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EXHIBIT 10.3
THE GEON COMPANY
1998 INTERIM STOCK AWARD PLAN
(as amended and restated through November 4, 1998)
1. Purpose. The Geon Company 1998 Interim Stock Award Plan (the "Plan")
is designed to foster and promote the long-term growth and performance of the
Company by enhancing the Company's ability to attract and retain qualified key
employees and motivating key employees through stock ownership and
performance-based incentives. To achieve this purpose, this Plan provides
authority for the grant of Stock Options, Restricted Stock, Stock Equivalent
Units, Stock Appreciation Rights, Performance-Based Stock Awards, and other
stock and performance-based incentives.
2. Definitions.
(a) "Affiliate" - This term has the meaning given to it in
Rule 12b-2 under the Exchange Act.
(b) "Award" - The grant of Stock Options, Restricted Stock,
Stock Equivalent Units, Stock Appreciation Rights, Performance-Based Stock
Awards, and other stock and performance-based incentives under this Plan.
(c) "Award Agreement" - Any agreement between the Company and
a Participant that sets forth terms, conditions, and restrictions applicable to
an Award.
(d) "Board of Directors " - The Board of Directors of the
Company,
(e) "Change of Control" - A "Change of Control" means:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
voting securities of the Company where such acquisition causes
such Person to own 20% or more of the combined voting power of
the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (a), the following
acquisitions shall not be deemed to result in a Change of
Control: (i) any acquisition directly from the Company, (ii)
any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company or (iv) any acquisition by any corporation pursuant to
a transaction that complies with clauses (i), (ii) and (iii)
of subsection (c) below; provided, further, that if any
Person's beneficial ownership of the Outstanding Company
Voting Securities reaches or exceeds 20% as a result of a
transaction
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described in clause (i) or (ii) above, and such Person
subsequently acquires beneficial ownership of additional
voting securities of the Company, such subsequent acquisition
shall be treated as an acquisition that causes such Person to
own 20% or more of the Outstanding Company Voting Securities;
and provided, further, that if at least a majority of the
members of the Incumbent Board determines in good faith that a
Person has acquired beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of the Outstanding Company Voting Securities
inadvertently, and such Person divests as promptly as
practicable a sufficient number of shares so that such Person
beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) less than 20% of the
Outstanding Company Voting Securities, then no Change of
Control shall have occurred as a result of such Person's
acquisition; or
(ii) individuals who, as of November 6, 1996,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to November 6, 1996 whose election, or nomination
for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or
removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(iii) The approval by the shareholders of the Company
of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another corporation
("Business Combination") or, if consummation of such Business
Combination is subject, at the time of such approval by
shareholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or
implicitly by consummation); excluding, however, such a
Business Combination pursuant to which (i) all or
substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation,
a corporation that as a result of such transaction owns the
Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
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Outstanding Company Voting Securities, (ii) no Person
(excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business
Combination or the combined voting power of the then
outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business
Combination and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
or
(iv) approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(f) "Change of Control Price" - the higher of (i) the highest
reported sales price, regular way, of a share of Common Stock in any transaction
reported on the New York Stock Exchange Composite Tape or other national
exchange on which such shares are listed or on NASDAQ during the 60-day period
prior to and including the date of a Change of Control or (ii) if the Change of
Control is the result of a tender or exchange offer or a Business Combination,
the highest price per share of Common Stock paid in such tender or exchange
offer or Business Combination; provided, however, that, in the case of Incentive
Stock Options and Stock Appreciation Rights relating to Incentive Stock Options,
the Change of Control Price shall be in all cases the Fair Market Value of the
Common Stock on the date such Incentive Stock Option or Stock Appreciation Right
is exercised. To the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other noncash
consideration, the value of such securities or other noncash consideration shall
be determined in the sole discretion of the Board.
(g) "Code" - The Internal Revenue Code of 1986, or any law
that supersedes or replaces it, as amended from time to time.
(h) "Committee" - The Compensation Committee of the Board of
Directors, or any other committee of the Board of Directors that the Board of
Directors authorizes to administer this Plan. The Committee will be constituted
in a manner that satisfies all applicable legal requirements, including
satisfying the disinterested administration standard set forth in Rule 16b-3 and
the outside director requirement under Section 162(m).
(i) "Common Stock" or "stock" - Common Stock, $.10 par value,
of the Company, including authorized and unissued shares and treasury shares.
(j) "Company" - The Geon Company, a Delaware corporation, and
its direct and indirect subsidiaries.
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(k) "Continuing Director" - A Director following a Change of
Control who was a Director prior to such Change of Control or who was
recommended or elected to succeed a Continuing Director by a majority of the
Continuing Directors then in office.
(l) "Director" - A director of the Company.
(m) "Exchange Act" - The Securities Exchange Act of 1934, as
amended, or any law that supersedes or replaces it, as the same may be amended
from time to time.
(n) "Fair Market Value" of Common Stock - The Fair Market
Value of a share of Common Stock on any particular date means the mean of the
high and low prices of the Common Stock on the relevant date or, if no sale was
made on such date, then on the next preceding day on which such a sale was made
(a) if the Common Stock is listed on the New York Stock Exchange, as reported on
the New York Stock Exchange Composite Transactions listing (or similar report),
or (b) if the Common Stock is listed on the NASDAQ National Market System, then
as reported on such system, or (c) if not listed on either the New York Stock
Exchange or the NASDAQ National Market System, as determined by the Board or
Committee.
(o) "Incentive Stock Option" - A Stock Option that meets the
requirements of Section 422 of the Code.
(p) "Non-Employee Director" - A Director who is not an
employee of the Company.
(q) "Notice of Award" - Any notice by the Committee to a
Participant that advises the Participant of the grant of an Award or sets forth
terms, conditions, and restrictions applicable to an Award.
(r) "Participant" - Any person to whom an Award has been
granted under this Plan.
(s) "Performance-Based Stock Award" - A Stock Award granted to
a Participant pursuant to Section 7.
(t) "Restricted Stock" - An Award of Common Stock subject to
restrictions or risk of forfeiture.
(u) "Rule 16b-3" - Rule 16b-3 under the Exchange Act as the
same may be amended, modified, superseded or replaced from time to time.
(v) "Section 162(m)" - Section 162(m) of the Code, together
with the regulations promulgated by the Internal Revenue Service thereunder, as
the same may be amended, modified, superseded or replaced from time to time.
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(w) "Stock Appreciation Right" - This term has the meaning
given to it in Section 6(b)(ii).
(x) "Stock Award" - This term has the meaning given to it in
Section 6(b)(iii).
(y) "Stock Equivalent Unit" - An Award that is valued by
reference to the value of Common Stock.
(z) "Stock Option" - This term has the meaning given to it in
Section 6(b)(iv).
3. Eligibility. All key employees of the Company and its Affiliates,
including officers whether or not Directors, are eligible for the grant of
Awards. The selection of key employees to receive Awards will be within the
discretion of the Committee. More than one Award may be granted to the same key
employee. Non-Employee Directors are not, however, eligible for the grant of any
Awards.
4. Common Stock Available for Awards; Adjustment.
(a) Number of Shares of Common Stock. Subject to adjustment as
provided for in Section 4(d), the aggregate number of shares of Common Stock
that may be subject to Awards granted under this Plan shall be 350,000 shares of
Common Stock. The assumption of awards granted by an organization acquired by
the Company, or the grant of Awards under this Plan in substitution for any such
awards, will not reduce the number of shares of Common Stock available for the
grant of Awards under this Plan.
Common Stock Subject to an Award that expires or is forfeited,
terminated, or canceled will again be available for grant under this Plan,
without reducing the number of shares of Common Stock available for grant of
Awards under this Plan, except to the extent that the availability of those
shares of Common Stock would cause this Plan or any Awards granted under this
Plan to fail to qualify for the exemption provided by Rule 16b-3.
Notwithstanding the foregoing, Common Stock subject to awards of Stock Options
and Stock Appreciation Rights to Participants who are employees which expire or
are forfeited, terminated, or canceled in the same year such Award is granted
will, upon such expiration or forfeiture, termination, or cancellation, continue
to be counted against the maximum number of shares with respect to which Options
and Stock Appreciation Rights may be granted under this Plan in such year to
such Participants holding the expired or forfeited, terminated or canceled Stock
Options or Stock Appreciation Rights.
(b) Limitations on Certain Awards. (i) The aggregate number of
shares of Common Stock that may be issued upon exercise of Incentive Stock
Options is 280,000.
(ii) The maximum number of shares with respect to
which Options (including Incentive Stock Options) and Stock
Appreciation Rights may be granted under this Plan in any
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one fiscal year is (A) 100,000 as to any individual Participant who is an
employee (other than the Chief Executive Officer or the Chief Operating Officer
of the Company) and (B) 200,000 as to any individual Participant who is the
Chief Executive Officer or the Chief Operating Officer of the Company.
(iii) The aggregate number of shares of Restricted
Stock (other than Restricted Stock which is a
Performance-Based Stock Award) that may be awarded under this
Plan is 280,000.
(c) No Fractional Shares. No fractional shares will be issued,
and the Committee will determine the manner in which the value of fractional
shares will be treated.
(d) Adjustment. In the event of any change in the number of
shares of Common Stock by reason of a merger, consolidation, reorganization,
recapitalization, or similar transaction, or in the event of a stock dividend,
stock split, or distribution to stockholders (other than normal cash dividends),
the Committee will adjust the number and class of shares that may be issued
under this Plan, the number and class of shares subject to outstanding Awards,
the exercise price applicable to outstanding Awards, and the Fair Market Value
of the shares of Common Stock and other value determinations applicable to
outstanding Awards.
5. Administration.
(a) Committee. This Plan will be administered by the
Committee. The Committee will, subject to the terms of this Plan, have the
authority to: (i) select the eligible employees who will receive Awards, (ii)
grant Awards, (iii) determine the number and types of Awards to be granted to
employees, (iv) determine the terms, conditions, vesting periods, and
restrictions applicable to Awards, (v) adopt, alter, and repeal administrative
rules and practices governing this Plan, (vi) interpret the terms and provisions
of this Plan and any Awards granted under this Plan, (vii) prescribe the forms
of any Notices of Award, Award Agreements, or other instruments relating to
Awards, and (viii) otherwise supervise the administration of this Plan. Except
as provided in the immediately following sentence, all decisions by the
Committee will be made with the approval of not less than a majority of its
members. In furtherance and not in limitation of the authority granted in clause
(vi) of this paragraph, any interpretation by a majority of the Incumbent
Directors then serving on the Committee as to whether a sale or other
disposition of assets by the Company or an acquisition of assets of another
corporation constitutes a "sale or other disposition of all or substantially all
of the assets of the Company or the acquisition of assets of another
corporation" for purposes of clause (iii) of the definition of "Change of
Control" in Section 2(e) hereof shall be final and binding for all purposes of
this Plan and any Awards hereunder, notwithstanding that the transaction in
question was, or is contemplated to be, submitted to stockholders of the Company
for their approval and notwithstanding such approval.
(b) Delegation. The Committee may delegate any of its
authority to any other person or persons that it deems appropriate, provided the
delegation does not cause this Plan or
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any Awards granted under this Plan to fail to qualify for the exemption provided
by Rule 16b-3 under the Exchange Act.
(c) Decisions Final. All decisions by the Committee, and by
any other person or persons to whom the Committee has delegated authority, will
be final and binding on all persons.
6. Awards.
(a) Grant of Awards. The Committee will determine the type or
types of Awards to be granted to each Participant and will set forth in the
related Notice of Award or Award Agreement the terms, conditions, vesting
periods, and restrictions applicable to each Award. Awards may be granted singly
or in combination or tandem with other Awards. Awards may also be granted in
replacement of, or in substitution for, other awards granted by the Company,
whether or not granted under this Plan, except that, with respect to
Performance-Based Stock Awards, the new Award must also be wholly contingent on
the attainment of performance goals established by the Committee; without
limiting the foregoing, if a Participant pays all or part of the exercise price
or taxes associated with an Award by the transfer of Common Stock or the
surrender of all or part of an Award (including the Award being exercised), the
Committee may, in its discretion, grant a new Award (which, in the case of
Awards intended to replace Performance-Based Stock Awards, must also be wholly
contingent on the attainment of performance goals established by the Committee)
to replace the shares of Common Stock that were transferred or the Award that
was surrendered. The Company may assume awards granted by an organization
acquired by the Company or may grant Awards in replacement of, or in
substitution for, any such awards.
(b) Types of Awards. Awards may include, but are not limited
to, the following:
(i) Stock Appreciation Right - A right to receive a
payment, in cash or Common Shares, equal to the excess of (A)
the Fair Market Value of a specified number of shares of
Common Stock on the date the right is exercised over (B) the
Fair Market Value on the date the right is granted. The right
may be conditioned upon the occurrence of certain events, such
as a Change of Control of the Company, or may be
unconditional, as determined by the Committee.
(ii) Stock Award - An Award that is made in Common
Stock, Restricted Stock, or Stock Equivalent Units or that is
otherwise based on, or valued in whole or in part by reference
to, the Common Shares, including Performance-Based Stock
Awards. All or any part of any Stock Award may be subject to
such conditions, restrictions, and risks of forfeiture, as and
to the extent established by the Committee. Stock Awards may
be based on the Fair Market
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Value of the Common Stock, or on other specified values or
methods of valuation, as determined by the Committee.
(iii) Stock Option - A right to purchase a specified
number of shares of Common Stock, during a specified period,
and at a specified exercise price, all as determined by the
Committee. A Stock Option may be an Incentive Stock Option or
a Stock Option that does not qualify as an Incentive Stock
Option (a "non-qualified Stock Option"). In addition to the
terms, conditions, vesting periods, and restrictions
established by the Committee, Incentive Stock Options must
comply with the requirements of Section 422 of the Code. The
exercise price of an Incentive Stock Option may be no less
than the Fair Market Value of the Common Shares on the date
the Stock Option is granted.
(iii) Performance-Based Stock Awards - A Stock Award
granted to a Participant pursuant to Section 7.
7. Performance-Based Stock Awards.
(a) Performance-Based Stock Awards. The Committee may, in its
discretion, grant Stock Awards valued by reference to shares of Common Stock
that are wholly contingent on the attainment of performance goals established by
the Committee from time to time. The performance goals will relate to one or
more of the following performance measures, as determined by the Committee for
each applicable performance period: (i) return to stockholders, (ii) cash flow,
(iii) return on equity, (iv) Company created income (for example, income due to
Company initiated cost reductions or productivity improvements), (v) sales
growth, (vi) earnings and earnings growth, (vii) return on assets, (viii) stock
price, (ix) earnings per share, (x) market share, (xi) customer satisfaction,
and (xii) safety and/or environmental performance. Any such performance goals
and the applicable performance measures will be determined by the Committee at
the time of grant and reflected in a written award agreement. The number or
value of Performance-Based Stock Awards that will be paid out to any Participant
at the end of the applicable performance period, which may be one year or longer
as determined by the Committee, will depend on the extent to which the Company
attains the established performance goals.
(b) Maximum Amount of Performance-Based Stock Awards. No
participant who is an employee may be awarded Performance-Based Stock Awards in
any one fiscal year in excess of an aggregate of 50,000 shares of Common Stock.
The maximum dollar value, based on the Fair Market Value of the number of shares
of Common Stock awarded, of any Performance-Based Stock Award to any Participant
who is an employee shall not exceed $1,200,000 in any one fiscal year.
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8. Deferral of Payment.
With the approval of the Committee, the delivery of the Common
Stock, cash, or any combination thereof subject to an Award may be deferred,
either in the form of installments or a single future delivery. The Committee
may also permit selected Participants to defer the payment of some or all of
their Awards, as well as other compensation, in accordance with procedures
established by the Committee to assure that the recognition of taxable income is
deferred under the Code. Deferred amounts may, to the extent permitted by the
Committee, be credited as cash or Stock Equivalent Units. The Committee may also
establish rules and procedures for the crediting of interest on deferred cash
payments and dividend equivalents on Stock Equivalent Units.
9. Payment of Exercise Price. The exercise price of a Stock Option and
any Stock Award for which the Committee has established an exercise price may be
paid in cash, by the transfer of Common Stock, by the surrender of all or part
of an Award (including the Award being exercised), or by a combination of these
methods, as and to the extent permitted by the Committee. The Committee may
prescribe any other method of paying the exercise price that it determines to be
consistent with applicable law and the purpose of this Plan.
In the event shares of Restricted Stock are used to pay the
exercise price of a Stock Award, a number of the shares of Common Stock issued
upon the exercise of the Award equal to the number of shares of Restricted Stock
used to pay the exercise price will be subject to the same restrictions as the
Restricted Stock.
10. Taxes Associated with Award. Prior to the payment of an Award, the
Company may withhold, or require a Participant to remit to the Company, an
amount sufficient to pay any Federal, state, and local taxes associated with the
Award. The Committee may, in its discretion and subject to such rules as the
Committee may adopt, permit a Participant to pay any or all taxes associated
with the Award in cash, by the transfer of Common Stock, by the surrender of all
or part of an Award (including the Award being exercised), including
Performance-Based Stock Awards, or by a combination of these methods. The
Committee may permit a Participant to pay any or all taxes associated with an
Incentive Stock Option in cash, by the transfer of Common Stock, or by a
combination of these methods.
11. Termination of Employment. Subject to Section 12, if the employment
of a Participant terminates for any reason, all unexercised, deferred, and
unpaid Awards may be exercisable or paid only in accordance with rules
established by the Committee. Subject to the foregoing exception, these rules
may provide, as the Committee deems appropriate, for the expiration,
continuation, or acceleration of the vesting of all or part of the Awards.
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12. Change of Control. In the event of a Change of Control of the
Company, unless and to the extent otherwise determined by the Board of
Directors, (i) all Stock Appreciation Rights and Stock Options then outstanding
will become fully exercisable as of the date of the Change of Control and (ii)
all restrictions and conditions applicable to Restricted Stock and other Stock
Awards, including Performance-Based Stock Awards, will be deemed to have been
satisfied as of the date of the Change of Control. Any such determination by the
Board of Directors that is made after the occurrence of a Change of Control will
not be effective unless a majority of the Directors then in office are
Continuing Directors and the determination is approved by a majority of the
Continuing Directors.
Notwithstanding any other provision of this Plan, during the
60-day period from and after a Change of Control (the "Exercise Period"), unless
the Committee shall determine otherwise at the time of grant, an optionee shall
have the right, whether or not the Stock Option is fully exercisable and in lieu
of the payment of the exercise price for the shares of Common Stock being
purchased under the Stock Option and by giving notice to the Company, to elect
(within the Exercise Period) to surrender all or part of the Stock Option to the
Company and to receive cash, within 30 days of such notice, in an amount equal
to the amount by which the Change of Control Price per share of Common Stock on
the date of such election shall exceed the exercise price per share of Common
Stock under the Stock Option (the "Spread") multiplied by the number of shares
of Common Stock granted under the Stock Option as to which the right granted
under this Section shall have been exercised.
13. Amendment, Suspension, or Termination of this Plan; Amendment of
Outstanding Awards.
(a) Amendment, Suspension, or Termination of this Plan. The
Board of Directors may amend, suspend, or terminate this Plan at any time.
Stockholder approval for any such amendment will be required only to the extent
necessary to preserve the exemption provided by Rule 16b-3 for this Plan and
Awards granted under this Plan.
(b) Amendment of Outstanding Awards. The Committee may, in its
discretion, amend the terms of any Award, including, waiving, in whole or in
part, any restrictions or conditions applicable to, or accelerating the vesting
of, any Award, prospectively or retroactively, but no such amendment may impair
the rights of any Participant without his or her consent or cause Awards
intended to qualify as performance based compensation under Section 162(m) to
fail to so qualify.
14. Awards to Foreign Nationals and Employees Outside the United
States. To the extent that the Committee deems appropriate to comply with
foreign law or practice and to further the purpose of this Plan, the Committee
may, without amending this Plan, (i) establish special rules applicable to
Awards granted to Participants who are foreign nationals, are employed outside
the United States, or both, including rules that differ from those set forth in
this Plan, and (ii) grant Awards to such Participants in accordance with those
rules.
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15. Nonassignability. Unless otherwise determined by the Committee, (i)
no Award granted under this Plan may be transferred or assigned by the
Participant to whom it is granted other than by will, pursuant to the laws of
descent and distribution, or pursuant to a qualified domestic relations order
and (ii) an Award granted under this Plan may be exercised, during the
Participant's lifetime, only by the Participant or by the Participant's guardian
or legal representative; except that, no Incentive Stock Option may be
transferred or assigned pursuant to a qualified domestic relations order or
exercised, during the Participant's lifetime, by the Participant's guardian or
legal representative.
16. Governing Law. The interpretation, validity, and enforcement of
this Plan will, to the extent not governed by the Code or the securities laws of
the United States, be governed by the laws of the State of Ohio.
17. Rights of Employees. Nothing in this Plan will confer upon any
Participant the right to continued employment by the Company or limit in any way
the Company's right to terminate any Participant's employment at will.
18. Effective and Termination Dates.
(a) Effective Date. This Plan will become effective on the
date of its adoption by the Board of Directors.
(b) Termination Date. This Plan will continue in effect until
terminated by the Board of Directors.
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