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Exhibit 10.4
WERNER HOLDING CO. (PA), INC.
STOCK INCENTIVE PLAN
l. ESTABLISHMENT AND PURPOSE OF THE PLAN. This Management
Stock Incentive Plan (the "Plan") is established by Werner Holding Co. (PA),
Inc., a Pennsylvania corporation (the "Company"), as of November 24, 1997. The
Plan is designed to enable the Company to attract, retain and motivate
directors, members of the management and certain other officers and key
employees the Company, and its subsidiaries, by providing for or increasing
their proprietary interest in the Company. The Plan provides for the grant of
options ("Options") that qualify as incentive stock options ("Incentive Stock
Options") under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), as well as Options that do not so qualify ("Non-Qualified
Options"), for the grant of stock appreciation rights ("Stock Appreciation
Rights") and for the sale or grant of restricted stock ("Restricted Stock").
2. STOCK SUBJECT TO PLAN. The number of shares of stock that
may be subject to Options or Stock Appreciation Rights granted hereunder plus
the number of shares of stock that may be granted or sold as Restricted Stock
hereunder shall not in the aggregate exceed 7,600 shares of the Company's Class
C Common Stock (the "Shares"), subject to adjustment under Section 13 hereof;
provided further that the number of Shares that a Participant (as hereinafter
defined) may receive pursuant to the Plan shall in no event exceed 2,500 in any
year. The Shares that may be subject to Options granted and Restricted Stock
sold or granted under the Plan may be authorized and unissued Shares or Shares
reacquired by the Company and held as treasury stock.
Shares that are subject to the unexercised portions of any
Options that expire, terminate or are canceled, and Shares that are subject to
any Stock Appreciation Rights that expire, terminate or are canceled, and Shares
of Restricted Stock that are reacquired by the Company pursuant to the
restrictions thereon, shall again be available for the grant of Options or Stock
Appreciation Rights and the sale or grant of Restricted Stock under the Plan. If
a Stock Appreciation Right is exercised, any Option or portion thereof that is
surrendered in connection with such exercise shall terminate and the Shares
theretofore subject to the Option or portion thereof shall not be available for
further use under the Plan.
3. SHARES SUBJECT TO ARTICLES OF INCORPORATION. All Shares
issuable under Options or Stock Appreciation Rights and all Shares of Restricted
Stock sold or granted pursuant to this Plan shall be subject to the terms and
restrictions contained in the Articles of Incorporation of the Company. A copy
of the Articles of Incorporation shall be delivered to the recipient of an
Option, Stock Appreciation Right or Restricted Stock at the time of grant or
issuance.
4. ADMINISTRATION OF THE PLAN. The Plan shall be administered
by a committee (the "Committee") appointed by the Board of Directors (the
"Board") of the
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Company. If no persons are designated by the Board to serve on the Committee,
the Plan shall be administered by the Board and all references herein to the
Committee shall refer to the Board. The Board shall have the discretion to add,
remove or replace members of the Committee, and shall have the sole authority to
fill vacancies on the Committee; provided that one member of the Committee shall
be a member of the Board appointed pursuant to Section 4(iii) of the Shareholder
Agreement (the "Shareholder Agreement") by and among the Company, the holders of
Class D Common Stock of the Company, and the Designated Shareholders, as such
term is defined in the Shareholder Agreement.
All actions of the Committee shall be authorized by a majority
vote thereof at a duly called meeting. The Committee shall have the sole
authority, in its absolute discretion, to adopt, amend, and rescind such rules
and regulations as, in its opinion, may be advisable in the administration of
the Plan, to construe and interpret the Plan, the rules and regulations, and the
agreements and other instruments evidencing Options and Stock Appreciation
Rights granted and Restricted Stock sold or granted under the Plan, and to make
all other determinations deemed necessary or advisable for the administration of
the Plan. All decisions, determinations, and interpretations of the Committee
shall be final and conclusive upon the Participants, as hereinafter defined.
Notwithstanding the foregoing, any dispute arising under any Agreement (as
defined below) shall be resolved pursuant to the dispute resolution mechanism
set forth in such Agreement.
Subject to the express provisions of the Plan, the Committee
shall determine the number of Shares subject to grants or sales and the terms
thereof, including the provisions relating to the exercisability of Options and
Stock Appreciation Rights, lapse and non-lapse restrictions upon the Shares
obtained or obtainable under the Plan and the termination and/or forfeiture of
Options and Stock Appreciation Rights and Restricted Stock under the Plan. The
terms upon which Options and Stock Appreciation Rights are granted and
Restricted Stock is sold or granted shall be evidenced by a written agreement,
executed by the Company and the Participant (each, an "Agreement"), containing
such terms and conditions as may be approved by the Committee; provided that
such terms and conditions are not inconsistent with the express conditions of
the Plan.
5. ELIGIBILITY. Persons who shall be eligible for grants of
Options or Stock Appreciation Rights or sales or grants of Restricted Stock
hereunder shall be those directors, officers and employees of the Company or a
subsidiary of the Company who are members of a select group of directors,
management and other key employees that the Committee may from time to time
designate to participate under the Plan ("Participants") through grants of
Non-Qualified Options, Incentive Stock Options and, if applicable, Stock
Appreciation Rights, and/or through sales or grants of Restricted Stock.
6. TERMS AND CONDITIONS OF OPTIONS. No Incentive Stock Option
shall be granted for a term of more than ten years and no Non-Qualified Option
shall be granted for a term of more than ten years and thirty days. Options may,
in the discretion of the Committee, be granted with associated Stock
Appreciation Rights or be amended so as to provide for associated Stock
Appreciation Rights. The Agreement may contain such other terms,
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provisions, and conditions as may be determined by the Committee as long as such
terms, conditions and provisions are not inconsistent with the Plan. The
Committee shall designate as such those Options intended to be eligible to
qualify and be treated as Incentive Stock Options and, correspondingly, those
Options not intended to be eligible to qualify and be treated as Incentive Stock
Options.
7. EXERCISE PRICE OF OPTIONS. The exercise price for each
Non-Qualified Option granted hereunder shall be set forth in the Agreement. For
so long as required under Section 422 of the Code and the regulations
promulgated thereunder (or any successor statute or rules), the exercise price
of any Option intended to be eligible to qualify and be treated as an Incentive
Stock Option shall not be less than the fair market value of the Shares on the
date such Incentive Stock Option is granted, except that if such Incentive Stock
Option is granted to a Participant who on the date of grant is treated under
Section 424(d) of the Code as owning stock (not including stock purchasable
under outstanding options) possessing more than ten percent of the total
combined voting power of all classes of the Company's stock, the exercise price
shall not be less than one hundred ten percent (110%) of the fair market value
of the Shares on the date such Incentive Stock Option is granted.
The fair market value of Shares for the purposes of this Plan
shall be determined by the Board, whose valuation shall be binding upon each
Optionee.
Payment for Shares purchased upon exercise of any Option
granted hereunder shall be in cash at the time of exercise, except that, if
either the Agreement so provides or the Committee so permits, and if the Company
is not then prohibited from doing so, such payment may be made in whole or in
part with surrendered or withheld shares of stock of the same class as the stock
then subject to the Option. The Committee also may on an individual basis permit
payment or agree to permit payment by such other alternative means as may be
lawful, including by delivery of an executed exercise notice together with
irrevocable instructions to a broker promptly to deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price.
8. NON-TRANSFERABILITY. Unless provided otherwise in the
Agreement, any Option granted under this Plan shall by its terms be
nontransferable by the Participant other than by will or the laws of descent and
distribution (in which case such descendant or beneficiary shall be subject to
all terms of the Plan applicable to Participants) and is exercisable during the
Participant's lifetime only by the Participant or by the Participant's guardian
or legal representative.
9. INCENTIVE STOCK OPTIONS. The provisions of the Plan are
intended to satisfy the requirements set forth in Section 422 of the Code and
the regulations promulgated thereunder (including the aggregate fair market
value limits set forth in Section 422(d) of the Code) with respect to Incentive
Stock Options granted under the Plan. For so long as required under Section 422
of the Code and the regulations promulgated thereunder (or any successor statute
or rules), during the term of the Plan, the aggregate fair market value of the
Shares with respect to which Incentive Stock Options are first exercisable by a
Participant
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during any calendar year shall not exceed $100,000. For the purpose of this
Section 9, the fair market value of the Shares shall be determined at the time
the Incentive Stock Option is granted.
10. STOCK APPRECIATION RIGHTS. The Committee may, under such
terms and conditions as it deems appropriate, grant to any Participant selected
by the Committee Stock Appreciation Rights, which may or may not be associated
with Options. Upon exercise of a Stock Appreciation Right, the Participant shall
be entitled to receive payment of an amount equal to the excess of the fair
market value, as defined by the Committee, of the underlying Shares on the date
of exercise over the Stock Appreciation Right's exercise price. Such payment may
be made in additional Shares valued at their fair market value on the date of
exercise or in cash, or partly in Shares and partly in cash, as the Committee
may designate. The Committee may require that any Stock Appreciation Right shall
be subject to the condition that the Committee may at any time in its absolute
discretion not allow the exercise of such Stock Appreciation Right.
11. RESTRICTED STOCK. The Committee may sell or grant
Restricted Stock under the Plan (either independently or in connection with the
exercise of Options or Stock Appreciation Rights under the Plan) to Participants
selected by the Committee. The Committee shall in each case determine the number
of Shares of Restricted Stock to be sold or granted, the price at which such
Shares are sold, if applicable, and the terms and duration of the restrictions
to be imposed upon those Shares.
12. INVESTMENT REPRESENTATION. Each Agreement may contain an
agreement that, upon demand by the Committee for such a representation, the
optionee shall deliver to the Committee at the time of any exercise of an Option
a written representation that the Shares to be acquired upon such exercise are
to be acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation prior to
the delivery of any Shares issued upon exercise of an Option and prior to the
expiration of the option period shall be a condition precedent to the right of
the optionee or such other person to purchase any Shares.
13. ADJUSTMENTS. In the event of any one or more
reorganizations, recapitalizations, stock splits, reverse stock splits, stock
dividends, extraordinary dividends, or distributions, or similar events, an
appropriate adjustment shall be made in the number, exercise or sale price
and/or type of shares or securities for which Options or Stock Appreciation
Rights may thereafter be granted and Restricted Stock may thereafter be sold or
granted under the Plan. The Committee also shall designate the appropriate
changes that shall be made in Options or Stock Appreciation Rights, or rights to
purchase Restricted Stock under the Plan, so as to preserve the value of any
such Options, Stock Appreciation Rights or Restricted Stock. Any such adjustment
in outstanding Options shall be made without changing the aggregate exercise
price applicable to the unexercised portions of such Options. Any such
adjustments in outstanding rights to purchase Restricted Stock shall be made
without changing the aggregate purchase price of such Restricted Stock.
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14. DURATION OF PLAN. Options may not be granted and
Restricted Stock may not be sold or granted under the Plan after November 24,
2007.
15. AMENDMENT AND TERMINATION OF THE PLAN. Subject to the
Section 5.4 of the Recapitalization Agreement, dated as of October 8, 1997 and
amended and restated as of October 27, 1997 (the "Recapitalization Agreement")
between the Company and the Investors set forth on Schedule 1 to the
Recapitalization Agreement, the Board may at any time amend, suspend or
terminate the Plan. The Committee may amend the Plan or any Agreement issued
hereunder to the extent necessary for any Option or Stock Appreciation Right
granted or Restricted Stock sold or granted under the Plan to comply with
applicable tax or securities laws. If the Board determines that the approval of
such action by the stockholders of the Company is advisable or necessary for
compliance with applicable securities law, tax law, stock exchange requirement
or other applicable federal or state law, no such action of the Board or the
Committee shall be permitted unless taken with or ratified by such approval.
No Option or Stock Appreciation Right may be granted or
Restricted Stock sold or granted during any suspension of the Plan or after the
termination of the Plan. No amendment, suspension or termination of the Plan or
of any Agreement issued hereunder shall, without the consent of the affected
holder of such Option or Stock Appreciation Right or Restricted Stock, adversely
alter or otherwise impair any rights or obligations in any Option or Stock
Appreciation Right or Restricted Stock theretofore granted or sold to such
holder under the Plan.
16. NATURE OF PLAN. This Plan is intended to qualify as a
compensatory benefit plan within the meaning of Rule 701 under the Act. This
Plan is intended to constitute an unfunded arrangement for a select group of
directors, management and other key employees.
17. CANCELLATION OF OPTIONS. Any Option granted under the Plan
may be canceled at any time with the consent of the holder and a new Option may
be granted to such holder in lieu thereof.
18. WITHHOLDING TAXES. Whenever Shares are to be issued with
respect to the exercise of Options or amounts are to be paid or income earned
with respect to Stock Appreciation Rights or Restricted Stock under the Plan,
the Committee in its discretion may require the Participant to remit to the
Company, prior to the delivery of any certificate or certificates for such
Shares or the payment of any such amounts, all or any part of the amount
determined in the Committee's discretion to be sufficient to satisfy federal,
state and local withholding tax obligations (the "Withholding Obligation") that
the Company or its counsel determines may arise with respect to such exercise,
issuance or payment. Pursuant to a procedure established by the Committee or as
set forth in the Agreement, the Participant may (i) request the Company to
withhold delivery of a sufficient number of Shares or a sufficient amount of the
Participant's compensation or (ii) deliver a sufficient number of
previously-issued Shares, to satisfy the Withholding Obligation.
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EXHIBIT
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EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION
(IN THOUSANDS OF DOLLARS)
(A) (B) (C)
Cumulative
Fiscal Year Minimum Target Target
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l998 60,320 75,400 75,400
l999 75,120 93,900 169,300
2000 94,720 118,400 287,700
2001 107,840 134,800 422,500
2002 117,520 146,900 569,400
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") is defined as Consolidated Net Income (loss) of the Company and its
subsidiaries as it would appear on a statement of income (loss), which shall (i)
exclude or be adjusted otherwise for all acquisitions and additional equity
contributions to the extent such acquisitions and/or equity contributions
materially change target EBITDA for any particular Fiscal Year,(ii) reflect a
reduction for all management and employment bonuses payable with respect to the
Fiscal Year of the Company prepared in accordance with U.S. GAAP, consistently
applied and (iii) be adjusted for any material Board approved amendment to the
capital expenditure plan; plus (minus), to the extent such amounts are otherwise
taken into account in determining EBITDA (prior to adjustment), the following:
1. Any provision (benefit) for taxes (including
franchise taxes) deducted (added) in calculating such
consolidated net income (loss); plus
2. Any interest expense (net of interest income),
deducted in calculating such consolidated net income
(loss); plus
3. Amortization expenses deducted in calculating
consolidated net income (loss); plus
4. Depreciation expense deducted in calculating
consolidated net income (loss); plus
5. Management fees paid to Investcorp; plus (minus)
6. Any unusual losses (gains) deducted (added) in
calculating consolidated net income (loss). (Unusual
items are intended to include transactions considered
outside the ordinary course of business. EBITDA will
be adjusted to eliminate the effects, if any, of
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such transactions, the intent being to calculate
EBITDA as if such transactions had not occurred.);
plus (minus)
7. Any compensation expense (income) deducted (added) in
calculating consolidated net income (loss)
attributable to transactions involving equity
securities of the Company or its subsidiaries.
The Participant and his or her representative shall be
provided reasonable opportunity to review the computation of EBITDA and
reasonable access to the data and information supporting such computation, but
the Board's determination shall be conclusive and binding.
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