be assigned, or employed or retained to perform, administrative, clerical
and other duties of the Committee, subject to the supervision and control of the
Committee; provided, however, that only the Committee may grant or award an
Award under the Plan and make decisions concerning the timing, pricing and
amount of any Award, except for stock options automatically granted to Directors
who are not employees of the Company under Section 13 hereof.
For so long as Directors and/or Section 16 Officers are or may
be Participants in the Plan, the Committee shall not knowingly take any action,
or decline to take any action, which shall cause the Plan not to meet the
requirements contained in Rule 16b-3 under the Exchange Act, as such rule is
amended or superseded from time to time, which permit the granting or making of
Awards under the Plan to be exempt from section 16(b) of the Exchange Act as
amended or superseded from time to time.
SECTION 4. ELIGIBILITY
Any Key Employee is eligible to become a Participant in the
Plan. Directors of the Company, other than Directors who are employees of the
Company, shall be eligible only to receive stock options pursuant to Section 13
hereof.
SECTION 5. SHARES AVAILABLE
(a) Shares of Common Stock available for issuance under the
Plan may be authorized and unissued shares or treasury shares. Subject to the
adjustments provided for in Sections 18 and 19 hereof, the maximum number of
shares of Common Stock available for grant of Awards under the Plan is 120,000
shares. Of this total number, up to 30,000 shares may be issued pursuant to the
exercise of Directors' Stock Options. Notwithstanding the foregoing, at no time
shall the number of shares of Common Stock deemed to be available for grant in
any fiscal year exceed ten percent of the total number of issued and outstanding
shares of Common Stock of the Company.
(b) For purposes of calculating the number of shares of Common
Stock deemed to be granted hereunder during any fiscal year, each Award, whether
denominated in stock options, stock appreciation rights, restricted stock,
performance shares or phantom stock, shall be deemed to be a grant of a number
of shares of Common Stock equal to the number of shares represented by the stock
options, shares of restricted stock, performance shares, shares of phantom stock
or stock appreciation rights set forth in the Award; provided however
(i) in the case of any Award as to which the exercise of
one right nullifies the exercisability of another (including, by way of
illustration the grant of a stock option with Tandem SARs (as hereinafter
defined)), the number of shares deemed to have been granted shall be the maximum
number of shares (and/or cash equivalents) that could have been acquired upon
the maximum exercise or settlement of the Award; and
(ii) in the case of Performance Share Awards (as
hereinafter defined) providing for payments in excess of 100% of the number of
shares set forth in the Award Agreement, the number of shares granted shall be
deemed to be the maximum number of shares (and/or the cash equivalent thereof)
issuable under the Award at the highest level of performance.
(c) Shares of Common Stock covered by lapsed, cancelled,
surrendered or terminated Awards shall be shares available for regrant under the
Plan; provided, however, that the portion of any Award that has been settled by
the payment of cash or the issuance of shares of Common Stock, or a combination
thereof, shall not be available for re-grant
-3-
under the Plan, irrespective of the value of the settlement or the method of its
payment. The settlement of an Award shall not be deemed to be the grant of an
Award hereunder.
SECTION 6. TERM
The Plan shall become effective as of October 31, 1995,
subject to approval of the Plan by the holders of a majority of the shares of
Common Stock. No Awards shall be exercisable or payable before approval of the
Plan has been obtained from the Company's shareholders and no Awards may be
granted after December 31, 2005.
SECTION 7. PARTICIPATION
The Committee shall select, from time to time, Participants
from those Key Employees who, in the opinion of the Committee, can further the
Plan's purpose and the Committee shall determine the type or types of Awards, if
any, to be made to the Participant. Any selection by the Committee of an
employee of the Company or a Subsidiary to be a Participant in the Plan shall
irrevocably constitute the Committee's concurrent and conclusive determination
that such employee is a Key Employee. In addition, all non-employee Directors
shall participate in the Plan solely in the manner specified in Section 13
hereof. The terms, conditions and restrictions of each Award shall be set forth
in an Award Agreement, and no Participant shall have any rights to or interest
in an Award unless and until such Participant has exercised and delivered an
Award Agreement with respect to such Award.
SECTION 8. STOCK OPTIONS
(a) Grants. Awards may be granted in the form of stock
options. Stock options may be incentive stock options within the meaning of
section 422 of the Code or nonqualified stock options (i.e., stock options which
are not incentive stock options), or a combination of both, or any particular
type of tax advantage option authorized by the Code from time to time.
(b) Terms and Conditions of Options. An option shall be
exercisable in whole or in such installments and at such times as may be
determined by the Committee; provided, however, that no stock option shall be
exercisable more than ten years after the date of grant thereof. In the absence
of any provision in an option to the contrary (i) the option will become
immediately exercisable upon the date of grant thereof, and (ii) the option will
lapse upon the earliest of (A) one year after Termination of the Participant's
relationship with the Company if the Termination is due to death or disability
or if the Participant dies within 90 days of the Termination, or (B) three
months after Termination if the Termination is for any reason other than death
or disability. The option exercise price shall be established by the Committee,
but such price shall not be less than the per share fair market value of the
Common Stock, as determined by the Committee, on the date of the stock option's
grant subject to adjustment as provided in Sections 18 or 19 hereof.
(c) Restrictions Relating to Incentive Stock Options. Stock
options issued in the form of incentive stock options shall, in addition to
being subject to all applicable terms, conditions, restrictions and/or
limitations established by the Committee, comply with section 422 of the Code.
Incentive stock options shall be granted only to those Key Employees who are
employees of the Company and its "subsidiaries" within the meaning of section
424 of the Code, and shall be granted within ten years after the date the Plan
was adopted by the Board of Directors. The aggregate fair market value
(determined as of the date the option is granted) of shares with respect to
which incentive stock options are exercisable for the first time by an
individual during any calendar year (under this Plan or any other plan of the
Company or any Subsidiary which provides for the granting of incentive stock
options) may not exceed $100,000 or such other number as may be applicable under
the Code from time to time. Any incentive stock option that is granted to any
employee who is, at the time the option is granted, deemed for purposes of
section 422 of the Code, or any successor provision, to own shares of the
Company possessing more than ten percent (10%) of the total combined voting
power of all classes of shares of the Company or of a parent or subsidiary of
the Company shall have an option exercise price that is at least 110 percent
(110%) of the fair market value of the shares at the date of grant and shall not
be exercisable after the expiration of 5 years from the date it is granted.
(d) Additional Terms and Conditions. The Committee may, in any
manner not inconsistent with the Plan, by way of the Award Agreement or
otherwise, establish such other terms, conditions, restrictions and/ or
limitations, if any, on any stock option Award and the exercise thereof.
-4-
(e) Payment. Upon exercise, a Participant may pay the option
exercise price of a stock option (i) in cash, (ii) in shares of Common Stock, or
(iii) a combination thereof, or (iv) in the sole discretion of the Committee,
through a cashless exercise procedure involving a broker; provided, however,
that such method and time for payment shall be permitted by and be in compliance
with applicable law, or (v) such other consideration as the Committee may deem
appropriate. The Committee shall establish appropriate methods for accepting
Common Stock and may impose such conditions as it deems appropriate on the use
of such Common Stock to exercise a stock option.
SECTION 9. STOCK APPRECIATION RIGHTS
(a) Grants. Awards may be granted in the form of stock
appreciation rights ("SARs"). SARs shall entitle the recipient to receive a
payment equal to the appreciation in market value of a stated number of shares
of Common Stock from the price stated in the Award Agreement to the market value
of the Common Stock on the date of exercise or surrender. A SAR may be granted
in tandem with all or a portion of a related stock option under the Plan
("Tandem SARs"). Tandem SARs shall permit the optionee to surrender a stock
option or portion thereof and to receive the payment to which he is entitled
under the SAR Award Agreement with respect to the shares of Common Stock subject
to the surrendered stock option or portion thereof. A Tandem SAR may be granted
either at the time of the grant of the related stock option or at any time
thereafter during the term of the stock option.
(b) Terms and Conditions of Tandem SARs. A Tandem SAR shall be
exercisable to the extent, and only to the extent, that the related stock option
is exercisable. The appreciation in value of a Tandem SAR shall be the
appreciation in fair market value from an amount not less than the option
exercise price of the related stock option or portion thereof being surrendered
to the market value of the Common Stock on the date of exercise. Upon exercise
of a Tandem SAR as to some or all of the shares covered by an Award, the related
stock option shall be cancelled automatically to the extent of the number of
SARs exercised, and such shares shall not thereafter be eligible for grant under
Section 5 hereof.
(c) Deemed Exercise. The Committee may provide that an SAR
shall be deemed to be exercised at the close of business on the scheduled
expiration date of such SAR, if at such time the SAR by its terms is otherwise
exercisable and, if so exercised, would result in a payment to the Participant.
(d) Additional Terms and Conditions. The Committee may, in any
manner not inconsistent with the Plan, by way of the Award Agreement or
otherwise, determine such other terms, conditions, restrictions and/or
limitations, if any, on any SAR Award.
SECTION 10. RESTRICTED STOCK AWARDS
(a) Grants. Awards may be granted in the form of Restricted
Stock Awards. Restricted Stock Awards consist of shares of Common Stock bearing
restrictions on their transfer or otherwise as authorized by Section 10(b),
below, and may be awarded to a Key Employee with or without payment of
consideration by the Key Employee.
(b) Award Restrictions. Restricted Stock Awards shall be
subject to such terms, conditions, restrictions, or limitations as the Committee
deems appropriate including, by way of illustration but not by way of
limitation, restrictions on transferability, requirements of continued
employment or individual performance or the financial performance of the
Company. The Committee may modify, or accelerate the termination of, the
restrictions applicable to a Restricted Stock Award under such circumstances as
it deems appropriate.
(c) Rights as Shareholders. During the period in which any
shares of Common Stock are subject to the restrictions imposed under this
Section 10, the Committee may, in its discretion, grant to the Participant to
whom such restricted shares have been awarded, all or any of the rights of a
shareholder with respect to such shares, including, by way of illustration but
not by way of limitation, the right to vote such shares and to receive
dividends.
(d) Evidence of Award. Any Restricted Stock Award granted
under the Plan may be evidenced in such manner as the Committee deems
appropriate, including, without limitation, book entry registration or issuance
of a stock certificate or certificates.
-5-
(e) Additional Terms and Conditions. The Committee may, in any
manner not inconsistent with the Plan, by way of Award Agreement or otherwise,
determine such other terms, conditions, restrictions or limitations, if any, on
any Award of Restricted Stock.
SECTION 11. PHANTOM STOCK
(a) Grants. Awards may be granted in the form of Phantom Stock
Awards. Phantom Stock Awards shall entitle the Participant to receive the market
value or the appreciation in value of a stated number of shares of Common Stock
on a settlement date determined by the Committee.
(b) Terms and Conditions. The Committee may, in any manner not
inconsistent with the Plan, by way of Award Agreement or otherwise, determine
such terms, conditions, restrictions or limitations, if any, on any Award of
Phantom Stock.
SECTION 12. PERFORMANCE SHARES
(a) Grants. Awards may be granted in the form of performance
shares. "Performance Shares" means interests the entitlement to which is based
upon the attainment of pre-determined Performance Targets as hereinafter defined
during a Performance Period as hereinafter defined. At the end of the
Performance Period, Performance Shares shall be converted into Common Stock (or
Common Stock and cash, as determined by the Award Agreement) and distributed to
Participants based upon such entitlement.
(b) Performance Criteria. The Committee may grant an Award of
Performance Shares to Participants as of the first day of each Performance
Period. As used herein, the term "Performance Period" means the period during
which a Performance Target is measured and the term "Performance Target" means
the predetermined goals established by the Committee. A Performance Target will
be established at the beginning of each Performance Period. If at the end of the
Performance Period, the Performance Target is fully met, the Performance Shares
will be converted 100% into shares of Common Stock (or the cash equivalent
thereof, as determined by the Award Agreement) and issued to the Participant.
Award payments in excess of 100% shall be permitted based upon an attainment in
excess of 100% of the Performance Target. If the Performance Target has not been
fully met, Performance Shares will be converted and delivered only to the
extent, if any, provided at the time of the grant of such Award for conversion
based upon partial attainment of the Performance Target and the balance of the
Performance Shares will be forfeited to the Company and available for reissuance
pursuant to Section 5 hereof.
(c) Additional Terms and Conditions. The Committee may, in any
manner not inconsistent with the terms of this Plan, by way of the Award
Agreement or otherwise, determine the manner of payment of Awards of Performance
Shares and other terms, conditions, restrictions or limitations, if any, on any
Award of Performance Shares.
SECTION 13. DIRECTORS' STOCK OPTIONS
(a) Grants. Awards may be granted to non-employee Directors
only in the form of stock options satisfying the requirements of this Section
13. Each person who is elected or appointed to serve as a Director of the
Company after the effective date of the Plan and who is not a Director on the
effective date of the Plan shall, upon his initial appointment or election as a
Director, automatically be granted an option for 2,500 shares of Common Stock.
At each year's annual meeting of the shareholders of the Company commencing at
the 1996 annual meeting there shall be granted automatically to each
non-employee Director, the option to purchase 500 shares of Common Stock. All
stock options granted under this Section 13 shall be nonqualified stock options.
(b) Option Exercise Price. The option exercise price of all
stock options granted under this Section 13 shall be the per share fair market
value of the outstanding shares of the Common Stock on the date such options are
automatically granted. Payment of the option exercise price may be made in cash
or in shares of Common Stock or a combination of cash and Common Stock to the
extent provided in the Award Agreement.
(c) Administration. Subject to the express provisions of this
Section 13, the Committee shall have conclusive authority to construe and
interpret any Stock Option Award granted under this Section 13 and to adopt
-6-
Administrative Policies with respect thereto; provided, however, that no action
shall be taken which would prevent the options granted under this Section 13 or
any Award granted under the Plan from meeting the requirements for exemption
from Section 16(b) of the Exchange Act, or subsequent comparable statute, as set
forth in Rule 16b-3 of the Exchange Act or any subsequent comparable rule.
(d) Option Agreement. The options granted hereunder shall be
evidenced by an option agreement, dated as of the date of the grant, which
agreement shall be in such form, consistent with the terms and requirements of
this Section 13, as shall be approved by the Committee from time to time and
executed on behalf of the Company by the President. The Option Agreement shall
require the optionee to refrain from selling or otherwise disposing of shares so
acquired for at least 120 days following the exercise of such option.
(e) Option Period. Options granted under this Section 13 will
become exercisable [at such times as the Committee shall approve. No such
options shall be exercisable later than 10 years from the date of grant.
(f) Transferability. No option granted under this Section 13
shall be transferable by the non-employee Director except by will or the laws of
descent and distribution, or pursuant to a Qualified Domestic Relations Order,
and during the Director's lifetime options may be exercised only by him or his
guardian or legal representative or his transferee under such Qualified Domestic
Relations Order.
(g) Limitations on Exercise. Directors' Stock Options shall
become exercisable at such times as the Committee shall approve. To the extent
an option is not otherwise exercisable at the date of the Director's retirement
as a Director, or if the Director ceases to be a Director for any other reason
including death, it shall become fully exercisable upon any of said events;
provided, however, that Director Stock Options shall not become exercisable
under this sentence prior to the expiration of six months from the date of
grant. Upon the occurrence of any of the foregoing events, such options shall be
exercisable for a period of three years, subject to any shorter original term
thereof.
SECTION 14. PAYMENT OF AWARDS
Except as otherwise provided herein Award Agreements may
provide that, at the discretion of the Committee, payment of Awards may be made
in cash, Common Stock, a combination of cash and Common Stock, or any other form
of property as the Committee shall determine. The terms of Award Agreements may
provide for payment of Awards in the form of a lump sum or installments, as
determined by the Committee. In connection with transactions involving the
exercise and cancellation of an Award (under this Section 14 or Section 25, or
otherwise) held by or through a Director or a Section 16 Officer (whether or not
the transaction also involves the related surrender and cancellation of a stock
option) and the receipt of cash in complete or partial settlement of the Award,
or the cash settlement of an equity security to satisfy the tax withholding
consequences of a Derivative Security, the Committee may require that such
transaction be consummated in compliance with Rule 16b-3(e) under the Exchange
Act, as such rule may be amended or superseded from time to time, unless the
holder of such Award waives such compliance in a writing executed by such holder
and delivered to the Committee and the Committee consents to such waiver.
SECTION 15. DIVIDENDS AND DIVIDEND EQUIVALENTS
If an Award is granted in the form of a Restricted Stock Award
or Phantom Stock Award, the Committee may choose, at the time of the grant of
the Award, to include as part of such Award an entitlement to receive dividends
or dividend equivalents, subject to such terms, conditions, restrictions or
limitations, if any, as the Committee may establish. Dividends and dividend
equivalents shall be paid in such form and manner and at such time as the
Committee shall determine. All dividends or dividend equivalents which are not
paid currently may, at the Committee's discretion, accrue interest or be
reinvested into additional shares of Common Stock.
SECTION 16. TERMINATION OF EMPLOYMENT
The Committee may adopt Administrative Policies determining
the entitlement of Participants who cease to be employed by either the Company
or a Subsidiary whether because of death, disability, resignation, termination
or retirement pursuant to an established retirement plan or policy of the
Company or of its applicable Subsidiary.
-7-
SECTION 17. ASSIGNMENT AND TRANSFER; HOLDING PERIOD
The rights and interests of a Participant under the Plan, and
in any Derivative Security issued or granted under the Plan, may not be
assigned, sold, encumbered or transferred except, in the event of the death of a
Participant, by will or the laws of descent and distribution, or except pursuant
to a Qualified Domestic Relations Order.
Except as otherwise provided in the first paragraph of this
Section 17 (but such exception shall not apply if its application would cause
the grant or award of the subject equity security or Derivative Security not to
be exempt from section 16(b) of the Exchange Act), an equity security of the
Company granted or awarded to a Director or Section 16 Officer as an Award under
the Plan shall not be assigned, sold, encumbered, transferred or otherwise
disposed of prior to the elapse of six months from the date of grant, and
neither a Derivative Security granted or awarded to a Director or Section 16
Officer as an Award under the Plan, nor the underlying equity security with
respect to such Derivative Security, shall be assigned, sold, encumbered,
transferred or otherwise disposed of prior to the elapse of six months from the
date of acquisition of the Derivative Security to the date of disposition of the
Derivative Security (other than upon exercise or conversion) or such underlying
equity security, unless, in either case, the holder of such equity security or
Derivative Security requests waiver of such restrictions in a writing delivered
to the Committee and the Committee consents to such waiver.
SECTION 18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the outstanding shares of Common
Stock by reason of any reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or any change
in the corporate structure or shares of the Company, the maximum aggregate
number and class of shares as to which Awards may be or are required to be
granted under the Plan, and the shares issuable pursuant to and the exercise or
purchase price payable under then outstanding Awards, shall be appropriately
adjusted by the Committee whose determination shall be final. Any such
adjustments may be provided for in Award Agreements.
SECTION 19. EXTRAORDINARY DISTRIBUTIONS AND PRO RATA REPURCHASES
In the event the Company shall at any time when an Award is
outstanding make an Extraordinary Distribution (as hereinafter defined) in
respect of Common Stock or effect a Pro Rata Repurchase of Common Stock (as
hereinafter defined), the Committee may consider the economic impact of the
Extraordinary Distribution or Pro Rata Repurchase on Participants and make such
adjustments as it deems equitable under the circumstances. The determination of
the Committee shall, subject to revision by the Board of Directors, be final and
binding upon all Participants.
(a) As used herein, the term "Extraordinary Distribution"
means any dividend or other distribution by the Company of:
(i) cash, where the aggregate amount of such cash dividend
or distribution together with the amount of all cash dividends and distributions
made during the twelve months preceding the date of payment of such dividend or
other distribution, when combined with the aggregate amount of all Pro Rata
Repurchases (for this purpose, including only that portion of the aggregate
purchase price of such Pro Rata Repurchases which is in excess of the fair
market value (as determined by the Committee) of the Common Stock repurchased
during such twelve month period), exceeds ten percent (10%) of the aggregate
fair market value (as determined by the Committee) of all shares of Common Stock
outstanding on the record date for determining the shareholders entitled to
receive such Extraordinary Distribution; or
(ii) any shares of capital stock of the Company (other
than shares of Common Stock), other securities of the Company (including
evidences of indebtedness of the Company), or any other investments, assets or
property of the Company (including shares of any Subsidiary of the Company), or
any combination thereof.
(b) As used herein "Pro Rata Repurchase" means any purchase of
shares of Common Stock by the Company or any Subsidiary thereof, pursuant to any
tender offer or exchange offer subject to section 13(e) of the Exchange Act or
any successor provision of law, or pursuant to any other offer available to
substantially all holders of Common Stock; provided, however, that no purchase
of shares of the Company or any Subsidiary thereof made in open market
transactions shall be deemed a Pro Rata Repurchase.
-8-
SECTION 20. WITHHOLDING TAXES
The Company or the applicable Subsidiary shall be entitled to
deduct from any payment under the Plan, regardless of the form of such payment,
the amount of all applicable income and employment tax required by law to be
withheld with respect to such payment or may require the Participant to pay to
it such tax prior to and as a condition of the making of such payment. In
accordance with any applicable Administrative Policies it establishes, the
Committee may allow a Participant to pay the amount of taxes required by law to
be withheld from an Award by withholding from any payment of Common Stock due as
a result of such Award, or by permitting the Participant to deliver to the
Company shares of Common Stock having a fair market value, as determined by the
Committee, equal to the amount of such required withholding taxes.
SECTION 21. REGULATORY APPROVALS AND LISTINGS
Notwithstanding anything contained in this Plan to the
contrary, the Company shall have no obligation to issue or deliver certificates
of Common Stock evidencing Restricted Stock Awards or any other Award payable in
Common Stock prior to (a) the obtaining of any approval from any governmental
agency which the Company shall, in its sole discretion, determine to be
necessary or advisable, (b) the admission of such shares to trading on the
Applicable Market and (c) the completion of any registration or other
qualification of said shares under any state or Federal law or ruling of any
governmental body which the Company shall, in its sole discretion, determine to
be necessary or advisable. The Company shall have the right to require that any
certificate for Common Stock issued pursuant to the Plan or an Award bear any
restrictive legend required by law and/or to evidence restrictions on the
transfer of the shares under applicable law, the Award Agreement or the Plan.
SECTION 22. NO RIGHT TO CONTINUED EMPLOYMENT OR GRANTS
Participation in the Plan shall not give any Key Employee any
right to remain in the employ of the Company or any Subsidiary. The Company or,
in the case of employment with a Subsidiary, the Subsidiary, reserves the right
to terminate the employment of any Key Employee at any time, subject to the
terms of any employment agreement with such Key Employee. The adoption of this
Plan shall not be deemed to give any Key Employee or any other individual any
right to be selected as a Participant, to be granted any Awards hereunder or, if
granted an Award, to receive any additional Awards at any subsequent time.
SECTION 23. RIGHTS AS SHAREHOLDER
No Participant shall have any rights as a shareholder as a
result of participation in the Plan until the date of issuance of and only as
the holder of a stock certificate in his name [except, in the case of Restricted
Stock Awards, to the extent such rights are granted to the Participant under
Section 10(c) hereof]. To the extent any person acquires a right to receive
payments from the Company under this Plan, such rights shall be no greater than
the rights of an unsecured creditor of the Company.
SECTION 24. RESPONSIBILITY AND INDEMNIFICATION
No member of the Board of Directors or the Committee shall be
liable to the Company, any Participant or any third party for any action or
determination made in good faith with respect to the Plan and Awards thereunder,
or for any matter as to which the Company's articles of incorporation or code of
regulations, or any valid contract between the Company and such member, limits
or negates the liability of Directors. Such members shall be entitled to
indemnification and reimbursement in the manner provided in the Company's
articles of incorporation and code of regulations, in any valid contract between
the Company and such member, and under any directors' and officers' liability
insurance coverage which may be in effect from time to time.
SECTION 25. SUBSTITUTION, EXTENSION, RENEWAL AND REGRANT OF AWARDS
Awards may be granted under the Plan from time to time in
substitution for stock options and other rights or awards held by employees of
organizations who become or are about to become Key Employees of the Company or
a Subsidiary as the result of a merger or consolidation of the employing
organization with the Company or a Subsidiary, or the acquisition by the Company
or a Subsidiary of the assets of the employing organization, or the acquisition
by the Company or
-9-
a Subsidiary of equity interests in the employing organization as the result of
which it becomes a Subsidiary. The Committee may extend or renew outstanding
Awards granted under the Plan on terms not inconsistent with the Plan.
The Committee may accept the surrender or cancellation of
outstanding Awards (to the extent not theretofore exercised, paid or settled)
and grant or award new Awards in substitution therefor, which new Awards may be
different types of Awards than the Awards so surrendered and/or cancelled.
SECTION 26. AMENDMENT
The Committee may suspend, reinstate and terminate the Plan or
any portion thereof at any time. In addition, the Committee may, from time to
time, amend the Plan in any manner, but may not without shareholder approval
adopt any amendment (i) which would (a) materially increase the benefits
accruing to Participants under the Plan, (b) materially increase the number of
shares of Common Stock which may be issued under the Plan (except as specified
in Section 18), or (c) materially modify the requirements as to eligibility for
participation in the Plan, or (ii) that requires shareholder approval in order
for the Plan to comply with Section 162(m) of the Code. Notwithstanding the
foregoing, the provisions of Section 13 relating to the eligibility for, and the
amount, price and timing of, Awards to Directors thereunder shall not be
amended, nor shall the operation of Section 13 be suspended or reinstated, more
than once every six months other than to comport with changes in the Code,
ERISA, or the rules thereunder.
SECTION 27. CORPORATE CHANGES; USE OF FUNDS
The grant of an Award pursuant to the Plan shall not affect
the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its stock, securities, capital or business
structure, or to merge, consolidate, dissolve, or liquidate, or to sell, lease
or transfer all or any part of its business or assets. The funds received by the
Company upon any exercise or settlement of an Award may be used by the Company
for any corporate purpose or purposes.
SECTION 28. CHANGE IN CONTROL
(a) Stock Options. In the event of a Change in Control,
options not otherwise exercisable at the time of a Change in Control shall
become fully exercisable upon such Change in Control; provided, however, that
options shall not become exercisable under this provision prior to the
expiration of six months from the date of grant.
(b) Stock Appreciation Rights. In the event of a Change in
Control, Tandem SARs not otherwise exercisable upon a Change in Control shall
become exercisable to the extent that the related Stock Option is exercisable.
(i) The Company shall make payment to Participants with
respect to SARs in cash in an amount equal to the appreciation in the value of
the SAR from the base price specified in the Award Agreement to the Change in
Control Price.
(ii) Such cash payments to Participants shall be due and
payable, and shall be paid by the Company, immediately upon the occurrence of
such Change in Control; and
(iii) After the payment provided for in (ii) above,
Participants shall have no further rights under SARs outstanding at the time of
such Change in Control.
(c) Restricted Stock Awards. In the event of a Change in
Control, all restrictions previously established with respect to Restricted
Stock Awards will conclusively be deemed to have been satisfied. Participants
shall be entitled to have issued to them the shares of Common Stock described in
the applicable Award Agreements, free and clear of any restriction or
restrictive legend, except that if upon the advice of counsel to the Company,
shares of Common Stock cannot lawfully be issued without restriction, then the
Company shall make payment to Participants in cash in an amount equal to the
Change in Control Price of the Common Stock that otherwise would have been
issued:
(i) Such cash payments to Participants shall be due and
payable, and shall be paid by the Company, immediately upon the occurrence of
such Change in Control; and
-10-
(ii) After the payment provided for in (i) above,
Participants shall have no further rights under Restricted Stock Awards
outstanding at the time of such Change in Control of the Company.
(d) Phantom Stock. In the event of a Change in Control:
(i) all restrictions and conditions, if any, previously
established with respect to Phantom Stock Awards will conclusively be deemed to
have been satisfied and fulfilled. Participants shall be entitled to receive
Common Stock in satisfaction of their rights under Phantom Stock Awards in
accordance with the amounts otherwise payable by the Company pursuant to the
Award Agreement.
(ii) Such Common Stock shall be issued to Participants by
the Company immediately upon the occurrence of such Change in Control; and
(iii) After the payment provided for in (ii) above, the
Participants shall have no further rights under Phantom Stock Awards outstanding
at the time of such Change in Control of the Company.
(e) Performance Shares. In the event of a Change in Control:
(i) All previously established Performance Targets will be
conclusively deemed to have been met. Participants shall be entitled to a pro
rata proportion of the shares of Common Stock which would have been issued to
them upon conversion of any outstanding Performance Shares at the end of the
Performance Period (based upon the applicable Performance Targets which are
conclusively deemed to have been met by reason of the Change in Control),
payable in the manner specified in subsection (ii) hereof. The pro rata
proportion of the shares of Common Stock to be issued shall be equal to a
fraction, the numerator of which is the duration of the Performance Period prior
to such Change in Control and the denominator of which is the original length of
the Performance Period;
(ii) In lieu of issuing shares of Common Stock upon such
conversion of Performance Shares, the Company shall make payment to Participants
in cash in an amount equal to the Change in Control Price of the shares of
Common Stock that would have been issued under paragraph (i) above;
(iii) Such cash payments to Participants shall be due and
payable, and shall be paid by the Company, immediately upon the occurrence of
such Change in Control; and
(iv) After the payment provided for in (ii) above, the
Participants shall have no further rights under awards of Performance Shares
outstanding at the time of such Change in Control of the Company..
(f) Directors' Stock Options. Directors' Stock Options not
otherwise exercisable at the time of a Change in Control shall become fully
exercisable upon such Change in Control; provided, however, that options shall
not become exercisable under this provision prior to the expiration of six
months from the date of grant.
(i) The Company shall make payment to Directors with
respect to Options in cash in an amount equal to the appreciation in the value
of the Option from the option exercise price specified in the Award Agreement to
the Change in Control Price.
(ii) Such cash payments to Directors shall be due and
payable, and shall be paid by the Company, immediately upon the occurrence of
such Change in Control; and
(iii) After the payment provided for in (i) above,
Participants shall have no further rights under Options outstanding at the time
of such Change in Control.
(g) Miscellaneous. Upon a Change in Control, no action shall
be taken which would adversely affect the rights of any Participant or the
operation of the Plan with respect to any Award to which the Participant may
have become entitled hereunder on or prior to the date of the Change in Control
or to which he may become entitled as a result of such Change in Control.
-11-
SECTION 29. GOVERNING LAW
The Plan shall be governed by and construed in accordance with
the laws of the State of Ohio, except as preempted by applicable Federal law.
SECTION 30. INTERPRETATION
The Plan is designed and intended to comply with Rule 16b-3
promulgated under the Exchange Act and, to the extent applicable, with Section
162(m) of the Code and all provisions hereof shall be construed in a manner to
so comply.
-12-