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Exhibit 4(e)
Core Materials Corporation
Long-Term Equity Incentive Plan
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CORE MATERIALS CORPORATION
LONG-TERM EQUITY INCENTIVE PLAN
ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. Core Materials Corporation, a Delaware
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the "Core Materials Corporation
Long-Term Equity Incentive Plan" (hereinafter referred to as the "Plan"), as
set forth in this document. The Plan permits the grant of Nonqualified Stock
Options, Incentive Stock Options, Director Options, Stock Appreciation Rights,
Restricted Stock, Performance Shares and Performance Units, and Other Incentive
Awards.
Subject to approval by the Company's stockholders within twelve (12)
months of the Effective date (as herein defined), the Plan shall become
effective as of January 1, 1997 (the "Effective Date") and shall remain in
effect as provided in Section 1.3 hereof.
1.2 OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize
the profitability and growth of the Company through incentives which are
consistent with the Company's goals and which link and align the personal
interests of Participants and Eligible Directors to those of the Company's
stockholders; to provide Participants and Eligible Directors with an incentive
for excellence in individual performance; and to promote teamwork.
The Plan is further intended to provide flexibility to the Company in
its ability to motivate, attract, and retain the services of Participants and
Eligible Directors who make significant contributions to the Company's success
and to allow Participants and Eligible Directors to share in the success of the
Company.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective
Date, as described in Section 1.1 hereof, and shall remain in effect, subject
to the right of the Board of Directors to amend or terminate the Plan at any
time pursuant to Article 16 hereof, until all Shares subject to it shall have
been purchased or acquired according to the Plan's provisions. However, in no
event may an Award or Director Option be granted under the Plan on or after
December 31, 2006.
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ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings
set forth below, and when the meaning is intended, the initial letter of the
word shall be capitalized:
2.1 "AWARD" means, individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Shares or Performance Units, or Other
Incentive Awards, but shall not include any Director Option.
2.2 "AWARD AGREEMENT" means an agreement entered into by the Company
and each Participant setting forth the terms and provisions applicable to
Awards granted under this Plan.
2.3 "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.
2.4 "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of
the Company.
2.5 "CHANGE IN CONTROL" of the Company means the Company or its
shareholders entering into one or more agreements to dispose of all or
substantially all of the assets or fifty percent (50%) or more of the
outstanding capital stock of the Company by means of sale (whether as a result
of a tender offer or otherwise), merger, reorganization or liquidation in one
or a series of related transactions; provided, however, that a "Change in
Control" shall not occur in the event that (a) the primary purpose of the
transaction is to change the Company's domicile solely within the United
States; or (b) the transaction is approved by a majority of the members of the
Board of Directors who had either been in office for more than twelve months
prior to such transaction or had been elected, or nominated for election by the
Company's shareholders, by the vote of three-fourths of the directors then
still in office who were directors at the beginning of such twelve-month
period.
2.6 "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
2.7 "COMMITTEE" means the Compensation Committee of the Board, as
specified in Article 3 herein, or such other Committee appointed by the Board
to administer the Plan with respect to grants of Awards.
2.8 "COMPANY" means Core Materials Corporation, a Delaware
corporation, and the Company's Subsidiaries, as well as any
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successor to any of such entities as provided in Article 19 herein.
2.9 "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company.
2.10 "DIRECTOR OPTION" means a Nonqualified Stock Option granted to
each Eligible Director pursuant to Section 6.9 without any action by the Board
or the Committee.
2.11 "DISABILITY" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan. To the extent that a
Participant is not covered under a long-term disability plan, the term
"Disability" shall have the meaning ascribed to the term "permanent and total
disability" under Section 22(e)(3) of the Code, or any successor provision
thereto.
2.12 "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.13 "ELIGIBLE DIRECTOR" means, on any date, a person who is serving
as a member of the Board who is a Nonemployee Director.
2.14 "EMPLOYEE" means any employee of the Company. Nonemployee
Directors shall not be considered Employees under this Plan unless specifically
designated otherwise.
2.15 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
2.16 "FAIR MARKET VALUE" shall be determined on the basis of the
average of the high and low sale prices on the principal securities exchange on
which the Shares are publicly traded or, if there is no such sale on the
relevant date, then on the last previous day on which a sale was reported.
2.17 "FREESTANDING SAR" means an SAR that is granted independently of
any Options, as described in Article 7 herein.
2.18 "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase
Shares granted under Article 6 herein and which is designated as an Incentive
Stock Option and which is intended to meet the requirements of Code Section
422.
2.19 "INSIDER" shall mean an individual who is, on the relevant date,
an officer, director, or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
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2.20 "NAMED EXECUTIVE OFFICER" means a Participant who, as of the date
of vesting and/or payout of an Award, as applicable, is one of the group of
"covered employees," as defined in the regulations promulgated under Code
Section 162(m), or any successor statute.
2.21 "NONEMPLOYEE DIRECTOR" means an individual who is a member of the
Board of Directors of the Company but who is not an Employee of the Company or
a Subsidiary.
2.22 "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase
Shares granted under Article 6 herein and which is not intended to meet the
requirements of Code Section 422.
2.23 "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Article 6 herein, but shall not include a Director
Option.
2.24 "OPTION PRICE" means the price at which a Share may be purchased
by a Participant pursuant to an Option.
2.25 "OTHER INCENTIVE AWARD" means an award granted pursuant to
Article 10 hereof.
2.26 "PARTICIPANT" means an Employee who has outstanding an Award
granted under the Plan.
2.27 "PERFORMANCE-BASED EXCEPTION" means the performance-based
exception from the tax deductibility limitations of Code Section 162(m).
2.28 "PERFORMANCE PERIOD" means the time period during which
performance goals must be achieved with respect to an Award, as determined by
the Committee.
2.29 "PERFORMANCE SHARE" means an Award granted to a Participant, as
described in Article 9 herein.
2.30 "PERFORMANCE UNIT" means an Award granted to a Participant, as
described in Article 9 herein.
2.31 "PERIOD OF RESTRICTION" means the period during which the
transfer of Shares of Restricted Stock is limited in some way (based on the
passage of time, the achievement of performance goals, and/or upon the
occurrence of other events as determined by the Committee at its discretion),
and the Shares are subject to a substantial risk of forfeiture, as provided in
Article 8 herein.
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2.32 "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
2.33 "RESTRICTED STOCK" means an Award granted to a Participant
pursuant to Article 8 herein.
2.34 "RETIREMENT" means the normal retirement date on which a
Participant qualifies for full retirement benefits under the Company's
qualified retirement plan, as identified by the Committee. In the event that a
Participant is not covered under any qualified retirement plan maintained by
the Company, the term "Retirement" shall mean the date on which such
Participant attains age 65.
2.35 "SHARES" means the shares of common stock of the Company.
2.36 "SHARE POOL" means the number of shares authorized for issuance
under paragraph 4.1, as adjusted for awards and payouts under paragraph 4.2 and
as adjusted for changes in corporate capitalization under paragraph 4.3.
2.37 "STOCK APPRECIATION RIGHT" or "SARA" means an Award, granted
alone or in connection with a related Option, designated as an SAR, pursuant to
the terms of Article 7 herein.
2.38 "SUBSIDIARY" means any corporation, partnership, joint venture,
affiliate, or other entity in which the Company has a majority voting interest,
and which the Committee designates as a participating entity in the Plan.
2.39 "TANDEM SAR" means an SAR that is granted in connection with a
related Option pursuant to Article 7 herein, the exercise of which shall
require forfeiture of the right to purchase a Share under the related Option
(and when a Share is purchased under the Option, the Tandem SAR shall similarly
be canceled).
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board, or by any other Committee appointed by the Board. The
members of the Committee shall be appointed from time to time by, and shall
serve at the discretion of, the Board of Directors. Notwithstanding any
provision contained herein, to the extent that any Award is designed to comply
with the Performance-Based Exception, the Committee shall
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satisfy the requirements contained in Section 1.162-27(c)(4) of the
final regulations promulgated by the Internal Revenue Service under Section
162(m) of the Code. For purposes of granting Awards under the Plan, the
Committee shall be composed of not less than the minimum number of persons from
time to time required by Rule 16b-3 under the Exchange Act, each of whom shall
be a "non-employee director" within the meaning of Rule 16b-3 under the
Exchange Act, or any successor rule or regulation.
3.2 AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Employees who
shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any agreement or instrument entered
into under the Plan; establish, amend, or waive rules and regulations for the
Plan's administration; and (subject to the provisions of Article 16 herein)
amend the terms and conditions of any outstanding Award to the extent such
terms and conditions are within the discretion of the Committee as provided in
the Plan. Further, the Committee shall make all other determinations which may
be necessary or advisable for the administration of the Plan. As permitted by
law, the Committee may delegate its authority as identified herein.
Notwithstanding anything else contained in the Plan to the contrary, neither
the Committee nor the Board shall have any discretion regarding whether an
Eligible Director shall receive a Director Option pursuant to Section 6.9 or
regarding the terms of any Director Option, including, without limitation, the
number of Shares subject to such Director Option, the timing of the grant or
the exercisability of such Director Option or the exercise price per Share of
such Director Option.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its stockholders, Employees, Participants, and their
estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1 NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as
provided in Section 4.3 herein, the number of Shares hereby reserved for
issuance under the Plan shall be One Million Five Hundred Thousand
(1,500,000.00). The Committee shall determine the appropriate methodology for
calculating the number of Shares issued pursuant to the Plan.
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Unless and until the Committee determines that an Award to a Named
Executive Officer shall not be designed to comply with the Performance-Based
Exception, the following rules shall apply to grants of such Awards under the
Plan:
(a) The maximum aggregate number of Shares (including Options, SARs,
Restricted Stock, Performance Units and Performance Shares paid
out in Shares, or Other Incentive Awards paid out in Shares) that
may be granted or that may vest, as applicable, pursuant to any
Award held by any Named Executive Officer shall be One Hundred
Twenty-five Thousand (125,000). For this purpose, to the extent
that any Option is canceled (as described in Section
1.162-27(e)(2)(vi)(B) of the final regulations under Section
162(m) of the Code, such canceled Option shall continue to be
counted against the maximum number of Shares for which Options may
be granted to a Named Executive Officer under the Plan; and
(b) The maximum aggregate cash payout (including Performance Units and
Performance Shares paid out in cash, or Other Incentive Awards
paid out in cash) with respect to Awards granted in any fiscal
year which may be made to any Named Executive Officer shall be One
Hundred Twenty-five Thousand Dollars ($125,000).
4.2 LAPSED AWARDS. If any Award or Director Option granted under this
Plan is canceled, terminates, expires, or lapses for any reason (with the
exception of the termination of a Tandem SAR upon exercise of the related
Option, or the termination of a related Option upon exercise of the
corresponding Tandem SAR), any Shares subject to such Award or Director Option
again shall be available for the grant of an Award or Director Option under the
Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether
or not such reorganization comes within the definition of such term in Code
Section 368), or any partial or complete liquidation of the Company, such
adjustment shall be made in the number and class of Shares available in the
Share Pool and in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; provided, however, that the number of Shares
subject to any Award shall always be a whole
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number. If, pursuant to the preceding sentence, an adjustment is made to
outstanding Options held by Participants, a corresponding adjustment shall be
made to outstanding Director Options and if, pursuant to the preceding
sentence, an adjustment is made to the number of Shares authorized for issuance
under the Plan, a corresponding adjustment shall be made to the number of
Shares subject to each Director Option thereafter granted pursuant to Section
6.9.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in this Plan include
all officers and key employees of the Company, as determined by the Committee,
including Employees who are members of the Board and Employees who reside in
countries other than the United States of America.
5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Employees, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award. Each Eligible Director shall receive nondiscretionary Director Options
in accordance with, and only in accordance with, Section 6.9 hereof.
ARTICLE 6. STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted, either by the Committee or the Board, to one or more
Participants in such number, and upon such terms, and at any time and from time
to time as shall be determined by the Committee. The Committee or the Board
shall have the authority to grant Incentive Stock Options or to grant
Nonqualified Stock Options or to grant both types of Options. In the case of
Incentive Stock Options, the terms and conditions of such grants shall be
subject to, and comply with, such rules as may be prescribed by Section 422 of
the Code, as from time to time amended, and any regulations implementing such
statute, including, without limitation, the requirements of Code Section 422(d)
which limit the aggregate Fair Market Value of Shares (determined at the time
that such Option is granted) for which Incentive Stock Options are exercisable
for the first time to $100,000 per calendar year. Each provision of the Plan
and of each written Award Agreement relating to an Option designated as an
Incentive Stock Option shall be construed so that such Option qualifies as an
Incentive Stock Option, and any provision that cannot be so construed shall be
disregarded.
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6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement also shall specify whether the
Option is intended to be an ISO or an NQSO.
6.3 OPTION PRICE. Unless otherwise designated by the Committee at the
time of grant, the Option Price for each grant of an Option under this Plan
shall be at least equal to one hundred percent (100%) of the Fair Market Value
of a Share on the date the Option is granted. Notwithstanding any provision
contained herein, in the case of an Incentive Stock Option, the exercise price
at the time such Incentive Stock Option is granted to any Employee who, at the
time of such grant, owns (within the meaning of Section 425(d) of the Code)
more than ten percent of the voting power of all classes of stock of the
Company or a subsidiary, shall not be less than 110% of the per Share Fair
Market Value on the date of grant.
6.4 DURATION OF OPTIONS. Each Option granted to an Employee shall
expire at such time as the Committee shall determine at the time of grant;
provided, however, that in the case of an Incentive Stock Option, an Employee
may not exercise such Incentive Stock Option after (a) the date which is ten
years (five years in the case of a Participant who owns more than ten percent
of the voting power of the Company or a subsidiary) after the date on which
such Incentive Stock Option is granted; or (b) the date which is three months
(twelve months in the case of a Participant who becomes disabled, as defined in
Section 22(e)(3) of the Code, or who dies) after the date on which he ceases to
be an Employee of the Company or a subsidiary.
6.5 EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant.
6.6 PAYMENT. Options granted under this Article 6 shall be exercised
by the delivery of a written notice of exercise to the Company, setting forth
the number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, or (b) by tendering
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that the Shares which are
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tendered must have been held by the Participant for at least six (6) months
prior to their tender to satisfy the Option Price), or (c) by a combination of
(a) and(b).
As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).
6.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose
such restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws
applicable to such Shares.
6.8 TERMINATION OF EMPLOYMENT. Each Option Award Agreement shall set
forth the extent to which the Participant shall have the right to exercise the
Option following termination of the Participant's employment with the Company
and/or its Subsidiaries. Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the Award Agreement entered
into with each Participant, need not be uniform among all Options issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination of employment.
6.9 DIRECTOR OPTIONS. Notwithstanding anything else contained herein
to the contrary, each Eligible Director shall receive, on April 16, 1997,
provided that the Eligible Director is serving as a member of the Board on such
date, a grant of a Director Option to purchase 35,000 Shares at an exercise
price per Share equal to the Fair Market Value on the date of grant. Each
Eligible Director who is first elected to the Board after April 16, 1997 shall
receive, on the day following such election, a grant of a Director Option to
purchase 35,000 Shares at an exercise price per Share equal to the Fair Market
Value on the date of grant. A Director Option shall be exercisable until the
earlier to occur of the following two dates: (a) the tenth anniversary of the
date of grant of such Director Option; or (b) twelve months after the date the
Eligible Director ceases to be a member of the Board, except that if the
Eligible Director ceases to be a member of the Board after having been
convicted of, or pled guilty or nolo contendere to, a felony, his Director
Option shall be canceled on the date he ceases to be a member of the Board.
Each Director Option shall vest twenty percent (20%) on the annual anniversary
date after the date of grant; and any unvested Director Options shall be
forfeited by the Eligible
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Director if he terminates his service on the Board prior to satisfaction of
such vesting requirement. An Eligible Director may pay the exercise price of a
Director Option in the manner described in Section 6.6. Each Director Option
shall be evidenced by an agreement between the Company and the Eligible
Director.
6.10 NONTRANSFERABILITY OF OPTIONS AND DIRECTOR OPTIONS.
(a) INCENTIVE STOCK OPTIONS AND DIRECTOR OPTIONS. No ISO or Director
Option granted under the Plan may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution. Further, all
ISOs and Director Options granted to a Participant or Eligible
Director under the Plan shall be exercisable during his or her
lifetime only by such Participant or Eligible Director
(b) NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a
Participant's Award Agreement, no NQSO granted under this
Article 6 may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by
the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all NQSOs
granted to a Participant under this Article 6 shall be
exercisable during his or her lifetime only by such Participant
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARS. Subject to the terms and conditions of the Plan,
SARs may be granted to Participants at any time and from time to time as shall
be determined by the Committee. The Committee may grant Freestanding SARs,
Tandem SARs, or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number
of SARs granted to each Participant (subject to Article 4 herein) and,
consistent with the provisions of the Plan, in determining the terms and
conditions pertaining to such SARs.
Unless otherwise designated by the Committee at the time of grant, the
grant price of a Freestanding SAR shall equal the Fair Market Value of a Share
on the date of grant of the SAR. The grant price of Tandem SARs shall equal the
Option Price of the related Option.
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7.2 EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the
right to exercise the equivalent portion of the related Option. A Tandem SAR
may be exercised only with respect to the Shares for which its related Option
is then exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one
hundred percent (100%) of the difference between the Option Price of the
underlying ISO and the Fair Market Value of the Shares subject to the
underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem
SAR may be exercised only when the Fair Market Value of the Shares subject to
the ISO exceeds the Option Price of the ISO.
7.3 EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised
upon whatever terms and conditions the Committee, in its sole discretion,
imposes upon them.
7.4 SAR AGREEMENT. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the SAR, and such
other provisions as the Committee shall determine.
7.5 TERM OF SARS. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
unless otherwise designated by the Committee, such term shall not exceed ten
(10) years.
7.6 PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined
by multiplying:
(a) The difference between the Fair Market Value of a Share on the
date of exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may
be in cash, in Shares of equivalent value, in Restricted Shares of equivalent
value, or in some combination thereof.
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7.7 TERMINATION OF EMPLOYMENT. Each SAR Award Agreement shall set
forth the extent to which the Participant shall have the right to exercise the
SAR following termination of the Participant's employment with the Company
and/or its Subsidiaries. Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the Award Agreement entered
into with Participants, need not be uniform among all SARs issued pursuant to
the Plan, and may reflect distinctions based on the reasons for termination of
employment.
7.8 NONTRANSFERABILITY OF SARS. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant.
ARTICLE 8. RESTRICTED STOCK
8.1 GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of
the Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee shall
determine.
8.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by an Award Agreement that shall specify the Period(s) of
Restriction, the number of Shares of Restricted Stock granted, and such other
provisions as the Committee shall determine.
8.3 TRANSFERABILITY. Except as provided in this Article 8, the Shares
of Restricted Stock granted herein may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the
applicable Period of Restriction established by the Committee and specified in
the Restricted Stock Award Agreement, or upon earlier satisfaction of any other
conditions, as specified by the Committee in its sole discretion and set forth
in the Restricted Stock Agreement. All rights with respect to the Restricted
Stock granted to a Participant under the Plan shall be available during his or
her lifetime only to such Participant.
8.4 OTHER RESTRICTIONS. Subject to Article 11 herein, the Committee
may impose such other conditions and/or restrictions on any Shares of
Restricted Stock granted pursuant to the Plan as it may deem advisable
including, without limitation, a requirement that Participants pay a stipulated
purchase price for each Share
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of Restricted Stock, restrictions based upon the achievement of specific
performance goals (Company-wide, divisional, and/or individual), time-based
restrictions on vesting following the attainment of the performance goals,
and/or restrictions under applicable federal or state securities laws.
The Company shall retain the certificates representing Shares of
Restricted Stock in the Company's possession until such time as all conditions
and/or restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted
Stock covered by each Restricted Stock grant made under the Plan shall become
freely transferable by the Participant after the last day of the applicable
Period of Restriction.
8.5 VOTING RIGHTS. Unless otherwise designated by the Committee at the
time of grant, Participants holding Shares of Restricted Stock granted
hereunder may exercise full voting rights with respect to those Shares during
the Period of Restriction.
8.6 DIVIDENDS AND OTHER DISTRIBUTIONS. Unless otherwise designated by
the Committee at the time of grant, Participants holding Shares of Restricted
Stock granted hereunder may be credited with regular cash dividends paid with
respect to the underlying Shares while they are so held during the Period of
Restriction. The Committee may apply any restrictions to the dividends that the
Committee deems appropriate. Without limiting the generality of the preceding
sentence, if the grant or vesting of Restricted Shares granted to a Named
Executive Officer is designed to comply with the requirements of the
Performance-Based Exception, the Committee may apply any restrictions it deems
appropriate to the payment of dividends declared with respect to such
Restricted Shares, such that the dividends and/or the Restricted Shares
maintain eligibility for the Performance-Based Exception.
8.7 TERMINATION OF EMPLOYMENT. Each Restricted Stock Award Agreement
shall set forth the extent to which the Participant shall have the right to
receive unvested Restricted Shares following termination of the Participant's
employment with the Company and/or its Subsidiaries. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
Award Agreement entered into with each Participant, need not be uniform among
all Shares of Restricted Stock issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination of employment; provided,
however that, except in the cases of terminations connected with
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a Change in Control, terminations by reason of death or Disability, and except
for Restricted Shares paid to Participants upon SAR exercise, the vesting of
Shares of Restricted Stock which qualify for the Performance-Based Exception
and which are held by Named Executive Officers shall not occur prior to the
time they otherwise would have, but for the employment termination.
ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of the
Plan, Performance Units and/or Performance Shares may be granted to
Participants in such amounts and upon such terms, and at any time and from time
to time, as shall be determined by the Committee.
9.2 VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall
have an initial value that is established by the Committee at the time of
grant. Each Performance Share shall have an initial value equal to the Fair
Market Value of a Share on the date of grant. The Committee shall set
performance goals in its discretion which, depending on the extent to which
they are met, will determine the number and/or value of Performance
Units/Shares that will be paid out to the Participant. For purposes of this
Article 9, the time period during which the performance goals must be met shall
be called a "Performance Period."
9.3 EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of this
Plan, after the applicable Performance Period has ended, the holder of
Performance Units/Shares shall be entitled to receive payout on the number and
value of Performance Units/Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent to which the
corresponding performance goals have been achieved, as established by the
Committee.
9.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Payment of
earned Performance Units/Shares shall be made in a single lump sum within
seventy-five (75) calendar days following the close of the applicable
Performance Period. Subject to the terms of this Plan, the Committee, in its
sole discretion, may pay earned Performance Units/Shares in the form of cash or
in Shares (or in a combination thereof) which have an aggregate Fair Market
Value equal to the value of the earned Performance Units/Shares at the close of
the applicable Performance Period. Such Shares may be granted subject to any
restrictions deemed appropriate by the Committee.
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At the discretion of the Committee, Participants may be entitled to
receive any dividends declared with respect to Shares which have been earned in
connection with grants of Performance Units and/or Performance Shares which
have been earned, but not yet distributed to Participants (such dividends shall
be subject to the same accrual, forfeiture, and payout restrictions as apply to
dividends earned with respect to Shares of Restricted Stock, as set forth in
Section 8.6 herein). In addition, Participants may, at the discretion of the
Committee, be entitled to exercise their voting rights with respect to such
Shares.
9.5 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT.
Unless otherwise designated by the Committee, and set forth in the
Participant's Award Agreement, in the event the employment of a Participant is
terminated due to death, Disability, or Retirement during a Performance Period,
the Participant shall receive a prorated payout of the Performance
Units/Shares. The prorated payout shall be determined by the Committee, shall
be based upon the length of time that the Participant held the Performance
Units/Shares during the Performance Period, and shall further be adjusted based
on the achievement of the preestablished performance goals.
Payment of earned Performance Units/Shares shall be made at a time
specified by the Committee in its sole discretion and set forth in the
Participant's Award Agreement. Notwithstanding the foregoing, with respect to
Named Executive Officers who retire during a Performance Period, payments shall
be made at the same time as payments are made to Participants who did not
terminate employment during the applicable Performance Period.
9.6 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that a
Participant's employment terminates for any reason other than those reasons set
forth in Section 9.5 herein, all Performance Units/Shares shall be forfeited by
the Participant to the Company unless determined otherwise by the Committee, as
set forth in the Participant's Award Agreement.
9.7 NONTRANSFERABILITY. Except as otherwise provided in a
Participant's Award Agreement, Performance Units/Shares may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, a Participant's rights
under the Plan shall be exercisable during the Participant's lifetime only by
the Participant or the Participant's legal representative.
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ARTICLE 10. OTHER INCENTIVE AWARDS
10.1 GRANT OF OTHER INCENTIVE AWARDS. Subject to the terms and
provisions of the Plan, Other Incentive Awards may be granted to Participants
in such amount, upon such terms, and at any time and from time to time as shall
be determined by the Committee.
10.2 OTHER INCENTIVE AWARD AGREEMENT. Each Other Incentive Award grant
shall be evidenced by an Award Agreement that shall specify the amount of the
Other Incentive Award granted, the terms and conditions applicable to such
grant, the applicable Performance Period and performance goals, and such other
provisions as the Committee shall determine, subject to the terms and
provisions of the Plan.
10.3 NONTRANSFERABILITY. Except as otherwise provided in a
Participant's Award Agreement, Other Incentive Awards may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution.
10.4 FORM AND TIMING OF PAYMENT OF OTHER INCENTIVE AWARDS. Payment of
Other Incentive Awards shall be made at such times and in such form, in cash,
in Shares, or in Restricted Shares (or a combination thereof), as established
by the Committee subject to the terms of the Plan. Such Shares may be granted
subject to any restrictions deemed appropriate by the Committee. Without
limiting the generality of the foregoing, annual incentive awards may be paid
in the form of Shares and/or Other Incentive Awards (which may or may not be
subject to restrictions, at the discretion of the Committee).
ARTICLE 11. PERFORMANCE MEASURES
Unless and until the Committee proposes for shareholder vote and
shareholders approve a change in the general performance measures set forth in
this Article 11, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Named Executive Officers which are
designed to qualify for the Performance-Based Exception, the performance
measure(s) to be used for purposes of such grants shall be chosen from among
the following alternatives, as reported on the Company's annual 10-k report:
(a) Return on Assets ("ROA") which equals net income divided by total
assets.
(b) Return on Sales ("ROS") which equals net income divided by net
sales.
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(c) Return on Equity ("ROE") which equals net income divided by total
equity.
(d) Cash Flow Return on Investment ("CFROI") which equals net cash
flows divided by owners equity.
(e) Operating Income.
(f) Earnings Before Income Taxes ("EBIT") which equals net income plus
taxes.
(g) Net Earnings which equals net earnings as reported.
(h) Earnings Per Share.
The Committee shall have the discretion to adjust the determinations
of the degree of attainment of the preestablished performance goals; provided,
however, that Awards which are designed to qualify for the Performance-Based
Exception, and which are held by Named Executive Officers, may not be adjusted
upward (the Committee shall retain the discretion to adjust such Awards
downward).
In the event that applicable tax and/or securities laws change to
permit Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Code
Section 162(m) and, thus, which use performance measures other than those
specified above. To the extent that the Committee determines that it is
advisable to grant Awards in compliance with the Performance-Based Exception,
the Committee must certify, in writing, prior to the payment of any
compensation under the Award, that the performance goals and any other material
terms were in fact satisfied.
ARTICLE 12. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death
before he or she receives any or all of such benefit. Each such designation
shall revoke all prior designations by the same Participant, shall be in a form
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prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
ARTICLE 13. DEFERRALS
The Committee may permit a Participant to defer such Participant's
receipt of the payment of cash or the delivery of Shares that would otherwise
be due to such Participant by virtue of the exercise of an Option or SAR, the
lapse or waiver of restrictions with respect to Restricted Stock, or the
satisfaction of any requirements or goals with respect to Performance
Units/Shares or Other Incentive Awards. If any such deferral election is
required or permitted, the Committee shall, in its sole discretion, establish
rules and procedures for such payment deferrals.
ARTICLE 14. RIGHTS OF EMPLOYEES
14.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's employment at
any time, nor confer upon any Participant any right to continue in the employ
of the Company.
14.2 PARTICIPATION. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected
to receive a future Award.
ARTICLE 15. CHANGE IN CONTROL
15.1 TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change
in Control, unless otherwise specifically prohibited under applicable laws, or
by the rules and regulations of any governing governmental agencies or national
securities exchanges:
(a) Any and all Options, Director Options and SARs granted hereunder
shall become immediately exercisable, and shall remain exercisable
throughout their entire term, and any cash or property received
upon exercise of any Option or SAR shall be free from further
restriction;
(b) Any restriction periods and restrictions imposed on Restricted
Shares shall lapse; and
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(c) Unless otherwise specified in Participant's Award Agreement at
time of grant, the target payout opportunities attainable under
all outstanding Awards of Performance Units and Performance Shares
and Other Incentive Awards shall be deemed to have been fully
earned for the entire Performance Period(s) as of the effective
date of the Change in Control. The vesting of all such Awards
shall be accelerated as of the effective date of the Change in
Control, and in full settlement of such Awards, there shall be
paid out to Participants (in Shares for Awards normally paid in
Shares and in cash for Awards normally paid in cash) within thirty
(30) days following the effective date of the Change in Control a
pro rata portion of all targeted Award opportunities associated
with such outstanding Awards, based on the number of complete and
partial calendar months within the Performance Period which had
elapsed as of such effective date.
15.2 TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE-IN-CONTROL
PROVISIONS. Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Article 15 may not be terminated,
amended, or modified to affect adversely any Award or Director Option
theretofore granted under the Plan without the prior written consent of the
Participant or Eligible Director with respect to said Participant's or Eligible
Director's outstanding Awards or Director Options.
ARTICLE 16. AMENDMENT, MODIFICATION, AND TERMINATION
16.1 AMENDMENT, MODIFICATION, AND TERMINATION. The Board may at any
time and from time to time alter, amend, suspend or terminate the Plan in whole
or in part, provided that no amendment may be made to Section 6.9 or any other
provision of the Plan relating to Director Options within six months of the
last date on which any such provision was amended, other than to comport with
changes in the Code or the rules thereunder. The Committee shall not have the
authority to cancel outstanding Awards and issue substitute Awards in
replacement thereof.
16.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award.
16.3 COMPLIANCE WITH CODE SECTION 162(m). At all times when Code
Section 162(m) is applicable, all Awards granted under this Plan shall comply
with the requirements of Code Section
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162(m); provided, however, that in the event the Committee determines that such
compliance is not desired with respect to any Award or Awards available for
grant under the Plan, then compliance with Code Section 162(m) will not be
required. In addition, in the event that changes are made to Code Section
162(m) to permit greater flexibility with respect to any Award or Awards
available under the Plan, the Committee may, subject to this Article 16, make
any adjustments it deems appropriate.
ARTICLE 17. WITHHOLDING
17.1 TAX WITHHOLDING. The Company shall have the power and the right
to deduct or withhold, or require a Participant or Eligible Director to remit
to the Company, an amount sufficient to satisfy federal, state, and local
taxes, domestic or foreign, required by law or regulation to be withheld with
respect to any taxable event arising as a result of this Plan.
17.2 SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options, Director Options or SARs, upon the lapse of restrictions
on Restricted Stock, or upon any other taxable event arising as a result of
Awards granted hereunder, Participants or Eligible Directors may elect, subject
to the approval of the Committee, to satisfy the withholding requirement, in
whole or in part, by having the Company withhold Shares having a Fair Market
Value on the date the tax is to be determined equal to the minimum statutory
total tax which could be imposed on the transaction. All such elections shall
be irrevocable, made in writing, signed by the Participant or Eligible
Director, and shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate.
ARTICLE 18. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of
the Board, shall be indemnified by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit, or proceeding
to which he or she may be a party or in which he or she may be involved by
reason of any action taken or failure to act under the Plan. Such person shall
be indemnified by the Company for all amounts paid by him or her in settlement
thereof, with the Company's approval, or paid by him or her in satisfaction of
any judgment in any such action, suit, or proceeding against him or her,
provided he or she shall give the Company an opportunity, at its own expense,
to handle and defend
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the same before he or she undertakes to handle and defend it on his or her own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise,
or any power that the Company may have to indemnify them or hold them harmless.
ARTICLE 19. SUCCESSORS
All obligations of the Company under the Plan with respect to Awards
or Director Options granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
ARTICLE 20. LEGAL CONSTRUCTION
20.1 GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine, the
plural shall include the singular, and the singular shall include the plural.
20.2 SEVERABILITY. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
20.3 REQUIREMENTS OF LAW. The granting of Awards or Director Options
and the issuance of Shares under the Plan shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.
20.4 GOVERNING LAW. To the extent not preempted by federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.
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