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TEAM AMERICA CORPORATION
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Exhibit 4(a)
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TEAM AMERICA CORPORATION
1996 INCENTIVE STOCK PLAN
Adopted by Board of Directors: October 24, 1996
Approved by Shareholders: October 24, 1996
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TABLE OF CONTENTS
Section 1. Purpose......................................................1
Section 2. Definitions..................................................1
Section 3. Administration...............................................3
Section 4. Eligibility..................................................4
Section 5. Shares Available.............................................4
Section 6. Term.........................................................5
Section 7. Participation................................................5
Section 8. Stock Options................................................6
Section 9. Stock Appreciation Rights....................................7
Section 10. Restricted Stock Awards......................................8
Section 11. Phantom Stock................................................8
Section 12. Performance Shares...........................................9
Section 13. Directors' Stock Options.....................................9
Section 14. Payment of Awards...........................................10
Section 15. Dividends and Dividend Equivalents..........................11
Section 16. Termination of Employment...................................11
Section 17. Assignment and Transfer; Holding Period.....................11
Section 18. Adjustments Upon Changes in Capitalization..................12
Section 19. Extraordinary Distributions and Pro Rata Repurchases........12
Section 20. Withholding Taxes...........................................13
Section 21. Regulatory Approvals and Listings...........................13
Section 22. No Right to Continued Employment or Grants..................13
Section 23. Rights as Shareholder.......................................13
Section 24. Responsibility and Indemnification..........................14
Section 25. Substitution, Extension, Renewal and Regrant of Awards......14
Section 26. Amendment...................................................14
Section 27. Corporate Changes; Use of Funds.............................15
Section 28. Change in Control...........................................15
Section 29. Governing Law...............................................17
Section 30. Interpretation..............................................17
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TEAM AMERICA CORPORATION
1996 INCENTIVE STOCK PLAN
SECTION 1. PURPOSE
The purpose of this Plan is to advance the long-term interests of TEAM
America Corporation by (i) motivating executive and other personnel by means of
long-term incentive compensation, (ii) furthering the identity of interests of
participants with those of the shareholders of the Company through the ownership
and performance of the Common Stock of the Company and (iii) permitting the
Company to attract and retain directors and executive personnel upon whose
judgment the successful conduct of the business of the Company largely depends.
Toward this objective, the Committee may grant stock options, stock appreciation
rights, restricted stock awards, phantom stock and/or performance shares to Key
Employees of the Company and its Subsidiaries, and shall grant stock options to
non-employee directors of the Company, on the terms and subject to the
conditions set forth in the Plan.
SECTION 2. DEFINITIONS
2.1. "Administrative Policies" means the administrative policies and
procedures adopted and amended from time to time by the Committee to administer
the Plan.
2.2. "Applicable Market" means the Nasdaq National Market ("NNM") or,
if the Common Stock is no longer traded in the NNM, then the principal national
securities exchange, if any, on which the Common Stock is traded as determined
by the Committee, or if the Common Stock is no longer traded in the NNM or on
any national securities exchange, then such other market price reporting system
pursuant to which the Common Stock is traded or quoted as designated by the
Committee.
2.3. "Award" means any form of stock option, stock appreciation right,
restricted stock award, phantom stock or performance share granted under the
Plan, whether singly, in combination, or in tandem, granted, made or awarded to
a Participant by the Committee pursuant to such terms, conditions, restrictions
and limitations, if any, as the Committee may establish by the Award Agreement
or otherwise.
2.4. "Award Agreement" means a written agreement with respect to an
Award between the Company and a Participant establishing the terms, conditions,
restrictions and limitations applicable to an Award. To the extent an Award
Agreement is inconsistent with the terms of the Plan, the Plan shall govern the
rights of the Participant thereunder.
2.5. "Board of Directors" or "Board" means the directors of the
Company, as a group, serving as such from time to time.
2.6. "Change in Control" means (a) the acquisition after the effective
date of this Plan by any "Person" (defined for the purposes of this Section to
mean any person within the meaning of Section 13(d) of the Exchange Act, other
than the Company or an employee benefit plan created by the Board of Directors
of the Company), either directly or indirectly, of the beneficial ownership
(determined under Rule 13d-3 of the Regulations promulgated by the Securities
and Exchange
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Commission ("SEC") under Section 13(d) of the Exchange Act) of any securities
issued by the Company if, after such acquisition, such Person is the beneficial
owner of securities issued by the Company having 20% or more of the voting power
in the election of Directors at the next meeting of the holders of voting
securities to be held for such purpose of all of the voting securities issued by
the Company, if such person acquired such beneficial ownership without the prior
consent of the Board of Directors; (b) the commencement (determined under Rule
14d-2 of the Regulations promulgated by the SEC under Section 14(d) of the
Exchange Act) after the effective date of this Plan by any Person of a tender
offer subject to the provisions of Section 14(d) of the Exchange Act if, after
consummation of such tender offer, such Person would, directly or indirectly, be
the beneficial owner of securities issued by the Company having 20% or more of
the voting power in the election of Directors at the next meeting of the holders
of voting securities to be held for such purpose of all of the voting securities
issued by the Company, if such Person commenced such tender offer without the
prior written consent of the Directors; (c) the election of a majority of the
Directors, elected at any meeting of the holders of voting securities of the
Company, who were not nominated for such election by the Board of Directors or a
duly constituted committee of the Board of Directors; or (d) the merger or
consolidation with or transfer of substantially all of the assets of the Company
to another person if the Board of Directors does not adopt a resolution, before
the Company enters into any agreement for such merger, consolidation or
transfer, determining that it is not a Change in Control.
2.7. "Change in Control Price" means the higher of (i) the mean of the
high and low closing prices for the Company's Common Stock on the Applicable
Market on the date of determination of the Change in Control, or (ii) the
highest price per share actually paid for the Common Stock in connection with
the Change in Control.
2.8. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.9. "Committee" means the Compensation Committee of the Board of
Directors or such other committee designated by the Board to administer the Plan
under Section 3 hereof.
2.10."Common Stock" means the Common Shares, without par value, of the
Company.
2.11."Company" means TEAM America Corporation, an Ohio corporation.
2.12."Derivative Security" means any of the "derivative securities" as
defined in Rule 16a-1 under the Exchange Act as such rule may be amended or
superseded from time to time.
2.13."Director" means a member of the Board of Directors.
2.14."Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.15."IPO" means the initial underwritten public offering of the Common
Stock.
2.16."IPO Price" means the price at which the Common Stock is offered
by the Company in the IPO.
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2.17."Key Employee" means an employee of the Company or a Subsidiary
who holds a position of responsibility in an executive, managerial,
administrative or professional capacity, and whose performance, as determined by
the Committee in the exercise of its sole and absolute discretion, can have an
effect on the growth, profitability and success of the Company.
2.18."Participant" means any individual to whom an Award has been
granted by the Committee under this Plan.
2.19."Plan" means this TEAM America Corporation 1996 Incentive Stock
Plan, as the same may be amended from time to time.
2.20."Section 16 Officer" means any Participant who is an "officer" of
the Company within the meaning of Rule 16a-1 under the Exchange Act as such rule
may be amended or superseded from time to time.
2.21."Subsidiary" means a corporation or other business entity in
which the Company directly or indirectly has an ownership interest of fifty-one
percent or more.
2.22."Termination" means the termination of the Participant's
relationship with the Company including termination of the Participant's
employment and status as a Director. A Participant who is absent from employment
or other relationship with the Company for a reason or purpose and for a period
of time approved by the Committee, in its sole discretion, shall not for the
period of such absence be deemed, solely because of such absence, to have
suffered a Termination, unless and until the Committee otherwise determines.
SECTION 3. ADMINISTRATION
The Plan shall be administered under the supervision of either (i) the
Board of Directors, or (ii) the Committee composed of not less than three
Directors each of whom shall be a "nonemployee director" as defined in Rule
16b-3 under the Exchange Act as such rule may be amended or superseded from time
to time and an "outside director" under Section 162(m) of the Code and the
regulations thereunder. References to the authority, duties and obligations of
the Committee hereinafter set forth shall apply to the Board of Directors at any
time the Board of Directors rather than the Committee is administering and
supervising the Plan.
Members of the Committee shall serve at the pleasure of the Board of
Directors, and may resign by written notice filed with the Chairman of the
Board, President or Secretary of the Company. A vacancy in the membership of the
Committee shall be filled by the appointment of a successor member by the Board
of Directors. Until such vacancy is filled, the remaining members shall
constitute a quorum and the action at any meeting of a majority of the entire
Committee, or an action unanimously approved in writing by all Committee
members, shall constitute action of the Committee. Subject to the express
provisions of this Plan, the Committee shall have exclusive and final authority
to: (i) construe and interpret the Plan and any Award Agreement entered into
hereunder; (ii) establish, amend and rescind Administrative Policies for the
administration of the Plan; and (iii) determine the "fair market value" of the
Common Stock of the Company (based on the Applicable Market, if any, for the
Common Stock). The Committee shall have such additional
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authority as the Board of Directors may from time to time determine to be
necessary or desirable. Employees, agents and independent contractors of the
Company or the Committee may be assigned, or employed or retained to perform,
administrative, clerical and other duties of the Committee, subject to the
supervision and control of the Committee; provided, however, that only the
Committee may grant or award an Award under the Plan and make decisions
concerning the timing, pricing and amount of any Award, except for stock options
automatically granted to Directors who are not employees of the Company under
Section 13 hereof.
For so long as Directors and/or Section 16 Officers are or may be
Participants in the Plan, the Committee shall not knowingly take any action, or
decline to take any action, which shall cause the Plan not to meet the
requirements contained in Rule 16b-3 under the Exchange Act, as such rule is
amended or superseded from time to time, which permit the granting or making of
Awards under the Plan to be exempt from section 16(b) of the Exchange Act as
amended or superseded from time to time.
SECTION 4. ELIGIBILITY
Any Key Employee is eligible to become a Participant in the Plan.
Directors of the Company, other than Directors who are employees of the Company,
shall be eligible only to receive stock options pursuant to Section 13 hereof.
SECTION 5. SHARES AVAILABLE
(a) Shares of Common Stock available for issuance under the Plan may be
authorized and unissued shares or treasury shares. Subject to the adjustments
provided for in Sections 18 and 19 hereof, the maximum number of shares of
Common Stock available for grant of Awards under the Plan is 350,000 shares.
Notwithstanding the foregoing, at no time shall the number of shares of Common
Stock deemed to be available for grant in any calendar year exceed ten percent
of the total number of issued and outstanding shares of Common Stock of the
Company. The number of shares of Common Stock available for grant to any
individual Participant in any calendar year shall not exceed 50,000 shares.
(b) For purposes of calculating the number of shares of Common Stock
deemed to be granted hereunder during any fiscal year, each Award, whether
denominated in stock options, stock appreciation rights, restricted stock,
performance shares or phantom stock, shall be deemed to be a grant of a number
of shares of Common Stock equal to the number of shares represented by the stock
options, shares of restricted stock, performance shares, shares of phantom stock
or stock appreciation rights set forth in the Award; provided however
(i) in the case of any Award as to which the exercise of one right
nullifies the exercisability of another (including, by way of
illustration the grant of a stock option with Tandem SARs (as
hereinafter defined)), the number of shares deemed to have been granted
shall be the maximum number of shares (and/or cash equivalents) that
could have been acquired upon the maximum exercise or settlement of the
Award; and
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(ii) in the case of Performance Share Awards (as hereinafter
defined) providing for payments in excess of 100% of the number of
shares set forth in the Award Agreement, the number of shares granted
shall be deemed to be the maximum number of shares (and/or the cash
equivalent thereof) issuable under the Award at the highest level of
performance.
(c) Shares of Common Stock covered by lapsed, canceled, surrendered or
terminated Awards shall be shares available for regrant under the Plan;
provided, however, that the portion of any Award that has been settled by the
payment of cash or the issuance of shares of Common Stock, or a combination
thereof, shall not be available for re-grant under the Plan, irrespective of the
value of the settlement or the method of its payment. The settlement of an Award
shall not be deemed to be the grant of an Award hereunder.
SECTION 6. TERM
The Plan shall become effective as of October 24, 1996, subject to
approval of the Plan by the holders of a majority of the shares of Common Stock.
No Awards shall be exercisable or payable before approval of the Plan has been
obtained from the Company's shareholders and no Awards may be granted after
December 31, 2006.
SECTION 7. PARTICIPATION
The Committee shall select, from time to time, Participants from those
Key Employees who, in the opinion of the Committee can further the Plan's
purpose and the Committee shall determine the type or types of Awards, if any,
to be made to the Participant. Any selection by the Committee of an employee of
the Company or a Subsidiary to be a Participant in the Plan shall irrevocably
constitute the Committee's concurrent and conclusive determination that such
employee is a Key Employee. In addition, all non-employee Directors shall
participate in the Plan solely in the manner specified in Section 13 hereof. The
terms, conditions and restrictions of each Award shall be set forth in an Award
Agreement, and no Participant shall have any rights to or interest in an Award
unless and until such Participant has exercised and delivered an Award Agreement
with respect to such Award.
SECTION 8. STOCK OPTIONS
(a) Grants. Awards may be granted in the form of stock options. Stock
options may be incentive stock options within the meaning of section 422 of the
Code or nonqualified stock options (i.e., stock options which are not incentive
stock options), or a combination of both, or any particular type of tax
advantage option authorized by the Code from time to time.
(b) Terms and Conditions of Options. An option shall be exercisable in
whole or in such installments and at such times as may be determined by the
Committee; provided, however, that no stock option shall be exercisable more
than ten years after the date of grant thereof. In the absence of any provision
in an option to the contrary (i) the option will become exercisable as to 20% of
the shares of Common Stock subject to the option upon completion of the first
full year of employment of the Participant after the date of grant thereof and
as to 20% of such shares upon the completion of each full year thereafter prior
to Termination, and (ii) the option will lapse upon the earliest of (A) one year
after Termination of the Participant's relationship with the Company if the
Termination is
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due to death or disability or if the Participant dies within 90 days of the
Termination, or (B) 90 days after Termination if the Termination is for any
reason other than death or disability. The option exercise price shall be
established by the Committee, but such price shall not be less than the per
share fair market value of the Common Stock, as determined by the Committee, on
the date of the stock option's grant subject to adjustment as provided in
Sections 18 or 19 hereof; provided, however, that the option price of any
nonqualified stock option granted within 90 days following the closing of the
IPO may be the IPO Price.
(c) Restrictions Relating to Incentive Stock Options. Stock options
issued in the form of incentive stock options shall, in addition to being
subject to all applicable terms, conditions, restrictions and/or limitations
established by the Committee, comply with section 422 of the Code. Incentive
stock options shall be granted only to those Key Employees who are employees of
the Company and its "subsidiaries" within the meaning of section 424 of the
Code, and shall be granted within ten years after the date the Plan was adopted
by the Board of Directors. The aggregate fair market value (determined as of the
date the option is granted) of shares with respect to which incentive stock
options are exercisable for the first time by an individual during any calendar
year (under this Plan or any other plan of the Company or any Subsidiary which
provides for the granting of incentive stock options) may not exceed $100,000 or
such other number as may be applicable under the Code from time to time. Any
incentive stock option that is granted to any employee who is, at the time the
option is granted, deemed for purposes of section 422 of the Code, or any
successor provision, to own shares of the Company possessing more than ten
percent (10%) of the total combined voting power of all classes of shares of the
Company or of a parent or subsidiary of the Company shall have an option
exercise price that is at least 110 percent (110 %) of the fair market value of
the shares at the date of grant and shall not be exercisable after the
expiration of 5 years from the date it is granted.
(d) Additional Terms and Conditions. The Committee may, in any manner
not inconsistent with the Plan, by way of the Award Agreement or otherwise,
establish such other terms, conditions, restrictions and/ or limitations, if
any, on any stock option Award and the exercise thereof.
(e) Payment. Upon exercise, a Participant may pay the option exercise
price of a stock option (i) in cash, (ii) in shares of Common Stock, or (iii) a
combination thereof, or (iv) in the sole discretion of the Committee, through a
cashless exercise procedure involving a broker; provided, however, that such
method and time for payment shall be permitted by and be in compliance with
applicable law, or (v) such other consideration as the Committee may deem
appropriate. The Committee shall establish appropriate methods for accepting
Common Stock and may impose such conditions as it deems appropriate on the use
of such Common Stock to exercise a stock option.
SECTION 9. STOCK APPRECIATION RIGHTS
(a) Grants. Awards may be granted in the form of stock appreciation
rights ("SARs"). SARs shall entitle the recipient to receive a payment equal to
the appreciation in market value of a stated number of shares of Common Stock
from the price stated in the Award Agreement to the market value of the Common
Stock on the date of exercise or surrender. A SAR may be granted in tandem with
all or a portion of a related stock option under the Plan ("Tandem SARs"), or
may be granted separately ("Freestanding SARs"): provided, however, that
Freestanding SARs may be
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granted only to Key Employees who are foreign nationals or are employed outside
of the United States, or both, and as to whom the Committee determines the
interests of the Company could not as conveniently be served by the grant of
other forms of Awards under the Plan. Tandem SARs shall permit the optionee to
surrender a stock option or portion thereof and to receive the payment to which
he is entitled under the SAR Award Agreement with respect to the shares of
Common Stock subject to the surrendered stock option or portion thereof. A
Tandem SAR may be granted either at the time of the grant of the related stock
option or at any time thereafter during the term of the stock option. A
Freestanding SAR granted to a Section 16 Officer may be exercised no sooner than
six months after it is granted.
(b) Terms and Conditions of Tandem SARs. A Tandem SAR shall be
exercisable to the extent, and only to the extent, that the related stock option
is exercisable. The appreciation in value of a Tandem SAR shall be the
appreciation in fair market value from an amount not less than the option
exercise price of the related stock option or portion thereof being surrendered
to the market value of the Common Stock on the date of exercise. Upon exercise
of a Tandem SAR as to some or all of the shares covered by an Award, the related
stock option shall be canceled automatically to the extent of the number of SARs
exercised, and such shares shall not thereafter be eligible for grant under
Section 5 hereof.
(c) Terms and Conditions of Freestanding SARs. Freestanding SARs shall
be exercisable in whole or in such installments and at such times as may be
determined by the Committee. The base price of a Freestanding SAR shall also be
determined by the Committee; provided, however, that such price shall not be
less that the fair market value of the Common Stock on the date of the award of
the Freestanding SAR.
(d) Deemed Exercise. The Committee may provide that an SAR shall be
deemed to be exercised at the close of business on the scheduled expiration date
of such SAR, if at such time the SAR by its terms is otherwise exercisable and,
if so exercised, would result in a payment to the Participant.
(e) Additional Terms and Conditions. The Committee may, in any manner
not inconsistent with the Plan, by way of the Award Agreement or otherwise,
determine such other terms, conditions, restrictions and/or limitations, if any,
on any SAR Award.
SECTION 10. RESTRICTED STOCK AWARDS
(a) Grants. Awards may be granted in the form of Restricted Stock
Awards. Restricted Stock Awards consist of shares of Common Stock bearing
restrictions on their transfer or otherwise as authorized by Section 10(b),
below, and may be awarded to a Key Employee with or without payment of
consideration by the Key Employee.
(b) Award Restrictions. Restricted Stock Awards shall be subject to
such terms, conditions, restrictions, or limitations as the Committee deems
appropriate including, by way of illustration but not by way of limitation,
restrictions on transferability, requirements of continued employment or
individual performance or the financial performance of the Company. The
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Committee may modify, or accelerate the termination of, the restrictions
applicable to a Restricted Stock Award under such circumstances as it deems
appropriate.
(c) Rights as Shareholders. During the period in which any shares of
Common Stock are subject to the restrictions imposed under this Section 10, the
Committee may, in its discretion, grant to the Participant to whom such
restricted shares have been awarded, all or any of the rights of a shareholder
with respect to such shares, including, by way of illustration but not by way of
limitation, the right to vote such shares and to receive dividends.
(d) Evidence of Award. Any Restricted Stock Award granted under the
Plan may be evidenced in such manner as the Committee deems appropriate,
including, without limitation, book entry registration or issuance of a stock
certificate or certificates.
(e) Additional Terms and Conditions. The Committee may, in any manner
not inconsistent with the Plan, by way of Award Agreement or otherwise,
determine such other terms, conditions, restrictions or limitations, if any, on
any Award of Restricted Stock.
SECTION 11. PHANTOM STOCK
(a) Grants. Awards may be granted in the form of Phantom Stock Awards.
Phantom Stock Awards shall entitle the Participant to receive the market value
or the appreciation in value of a stated number of shares of Common Stock on a
settlement date determined by the Committee.
(b) Terms and Conditions. The Committee may, in any manner not
inconsistent with the Plan, by way of Award Agreement or otherwise, determine
such terms, conditions, restrictions or limitations, if any, on any Award of
Phantom Stock.
SECTION 12. PERFORMANCE SHARES
(a) Grants. Awards may be granted in the form of performance shares.
"Performance Shares" means interests the entitlement to which is based upon the
attainment of pre-determined Performance Targets as hereinafter defined during a
Performance Period as hereinafter defined. At the end of the Performance Period,
Performance Shares shall be converted into Common Stock (or Common Stock and
cash, as determined by the Award Agreement) and distributed to Participants
based upon such entitlement.
(b) Performance Criteria. The Committee may grant an Award of
Performance Shares to Participants as of the first day of each Performance
Period. As used herein, the term "Performance Period" means the period during
which a Performance Target is measured and the term "Performance Target" means
the predetermined goals established by the Committee. A Performance Target will
be established at the beginning of each Performance Period. If at the end of the
Performance Period, the Performance Target is fully met, the Performance Shares
will be converted 100% into shares of Common Stock (or the cash equivalent
thereof, as determined by the Award Agreement) and issued to the Participant.
Award payments in excess of 100% shall be permitted based upon an attainment in
excess of 100% of the Performance Target. If the Performance Target has not been
fully met, Performance Shares will be converted and delivered only to the
extent, if any, provided at the time
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of the grant of such Award for conversion based upon partial attainment of the
Performance Target and the balance of the Performance Shares will be forfeited
to the Company and available for reissuance pursuant to Section 5 hereof.
(c) Additional Terms and Conditions. The Committee may, in any manner
not inconsistent with the terms of this Plan, by way of the Award Agreement or
otherwise, determine the manner of payment of Awards of Performance Shares and
other terms, conditions, restrictions or limitations, if any, on any Award of
Performance Shares.
SECTION 13. DIRECTORS' STOCK OPTIONS
(a) Grants. Awards may be granted to non-employee Directors only in the
form of stock options satisfying the requirements of this Section 13. All stock
options granted under this Section 13 shall be nonqualified stock options.
(b) Option Exercise Price. The option exercise price of all stock
options granted under this Section 13 shall be the per share fair market value
of the outstanding shares of the Common Stock on the date such options are
granted; provided, however, that the option price of any nonqualified stock
option granted within 90 days following the closing of the IPO may be the IPO
Price. Payment of the option exercise price may be made in cash or in shares of
Common Stock or a combination of cash and Common Stock to the extent provided in
the Award Agreement.
(c) Administration. Subject to the express provisions of this Section
13, the Committee shall have conclusive authority to construe and interpret any
Stock Option Award granted under this Section 13 and to adopt Administrative
Policies with respect thereto; provided, however, that no action shall be taken
which would prevent the options granted under this Section 13 or any Award
granted under the Plan from meeting the requirements for exemption from Section
16(b) of the Exchange Act, or subsequent comparable statute, as set forth in
Rule 16b-3 of the Exchange Act or any subsequent comparable rule.
(d) Option Agreement. The options granted hereunder shall be evidenced
by an option agreement, dated as of the date of the grant, which agreement shall
be in such form, consistent with the terms and requirements of this Section 13,
as shall be approved by the Committee from time to time and executed on behalf
of the Company by the President. The Option Agreement shall require the optionee
to refrain from selling or otherwise disposing of shares so acquired for at
least 120 days following the exercise of such option.
(e) Option Period. Options granted under this Section 13 will become
exercisable at such times as the Committee shall approve.
(f) Limitations on Exercise. Directors' Stock Options shall become
exercisable at such times and to such extent as the Committee shall approve. To
the extent an option is not otherwise exercisable at the date of the Director's
retirement as a Director as required under any plan or policy of the Company, it
shall become fully exercisable upon such retirement; provided, however, that
Director Stock Options shall not become exercisable under this sentence prior to
the expiration of six months from the date of grant. Upon such retirement such
options shall be exercisable for a period
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of three years, subject to any shorter original term thereof. Options not
otherwise exercisable at the time of the death of a Director during continued
service with the Company shall become fully exercisable upon his death. Upon the
death of a Director while in service as a Director, such options shall remain
exercisable for a period of one year after the date of death. To the extent an
option is exercisable on the date a Director ceases to be a Director (other than
by reason of death or retirement as a Director under any plan or policy of the
Company), the option shall continue to be exercisable (subject to the original
term of the option) for a period of ninety (90) days thereafter.
SECTION 14. PAYMENT OF AWARDS
Except as otherwise provided herein Award Agreements may provide that,
at the discretion of the Committee, payment of Awards may be made in cash,
Common Stock, a combination of cash and Common Stock, or any other form of
property as the Committee shall determine. The terms of Award Agreements may
provide for payment of Awards in the form of a lump sum or installments, as
determined by the Committee. In connection with transactions involving the
exercise and cancellation of an Award (under this Section 14 or Section 25, or
otherwise) held by or through a Director or a Section 16 Officer (whether or not
the transaction also involves the related surrender and cancellation of a stock
option) and the receipt of cash in complete or partial settlement of the Award,
or the cash settlement of an equity security to satisfy the tax withholding
consequences of a Derivative Security, the Committee may require that such
transaction be consummated in compliance with Rule 16b-3(e) under the Exchange
Act, as such rule may be amended or superseded from time to time, unless the
holder of such Award waives such compliance in a writing executed by such holder
and delivered to the Committee and the Committee consents to such waiver.
SECTION 15. DIVIDENDS AND DIVIDEND EQUIVALENTS
If an Award is granted in the form of a Restricted Stock Award, Phantom
Stock Award or a Freestanding SAR, the Committee may choose, at the time of the
grant of the Award, to include as part of such Award an entitlement to receive
dividends or dividend equivalents, subject to such terms, conditions,
restrictions or limitations, if any, as the Committee may establish. Dividends
and dividend equivalents shall be paid in such form and manner and at such time
as the Committee shall determine. All dividends or dividend equivalents which
are not paid currently may, at the Committee's discretion, accrue interest or be
reinvested into additional shares of Common Stock.
SECTION 16. TERMINATION OF EMPLOYMENT
The Committee may adopt Administrative Policies determining the
entitlement of Participants who cease to be employed by either the Company or a
Subsidiary whether because of death, disability, resignation, termination or
retirement pursuant to an established retirement plan or policy of the Company
or of its applicable Subsidiary.
SECTION 17. ASSIGNMENT AND TRANSFER; HOLDING PERIOD
An equity security of the Company granted or awarded to a Director or
Section 16 Officer as an Award under the Plan shall not be assigned, sold,
encumbered, transferred or otherwise disposed of prior to the elapse of six
months from the date of grant, and neither a Derivative Security granted
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or awarded to a Director or Section 16 Officer as an Award under the Plan, nor
the underlying equity security with respect to such Derivative Security, shall
be assigned, sold, encumbered, transferred or otherwise disposed of prior to the
elapse of six months from the date of acquisition of the Derivative Security to
the date of disposition of the Derivative Security (other than upon exercise or
conversion) or such underlying equity security, unless, in either case, the
holder of such equity security or Derivative Security requests waiver of such
restrictions in a writing delivered to the Committee and the Committee consents
to such waiver.
SECTION 18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the outstanding shares of Common Stock by
reason of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or shares of the Company, the maximum aggregate number and
class of shares as to which Awards may be or are required to be granted under
the Plan, and the shares issuable pursuant to and the exercise or purchase price
payable under then outstanding Awards, shall be appropriately adjusted by the
Committee whose determination shall be final. Any such adjustments may be
provided for in Award Agreements.
SECTION 19. EXTRAORDINARY DISTRIBUTIONS AND PRO RATA REPURCHASES
In the event the Company shall at any time when an Award is outstanding
make an Extraordinary Distribution (as hereinafter defined) in respect of Common
Stock or effect a Pro Rata Repurchase of Common Stock (as hereinafter defined),
the Committee may consider the economic impact of the Extraordinary Distribution
or Pro Rata Repurchase on Participants and make such adjustments as it deems
equitable under the circumstances. The determination of the Committee shall,
subject to revision by the Board of Directors, be final and binding upon all
Participants.
(a) As used herein, the term "Extraordinary Distribution" means any
dividend or other distribution by the Company of:
(i) cash, where the aggregate amount of such cash dividend or
distribution together with the amount of all cash dividends and
distributions made during the twelve months preceding the date of
payment of such dividend or other distribution, when combined with the
aggregate amount of all Pro Rata Repurchases (for this purpose,
including only that portion of the aggregate purchase price of such Pro
Rata Repurchases which is in excess of the fair market value (as
determined by the Committee) of the Common Stock repurchased during
such twelve month period), exceeds ten percent (10%) of the aggregate
fair market value (as determined by the Committee) of all shares of
Common Stock outstanding on the record date for determining the
shareholders entitled to receive such Extraordinary Distribution; or
(ii) any shares of capital stock of the Company (other than
shares of Common Stock), other securities of the Company (including
evidences of indebtedness of the Company), or any other investments,
assets or property of the Company (including shares of any Subsidiary
of the Company), or any combination thereof.
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(b) As used herein "Pro Rata Repurchase" means any purchase of shares
of Common Stock by the Company or any Subsidiary thereof, pursuant to any tender
offer or exchange offer subject to section 13(e) of the Exchange Act or any
successor provision of law, or pursuant to any other offer available to
substantially all holders of Common Stock; provided, however, that no purchase
of shares of the Company or any Subsidiary thereof made in open market
transactions shall be deemed a Pro Rata Repurchase.
SECTION 20. WITHHOLDING TAXES
The Company or the applicable Subsidiary shall be entitled to deduct
from any payment under the Plan, regardless of the form of such payment, the
amount of all applicable income and employment tax required by law to be
withheld with respect to such payment or may require the Participant to pay to
it such tax prior to and as a condition of the making of such payment. In
accordance with any applicable Administrative Policies it establishes, the
Committee may allow a Participant to pay the amount of taxes required by law to
be withheld from an Award by withholding from any payment of Common Stock due as
a result of such Award, or by permitting the Participant to deliver to the
Company shares of Common Stock having a fair market value, as determined by the
Committee, equal to the amount of such required withholding taxes.
SECTION 21. REGULATORY APPROVALS AND LISTINGS
Notwithstanding anything contained in this Plan to the contrary, the
Company shall have no obligation to issue or deliver certificates of Common
Stock evidencing Restricted Stock Awards or any other Award payable in Common
Stock prior to (a) the obtaining of any approval from any governmental agency
which the Company shall, in its sole discretion, determine to be necessary or
advisable, (b) the admission of such shares to trading on the Applicable Market
and (c) the completion of any registration or other qualification of said shares
under any state or Federal law or ruling of any governmental body which the
Company shall, in its sole discretion, determine to be necessary or advisable.
The Company shall have the right to require that any certificate for Common
Stock issued pursuant. to the Plan or an Award bear any restrictive legend
required by law and/or to evidence restrictions on the transfer of the shares
under applicable law, the Award Agreement or the Plan.
SECTION 22. NO RIGHT TO CONTINUED EMPLOYMENT OR GRANTS
Participation in the Plan shall not give any Key Employee any right to
remain in the employ of the Company or any Subsidiary. The Company or, in the
case of employment with a Subsidiary, the Subsidiary, reserves the right to
terminate the employment of any Key Employee at any time, subject to the terms
of any employment agreement with such Key Employee. The adoption of this Plan
shall not be deemed to give any Key Employee or any other individual any right
to be selected as a Participant, to be granted any Awards hereunder or, if
granted an Award, to receive any additional Awards at any subsequent time.
SECTION 23. RIGHTS AS SHAREHOLDER
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No Participant shall have any rights as a shareholder as a result of
participation in the Plan until the date of issuance of and only as the holder
of a stock certificate in his name except, in the case of Restricted Stock
Awards, to the extent such rights are granted to the Participant under Section
10(c) hereof. To the extent any person acquires a right to receive payments from
the Company under this Plan, such rights shall be no greater than the rights of
an unsecured creditor of the Company.
SECTION 24. RESPONSIBILITY AND INDEMNIFICATION
No member of the Board of Directors or the Committee shall be liable to
the Company, any Participant or any third party for any action or determination
made in good faith with respect to the Plan and Awards thereunder, or for any
matter as to which the Company's articles of incorporation or code of
regulations, or any valid contract between the Company and such member, limits
or negates the liability of Directors. Such members shall be entitled to
indemnification and reimbursement in the manner provided in the Company's
articles of incorporation and code of regulations, in any valid contract between
the Company and such member, and under any directors' and officers' liability
insurance coverage which may be in effect from time to time.
SECTION 25. SUBSTITUTION, EXTENSION, RENEWAL AND REGRANT OF AWARDS
Awards may be granted under the Plan from time to time in substitution
for stock options and other rights or awards held by employees of organizations
who become or are about to become Key Employees of the Company or a Subsidiary
as the result of a merger or consolidation of the employing organization with
the Company or a Subsidiary, or the acquisition by the Company or a Subsidiary
of the assets of the employing organization, or the acquisition by the Company
or a Subsidiary of equity interests in the employing organization as the result
of which it becomes a Subsidiary. The Committee may extend or renew outstanding
Awards granted under the Plan on terms not inconsistent with the Plan.
The Committee may accept the surrender or cancellation of outstanding
Awards (to the extent not theretofore exercised, paid or settled) and grant or
award new Awards in substitution therefor, which new Awards may be different
types of Awards than the Awards so surrendered and/or canceled.
SECTION 26. AMENDMENT
The Committee may suspend, reinstate and terminate the Plan or any
portion thereof at any time. In addition, the Committee may, from time to time,
amend the Plan in any manner, but may not without shareholder approval adopt any
amendment (i) which would (a) materially increase the benefits accruing to
Participants under the Plan, (b) materially increase the number of shares of
Common Stock which may be issued under the Plan (except as specified in Section
18), or (c) materially modify the requirements as to eligibility for
participation in the Plan, or (ii) that requires shareholder approval in order
for the Plan to comply with Section 162(m) of the Code. Notwithstanding the
foregoing, the provisions of Section 13 relating to the eligibility for, and the
amount, price and timing of, Awards to Directors thereunder shall not be
amended, nor shall the operation of Section 13 be suspended or reinstated, more
than once every six months other than to comport with changes in the Code,
ERISA, or the rules thereunder.
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SECTION 27. CORPORATE CHANGES; USE OF FUNDS
The grant of an Award pursuant to the Plan shall not affect the right
or power of the Company to make adjustments, reclassifications, reorganizations,
or changes of its stock, securities, capital or business structure, or to merge,
consolidate, dissolve, or liquidate, or to sell, lease or transfer all or any
part of its business or assets. The funds received by the Company upon any
exercise or settlement of an Award may be used by the Company for any corporate
purpose or purposes.
SECTION 28. CHANGE IN CONTROL
(a) Stock Options. In the event of a Change in Control, options not
otherwise exercisable at the time of a Change in Control shall become fully
exercisable upon such Change in Control; provided, however, that options shall
not become exercisable under this provision prior to the expiration of six
months from the date of grant.
(b) Stock Appreciation Rights. In the event of a Change in Control,
Tandem SARs not otherwise exercisable upon a Change in Control shall become
exercisable to the extent that the related Stock Option is exercisable.
Freestanding SARs not otherwise exercisable upon a Change in Control shall also
become fully exercisable upon such Change in Control.
(i) The Company shall make payment to Participants with
respect to SARs in cash in an amount equal to the appreciation in the
value of the SAR from the base price specified in the Award Agreement
to the Change in Control Price.
(ii) Such cash payments to Participants shall be due and
payable, and shall be paid by the Company, immediately upon the
occurrence of such Change in Control; and
(iii) After the payment provided for in (ii) above,
Participants shall have no further rights under SARs outstanding at the
time of such Change in Control.
(c) Restricted Stock Awards. In the event of a Change in Control, all
restrictions previously established with respect to Restricted Stock Awards will
conclusively be deemed to have been satisfied. Participants shall be entitled to
have issued to them the shares of Common Stock described in the applicable Award
Agreements, free and clear of any restriction or restrictive legend, except that
if upon the advice of counsel to the Company, shares of Common Stock cannot
lawfully be issued without restriction, then the Company shall make payment to
Participants in cash in an amount equal to the Change in Control Price of the
Common Stock that otherwise would have been issued:
(i) Such cash payments to Participants shall be due and
payable, and shall be paid by the Company, immediately upon the
occurrence of such Change in Control; and
(ii) After the payment provided for in (i) above, Participants
shall have no further rights under Restricted Stock Awards outstanding
at the time of such Change in Control of the Company.
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(d) Phantom Stock. In the event of a Change in Control:
(i) all restrictions and conditions, if any, previously
established with respect to Phantom Stock Awards will conclusively be
deemed to have been satisfied and fulfilled. Participants shall be
entitled to receive Common Stock in satisfaction of their rights under
Phantom Stock Awards in accordance with the amounts otherwise payable
by the Company pursuant to the Award Agreement.
(ii) Such Common Stock shall be issued to Participants by the
Company immediately upon the occurrence of such Change in Control; and
(iii) After the payment provided for in (ii) above, the
Participants shall have no further rights under Phantom Stock Awards
outstanding at the time of such Change in Control of the Company.
(e) Performance Shares. In the event of a Change in Control:
(i) All previously established Performance Targets will be
conclusively deemed to have been met. Participants shall be entitled to
a pro rata proportion of the shares of Common Stock which would have
been issued to them upon conversion of any outstanding Performance
Shares at the end of the Performance Period (based upon the applicable
Performance Targets which are conclusively deemed to have been met by
reason of the Change in Control), payable in the manner specified in
subsection (ii) hereof. The pro rata proportion of the shares of Common
Stock to be issued shall be equal to a fraction, the numerator of which
is the duration of the Performance Period prior to such Change in
Control and the denominator of which is the original length of the
Performance Period;
(ii) In lieu of issuing shares of Common Stock upon such
conversion of Performance Shares, the Company shall make payment to
Participants in cash in an amount equal to the Change in Control Price
of the shares of Common Stock that would have been issued under
paragraph (i) above;
(iii) Such cash payments to Participants shall be due and
payable, and shall be paid by the Company, immediately upon the
occurrence of such Change in Control; and
(iv) After the payment provided for in (ii) above, the
Participants shall have no further rights under awards of Performance
Shares outstanding at the time of such Change in Control of the
Company.
(f) Directors' Stock Options. Directors' Stock Options not otherwise
exercisable at the time of a Change in Control shall become fully exercisable
upon such Change in Control; provided, however, that options shall not become
exercisable under this provision prior to the expiration of six months from the
date of grant.
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(i) The Company shall make payment to Directors with respect to
Options in cash in an amount equal to the appreciation in the value
of the Option from the option exercise price specified in the Award
Agreement to the Change in Control Price.
(ii) Such cash payments to Directors shall be due and payable,
and shall be paid by the Company, immediately upon the occurrence of
such Change in Control; and
(iii) After the payment provided for in (i) above,
Participants shall have no further rights under Options outstanding at
the time of such Change in Control.
(g) Miscellaneous. Upon a Change in Control, no action shall be taken
which would adversely affect the rights of any Participant or the operation of
the Plan with respect to any Award to which the Participant may have become
entitled hereunder on or prior to the date of the Change in Control or to which
he may become entitled as a result of such Change in Control.
SECTION 29. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the laws
of the State of Ohio, except as preempted by applicable Federal law.
SECTION 30. INTERPRETATION
The Plan is designed and intended to comply with Rule 16b-3 promulgated
under the Exchange Act and, to the extent applicable, with Section 162(m) of the
Code and all provisions hereof shall be construed in a manner to so comply.
[End of Plan]
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