Exhibit 10.6
DEVELOPERS DIVERSIFIED REALTY CORPORATION
EQUITY-BASED AWARD PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Developers Diversified Realty Corporation
Equity-Based Award Plan (the "Plan") is to enable Developers Diversified Realty
Corporation (the "Company") to attract, retain and reward key employees of the
Company and strengthen the mutuality of interests between those key employees
and the Company's shareholders by offering the key employees equity or
equity-based incentives.
For purposes of the Plan, the following terms are defined as
follows:
(a) "Affiliate" means any entity (other than the Company
and any Subsidiary) that is designated by the Board as a participating
employer under the Plan.
(b) "Award" means any award of Stock Options, Share
Appreciation Rights, Restricted Shares, Deferred Shares, Share
Purchase Rights or Other Share-Based Awards under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" has the meaning set forth in
Section 11(b).
(e) "Change in Control Price" has the meaning set forth
in Section 11(d).
(f) "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
(g) "Committee" means the Executive Compensation
Committee of the Board of the Company.
(h) "Company" means Developers Diversified Realty
Corporation, an Ohio corporation, or any successor corporation.
(i) "Deferred Shares" means an Award of the right to
receive Shares at the end of a specified deferral period granted
pursuant to Section 8.
(j) "Disability" means disability as determined under
procedures established by the Committee for purposes of the Plan.
(k) "Disinterested Person" has the meaning set forth in
Rule 16b-3(c)(2)(i) as promulgated by the Securities and Exchange
Commission under the Exchange Act, or any successor definition adopted
by the Securities and Exchange Commission.
(l) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(m) "Fair Market Value" means, as of any date, the mean
between the highest and lowest quoted selling price, regular way, of
the Shares on that date on the New York Stock Exchange or, if no such
sale of the Shares occurs on the New York Stock Exchange (or, if the
Shares no longer trade on the New York Stock Exchange, any other
national exchange) on that date, then that mean price on the next
preceding day on which the Shares were traded. If the Shares are no
longer traded on any national exchange, then the Fair Market Value of
the Shares as of any date is the value determined for that date by the
Committee in good faith.
(n) "Incentive Stock Option" means any Stock Option
intended to be and designated as, and that otherwise qualifies as, an
"Incentive Stock Option" within the meaning of Section 422 of the Code
or any successor section thereto.
(o) "Non-Qualified Stock Option" means any Stock Option
that is not an Incentive Stock Option.
(p) "Other Share-Based Awards" means an Award granted
pursuant to Section 10 that is valued, in whole or in part, by
reference to, or is otherwise based on, Shares.
(q) "Outside Director" has the meaning set forth in
Section 162(m) of the Code and the regulations promulgated thereunder.
(r) "Plan" means the Developers Diversified Realty
Corporation Equity-Based Award Plan, as amended from time to time.
(s) "Potential Change in Control" has the meaning set
forth in Section 11(c).
(t) "Restricted Shares" means an Award of Shares that is
granted pursuant to Section 7 and is subject to restrictions.
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(u) "Section 16 Participant" means a participant under
the Plan who is subject to Section 16 of the Exchange Act.
(v) "Share Appreciation Right" means an Award of a right
to receive an amount from the Company that is granted pursuant to
Section 6.
(w) "Shares" means the Common Shares, without par value,
of the Company.
(x) "Stock Option" or "Option" means any option to
purchase Shares (including Restricted Shares and Deferred Shares, if
the Committee so determines) that is granted pursuant to Section 5.
(y) "Share Purchase Right" means an Award of the right to
purchase Shares that is granted pursuant to Section 9.
(z) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the
Company if each of the corporations (other than the last corporation
in the unbroken chain) owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in that chain.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Committee. The
Committee shall consist of not less than three directors of the Company, all of
whom shall be Disinterested Persons and Outside Directors. Those directors
shall be appointed by the Board and shall serve as the Committee at the
pleasure of the Board. The functions of the Committee specified in the Plan
shall be exercised by the Board if and to the extent that no Committee exists
that has the authority to so administer the Plan.
The Committee shall have full power to interpret and
administer the Plan and full authority to select the individuals to whom Awards
will be granted and to determine the type and amount of any Award to be granted
to each participant, the consideration, if any, to be paid for any Award, the
timing of each Award, the terms and conditions of any Award granted under the
Plan and the terms and conditions of the related agreements that will be
entered into with participants. As to the selection of and grant of Awards to
participants who are not Section 16 Participants, the Committee may delegate
its responsibilities to members of the Company's management in any manner
consistent with applicable law.
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The Committee shall have the authority to adopt, alter and
repeal such rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any agreement relating thereto);
to direct employees of the Company or other advisors to prepare such materials
or perform such analyses as the Committee deems necessary or appropriate; and
otherwise to supervise the administration of the Plan.
Any interpretation or administration of the Plan by the
Committee, and all actions and determinations of the Committee, shall be final,
binding and conclusive on the Company, its shareholders, Subsidiaries,
Affiliates, all participants in the Plan, their respective legal
representatives, successors and assigns, and all persons claiming under or
through any of them. No member of the Board or of the Committee shall incur
any liability for any action taken or omitted, or any determination made, in
good faith in connection with the Plan.
SECTION 3. SHARES SUBJECT TO THE PLAN.
(a) Aggregate Shares Subject to the Plan. Subject to
adjustment as provided in Section 3(c), the total number of Shares
reserved and available for Awards under the Plan is 600,000. Any
Shares issued hereunder may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
(b) Forfeiture or Termination of Awards of Shares. If
any Shares subject to any Award granted hereunder are forfeited or an
Award otherwise terminates or expires without the issuance of Shares,
the Shares subject to that Award shall again be available for
distribution in connection with future Awards under the Plan as set
forth in Section 3(a), unless the participant who had been awarded
those forfeited Shares or the expired or terminated Award has
theretofore received dividends or other benefits of ownership with
respect to those Shares. For purposes hereof, a participant shall not
be deemed to have received a benefit of ownership with respect to
those Shares by the exercise of voting rights, or by the accumulation
of dividends that are not realized because of the forfeiture of those
Shares or the expiration or termination of the related Award without
issuance of those Shares.
(c) Adjustment. In the event of any merger,
reorganization, consolidation, recapitalization, share dividend, share
split, combination of shares or other change in corporate structure of
the Company affecting the Shares, such substitution or adjustment
shall be made in the aggregate number of Shares reserved for issuance
under the Plan, in the number and option price of Shares subject to
outstanding options granted under the Plan in the number and purchase
and purchase price of Shares subject to outstanding Share Purchase
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Rights granted under the Plan, in the number of Share Appreciation
Rights granted under the Plan and in the number of Shares subject to
Restricted Share Awards, Deferred Share Awards and any other
outstanding Awards granted under the Plan as may be approved by the
Committee, in its sole discretion, but the number of Shares subject to
any Award shall always be a whole number. Any fractional Shares shall
be eliminated.
(d) Annual Award Limit. No participant may be granted
Stock Options or other Awards under the Plan with respect to an
aggregate of more than 100,000 Shares (subject to adjustment as
provided in Section 3(c) hereof) during any calendar year.
SECTION 4. ELIGIBILITY.
Officers and other key employees of the Company, and of its
Subsidiaries and Affiliates, if any, who are responsible for or contribute to
the management, growth or profitability of the business of the Company (or of
its Subsidiaries or Affiliates, if any), are eligible to be granted Awards
under the Plan.
SECTION 5. STOCK OPTIONS.
(a) Grant. Stock Options may be granted alone, in
addition to or in tandem with other Awards granted under the Plan or
cash awards made outside the Plan. The Committee shall determine the
individuals to whom, and the time or times at which, grants of Stock
Options will be made, the number of Shares purchasable under each
Stock Option and the other terms and conditions of the Stock Options
in addition to those set forth in Sections 5(b) and 5(c). Any Stock
Option granted under the Plan shall be in such form as the Committee
may from time to time approve.
Stock Options granted under the Plan may be of two types which
shall be indicated on their face: (i) Incentive Stock Options and (ii)
Non-Qualified Stock Options. Subject to Section 5(c), the Committee
shall have the authority to grant to any participant Incentive Stock
Options, Non-Qualified Stock Options or both types of Stock Options.
(b) Terms and Conditions. Options granted under the Plan
shall be evidenced by an agreement ("Option Agreements"), shall be
subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable:
(1) Option Price. The option price per share of
Shares purchasable under a Non-Qualified Stock Option or
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an Incentive Stock Option shall be determined by the Committee
at the time of grant and shall be not less than 100% of the
Fair Market Value of the Shares at the date of grant (or, with
respect to an Incentive Stock Option, 110% of the Fair Market
Value of the Shares at the date of grant in the case of a
participant who at the date of grant owns Shares possessing
more than ten percent of the total combined voting power of all
classes of stock of the Company or its parent or Subsidiary
corporations (as determined under Sections 424(d), (e) and (f)
of the Code)).
(2) Option Term. The term of each Stock Option
shall be determined by the Committee and may not exceed ten
years from the date the Option is granted (or, with respect to
an Incentive Stock Option, five years in the case of a
participant who at the date of grant owns Shares possessing
more than ten percent of the total combined voting power of
all classes of stock of the Company or its parent or
Subsidiary corporations (as determined under Sections 424(d),
(e) and (f) of the Code)).
(3) Exercise. Stock Options shall be exercisable
at such time or times and shall be subject to such terms and
conditions as shall be determined by the Committee at or after
grant; but, except as provided in Section 5(b)(6) and Section
11, unless otherwise determined by the Committee at or after
grant, no Stock Option shall be exercisable prior to six
months and one day following the date of grant. If any Stock
Option is exercisable only in installments or only after
specified exercise dates, the Committee may waive, in whole or
in part, such installment exercise provisions, and may
accelerate any exercise date or dates, at any time at or after
grant based on such factors as the Committee shall determine,
in its sole discretion.
(4) Method of Exercise. Subject to any
installment exercise provisions that apply with respect to any
Stock Option, and the six month and one day holding period set
forth in Section 5(b)(3), that Stock Option may be exercised
in whole or in part, at any time during the Option period, by
the holder thereof giving to the Company written notice of
exercise specifying the number of Shares to be purchased.
That notice shall be accompanied by payment in full
of the Option price of the Shares for which the Option is
exercised, in cash or Shares or by check or such other
instrument as the Committee may accept. The value of each
such Share surrendered or withheld shall be 100% of
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the Fair Market Value of the Shares on the date the option is
exercised.
No Shares shall be issued on an exercise of an Option
until full payment has been made. A participant shall not
have rights to dividends or any other rights of a shareholder
with respect to any Shares subject to an Option unless and
until the participant has given written notice of exercise,
has paid in full for those Shares, has given, if requested,
the representation described in Section 11(a), and those
Shares have been issued to him.
(5) Non-Transferability of Options. No Stock
Option shall be transferable by any participant other than by
will or by the laws of descent and distribution, and all Stock
Options shall be exercisable, during the participant's
lifetime, only by the participant or, subject to Sections
5(b)(3) and 5(c), by the participant's authorized legal
representative if the participant is unable to exercise an
Option as a result of the participant's Disability.
(6) Termination by Death. Subject to Section
5(c), if any participant's employment with the Company or any
Subsidiary or Affiliate terminates by reason of death, any
Stock Option held by that participant may thereafter be
exercised, to the extent that Option was exercisable at the
time of death or would have become exercisable within one year
from the time of death had the participant continued to
fulfill all conditions of the Option during that period (or on
such accelerated basis as the Committee may determine at or
after grant), by the estate of the participant (acting through
its fiduciary), for a period of one year (or such other period
as the Committee may specify at or after grant) from the date
of that death. The balance of the Stock Option shall be
forfeited.
(7) Termination by Reason of Disability. Subject
to Sections 5(b)(3) and 5(c), if a participant's employment
with the Company or any Subsidiary or Affiliate terminates by
reason of Disability, any Stock Option held by that
participant may thereafter be exercised, to the extent that
Option was exercisable at the time of termination or would
have become exercisable within one year from the time of
termination had the participant continued to fulfill all
conditions of the Option during that period (or on such
accelerated basis as the Committee may determine at or after
grant), by the participant or by the participant's duly
authorized legal representative if the participant is unable
to exercise the Option as a result of the participant's
Disability, for a period of one year (or such other period as
the
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Committee may specify at or after grant) from the date of such
termination of employment, but in no event may any such Option
be exercised prior to six months and one day from the date of
grant; and if the participant dies within that one-year period
(or such other period as the Committee shall specify at or
after grant), any unexercised Stock Option held by that
participant shall thereafter be exercisable by the estate of
the participant (acting through its fiduciary) to the same
extent to which it was exercisable at the time of death, for a
period of one year from the date of that termination of
employment. The balance of the Stock Option shall be
forfeited.
(8) Other Termination. Unless otherwise
determined by the Committee at or after the time of granting
any Stock Option, if a participant's employment with the
Company or any Subsidiary or Affiliate terminates for any
reason other than death or Disability, all Stock Options held
by that participant shall terminate 90 days after the date
employment terminates.
(c) Incentive Stock Options. Notwithstanding Sections
5(b)(6) and (7), an Incentive Stock Option shall be exercisable by (i)
a participant's authorized legal representative (if the participant is
unable to exercise the Incentive Stock Option as a result of the
participant's Disability) only if, and to the extent, permitted by
Section 422 of the Code and (ii) by the participant's estate, in the
case of death, or authorized legal representative, in the case of
Disability, no later than 10 years from the date the Incentive Stock
Option was granted (in addition to any other restrictions or
limitations that may apply). Anything in the Plan to the contrary
notwithstanding, no term or provision of the Plan relating to
Incentive Stock Options shall be interpreted, amended or altered, nor
shall any discretion or authority granted under the Plan be exercised,
so as to disqualify the Plan under Section 422 of the Code, or,
without the consent of the participants affected, to disqualify any
Incentive Stock Option under that Section 422 or any successor Section
thereto.
(d) Buyout Provisions. The Committee may at any time buy
out for a payment in cash, Shares, Deferred Shares or Restricted
Shares an Option previously granted, based on such terms and
conditions as the Committee shall establish and agree upon with the
participant, but no such transaction involving a Section 16
Participant shall be structured or effected in a manner that would
result in any liability on the part of the participant under Section
16(b) of the Exchange Act or the rules and regulations promulgated
thereunder.
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SECTION 6. SHARE APPRECIATION RIGHTS.
(a) Grant. Share Appreciation Rights may be granted in
connection with all or any part of an Option, either concurrently with
the grant of the Option or, if the Option is a Non-Qualified Stock
Option, by an amendment to the Option at any time thereafter during
the term of the Option. Share Appreciation Rights may be exercised in
whole or in part at such times under such conditions as may be
specified by the Committee in the participant's Option Agreement.
(b) Terms and Conditions. The following terms and
conditions will apply to all Share Appreciation Rights that are
granted in connection with Options:
(1) Rights. Share Appreciation Rights shall
entitle the participant, upon exercise of all or any part of
the Share Appreciation Rights, to surrender to the Company
unexercised that portion of the underlying Option relating to
the same number of Shares as is covered by the Share
Appreciation Rights (or the portion of the Share Appreciation
Rights so exercised) and to receive in exchange from the
Company an amount equal to the excess of (x) the Fair Market
Value, on the date of exercise, of the Shares covered by the
surrendered portion of the underlying Option over (y) the
exercise price of the Shares covered by the surrendered
portion of the underlying Option. The Committee may limit the
amount that the participant will be entitled to receive upon
exercise of the Share Appreciation Right.
(2) Surrender of Option. Upon the exercise of
the Share Appreciation Right and surrender of the related
portion of the underlying Option, the Option, to the extent
surrendered, will not thereafter be exercisable. The
underlying Option may provide that such Share Appreciation
Rights will be payable solely in cash. The terms of the
underlying Option shall provide a method by which an
alternative fair market value of the Shares on the date of
exercise shall be calculated based on one of the following:
(x) the closing price of the Shares on the national exchange
on which they are then traded on the business day immediately
preceding the day of exercise; (y) the highest closing price
of the Shares on the national exchange on which they have been
traded, during the 90 days immediately preceding the Change in
Control; or (z) the greater of (x) and (y).
(3) Exercise. In addition to any further
conditions upon exercise that may be imposed by the Committee,
the Share Appreciation Rights shall be exercisable only to the
extent that the related Option is exercisable, except that in
no event will a Share
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Appreciation Right held by a Section 16 Participant be
exercisable within the first six months after it is awarded
even though the related Option is or becomes exercisable, and
each Share Appreciation Right will expire no later than the
date on which the related Option expires. A Share Appreciation
Right may only be exercised at a time when the Fair Market
Value of the Shares covered by the Share Appreciation Right
exceeds the exercise price of the Shares covered by the
underlying Option. No Share Appreciation Right held by a
Section 16 Participant shall be exercisable by its terms within
the first six months after it is granted, and a Section 16
Participant may only exercise a Share Appreciation Right during
a period beginning on the third business day and ending on the
twelfth business day following the release for publication of
quarterly or annual summary statements of the Company's sales
and earnings.
(4) Method of Exercise. Share Appreciation
Rights may be exercised by the participant's giving written
notice of the exercise to the Company, stating the number of
Share Appreciation Rights the participant has elected to
exercise and surrendering the portion of the underlying Option
relating to the same number of Shares as the number of Share
Appreciation Rights elected to be exercised.
(5) Payment. The manner in which the Company's
obligation arising upon the exercise of the Share Appreciation
Right will be paid will be determined by the Committee and
shall be set forth in the participant's Option Agreement. The
Committee may provide for payment in Shares or cash, or a
fixed combination of Shares or cash, or the Committee may
reserve the right to determine the manner of payment at the
time the Share Appreciation Right is exercised. Shares issued
upon the exercise of a Share Appreciation Right will be valued
at their Fair Market Value on the date of exercise.
SECTION 7. RESTRICTED SHARES.
(a) Grant. Restricted Shares may be issued alone, in
addition to or in tandem with other Awards under the Plan or cash
awards made outside of the Plan. The Committee shall determine the
individuals to whom, and the time or times at which, grants of
Restricted Shares will be made, the number of Restricted Shares to be
awarded to each participant, the price (if any) to be paid by the
participant (subject to Section 7(b)), the date or dates upon which
Restricted Share Awards will vest and the period or periods within
which those Restricted Share Awards may be subject to forfeiture, and
the
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other terms and conditions of those Awards in addition to those set
forth in Section 7(b).
The Committee may condition the grant of Restricted
Shares upon the attainment of specified performance goals or such
other factors as the Committee may determine in its sole discretion.
(b) Terms and Conditions. Restricted Shares awarded
under the Plan shall be subject to the following terms and conditions
and such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall deem desirable. A
participant who receives a Restricted Share Award shall not have any
rights with respect to that Award, unless and until the participant
has executed an agreement evidencing the Award in the form approved
from time to time by the Committee and has delivered a fully executed
copy thereof to the Company, and has otherwise complied with the
applicable terms and conditions of that Award.
(1) The purchase price (if any) for Restricted
Shares shall be determined by the Committee at the time of
grant.
(2) Awards of Restricted Shares must be accepted
by executing a Restricted Share Award agreement and paying the
price (if any) that is required under Section 7(b)(1).
(3) Each participant receiving a Restricted Share
Award shall be issued a stock certificate in respect of those
Restricted Shares. The certificate shall be registered in the
name of the participant, and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable
to the Award.
(4) The Committee shall require that the stock
certificates evidencing the Restricted Shares be held in
custody by the Company until the restrictions thereon shall
have lapsed, and that, as a condition of any Restricted Shares
Award, the participant shall have delivered to the Company a
stock power, endorsed in blank, relating to the Shares covered
by that Award.
(5) Subject to the provisions of this Plan and
the Restricted Share Award agreement, during a period set by
the Committee commencing with the date of any Award (the
"Restriction Period"), the participant shall not be permitted
to sell, transfer, pledge, assign or otherwise encumber the
Restricted Shares covered by that Award. The Restriction
Period shall not be less than three years in duration
("Minimum Restriction Period") unless otherwise determined by
the Committee at the time of grant. Subject to these
limitations and the Minimum Restriction Period
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requirement, the Committee, in its sole discretion, may provide
for the lapse of restrictions in installments and may
accelerate or waive restrictions, in whole or in part, based on
service, performance or such other factors and criteria as the
Committee may determine in its sole discretion.
(6) Except as provided in this Section 7(b)(6),
Section 7(b)(5) and Section 7(b)(7), the participant shall
have, with respect to the Restricted Shares awarded, all of
the rights of a shareholder of the Company, including the
right to vote the Shares, and the right to receive any
dividends. The Committee, in its sole discretion, as
determined at the time of Award, may permit or require the
payment of cash dividends to be deferred and subject to
forfeiture and, if the Committee so determines, reinvested,
subject to Section 11(f), in additional Restricted Shares to
the extent Shares are available under Section 3, or otherwise
reinvested. Unless the Committee or Board determines
otherwise, Share dividends issued with respect to Restricted
Shares shall be treated as additional Restricted Shares that
are subject to the same restrictions and other terms and
conditions that apply to the Shares with respect to which such
dividends are issued.
(7) No Restricted Shares shall be transferable by
a participant other than by will or by the laws of descent and
distribution.
(8) If a participant's employment with the
Company or any Subsidiary or Affiliate terminates by reason of
death, any Restricted Shares held by that participant shall
thereafter vest and any restriction shall lapse to the extent
such Restricted Shares would have become vested or no longer
subject to restriction within one year from the time of death
had the participant continued to fulfill all of the conditions
of the Restricted Share Award during that period (or on such
accelerated basis as the Committee may determine at or after
grant). The balance of the Restricted Shares shall be
forfeited.
(9) If a participant's employment with the
Company or any Subsidiary or Affiliate terminates by reason of
Disability, any Restricted Shares held by that participant
shall thereafter vest and any restriction shall lapse to the
extent such Restricted Shares would have become vested or no
longer subject to restriction within one year from the time of
termination had the participant continued to fulfill all of
the conditions of the Restricted Share Award during that
period (or on such accelerated basis as the Committee may
determine at or after grant), subject in all cases to the
Minimum.
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Restriction Period requirement. The balance of the
Restricted Shares shall be forfeited.
(10) Unless otherwise determined by the Committee
at or after the time of granting any Restricted Shares, if a
participant's employment with the Company or any Subsidiary or
Affiliate terminates for any reason other than death or
Disability, the Restricted Shares held by that participant
that are unvested or subject to restriction at the time of
termination shall thereupon be forfeited.
(c) Minimum Value. In order to better ensure that Award
payments actually reflect the performance of the Company and service
of the participant, the Committee may provide, in its sole discretion,
for a tandem performance-based or other award designed to guarantee a
minimum value, payable in cash or Shares, to the recipient of a
Restricted Share Award, subject to such performance, future service,
deferral and other terms and conditions as may be specified by the
Committee.
SECTION 8. DEFERRED SHARES.
(a) Grant. Deferred Shares may be awarded alone, in
addition to or in tandem with other Awards granted under the Plan or
cash awards made outside of the Plan. The Committee shall determine
the individuals to whom, and the time or times at which, Deferred
Shares shall be awarded, the number of Deferred Shares to be awarded
to any participant, the duration of the period (the "Deferral Period")
during which, and the conditions under which, receipt of the Shares
will be deferred, and the other terms and conditions of the Award in
addition to those set forth in Section 8(b).
The Committee may condition the grant of Deferred Shares upon
the attainment of specified performance goals or such other factors as
the Committee shall determine, in its sole discretion.
(b) Terms and Conditions. Deferred Share Awards shall be
subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable:
(1) The purchase price for Deferred Shares shall
be determined at the time of grant by the Committee. Subject
to the provisions of the Plan and the Award agreement referred
to in Section 8(b)(9), Deferred Share Awards may not be sold,
assigned, transferred, pledged or otherwise encumbered during
the Deferral Period. At the expiration of the Deferral Period
(or the Elective Deferral Period
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referred to in Section 8(b)(8), where applicable), stock
certificates shall be delivered to the participant, or his
legal representative, for the Shares covered by the Deferred
Share Award. The Deferral Period applicable to any Deferred
Share Award shall not be less than six months and one day
("Minimum Deferral Period").
(2) Unless otherwise determined by the Committee
at grant, amounts equal to any dividends declared during the
Deferral Period with respect to the number of Shares covered
by a Deferred Share Award will be paid to the participant
currently, or deferred and deemed to be reinvested in
additional Deferred Shares, or otherwise reinvested, all as
determined at or after the time of the Award by the Committee,
in its sole discretion.
(3) No Deferred Shares shall be transferable by a
participant other than by will or by the laws of descent and
distribution.
(4) If a participant's employment by the Company
or any Subsidiary or Affiliate terminates by reason of death,
any Deferred Shares held by such participant shall thereafter
vest or any restriction lapse, to the extent such Deferred
Shares would have become vested or no longer subject to
restriction within one year from the time of death had the
participant continued to fulfill all of the conditions of the
Deferred Share Award during such period (or on such
accelerated basis as the Committee may determine at or after
grant). The balance of the Deferred Shares shall be
forfeited.
(5) If a participant's employment by the Company
or any Subsidiary or Affiliate terminates by reason of
Disability, any Deferred Shares held by such participant shall
thereafter vest or any restriction lapse, to the extent such
Deferred Shares would have become vested or no longer subject
to restriction within one year from the time of termination
had the participant continued to fulfill all of the conditions
of the Deferred Shares Award during such period (or on such
accelerated basis as the Committee may determine at or after
grant), subject in all cases to the Minimum Deferral Period
requirement. The balance of the Deferred Shares shall be
forfeited.
(6) Unless otherwise determined by the Committee
at or after the time of granting any Deferred Share Award, if
a participant's employment by the Company or any Subsidiary or
Affiliate terminates for any reason other than death or
Disability, all Deferred Shares held by such participant which
are unvested or subject to restriction shall thereupon be
forfeited.
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(7) Based on service, performance or such other
factors or criteria as the Committee may determine, the
Committee may, at or after grant, accelerate the vesting of
all or any part of any Deferred Share Award or waive a portion
of the Deferral Period for all or any part of such Award,
subject in all cases to the Minimum Deferral Period
requirement.
(8) A participant may elect to further defer
receipt of a Deferred Share Award (or an installment of an
Award) for a specified period or until a specified event (the
"Elective Deferral Period"), subject in each case to the
Committee's approval and the terms of this Section 8 and such
other terms as are determined by the Committee, all in its
sole discretion. Subject to any exceptions approved by the
Committee, such election must be made at least 12 months prior
to completion of the Deferral Period for such Deferred Share
Award (or such installment).
(9) Each such Award shall be confirmed by, and
subject to the terms of, a Deferred Share Award agreement
evidencing the Award in the form approved from time to time by
the Committee.
(c) Minimum Value Provisions. In order to better ensure
that Award payments actually reflect the performance of the Company
and service of the participant, the Committee may provide, in its sole
discretion, for a tandem performance-based or other Award designed to
guarantee a minimum value, payable in cash or Shares to the recipient
of a Deferred Share Award, subject to such performance, future
service, deferral and other terms and conditions as may be specified
by the Committee.
SECTION 9. SHARE PURCHASE RIGHTS.
(a) Grant. Share Purchase Rights may be granted alone,
in addition to or in tandem with other Awards granted under the Plan
or cash awards made outside the Plan. The Committee shall determine
the individuals to whom, and the time or times at which, grants of
Share Purchase Rights will be made, the number of Shares which may be
purchased pursuant to the Share Purchase Rights, and the other terms
and conditions of the Share Purchase Rights in addition to those set
forth in Section 9(b). The Shares subject to the Share Purchase
Rights may be purchased, as determined by the Committee at the time of
grant:
(1) at the Fair Market Value of such Shares on the
date of grant; or
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(2) at 85% of the Fair Market Value of such
Shares on the date of grant if the grant of Share Purchase
Rights is made in lieu of cash compensation.
Subject to Section 9(b) hereof, the Committee may also impose
such deferral, forfeiture or other terms and conditions as it shall
determine, in its sole discretion, on such Share Purchase Rights or
the exercise thereof.
Each Share Purchase Right Award shall be confirmed by, and be
subject to the terms of, a Share Purchase Rights Agreement which shall
be in form approved by the Committee.
(b) Terms and Conditions. Share Purchase Rights may
contain such additional terms and conditions not inconsistent with the
terms of the Plan as the Committee shall deem desirable, and shall
generally be exercisable for such period as shall be determined by the
Committee. However, Share Purchase Rights granted to Section 16
Participants shall not become exercisable earlier than six months and
one day after the grant date. Share Purchase Rights shall not be
transferable by a participant other than by will or by the laws of
descent and distribution.
SECTION 10. OTHER SHARE-BASED AWARDS.
(a) Grant. Other Awards of Shares and other Awards that
are valued, in whole or in part, by reference to, or are otherwise
based on, Shares, including, without limitation, performance shares,
convertible preferred shares, convertible debentures, exchangeable
securities and Share Awards or options valued by reference to Book
Value or Subsidiary performance, may be granted alone, in addition to
or in tandem with other Awards granted under the Plan or cash awards
made outside of the Plan.
At the time the Shares or Other Share-Based Awards are
granted, the Committee shall determine the individuals to whom and the
time or times at which such Shares or Other Share-Based Awards shall
be awarded, the number of Shares to be used in computing an Award or
which are to be awarded pursuant to such Awards, the consideration, if
any, to be paid for such Shares or Other Share-Based Awards, and all
other terms and conditions of the Awards in addition to those set
forth in Section 10(b).
The provisions of Other Share-Based Awards need not be the
same with respect to each participant.
(b) Terms and Conditions. Other Share-Based Awards shall
be subject to the following terms and conditions and shall contain
such additional terms and conditions, not
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inconsistent with the terms of the Plan, as the Committee shall deem
desirable:
(1) Subject to the provisions of this Plan and
the Award agreement referred to in Section 10(b)(5) below,
Shares awarded or subject to Awards made under this Section 10
may not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the Shares are issued,
or, if later, the date on which any applicable restriction,
performance, holding or deferral period or requirement is
satisfied or lapses. All Shares or Other Share-Based Awards
granted under this Section 10 shall be subject to a minimum
holding period (including any applicable restriction,
performance and/or deferral periods) of six months and one day
("Minimum Holding Period").
(2) Subject to the provisions of this Plan and
the Award agreement and unless otherwise determined by the
Committee at the time of grant, the recipient of an Other
Share-Based Award shall be entitled to receive, currently or
on a deferred basis, interest or dividends or interest or
dividend equivalents with respect to the number of Shares
covered by the Award, as determined at the time of the Award
by the Committee, in its sole discretion, and the Committee
may provide that such amounts (if any) shall be deemed to have
been reinvested in additional Shares or otherwise reinvested.
(3) Subject to the Minimum Holding Period, any
Other Share-Based Award and any Shares covered by any such
Award shall vest or be forfeited to the extent, at the times
and subject to the conditions, if any, provided in the Award
agreement, as determined by the Committee, in its sole
discretion.
(4) In the event of the participant's Disability
or death, or in cases of special circumstances, the Committee
may, in its sole discretion, waive, in whole or in part, any
or all of the remaining limitations imposed hereunder or under
any related Award agreement (if any) with respect to any part
or all of any Award under this Section 10, provided that the
Minimum Holding Period requirement may not be waived, except
in case of a participant's death.
(5) Each Award shall be confirmed by, and subject
to the terms of, an agreement or other instrument evidencing
the Award in the form approved from time to time by the
Committee, the Company and the participant.
(6) Shares (including securities convertible into
Shares) issued on a bonus basis under this Section 10
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shall be issued for no cash consideration. Shares (including
securities convertible into Shares) purchased pursuant to a
purchase right awarded under this Section 10 shall bear a price
of at least 85% of the Fair Market Value of the Shares on the
date of grant. The purchase price of such Shares, and of any
Other Share-Based Award granted hereunder, or the formula by
which such price is to be determined, shall be fixed by the
Committee at the time of grant.
(7) In the event that any "derivative security",
as defined in Rule 16a-1(c) (or any successor thereto)
promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act, is awarded pursuant to this
Section 10 to any Section 16 Participant, such derivative
security shall not be transferrable other than by will or by
the laws of descent and distribution.
SECTION 11. CHANGE IN CONTROL PROVISION.
(a) Impact of Event. In the event of: (1) a "Change in
Control" as defined in Section 11(b) or (2) a "Potential Change in
Control" as defined in Section 11(c), the following acceleration and
valuation provisions shall apply:
(1) Any Stock Options awarded under the Plan not
previously exercisable and vested shall become fully
exercisable and vested;
(2) Any Share Appreciation Rights shall become
immediately exercisable;
(3) The restrictions applicable to any Restricted
Share Awards, Deferred Shares, Share Purchase Rights and Other
Share-Based Awards shall lapse and such Shares and Awards
shall be deemed fully vested; and
(4) The value of all outstanding Awards, in each
case to the extent vested, shall, unless otherwise determined
by the Committee in its sole discretion at or after grant but
prior to any Change in Control or Potential Change in Control,
be cashed out on the basis of the "Change in Control Price" as
defined in Section 11(d) as of the date such Change in Control
or such Potential Change in Control is determined to have
occurred;
but the provisions of Sections 11(a)(l) through (3) shall not apply
with respect to Awards granted to any Section 16 Participant which
have been held by such participant for less than six months and one
day as of the date that such Change in
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Control or Potential Change in Control is determined to have occurred.
(b) Definition of Change in Control. For purposes of
Section 11(a), a "Change in Control" means the occurrence of any of
the following: (i) the Board or shareholders of the Company approve a
consolidation or merger in which the Company is not the surviving
corporation, the sale of substantially all of the assets of the
Company, or the liquidation or dissolution of the Company; (ii) any
person or other entity (other than the Company or a Subsidiary or any
Company employee benefit plan (including any trustee of any such plan
acting in its capacity as trustee)) purchases any Shares (or
securities convertible into Shares) pursuant to a tender or exchange
offer without the prior consent of the Board of Directors, or becomes
the beneficial owner of securities of the Company representing 20% or
more of the voting power of the Company's outstanding securities; or
(iii) during any two-year period, individuals who at the beginning of
such period constitute the entire Board of Directors cease to
constitute a majority of the Board of Directors, unless the election
or the nomination for election of each new director is approved by at
least two-thirds of the directors then still in office who were
directors at the beginning of that period.
(c) Definition of Potential Change in Control. For
purposes of Section 11(a), a "Potential Change in Control" means the
happening of any one of the following:
(1) The approval by the shareholders of the
Company of an agreement by the Company, the consummation of
which would result in a Change in Control of the Company as
defined in Section 11(b); or
(2) The acquisition of beneficial ownership,
directly or indirectly, by any entity, person or group (other
than the Company or a Subsidiary or any Company employee
benefit plan (including any trustee of any such plan acting in
its capacity as trustee)) of securities of the Company
representing 5% or more of the combined voting power of the
Company's outstanding securities and the adoption by the Board
of a resolution to the effect that a Potential Change in
Control of the Company has occurred for purposes of this Plan.
(d) Change in Control Price. For purposes of this
Section 11, "Change in Control Price", means the highest price per
share paid in any transaction reported on the New York Stock Exchange
Composite Index (or, if the Shares are not then traded on the New York
Stock Exchange, the highest price paid as reported for any national
exchange on which the Shares are then traded) or paid or offered in
any bona fide transaction related to a Change in Control or Potential
Change in Control
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of the Company, at any time during the 60-day period immediately
preceding the occurrence of the Change in Control (or, when
applicable, the occurrence of the Potential Change in Control event),
in each case as determined by the Committee.
SECTION 12. AMENDMENTS AND TERMINATION.
The Board may at any time, in its sole discretion, amend,
alter or discontinue the Plan, but no such amendment, alteration or
discontinuation shall be made that would impair the rights of a participant
under an Award theretofore granted, without the participant's consent. The
Company shall submit to the shareholders of the Company for their approval any
amendments to the Plan which is required by Section 16 of the Exchange Act or
the rules and regulations thereunder, or Section 162(m) of the Code, to be
approved by the shareholders.
The Committee may at any time, in its sole discretion, amend
the terms of any Award, but no such amendment shall be made that would impair
the rights of a participant under an Award theretofore granted, without the
participant's consent; nor shall any such amendment be made that would make the
applicable exemptions provided by Rule 16b-3 under the Exchange Act unavailable
to any Section 16 Participant holding the Award without the participant's
consent.
Subject to the above provisions, the Board shall have all
necessary authority to amend the Plan to take into account changes in
applicable securities and tax laws and accounting rules, as well as other
developments.
SECTION 13. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for
incentive and deferred compensation. With respect to any payment not yet made
to a participant by the Company, nothing contained herein shall give that
participant any rights that are greater than those of a general creditor of the
Company.
SECTION 14. GENERAL PROVISIONS.
(a) The Committee may require each participant acquiring
Shares pursuant to an Award under the Plan to represent to and agree
with the Company in writing that the participant is acquiring the
Shares without a view to distribution thereof. The certificates for
any such Shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
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All Shares or other securities delivered under the Plan shall
be subject to such stop-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock
exchange upon which the Shares are then listed, and any applicable
federal or state securities laws, and the Committee may cause a legend
or legends to be put on any certificate for any such Shares to make
appropriate reference to those restrictions.
(b) Nothing contained in this Plan shall prevent the
Board from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required, and such
arrangements may be either generally applicable or applicable only in
specific cases.
(c) Neither the adoption of the Plan, nor its operation,
nor any document describing, implementing or referring to the Plan, or
any part thereof, shall confer upon any participant under the Plan any
right to continue in the employ, or as a director, of the Company or
any Subsidiary or Affiliate, or shall in any way affect the right and
power of the Company or any Subsidiary or Affiliate to terminate the
employment, or service as a director, of any participant under the
Plan at any time with or without assigning a reason therefor, to the
same extent as the Company or any Subsidiary or Affiliate might have
done if the Plan had not been adopted.
(d) For purposes of this Plan, a transfer of a
participant between the Company and any Subsidiary or Affiliate shall
not be deemed a termination of employment.
(e) No later than the date as of which an amount first
becomes includable in the gross income of the participant for federal
income tax purposes with respect to any Award under the Plan, the
participant shall pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any federal,
state or local taxes or other items of any kind required by law to be
withheld with respect to that amount. Subject to the following
sentence, unless otherwise determined by the Committee, withholding
obligations may be settled with Shares, including unrestricted Shares
previously owned by the participant or Shares that are part of the
Award that gives rise to the withholding requirement. Notwithstanding
the foregoing, any election by a Section 16 Participant to settle any
tax withholding obligation with Shares that are part of an Award shall
be subject to approval by the Committee, in its sole discretion. The
obligations of the Company under the Plan shall be conditional on
those payment or arrangements and the Company and its Subsidiaries and
Affiliates shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise payable
to the participant.
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(f) The actual or deemed reinvestment of dividends or
dividend equivalents in additional Restricted Shares (or in Deferred
Shares or other types of Awards) at the time of any dividend payment
shall only be permissible if sufficient Shares are available under
Section 3 for reinvestment (taking into account then outstanding Stock
Options).
(g) The Plan, all Awards made and actions taken
thereunder and any agreements relating thereto shall be governed by
and construed in accordance with the laws of the State of Ohio.
(h) All agreements entered into with participants pursuant
to the Plan shall be subject to the Plan.
(i) The provisions of Awards need not be the same with
respect to each participant.
SECTION 15. SHAREHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.
The Plan was adopted by the Board on March 5, 1996 and is
subject to approval by the holders of the Company's outstanding Shares, in
accordance with applicable law.
SECTION 16. TERM OF PLAN.
No Award shall be granted pursuant to the Plan on or after
April 30, 2006, but Awards granted prior to that date may extend beyond that
date.
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