1
EXHIBIT 10.1
1998 DEVELOPERS DIVERSIFIED REALTY CORPORATION
EQUITY-BASED AWARD PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the 1998 Developers Diversified Realty Corporation
Equity-Based Award Plan (the "Plan") is to enable Developers Diversified Realty
Corporation (the "Company") and its Subsidiaries (as defined below) to attract,
retain and reward employees of the Company and its Subsidiaries and strengthen
the mutuality of interests between those employees and the Company's
shareholders by offering the employees equity or equity-based incentives thereby
increasing their proprietary interest in the Company's business and enhancing
their personal interest in the Company's success.
For purposes of the Plan, the following terms are defined as follows:
(a) "Affiliate" means any entity (other than the Company and any
Subsidiary) that is designated by the Board as a participating
employer under the Plan.
(b) "Award" means any award of Stock Options, Share Appreciation
Rights, Restricted Shares, Deferred Shares, Share Purchase Rights or
Other Share-Based Awards under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" has the meaning set forth in Section 11(b).
(e) "Change in Control Price" has the meaning set forth in Section
11(d).
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(g) "Committee" means the Granting Committee of the Board of the
Company.
(h) "Company" means Developers Diversified Realty Corporation, an
Ohio corporation, or any successor corporation.
(i) "Deferred Shares" means an Award of the right to receive Shares
at the end of a specified deferral period granted pursuant to Section
8.
(j) "Disability" means a permanent and total disability as defined in
Section 22(e)(3) of the Code.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(l) "Fair Market Value" means, as of a given date, (in order of
applicability): (i) the closing price of a Common Share on the
principal exchange on which the Common Shares are then trading, if
any, on the day immediately prior to such date, or if Common Shares
were not traded on the day previous to such date, then on the next
preceding trading day during which a sale occurred; or (ii) if Common
Shares are not traded on an exchange but are quoted on NASDAQ or a
successor quotation
2
system, (A) the last sale price (if Common Shares are then listed as a
National Market Issue under the NASD National Market System) or (B) if
Common Shares are not then so listed, the mean between the closing
representative bid and asked prices for Common Shares on the day
previous to such date as reported by NASDAQ or such successor
quotation system; or (iii) if Common Shares are not publicly traded on
an exchange and not quoted on NASDAQ or a successor quotation system,
the mean between the closing bid and asked prices for Common Shares,
on the day previous to such date, as determined in good faith by the
Committee; or (iv) if Common Shares are not publicly traded, the fair
market value established by the Committee acting in good faith.
(m) "Incentive Stock Option" means any Stock Option intended to be
and designated as, and that otherwise qualifies as, an "Incentive
Stock Option" within the meaning of Section 422 of the Code or any
successor section thereto.
(n) "Non-Qualified Stock Option" means any Stock Option that is not
an Incentive Stock Option.
(o) "Other Share-Based Awards" means an Award granted pursuant to
Section 10 that is valued, in whole or in part, by reference to, or is
otherwise based on, Shares.
(p) "Outside Director" has the meaning set forth in Section 162(m) of
the Code and the regulations promulgated thereunder.
(q) "Plan" means the 1998 Developers Diversified Realty Corporation
Equity-Based Award Plan, as amended from time to time.
(r) "Potential Change in Control" has the meaning set forth in
Section 11(c).
(s) "Restricted Shares" means an Award of Shares that is granted
pursuant to Section 7 and is subject to restrictions.
(t) "Section 16 Participant" means a participant under the Plan who
is subject to Section 16 of the Exchange Act.
(u) "Share Appreciation Right" means an Award of a right to receive
an amount from the Company that is granted pursuant to Section 6.
(v) "Shares" means the Common Shares, without par value, of the
Company.
(w) "Stock Option" or "Option" means any option to purchase Shares
(including Restricted Shares and Deferred Shares, if the Committee so
determines) that is granted pursuant to Section 5.
(x) "Share Purchase Right" means an Award of the right to purchase
Shares that is granted pursuant to Section 9.
(y) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of
the corporations (other than the last corporation in the unbroken
chain) owns stock
- --------------------------------------------------------------------------------
Page 2
3
possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in that chain.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee shall
consist of not less than three directors of the Company, all of whom shall be
Outside Directors. Those directors shall be appointed by the Board and shall
serve as the Committee at the pleasure of the Board. The functions of the
Committee specified in the Plan shall be exercised by the Board if and to the
extent that no Committee exists that has the authority to so administer the
Plan.
The Committee shall have full power to interpret and administer the
Plan and full authority to select the individuals to whom Awards will be granted
and to determine the type and amount of any Award to be granted to each
participant, the consideration, if any, to be paid for any Award, the timing of
each Award, the terms and conditions of any Award granted under the Plan, and
the terms and conditions of the related agreements that will be entered into
with participants. As to the selection of and grant of Awards to participants
who are not executive officers of the Company or any Subsidiary or Affiliate, or
Section 16 Participants, the Committee may delegate its responsibilities to
members of the Company's management in any manner consistent with applicable
law.
The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
Award issued under the Plan (and any agreement relating thereto); to direct
employees of the Company or other advisors to prepare such materials or perform
such analyses as the Committee deems necessary or appropriate; and otherwise to
supervise the administration of the Plan.
Any interpretation or administration of the Plan by the Committee, and
all actions and determinations of the Committee, shall be final, binding and
conclusive on the Company, its shareholders, Subsidiaries, Affiliates, all
participants in the Plan, their respective legal representatives, successors and
assigns, and all persons claiming under or through any of them. No member of the
Board or of the Committee shall incur any liability for any action taken or
omitted, or any determination made, in good faith in connection with the Plan.
SECTION 3. SHARES SUBJECT TO THE PLAN.
(a) Aggregate Shares Subject to the Plan. Subject to adjustment as
provided in Section 3(c), the total number of Shares reserved and
available for Awards under the Plan is 1,000,000. Any Shares issued
hereunder may consist, in whole or in part, of authorized and unissued
shares or treasury shares.
(b) Forfeiture or Termination of Awards of Shares. If any Shares
subject to any Award granted hereunder are forfeited or an Award
otherwise terminates or expires without the issuance of Shares, the
Shares subject to that Award shall again be available for distribution
in connection with future Awards under the Plan as set forth in
Section 3(a), unless the participant who had been awarded those
forfeited Shares or the expired or terminated Award has theretofore
received dividends or other benefits of ownership with respect to
those Shares. For purposes hereof, a participant shall not be deemed
to have received a benefit of ownership with respect to those Shares
by the exercise of voting rights, or by the
- --------------------------------------------------------------------------------
Page 3
4
accumulation of dividends that are not realized because of the
forfeiture of those Shares or the expiration or termination of the
related Award without issuance of those Shares.
(c) Adjustment. In the event of any merger, reorganization,
consolidation, recapitalization, share dividend, share split,
combination of shares or other change in corporate structure of the
Company affecting the Shares, such substitution or adjustment shall be
made in the aggregate number of Shares reserved for issuance under the
Plan, in the number and option price of Shares subject to outstanding
options granted under the Plan, in the number and purchase price of
Shares subject to outstanding Share Purchase Rights granted under the
Plan, in the number of Share Appreciation Rights granted under the
Plan and in the number of Shares subject to Restricted Share Awards,
Deferred Share Awards and any other outstanding Awards granted under
the Plan as may be approved by the Committee, in its sole discretion,
but the number of Shares subject to any Award shall always be a whole
number. Any fractional Shares shall be eliminated.
(d) Annual Award Limit. No participant may be granted Stock Options
or other Awards under the Plan with respect to an aggregate of more
than 500,000 Shares (subject to adjustment as provided in Section
3(c) hereof) during any calendar year.
SECTION 4. ELIGIBILITY.
Grants may be made from time to time to those officers and employees
of the Company who are designated by the Committee in its sole and exclusive
discretion. Eligible persons may include, but shall not necessarily be limited
to, officers of the Company and any Subsidiary, excluding members of the
Committee; however, Stock Options intended to qualify as Incentive Stock
Options shall be granted only to eligible persons while actually employed by
the Company or a Subsidiary. The Committee may grant more than one Award to the
same eligible person. No Award shall be granted to any eligible person during
any period of time when such eligible person is on a leave of absence.
SECTION 5. STOCK OPTIONS.
(a) Grant. Stock Options may be granted alone, in addition to or in
tandem with other Awards granted under the Plan or cash awards made
outside the Plan. The Committee shall determine the individuals to
whom, and the time or times at which, grants of Stock Options will be
made, the number of Shares purchasable under each Stock Option, and
the other terms and conditions of the Stock Options in addition to
those set forth in Sections 5(b) and 5(c). Any Stock Option granted
under the Plan shall be in such form as the Committee may from time
to time approve.
Stock Options granted under the Plan may be of two types which shall
be indicated on their face: (i) Incentive Stock Options and (ii)
Non-Qualified Stock Options. Subject to Section 5(c), the Committee
shall have the authority to grant to any participant Incentive Stock
Options, Non-Qualified Stock Options or both types of Stock Options.
(b) Terms and Conditions. Options granted under the Plan shall be
evidenced by an agreement ("Option Agreements"), shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:
- --------------------------------------------------------------------------------
Page 4
5
(1) Option Price. The option price per share of
Shares purchasable under a Non-Qualified Stock Option or an
Incentive Stock Option shall be determined by the Committee at
the time of grant and shall be not less than 100% of the Fair
Market Value of the Shares at the date of grant (or, with
respect to an Incentive Stock Option, 110% of the Fair Market
Value of the Shares at the date of grant in the case of a
participant who at the date of grant owns Shares possessing
more than 10% of the total combined voting power of all
classes of stock of the Company or its parent or Subsidiary
corporations (as determined under Sections 424(d), (e) and (f)
of the Code)).
(2) Option Term. The term of each Stock Option shall
be determined by the Committee and may not exceed ten years
from the date the Option is granted (or, with respect to an
Incentive Stock Option, five years in the case of a
participant who at the date of grant owns Shares possessing
more than 10% of the total combined voting power of all
classes of stock of the Company or its parent or Subsidiary
corporations (as determined under Sections 424(d), (e) and (f)
of the Code)).
(3) Exercise. Stock Options shall be exercisable at
such time or times and shall be subject to such terms and
conditions as shall be determined by the Committee at or after
grant; but, except as provided in Section 5(b)(6) and Section
11, unless otherwise determined by the Committee at or after
grant, no Stock Option shall be exercisable prior to six
months and one day following the date of grant. If any Stock
Option is exercisable only in installments or only after
specified exercise dates, the Committee may waive, in whole or
in part, such installment exercise provisions, and may
accelerate any exercise date or dates, at any time at or after
grant, based on such factors as the Committee shall determine
in its sole discretion.
(4) Method of Exercise. Subject to any installment
exercise provisions that apply with respect to any Stock
Option, and the six month and one day holding period set forth
in Section 5(b)(3), that Stock Option may be exercised in
whole or in part, at any time during the Option period, by the
holder thereof giving to the Company written notice of
exercise specifying the number of Shares to be purchased.
That notice shall be accompanied by payment in full
of the Option price of the Shares for which the Option is
exercised, in cash or Shares or by check or such other
instrument as the Committee may accept. The value of each such
Share surrendered or withheld shall be 100% of the Fair Market
Value of the Shares on the date the option is exercised.
No Shares shall be issued on an exercise of an Option
until full payment has been made. A participant shall not have
rights to dividends or any other rights of a shareholder with
respect to any Shares subject to an Option unless and until
the participant has given written notice of exercise, has paid
in full for those Shares, has given, if requested, the
representation described in Section 14(a), and those Shares
have been issued to him.
(5) Non-Transferability of Options. No Stock Option
shall be transferable by any participant other than by will or
by the laws of descent and distribution or pursuant to a
qualified domestic relations order (as defined in the Code or
the Employment Retirement Income Security Act of 1974, as
amended) except that, if so provided in the Option Agreement,
the participant may transfer the Option, other than an
Incentive Stock Option, during his lifetime to one or more
members of his family, to one or more trusts for the benefit
of one or more of his family, or to a partnership or
partnerships of members of his family, provided that no
consideration is paid for the transfer and that the transfer
would not result in
- --------------------------------------------------------------------------------
Page 5
6
the loss of any exemption under Rule 16b-3 of the Exchange
Act with respect to any Option. The transferee of an Option
will be subject to all restrictions, terms and conditions
applicable to the Option prior to its transfer, except that
the Option will not be further transferable by the
transferee other than by will or by the laws of descent and
distribution.
(6) Termination of Employment
(i) Termination by Death. Subject to Section 5(c), if
any participant's employment with the Company or any
Subsidiary or Affiliate terminates by reason of death, any
Stock Option held by that participant shall become
immediately and automatically vested and exercisable. If
termination of a participant's employment is due to death,
then any Stock Option held by that participant may
thereafter be exercised for a period of one year (or such
other period as the Committee may specify at or after
grant) from the date of death. Notwithstanding the
foregoing, in no event will any Stock Option be exercisable
after the expiration of the option period of such Option.
The balance of the Stock Option shall be forfeited if not
exercised within one year.
(ii) Termination by Reason of Disability. Subject to
Sections 5(b)(3) and 5(c), if a participant's employment
with the Company or any Subsidiary or Affiliate terminates
by reason of Disability, any Stock Option held by that
participant shall become immediately and automatically
vested and exercisable. If termination of a participant's
employment is due to Disability, then any Stock Option held
by that participant may thereafter be exercised by the
participant or by the participant's duly authorized legal
representative if the participant is unable to exercise the
Option as a result of the participant's Disability, for a
period of one year (or such other period as the Committee
may specify at or after grant) from the date of such
termination of employment, but in no event may any such
Option be exercised prior to six months and one day from
the date of grant; and if the participant dies within that
one-year period (or such other period as the Committee may
specify at or after grant), any unexercised Stock Option
held by that participant shall thereafter be exercisable by
the estate of the participant (acting through its
fiduciary) for a period of one year from the date of that
termination of employment. Notwithstanding the foregoing,
in no event will any Stock Option be exercisable after the
expiration of the option period of such Option. The balance
of the Stock Option shall be forfeited if not exercised
within one year.
(iii) Termination by Retirement. Unless otherwise
determined by the Committee at or after the time of
granting any Stock Option, if a participant terminates
employment with the Company or any Subsidiary or Affiliate
because of normal or early retirement, all Stock Options
held by that participant shall terminate one year after the
date of retirement. Notwithstanding the foregoing, in no
event will any Stock Option be exercisable after the
expiration of the option period of such Option. The balance
of the Stock Option shall be forfeited if not exercised
within one year.
(iv) Other Termination. Unless otherwise determined
by the Committee at or after the time of granting any Stock
Option, if a participant's employment with the Company or
any Subsidiary or Affiliate terminates for any reason other
than death, Disability or retirement, all Stock Options
held by that participant shall terminate 30 days after the
date employment terminates.
- --------------------------------------------------------------------------------
Page 6
7
Notwithstanding the foregoing, in no event will any Stock Option
be exercisable after the expiration of the option period of such
Option. The balance of the Stock Option shall be forfeited.
In the event a participant is granted a leave of absence by
the Company or any Subsidiary or Affiliate to enter military
service or because of sickness, his employment with the Company
or such Subsidiary or Affiliate will not be considered
terminated, and he shall be deemed an employee of the Company or
such Subsidiary or Affiliate during such leave of absence or any
extension thereof granted by the Company or such Subsidiary or
Affiliate.
(c) Incentive Stock Options. Notwithstanding Sections 5(b)(6) and
(7), an Incentive Stock Option shall be exercisable by (i) a
participant's authorized legal representative (if the participant is
unable to exercise the Incentive Stock Option as a result of the
participant's Disability) only if, and to the extent, permitted by
Section 422 of the Code and (ii) by the participant's estate, in the
case of death, or authorized legal representative, in the case of
Disability, no later than 10 years from the date the Incentive Stock
Option was granted (in addition to any other restrictions or
limitations that may apply). Anything in the Plan to the contrary
notwithstanding, no term or provision of the Plan relating to
Incentive Stock Options shall be interpreted, amended or altered, nor
shall any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 422 of the
Code, or, without the consent of the participants affected, to
disqualify any Incentive Stock Option under that Section 422 or any
successor Section thereto.
(d) Buyout Provisions. The Committee may at any time buy out for a
payment in cash, Shares, Deferred Shares or Restricted Shares an
Option previously granted, based on such terms and conditions as the
Committee shall establish and agree upon with the participant, but no
such transaction involving a Section 16 Participant shall be
structured or effected in a manner that would result in any liability
on the part of the participant under Section 16(b) of the Exchange
Act or the rules and regulations promulgated thereunder.
(e) Certain Reissuance of Stock Options. To the extent Common Shares
are surrendered by a participant in connection with the exercise of a
Stock Option in accordance with Section 5(b), the Committee may, in
its sole discretion, grant new Stock Options to such participant (to
the extent Common Shares remain available for Awards), subject to the
following terms and conditions:
(1) The number of Common Shares shall be equal to the number of
Common Shares being surrendered by the participant;
(2) The option price per Common Share shall be equal to the Fair
Market Value of Common Shares, determined on the date of exercise of
the Stock Options whose exercise caused such Award; and
(3) The terms and conditions of such Stock Options shall in all
other respects replicate such terms and conditions of the Stock
Options whose exercise caused such Award, except to the extent such
terms and conditions are determined to not be wholly consistent with
the general provisions of this Section 5, or in conflict with the
remaining provisions of this Plan.
- --------------------------------------------------------------------------------
Page 7
8
SECTION 6. SHARE APPRECIATION RIGHTS.
(a) Grant. Share Appreciation Rights may be granted in
connection with all or any part of an Option, either
concurrently with the grant of the Option or, if the Option is a
Non-Qualified Stock Option, by an amendment to the Option at any
time thereafter during the term of the Option. Share
Appreciation Rights may be exercised in whole or in part at such
times under such conditions as may be specified by the Committee
in the participant's Option Agreement.
(b) Terms and Conditions. The following terms and conditions
will apply to all Share Appreciation Rights that are granted in
connection with Options:
(1) Rights. Share Appreciation Rights shall entitle the
participant, upon exercise of all or any part of the Share
Appreciation Rights, to surrender to the Company, unexercised,
that portion of the underlying Option relating to the same
number of Shares as is covered by the Share Appreciation Rights
(or the portion of the Share Appreciation Rights so exercised)
and to receive in exchange from the Company an amount equal to
the excess of (x) the Fair Market Value, on the date of
exercise, of the Shares covered by the surrendered portion of
the underlying Option over (y) the exercise price of the Shares
covered by the surrendered portion of the underlying Option. The
Committee may limit the amount that the participant will be
entitled to receive upon exercise of the Share Appreciation
Right.
(2) Surrender of Option. Upon the exercise of the Share
Appreciation Right and surrender of the related portion of the
underlying Option, the Option, to the extent surrendered, will
not thereafter be exercisable. The underlying Option may provide
that such Share Appreciation Rights will be payable solely in
cash. The terms of the underlying Option shall provide a method
by which an alternative fair market value of the Shares on the
date of exercise shall be calculated based on one of the
following: (x) the closing price of the Shares on the national
exchange on which they are then traded on the business day
immediately preceding the day of exercise; (y) the highest
closing price of the Shares on the national exchange on which
they have been traded during the 90 days immediately preceding
the Change in Control; or (z) the greater of (x) and (y).
(3) Exercise. In addition to any further conditions upon
exercise that may be imposed by the Committee, the Share
Appreciation Rights shall be exercisable only to the extent that
the related Option is exercisable, except that in no event will
a Share Appreciation Right held by a Section 16 Participant be
exercisable within the first six months after it is awarded even
though the related Option is or becomes exercisable, and each
Share Appreciation Right will expire no later than the date on
which the related Option expires. A Share Appreciation Right may
be exercised only at a time when the Fair Market Value of the
Shares covered by the Share Appreciation Right exceeds the
exercise price of the Shares covered by the underlying Option.
No Share Appreciation Right held by a Section 16 Participant
shall be exercisable by its terms within the first six months
after it is granted, and a Section 16 Participant may exercise a
Share Appreciation Right only during a period beginning on the
third business day and ending on the twelfth business day
following the release for publication of quarterly or annual
summary statements of the Company's sales and earnings.
(4) Method of Exercise. Share Appreciation Rights may be
exercised by the participant giving written notice of the
exercise to the Company, stating the number of Share
Appreciation Rights the participant has elected to exercise and
surrendering the portion of the
- --------------------------------------------------------------------------------
Page 8
9
underlying Option relating to the same number of Shares as the
number of Share Appreciation Rights elected to be exercised.
(5) Payment. The manner in which the Company's obligation
arising upon the exercise of the Share Appreciation Right will
be paid will be determined by the Committee and shall be set
forth in the participant's Option Agreement. The Committee may
provide for payment in Shares or cash, or a fixed combination of
Shares or cash, or the Committee may reserve the right to
determine the manner of payment at the time the Share
Appreciation Right is exercised. Shares issued upon the exercise
of a Share Appreciation Right will be valued at their Fair
Market Value on the date of exercise.
- --------------------------------------------------------------------------------
Page 9
10
SECTION 7. RESTRICTED SHARES.
(a) Grant. Restricted Shares may be issued alone, in addition
to or in tandem with other Awards under the Plan or cash
awards made outside the Plan. The Committee shall determine
the individuals to whom, and the time or times at which,
grants of Restricted Shares will be made, the number of
Restricted Shares to be awarded to each participant, the
price (if any) to be paid by the participant (subject to
Section 7(b)), the date or dates upon which Restricted Share
Awards will vest, the period or periods within which those
Restricted Share Awards may be subject to forfeiture, and the
other terms and conditions of those Awards in addition to
those set forth in Section 7(b).
The Committee may condition the grant of Restricted
Shares upon the attainment of specified performance goals or
such other factors as the Committee may determine in its sole
discretion.
(b) Terms and Conditions. Restricted Shares awarded under the
Plan shall be subject to the following terms and conditions
and such additional terms and conditions, not inconsistent
with the provisions of the Plan, as the Committee shall deem
desirable. A participant who receives a Restricted Share Award
shall not have any rights with respect to that Award, unless
and until the participant has executed an agreement evidencing
the Award in the form approved from time to time by the
Committee, has delivered a fully executed copy thereof to the
Company, and has otherwise complied with the applicable terms
and conditions of that Award.
(1) The purchase price (if any) for Restricted Shares
shall be determined by the Committee at the time of grant.
(2) Awards of Restricted Shares must be accepted by
executing a Restricted Share Award agreement and paying the
price (if any) that is required under Section 7(b)(1).
(3) Each participant receiving a Restricted Share
Award shall be issued a stock certificate in respect of those
Restricted Shares. The certificate shall be registered in the
name of the participant and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable
to the Award.
(4) The Committee shall require that the stock
certificates evidencing the Restricted Shares be held in
custody by the Company until the restrictions thereon shall
have lapsed, and that, as a condition of any Restricted Shares
Award, the participant shall have delivered to the Company a
stock power, endorsed in blank, relating to the Shares covered
by that Award.
(5) Subject to the provisions of this Plan and the
Restricted Share Award agreement, during a period set by the
Committee commencing with the date of any Award (the
"Restriction Period"), the participant shall not be permitted
to sell, transfer, pledge, assign or otherwise encumber the
Restricted Shares covered by that Award. The Restriction
Period shall not be less than three years in duration
("Minimum Restriction Period") unless otherwise determined by
the Committee at the time of grant. Subject to these
limitations and the Minimum Restriction Period requirement,
the Committee, in its sole discretion, may provide for the
lapse of restrictions in installments and may accelerate or
waive restrictions, in whole or in part, based on service,
performance or such other factors and criteria as the
Committee may determine in its sole discretion.
- --------------------------------------------------------------------------------
Page 10
11
(6) Except as provided in this Section 7(b)(6) and
Section 7(b)(5) and Section 7(b)(7), the participant shall
have, with respect to the Restricted Shares awarded, all of
the rights of a shareholder of the Company, including the
right to vote the Shares and the right to receive any
dividends. The Committee, in its sole discretion, as
determined at the time of Award, may permit or require the
payment of cash dividends to be deferred and subject to
forfeiture and, if the Committee so determines, reinvested,
subject to Section 14(f), in additional Restricted Shares to
the extent Shares are available under Section 3, or otherwise
reinvested. Unless the Committee or Board determines
otherwise, Share dividends issued with respect to Restricted
Shares shall be treated as additional Restricted Shares that
are subject to the same restrictions and other terms and
conditions that apply to the Shares with respect to which such
dividends are issued.
(7) No Restricted Shares shall be transferable by a
participant other than by will or by the laws of descent and
distribution.
(8) If a participant's employment with the Company or
any Subsidiary or Affiliate terminates by reason of death, any
Restricted Shares held by that participant shall thereafter
vest and any restriction shall lapse to the extent such
Restricted Shares would have become vested or no longer
subject to restriction within one year from the time of death
had the participant continued to fulfill all of the conditions
of the Restricted Share Award during that period (or on such
accelerated basis as the Committee may determine at or after
grant). The balance of the Restricted Shares shall be
forfeited.
(9) If a participant's employment with the Company or
any Subsidiary or Affiliate terminates by reason of
Disability, any Restricted Shares held by that participant
shall thereafter vest and any restriction shall lapse to the
extent such Restricted Shares would have become vested or no
longer subject to restriction within one year from the time of
termination had the participant continued to fulfill all of
the conditions of the Restricted Share Award during that
period (or on such accelerated basis as the Committee may
determine at or after grant), subject in all cases to the
Minimum Restriction Period requirement. The balance of the
Restricted Shares shall be forfeited.
(10) Unless otherwise determined by the Committee at
or after the time of granting any Restricted Shares, if a
participant's employment with the Company or any Subsidiary or
Affiliate terminates for any reason other than death or
Disability, the Restricted Shares held by that participant
that are unvested or subject to restriction at the time of
termination shall thereupon be forfeited.
(c) Minimum Value. In order to better ensure that Award
payments actually reflect the performance of the Company and
service of the participant, the Committee may provide, in its
sole discretion, for a tandem performance-based or other award
designed to guarantee a minimum value, payable in cash or
Shares, to the recipient of a Restricted Share Award, subject
to such performance, future service, deferral and other terms
and conditions as may be specified by the Committee.
SECTION 8. DEFERRED SHARES.
(a) Grant. Deferred Shares may be awarded alone, in addition
to or in tandem with other Awards granted under the Plan or
cash awards made outside the Plan. The Committee shall
determine the individuals to whom, and the time or times at
which, Deferred Shares shall be
- --------------------------------------------------------------------------------
Page 11
12
awarded, the number of Deferred Shares to be awarded to any
participant, the duration of the period (the "Deferral
Period") during which, and the conditions under which,
receipt of the Shares will be deferred, and the other terms
and conditions of the Award in addition to those set forth in
Section 8(b).
The Committee may condition the grant of Deferred Shares upon
the attainment of specified performance goals or such other
factors as the Committee shall determine in its sole
discretion.
(b) Terms and Conditions. Deferred Share Awards shall be
subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent
with the terms of the Plan, as the Committee shall deem
desirable:
(1) The purchase price for Deferred Shares shall be
determined at the time of grant by the Committee. Subject to
the provisions of the Plan and the Award agreement referred to
in Section 8(b)(9), Deferred Share Awards may not be sold,
assigned, transferred, pledged or otherwise encumbered during
the Deferral Period. At the expiration of the Deferral Period
(or the Elective Deferral Period referred to in Section
8(b)(8), where applicable), stock certificates shall be
delivered to the participant, or the participant's legal
representative, for the Shares covered by the Deferred Share
Award. The Deferral Period applicable to any Deferred Share
Award shall not be less than six months and one day ("Minimum
Deferral Period").
(2) Unless otherwise determined by the Committee at
grant, amounts equal to any dividends declared during the
Deferral Period with respect to the number of Shares covered
by a Deferred Share Award will be paid to the participant
currently, or deferred and deemed to be reinvested in
additional Deferred Shares, or otherwise reinvested, all as
determined by the Committee, in its sole discretion, at or
after the time of the Award.
(3) No Deferred Shares shall be transferable by a
participant other than by will or by the laws of descent and
distribution.
(4) If a participant's employment by the Company or
any Subsidiary or Affiliate terminates by reason of death, any
Deferred Shares held by such participant shall thereafter vest
or any restriction shall lapse to the extent such Deferred
Shares would have become vested or no longer subject to
restriction within one year from the time of death had the
participant continued to fulfill all of the conditions of the
Deferred Share Award during that period (or on such
accelerated basis as the Committee may determine at or after
grant). The balance of the Deferred Shares shall be forfeited.
(5) If a participant's employment by the Company or
any Subsidiary or Affiliate terminates by reason of
Disability, any Deferred Shares held by such participant shall
thereafter vest or any restriction lapse to the extent such
Deferred Shares would have become vested or no longer subject
to restriction within one year from the time of termination
had the participant continued to fulfill all of the conditions
of the Deferred Shares Award during that period (or on such
accelerated basis as the Committee may determine at or after
grant), subject in all cases to the Minimum Deferral Period
requirement. The balance of the Deferred Shares shall be
forfeited.
(6) Unless otherwise determined by the Committee at
or after the time of granting any Deferred Share Award, if a
participant's employment by the Company or any
- --------------------------------------------------------------------------------
Page 12
13
Subsidiary or Affiliate terminates for any reason other than
death or Disability, all Deferred Shares held by such
participant which are unvested or subject to restriction
shall thereupon be forfeited.
(7) Based on service, performance or such other
factors or criteria as the Committee may determine, the
Committee may, at or after grant, accelerate the vesting of
all or any part of any Deferred Share Award or waive a portion
of the Deferral Period for all or any part of such Award,
subject in all cases to the Minimum Deferral Period
requirement.
(8) A participant may elect to further defer receipt
of a Deferred Share Award (or an installment of an Award) for
a specified period or until a specified event (the "Elective
Deferral Period"), subject in each case to the Committee's
approval and the terms of this Section 8 and such other terms
as are determined by the Committee, all in its sole
discretion. Subject to any exceptions approved by the
Committee, such election must be made at least 12 months prior
to completion of the Deferral Period for such Deferred Share
Award (or such installment).
(9) Each such Award shall be confirmed by, and
subject to the terms of, a Deferred Share Award agreement
evidencing the Award in the form approved from time to time by
the Committee.
(c) Minimum Value Provisions. In order to better ensure that
Award payments actually reflect the performance of the Company
and service of the participant, the Committee may provide, in
its sole discretion, for a tandem performance-based or other
Award designed to guarantee a minimum value, payable in cash
or Shares to the recipient of a Deferred Share Award, subject
to such performance, future service, deferral and other terms
and conditions as may be specified by the Committee.
SECTION 9. SHARE PURCHASE RIGHTS.
(a) Grant. Share Purchase Rights may be granted alone, in
addition to or in tandem with other Awards granted under the
Plan or cash awards made outside the Plan. The Committee shall
determine the individuals to whom, and the time or times at
which, grants of Share Purchase Rights will be made, the
number of Shares which may be purchased pursuant to the Share
Purchase Rights, and the other terms and conditions of the
Share Purchase Rights in addition to those set forth in
Section 9(b). The Shares subject to the Share Purchase Rights
may be purchased, as determined by the Committee at the time
of grant:
(1) at the Fair Market Value of such Shares on the
date of grant; or
(2) at 85% of the Fair Market Value of such Shares on
the date of grant if the grant of Share Purchase Rights is
made in lieu of cash compensation.
Subject to Section 9(b) hereof, the Committee may also impose
such deferral, forfeiture or other terms and conditions as it shall
determine, in its sole discretion, on such Share Purchase Rights or the
exercise thereof.
Each Share Purchase Right Award shall be confirmed by, and be
subject to the terms of, a Share Purchase Rights Agreement
which shall be in form approved by the Committee.
- --------------------------------------------------------------------------------
Page 13
14
(b) Terms and Conditions. Share Purchase Rights may contain
such additional terms and conditions not inconsistent with the
terms of the Plan as the Committee shall deem desirable, and
shall generally be exercisable for such period as shall be
determined by the Committee. However, Share Purchase Rights
granted to Section 16 Participants shall not become
exercisable earlier than six months and one day after the
grant date. Share Purchase Rights shall not be transferable by
a participant other than by will or by the laws of descent and
distribution.
SECTION 10. OTHER SHARE-BASED AWARDS.
(a) Grant. Other Awards of Shares and other Awards that are
valued, in whole or in part, by reference to, or are otherwise
based on, Shares, including, without limitation, performance
shares, convertible preferred shares, convertible debentures,
exchangeable securities and Share Awards or options valued by
reference to Book Value or Subsidiary performance, may be
granted alone, in addition to or in tandem with other Awards
granted under the Plan or cash awards made outside the Plan.
At the time the Shares or Other Share-Based Awards are
granted, the Committee shall determine the individuals to whom
and the time or times at which such Shares or Other
Share-Based Awards shall be awarded, the number of Shares to
be used in computing an Award or which are to be awarded
pursuant to such Awards, the consideration, if any, to be paid
for such Shares or Other Share-Based Awards, and all other
terms and conditions of the Awards in addition to those set
forth in Section 10(b).
The provisions of Other Share-Based Awards need not be the
same with respect to each participant.
(b) Terms and Conditions. Other Share-Based Awards shall be
subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent
with the terms of the Plan, as the Committee shall deem
desirable:
(1) Subject to the provisions of this Plan and the
Award agreement referred to in Section 10(b)(5) below, Shares
awarded or subject to Awards made under this Section 10 may
not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the Shares are issued,
or, if later, the date on which any applicable restriction,
performance, holding or deferral period or requirement is
satisfied or lapses. All Shares or Other Share-Based Awards
granted under this Section 10 shall be subject to a minimum
holding period (including any applicable restriction,
performance and/or deferral periods) of six months and one day
("Minimum Holding Period").
(2) Subject to the provisions of this Plan and the
Award agreement and unless otherwise determined by the
Committee at the time of grant, the recipient of an Other
Share-Based Award shall be entitled to receive, currently or
on a deferred basis, interest or dividends or interest or
dividend equivalents with respect to the number of Shares
covered by the Award, as determined at the time of the Award
by the Committee, in its sole discretion, and the Committee
may provide that such amounts (if any) shall be deemed to have
been reinvested in additional Shares or otherwise reinvested.
(3) Subject to the Minimum Holding Period, any Other
Share-Based Award and any Shares covered by any such Award
shall vest or be forfeited to the extent, at the times
- --------------------------------------------------------------------------------
Page 14
15
and subject to the conditions, if any, provided in the Award
agreement, as determined by the Committee in its sole
discretion.
(4) In the event of the participant's Disability or
death, or in cases of special circumstances, the Committee
may, in its sole discretion, waive, in whole or in part, any
or all of the remaining limitations imposed hereunder or under
any related Award agreement (if any) with respect to any part
or all of any Award under this Section 10, provided that the
Minimum Holding Period requirement may not be waived, except
in case of a participant's death.
(5) Each Award shall be confirmed by, and subject to
the terms of, an agreement or other instrument evidencing the
Award in the form approved from time to time by the Committee,
the Company and the participant.
(6) Shares (including securities convertible into
Shares) issued on a bonus basis under this Section 10 shall be
issued for no cash consideration. Shares (including securities
convertible into Shares) purchased pursuant to a purchase
right awarded under this Section 10 shall bear a price of at
least 85% of the Fair Market Value of the Shares on the date
of grant. The purchase price of such Shares, and of any Other
Share-Based Award granted hereunder, or the formula by which
such price is to be determined, shall be fixed by the
Committee at the time of grant.
(7) In the event that any "derivative security," as
defined in Rule 16a-1(c) (or any successor thereto)
promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act, is awarded pursuant to this
Section 10 to any Section 16 Participant, such derivative
security shall not be transferrable other than by will or by
the laws of descent and distribution.
SECTION 11. CHANGE IN CONTROL PROVISION.
(a) Impact of Event. In the event of: (i) a "Change in
Control" as defined in Section 11(b) or (ii) a "Potential
Change in Control" as defined in Section 11(c), the following
acceleration and valuation provisions shall apply:
(1) Any Stock Options awarded under the Plan not
previously exercisable and vested shall become fully
exercisable and vested;
(2) Any Share Appreciation Rights shall become
immediately exercisable;
(3) The restrictions applicable to any Restricted
Share Awards, Deferred Shares, Share Purchase Rights and
Other Share-Based Awards shall lapse and such Shares and
Awards shall be deemed fully vested; and
(4) The value of all outstanding Awards, in each
case to the extent vested, shall, unless otherwise determined
by the Committee in its sole discretion at or after grant but
prior to any Change in Control or Potential Change in
Control, be cashed out on the basis of the "Change in Control
Price" as defined in Section 11(d) as of the date such Change
in Control or such Potential Change in Control is determined
to have occurred;
- --------------------------------------------------------------------------------
Page 15
16
but the provisions of Sections 11(a)(l) through (3) shall not apply with
respect to Awards granted to any Section 16 Participant which have been
held by such participant for less than six months and one day as of the
date that such Change in Control or Potential Change in Control is
determined to have occurred.
(b) Definition of Change in Control. For purposes of Section
11(a), a "Change in Control" means the occurrence of any of the
following: (i) the Board or shareholders of the Company approve a
consolidation or merger in which the Company is not the surviving
corporation, the sale of substantially all of the assets of the
Company, or the liquidation or dissolution of the Company; (ii)
any person or other entity (other than the Company or a
Subsidiary or any Company employee benefit plan (including any
trustee of any such plan acting in its capacity as trustee))
purchases any Shares (or securities convertible into Shares)
pursuant to a tender or exchange offer without the prior consent
of the Board of Directors, or becomes the beneficial owner of
securities of the Company representing 20% or more of the voting
power of the Company's outstanding securities; or (iii) during
any two-year period, individuals who at the beginning of such
period constitute the entire Board of Directors cease to
constitute a majority of the Board of Directors, unless the
election or the nomination for election of each new director is
approved by at least two-thirds of the directors then still in
office who were directors at the beginning of that period.
(c) Definition of Potential Change in Control. For purposes of
Section 11(a), a "Potential Change in Control" means the
happening of any one of the following:
(1) The approval by the shareholders of the Company
of an agreement by the Company, the consummation of which would
result in a Change in Control of the Company as defined in Section
11(b); or
(2) The acquisition of beneficial ownership, directly
or indirectly, by any entity, person or group (other than the
Company or a Subsidiary or any Company employee benefit plan
(including any trustee of any such plan acting in its capacity as
trustee)) of securities of the Company representing 5% or more of
the combined voting power of the Company's outstanding securities
and the adoption by the Board of a resolution to the effect that a
Potential Change in Control of the Company has occurred for
purposes of this Plan.
(d) Change in Control Price. For purposes of this Section 11,
"Change in Control Price" means the highest price per share paid
in any transaction reported on the New York Stock Exchange
Composite Index (or, if the Shares are not then traded on the New
York Stock Exchange, the highest price paid as reported for any
national exchange on which the Shares are then traded) or paid or
offered in any bona fide transaction related to a Change in
Control or Potential Change in Control of the Company, at any time
during the 60-day period immediately preceding the occurrence of
the Change in Control (or, when applicable, the occurrence of the
Potential Change in Control event), in each case as determined by
the Committee.
SECTION 12. AMENDMENTS AND TERMINATION.
The Board may at any time, in its sole discretion, amend, alter or
discontinue the Plan, but no such amendment, alteration or discontinuation
shall be made that would impair the rights of a participant under an Award
theretofore granted, without the participant's consent. The Company shall
submit to the shareholders of the Company, for their approval, any amendments
to the Plan required pursuant to Section
- --------------------------------------------------------------------------------
Page 16
17
162(m) of the Code or which would materially increase the benefits accruing to
participants under the Plan so long as such approval is required by law or
regulation.
The Committee may at any time, in its sole discretion, amend the
terms of any Award, but no such amendment shall be made that would impair the
rights of a participant under an Award theretofore granted, without the
participant's consent; nor shall any such amendment be made that would make the
applicable exemptions provided by Rule 16b-3 under the Exchange Act unavailable
to any Section 16 Participant holding the Award without the participant's
consent.
Subject to the above provisions, the Board shall have all
necessary authority to amend the Plan to take into account changes in
applicable securities and tax laws and accounting rules, as well as other
developments.
SECTION 13. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for
incentive and deferred compensation. With respect to any payment not yet made
to a participant by the Company, nothing contained herein shall give that
participant any rights that are greater than those of a general creditor of the
Company.
- --------------------------------------------------------------------------------
Page 17
18
SECTION 14. GENERAL PROVISIONS.
(a) The Committee may require each participant acquiring Shares
pursuant to an Award under the Plan to represent to and agree with
the Company in writing that the participant is acquiring the
Shares without a view to distribution thereof. The certificates
for any such Shares may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer.
All Shares or other securities delivered under the Plan shall be
subject to such stop-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and
other requirements of the Securities and Exchange Commission, any
stock exchange upon which the Shares are then listed, and any
applicable federal or state securities laws, and the Committee may
cause a legend or legends to be put on any certificate for any
such Shares to make appropriate reference to those restrictions.
(b) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required, and such
arrangements may be either generally applicable or applicable only
in specific cases.
(c) Neither the adoption of the Plan, nor its operation, nor any
document describing, implementing or referring to the Plan, or any
part thereof, shall confer upon any participant under the Plan any
right to continue in the employ, or as a director, of the Company
or any Subsidiary or Affiliate, or shall in any way affect the
right and power of the Company or any Subsidiary or Affiliate to
terminate the employment, or service as a director, of any
participant under the Plan at any time with or without assigning a
reason therefor, to the same extent as the Company or any
Subsidiary or Affiliate might have done if the Plan had not been
adopted.
(d) For purposes of this Plan, a transfer of a participant between
the Company and any Subsidiary or Affiliate shall not be deemed a
termination of employment.
(e) No later than the date as of which an amount first becomes
includable in the gross income of the participant for federal
income tax purposes with respect to any Award under the Plan, the
participant shall pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any
federal, state or local taxes or other items of any kind required
by law to be withheld with respect to that amount. Subject to the
following sentence, unless otherwise determined by the Committee,
withholding obligations may be settled with Shares, including
unrestricted Shares previously owned by the participant or Shares
that are part of the Award that gives rise to the withholding
requirement. Notwithstanding the foregoing, any election by a
Section 16 Participant to settle any tax withholding obligation
with Shares that are part of an Award shall be subject to approval
by the Committee in its sole discretion. The obligations of the
Company under the Plan shall be conditional on those payments or
arrangements and the Company and its Subsidiaries and Affiliates
shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise payable to
the participant.
(f) The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Shares (or in Deferred Shares
or other types of Awards) at the time of any dividend payment
shall be permissible only if sufficient Shares are available under
Section 3 for reinvestment (taking into account then outstanding
Stock Options).
- --------------------------------------------------------------------------------
Page 18
19
(g) The Plan, all Awards made and actions taken thereunder and any
agreements relating thereto shall be governed by and construed in
accordance with the laws of the State of Ohio.
(h) All agreements entered into with participants pursuant to the
Plan shall be subject to the Plan.
(i) The provisions of Awards need not be the same with respect to
each participant.
SECTION 15. SHAREHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.
The Plan was adopted by the Board on March 2, 1998 and is subject
to approval by a majority of the holders of the Company's outstanding Shares,
in accordance with applicable law. If the Plan is not so approved within twelve
(12) months after the date the Plan is adopted by the Board of Directors, the
Plan and any Grants made hereunder shall be null and void. However, if the Plan
is so approved, no further shareholder approval shall be required with respect
to the granting of Awards pursuant to the Plan.
SECTION 16. TERM OF PLAN.
No Award shall be granted pursuant to the Plan on or after March
1, 2008, but Awards granted prior to that date may extend beyond that date.
- --------------------------------------------------------------------------------
Page 19