Exhibit 10.xxviii
THE MEAD CORPORATION
1996 STOCK OPTION PLAN
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COMPOSITE
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06/24/99
Section 1. Purposes.
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The purposes of The Mead Corporation 1996 Stock Option Plan (the "Plan")
are (i) to provide incentives to officers, other key employees and non-employee
directors of the Company upon whose judgment, initiative and efforts the long-
term growth and success of the Company is largely dependent; (ii) to assist the
Company in attracting and retaining key employees and non-employee directors of
proven ability; and (iii) to increase the identity of interests of such key
employees and non-employee directors with those of the Company's shareholders by
providing such employees and directors with options to acquire Shares of the
Company.
Section 2. Definitions.
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For purposes of the Plan:
(a) "Acquisition Transaction" means a transaction of the type described
in Section 9(b) (ii).
(b) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the 1934 Act.
(c) "Board of Directors" or "Board" means the Board of Directors of the
Company.
(d) "Change in Composition of the Board," means an event of the type
described in Section 9(b) (iv).
(e) "Change in Control," means a transaction of the type described in
Section 9 (b) (iii).
(f) "Committee" means the committee referred to in Section 4.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Company" means The Mead Corporation, an Ohio corporation; when used
in the Plan with reference to employment, "Company" shall include any Subsidiary
of the Company.
(i) "Designation of Beneficiary" means such person(s) or entity whom the
Option Holder has designated by a transfer on death or other designation of
beneficiary to receive the Holder's Option on the Holder's death in accordance
with such procedures established from time to time by the Committee.
(j) "Fair Market Value" means the average of the highest sale price and
the lowest sale price of a Share on the date the value of a Share is to be
determined, as reported on the New York Stock Exchange - Composite Transactions
Tape or, if no sale is reported for such date, then on the next preceding date
for which a sale is reported.
(k) "Grantee" means the employee who received the option from the
Company.
(l) "Holder" means the person(s) or entity who owns the option, whether
Grantee, Transferee, heir or other beneficiary.
(m) "Incentive Stock Option" means an option granted under the Plan
which qualifies as an Incentive Stock Option under Section 422 of the Code.
(n) "Initial Director" means a person who is a Non-Employee Director at
the date of requisite approval of this Plan by the shareholders of the Company.
(o) "Limited Right" means a right granted under Section 9 of the Plan.
(p) "Non-Employee Director" means a member of the Board who is not also
an employee of the Company.
(q) "Nonqualified Option" means an option granted under the Plan which
does not qualify as an Incentive Stock Option under Section 422 of the Code.
(r) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(s) "Reload Option" means a Nonqualified Option granted under Section
6(d) of the Plan.
(t) "Share" or "Shares" means shares of common stock, without par value,
of the Company.
(u) "Subsequent Director" means a person who becomes a Non-Employee
Director subsequent to the date of requisite approval of this Plan by the
shareholders of the Company.
(v) "Subsidiary" means any corporation, partnership or other person or
entity at least 10% of the voting or equity interest of which is owned or
controlled, directly or indirectly, by the Company.
(w) "Tender Offer" means a tender offer or a request or invitation for
tenders or an exchange offer subject to regulation under Section 14(d) of the
1934 Act and the rules and regulations thereunder, as the same may be amended,
modified or superseded from time to time.
(x) "Tax Date" means the date as of which the amount of the withholding
tax payment with respect to the exercise of a Nonqualified Option is calculated.
(y) "Transferee" means the person who received the option from the
Grantee during the Grantee's lifetime.
(z) "Person" shall have the meaning given in Section 3(a)(9) of the 1934
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
Section 3. Shares Subject to the Plan.
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(a) Number of Shares. Subject to adjustment as provided in Section 11,
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the maximum number of Shares that may be issued and/or
delivered under the Plan upon the exercise of options is 8,000,000. Subject to
adjustment as provided in Section 11, the maximum number of Shares that may be
issued and/or delivered under the Plan to any individual over the term of the
Plan upon the exercise of options shall not exceed 800,000. Such Shares may be
either authorized and unissued or treasury Shares. Any shares (i) subject to an
option which for any reason has terminated or expired or has been cancelled
prior to being fully exercised or (ii) which have been received by the Company
as full or partial payment for Shares purchased pursuant to Section 8(b), may
again be granted pursuant to options under the Plan.
(b) Subject to adjustment as provided in Section 11, the maximum number
of Limited Rights which may be granted under the Plan is 8,000,000. Subject to
adjustment as provided in Section 11, the maximum number of Limited Rights that
may be granted under the Plan to any individual over the term of the Plan shall
not exceed 800,000. Any Limited Rights granted under the Plan which for any
reason terminate or expire or have been cancelled prior to being fully exercised
may again be granted under the Plan.
Section 4. Administration.
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The Plan shall be administered by a committee (the "Committee") of the
Board of Directors, consisting of three or more directors, who shall from time
to time be appointed by and serve at the pleasure of, the Board of Directors. No
director shall serve as a member of the Committee if (i) he or she does not
qualify as a disinterested person with respect to the Plan under Rule 16b-3 (or
any successor provision) under the 1934 Act or (ii) he or she does not qualify
as an outside director within the meaning of Section 162(m) of the Code.
The Committee shall have and exercise all the power and authority granted
to it under the Plan. Subject to the provisions of the Plan, the Committee shall
in its sole discretion determine the persons to whom, and the times at which,
Incentive Stock Options, Nonqualified Options, Reload Options and Limited Rights
shall be granted; the number of Shares to be subject to each option; the option
price per Share; and the term of each option. In making such determinations, the
Committee may take into consideration each participant's present and/or
potential contribution to the success of the Company and any other factors which
the Committee may deem relevant and proper. Subject to the provisions of the
Plan, the Committee shall also interpret the Plan; prescribe, amend and rescind
rules and regulations relating to the Plan; correct defects, supply omissions
and reconcile any inconsistencies in the Plan; and make all other determinations
necessary or advisable for the administration of the Plan. The Committee may in
its discretion change the terms of any Limited Right granted hereunder in
connection with an Incentive Stock Option to permit the Limited Right to be
exercisable even though the Fair Market Value of a Share on the date of exercise
does not exceed the exercise price of the related option. Such determinations of
the Committee shall be conclusive. A majority of the Committee shall constitute
a quorum for meetings of the Committee, and the act of a majority of the
Committee at a meeting, or an act reduced to or approved in writing by all
members of the Committee, shall be the act of the Committee.
Section 5. Eligibility.
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From time to time during the term of the Plan, the Committee may grant one
or more Incentive Stock Options, Nonqualified Options and Reload Options to any
person who is then an officer or other key employee of the Company. Each Non-
Employee Director shall be eligible
to receive Nonqualified Options granted under the formula provision set forth in
Section 7 of the Plan.
Section 6. Terms and Conditions of Options.
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(a) Option Grant Document. The terms of each option granted under the
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Plan (at any time after the establishment of the Plan) shall be set forth in a
written agreement or other grant document, the form of which shall be approved
by the Committee.
(b) Terms and Conditions of General Application. The following terms and
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provisions shall apply to all options granted under the Plan, except to the
extent otherwise provided in Sections 6 (c), 6 (d), 6 (e), 6 (f) and 7 hereof,
if applicable:
(1) No option may be granted under the Plan at an option price per
Share which is less than the Fair Market Value of a share on the date of grant.
(2) No option may be exercised more than ten years after the date
of grant.
(3) No option shall be exercisable within one year after the date
of grant. At the time an option is granted, the Committee may provide that after
such one year period, the option may be exercised with respect to all Shares
subject thereto, or may be exercised with respect to only a specified number of
Shares over a specified period or periods.
(4) Except as provided in Sections 6 (b) (5) and 6 (b) (6), an
option may be exercised only if the Grantee of such option has been continuously
employed by the Company since the date of grant. Whether authorized leave of
absence or absence for military or governmental service shall constitute a
termination of employment shall be determined by the Committee in its sole
discretion.
(5) At the time an option is granted, or at such other time as the
Committee may determine, the Committee may provide that, if the Grantee of the
Option ceases to be employed by the Company for any reason (including retirement
or disability) other than death, the option will continue to be exercisable by
the Holder (including a Transferee under Section 10 hereof) for such additional
period (not to exceed the remaining term of such option) after such termination
of employment as the Committee may provide.
(6) At the time an option is granted, the Committee may provide
that, if the Grantee of such option dies while employed by the Company or while
entitled to the benefits of any additional exercise period established by the
Committee with respect to such option in accordance with Section 6(b) (5), then
the option will continue to be exercisable by the person or persons to whom the
Grantee's rights with respect to such option shall have passed by will or by the
laws of descent and distribution (or in accordance with the procedures set forth
in Section 10 hereof) for such additional period after death (not to exceed the
remaining term of such option) as the Committee may provide.
(7) At the time an option is granted, the Committee may provide
for any restriction or limitation on the exercise of such option and/or for any
restriction or limitation on the transferability of the Shares issuable upon the
exercise of such option as it may deem appropriate.
(c) Additional Provisions Applicable to Incentive Stock Options. The
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following additional terms and provisions shall apply to Incentive
Stock Options granted under the Plan, notwithstanding any provision of Section 6
(b) to the contrary:
(1) No Incentive Stock Option shall be granted to an officer or
other employee who possesses directly or indirectly (within the meaning of
Section 424(d) of the Code) at the time of grant more than 10% of the voting
power of all classes of Shares of the Company or of any parent corporation or
any corporation, 50% or more of the voting stock of which is owned or
controlled, directly or indirectly, by the Company, unless the option price is
at least 110% of the Fair Market Value of the Shares subject to the option on
the date the option is granted and the option is not exercisable after the
expiration of five years from the date of grant.
(2) The aggregate Fair Market Value (determined on the date an
Incentive Stock Option is granted) of Shares with respect to which Incentive
Stock Options are exercisable for the first time by any individual in any
calendar year (under the Plan and all of the plans of the Company and any
Subsidiary and any parent corporation) shall not exceed $100,000, or such other
maximum amount permitted by the Code.
(3) Any Stock Option granted under the Plan may contain a feature
providing for, upon the exercise thereof, the grant of a Reload Option subject
to and in accordance with the terms and conditions set forth in Section 6 (d)
below.
(d) Additional Provisions Applicable to Reload Options. Whenever the
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Grantee of any option containing a reload feature (the "Original Option")
outstanding under this Plan exercises such Original Option, the Grantee of such
Original Option (except as provided in Section 6 (d) (5) below) shall be granted
on the date of such exercise (the "Reload Date") a new option (the "Reload
Option") for a number of Shares (the "Original Shares") equal to the number of
Shares subject to the Original Option being exercised less the number of Shares
subject to the Original Option which are (A) withheld by the Company as full or
partial payment of the option price for such Original Option, (B) otherwise
disposed of for purposes of having the proceeds applied for such purpose or (C)
withheld by the Company for purposes of tax withholding in accordance with
Section 8 (d) hereof. The following additional terms and provisions shall apply
to Reload Options granted under the Plan, notwithstanding any provision of
Section 6 (b) to the contrary:
(1) Option Price. The option price per Share covered by a Reload
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Option shall be an amount equal to the Fair Market Value per Share as of the
Reload Date.
(2) Expiration Date. Subject to Section 6 (d) (4) below, the
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option exercise period shall expire on, and the Reload Option shall no longer be
exercisable following, the tenth anniversary of the Reload Date.
(3) Vesting Period. Reload Options granted under this Section 6
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(d) shall vest and become exercisable with respect to all Shares covered thereby
on the third anniversary of the Reload Date, subject to Section 6 (f) hereof.
(4) Automatic Cancellation. Except as otherwise provided in the
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agreement evidencing a Reload Option, a Reload Option shall be immediately
cancelled (without any action taken by the Company) with respect to that number
of Shares subject to such Reload Option (such number of Shares being determined
in accordance with the succeeding sentence), effective immediately upon any
sale, disposition or purported assignment or transfer of any or all of the
Original Shares subject to
the Original Option prior to the third anniversary of the Reload Date. The
number of Shares subject to the Reload Option so cancelled shall equal the
number of Original Shares subject to the Original Option so sold, disposed of,
assigned or transferred prior to the third anniversary of the Reload Date;
provided, however, that such Shares subject to the Reload Option shall not be
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cancelled if such Original Shares are used in connection with the exercise of
another option with respect to which Section 6 (d) hereof applies.
(5) Active Employee. No Reload Option shall be granted to any
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person who is not employed by the Company at the time of exercise of an Original
Option.
(e) Waiver of Terms. Subject to the ten-year limitation in Section 6 (b)
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(3), the Committee may waive or modify at any time, either before or after the
granting of an option (including a Reload Option but excluding any option
granted under Section 7 hereof) any condition or restriction with respect to the
exercise of such option imposed by or pursuant to this Section 6 in such
circumstances as the committee may deem appropriate (including, without
limitation, in the event the Grantee retires with the approval of the Company,
or in the event of a proposed Acquisition Transaction, a Change in Control,
Tender Offer for Shares, or other similar transaction involving the Company).
(f) Acceleration Upon Certain Events. Subject to the first sentence of
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Section 6(b)(3) hereof, but notwithstanding any other provision of the Plan,
immediately prior to the occurrence of an "Acceleration" (as defined in this
Section 6(e)), all outstanding options granted hereunder (including Reload
Options and options granted pursuant to Section 7 hereof) shall become fully
vested and exercisable. As used in the immediately preceding sentence,
"immediately prior" to the Acceleration shall mean sufficiently in advance of
the Acceleration to permit the grantee to take all steps reasonably necessary to
exercise the option fully and to deal with the Shares purchased under the option
so that those Shares may be treated in the same manner in connection with the
Acceleration as the Shares of other shareholders. For purposes of this Section 6
(e), an "Acceleration" shall mean any of the following: (i) the date of the
first purchase of Shares pursuant to a Tender Offer (other than an offer by the
Company), (ii) the date of shareholder approval of an Acquisition Transaction,
(iii) the date of filing of the Schedule 13D or shareholder authorization of the
control share acquisition giving rise in either case to a Change in Control, or
(iv) the date of a Change in Composition of the Board.
Section 7. Non-Employee Directors Formula Options.
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The following additional terms and provisions of this Section 7 shall apply
to grants of options to Non-Employee Directors under the Plan, notwithstanding
any provision of Section 6(b) to the contrary. The provisions of this Section 7
shall not be amended more than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules promulgated thereunder.
(a) General. Non-Employee Directors shall receive Nonqualified Options
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under the Plan. The option price per Share shall equal the Fair Market Value of
a Share on the date of grant.
(b) Initial Grants to Initial Directors. Upon the requisite approval of
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the Plan by the shareholders of the Company, each Initial Director shall be
granted automatically an option to purchase 600 Shares.
(c) Initial Grants To Subsequent Directors. Each Subsequent Director
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shall, at the time such director becomes a Non-Employee Director, be granted
automatically an option to purchase 600 Shares.
(d) Subsequent Grants To Directors. On January 3rd of each year
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beginning on January 3, 1997, each continuing Initial Director shall be granted
automatically an option to purchase a number of Shares determined below. On
January 3rd of each year subsequent to a Subsequent Director's becoming a Non-
Employee Director, each Subsequent Director shall be granted automatically an
option to purchase a number of Shares determined below. The number of Shares
subject to each grant made pursuant to this Paragraph (d) shall equal the
product obtained by multiplying (w) 600, by (x) an adjustment factor (the
"Factor"). The Factor shall equal the quotient obtained by dividing (y) the
"base line number" for average "total compensation" paid to directors by
companies with annual sales in excess of $4 billion, as published in the Hay
Consulting Group's "Directors Compensation Report" (or comparable successor
report) in the calendar year immediately preceding the year in which such grant
is made, which report covers compensation paid in the year ending immediately
prior to the year of publication, by (z) $36,246. In the event that such
Directors Compensation Report (or comparable successor report) is not published
with respect to any year, the Factor shall equal one (1).
(e) Exercisability. Subject to Section 6 (f) hereof, each option granted
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under this Section 7 shall be exercisable as to 100 percent of the Shares
covered by the option on the first anniversary of the date the option is
granted.
(f) Termination. Upon the termination of a Non-Employee Director from
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such position, for any reason, after such director has attained either age 70 or
ten (10) years of service as a director of the Company (whether or not as a Non-
Employee Director), each option granted to such Non-Employee Director pursuant
to this Section 7 which is exercisable at the time of such termination shall
remain exercisable for the remainder of its term. Upon the termination of a Non-
Employee Director from such position, for any reason, prior to the attainment of
age 70 or ten (10) years of service as a director of the Company (whether or not
as a Non-Employee Director), all options granted to such Non-Employee Director
pursuant to this Section 7 which are exercisable at the time of such termination
shall remain exercisable for a period of one year following the date of such
termination, but in no event may the term of an option be extended beyond its
expiration date. Each option granted pursuant to this Section 7 which is not
exercisable at the time of such termination shall be immediately cancelled.
Section 8. Exercise of Options.
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(a) Notice of Exercise. The Holder of an option granted under the Plan
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may exercise all or part of such option by giving written notice of exercise to
the Committee or its designee; provided, however, that an option may not be
exercised for a fraction of a Share. No Holder of an option nor such Holder's
legal representatives, legatees, Transferees, distributees or Designation of
Beneficiary will be, or will be deemed to be, a Holder of any Shares covered by
such option unless and until the option shall have been exercised in accordance
with the Plan.
(b) Payment of Option Price. The option price for Shares with respect to
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which an option is exercised shall be paid in full at the time such notice is
given. An option shall be deemed exercised on the date the Committee or its
designee receives written notice of exercise, together with full payment for the
Shares purchased. The option price shall be paid to the Company either in cash
or Shares (including Shares
withheld from the Shares otherwise receivable by the Option Holder upon the
exercise of the option) having a Fair Market Value equal to the option
price (or a combination of cash and Shares such that the sum of the Fair
Market Value of the Shares plus the cash equals the option price). The
Committee shall have the authority, subject to such conditions and
procedures that it deems necessary and advisable, to authorize the use of a
cashless exercise procedure with a registered broker/dealer.
(c) Payment in Cancellation of Option. The Committee shall have the
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authority in its sole discretion to authorize the payment to an Option
Holder (with the consent of such Holder) in exchange for the cancellation
of all or a part of such Holder's Option (other than an option granted
under Section 7 hereof), of cash in an amount per Share not to exceed the
difference between the aggregate Fair Market Value on the date of such
cancellation of the Shares and the aggregate option price of such Shares;
provided, however, that if an Acceleration has occurred, for purposes of
this subparagraph, "Fair Market Value" on the date of such cancellation
shall be calculated in the same manner as the "exercise value" of a Limited
Right would be calculated under Section 9(c) with respect to such date
(whether or not any Limited Rights are actually outstanding).
(d) Tax Withholding. With the approval of the Committee, the
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Grantee of a Nonqualified Option may elect to have the Company retain from
the Shares to be issued upon the exercise by the Grantee of such option
Shares having a Fair Market Value on the Tax Date equal to all or any part
of the required minimum federal, state and local withholding tax payments
to be made by the Grantee with respect to the exercise of the option in
lieu of making such payments in cash. The Committee may establish from time
to time rules or limitations with respect to the right of a Grantee to
elect to have the Company retain Shares in satisfaction of withholding
payments; provided, however, that, in any event, any such election made by
a person subject to Section 16(b) of the 1934 Act must be made in
accordance with any applicable rules established under such Section.
If a Grantee transfers a Nonqualified Option pursuant to Section 10,
the Grantee is required to satisfy the applicable withholding taxes by
paying cash or other property to the Company with respect to any income
recognized by the Grantee on the exercise of such option by the Transferee.
The Grantee's withholding obligations must be satisfied on the date that
the Transferee exercises the option. If the Grantee does not satisfy the
applicable withholding tax obligation, the Company shall retain from the
Shares to be issued Shares having a Fair Market Value on the Tax Date equal
to the mandatory withholding tax payable by the Grantee.
In connection with the exercise of an option or Limited Right, the
Company has the right to require the Grantee to remit or otherwise make
available to the Company an amount sufficient to satisfy any federal, state
and/or local withholding tax requirements prior to the delivery or transfer
of any certificate or certificates for Shares (and prior to a cash payment
in the case of a Limited Right) or to take whatever action it deems
necessary to protect its interests with respect to tax liabilities in
connection with the issuance of Shares or cash payment.
Section 9. Limited Rights
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(a) Grant of Limited Rights. The Committee may grant Limited
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Rights with respect to any option granted under the Plan (other than an
option granted under Section 7) either at the time the option is granted or
at any time thereafter prior to the exercise, cancellation, termination or
expiration of such option. The number of Limited Rights
covered by any such grant shall not exceed, but may be less than, the
number of Shares covered by the related option. The term of any Limited
Right shall be the same as the term of the option to which it relates. The
right of a Holder to exercise a Limited Right shall be cancelled if and to
the extent a related option is exercised, and the right of a Holder to
exercise an option shall be cancelled if and to the extent a related
Limited Right is exercised.
(b) Events permitting Exercise of Limited Rights. A Limited Right
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shall be exercisable only if and to the extent that the related option is
exercisable; provided, however, that notwithstanding the foregoing, (x) a
Limited Right shall not be exercisable during the first six months of its
term, and (y) in the case of a Limited Right issued in connection with an
Incentive Stock Option, such Limited Right shall not be exercisable unless
the Fair Market Value of a Share on the date of exercise exceeds the
exercise price of a Share subject to the related option. A Limited Right
which is otherwise exercisable may be exercised only during the following
periods:
(i) during a period of 30 days following the date of expiration
of a Tender Offer (other than an offer by the Company), if the offeror
acquires Shares pursuant to such Tender Offer;
(ii) during a period of 30 days following the date of approval
by the shareholders of the Company of a definitive agreement: (x) for the
merger or consolidation of the Company into or with another corporation, if
the Company will not be the surviving corporation or will become a
subsidiary of another corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
or parent entity) at least 80% of the combined voting power of the voting
securities of the Company or such surviving or parent entity outstanding
immediately after such merger or consolidation, (y) for the merger or
consolidation of the Company with another corporation, if the Company will
be the surviving corporation and will not become a subsidiary of another
corporation, or for the merger or consolidation of any direct or indirect
subsidiary of the Company into or with another corporation, other than (in
either case) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent ((i) in the case of a merger or consolidation of the Company,
either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof, or (ii) in the
case of a merger or consolidation of any direct or indirect subsidiary of
the Company, either by remaining outstanding if the Company continues as a
parent of the merged or consolidated subsidiary or by being converted into
voting securities of the surviving entity or any parent thereof) at least
51% of the combined voting power of the voting securities of the Company or
surviving or parent entity outstanding immediately after such merger or
consolidation, or (z) for the sale or disposition of all or substantially
all of the assets of the Company (each of the foregoing transactions is
hereinafter referred to as an "Acquisition Transaction");
(iii) during a period of 30 days following: (x) the date upon
which the Company is provided a copy of a Schedule 13D (filed pursuant to
Section 13(d) of the 1934 Act and the rules and regulations promulgated
thereunder) indicating that any person or group (as such terms are defined
in Section 13(d)(3) of the 1934 Act) has become the beneficial owner (as
defined in Rule 13d-3 of the Exchange Act) of 20% or more of the
outstanding voting Shares of the Company or (y) the date of authorization,
by both a majority of the voting power of the Company and a majority of the
portion of such voting power excluding the voting
power of interested Shares, of a control share acquisition (as such term is
defined in Chapter 1701 of the Ohio Revised Code) (each of the foregoing
transactions is hereinafter referred to as a "Change in Control"); and
(iv) during a period of 30 days following a change in the
composition of the Board of Directors such that individuals who were
members of the Board of Directors on the date two years prior to such
change (and any new directors (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to
the election of directors of the Company) who were elected, or were
nominated for election, by the Company's shareholders with the affirmative
vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of such two year period or whose
election or nomination for election was previously so approved) no longer
constitute a majority of the Board of Directors (such a change in
composition is hereinafter referred to as a "Change in Composition of the
Board").
(c) Exercise of Limited Rights. Upon exercise of a Limited Right,
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the Holder thereof shall receive from the Company a cash payment equal to
the excess of: (x) the aggregate "exercise value" on the date of exercise
(determined as provided below) of that number of Shares as is equal to the
number of Limited Rights being exercised over (y) the aggregate exercise
price under the related option of that number of Shares as is equal to the
number of Limited Rights being exercised. A Holder shall exercise a Limited
Right by giving written notice of such exercise to the Committee. A Limited
Right shall be deemed exercised on the date the Committee receives such
written notice.
The "exercise value" of a Limited Right on the date of exercise shall
be:
(i) in the case of an exercise during a period described in
Section 9 (b) (i), the highest price per Share paid pursuant to any Tender
Offer which is in effect at any time during the 60-day period prior to the
date on which the Limited Right is exercised;
(ii) in the case of an exercise during a period described in
Section 9(b) (ii), the greater of: (x) the highest sale price of a Share
during the 30-day period prior to the date of shareholder approval of the
Acquisition Transaction, as reported on the New York Stock Exchange -
Composite Transactions Tape, or (y) the highest fixed or formula per Share
price payable pursuant to the Acquisition Transaction (if determinable on
the date of exercise);
(iii) in the case of an exercise during a period described in
Section 9(b) (iii), the greater of: (x) the highest sale price of a Share
during the 30-day period prior to the date the Company is provided with a
copy of the Schedule 13D, or the date of authorization of the control Share
acquisition, as reported on the New York Stock Exchange - Composite
Transactions Tape, or (y) the highest acquisition price of a Share shown on
such schedule 13D or to be paid in such control Share acquisition; and
(iv) in the case of an exercise during a period described in
Section 9 (b) (iv), the highest sale price of a Share during the 30-day
period prior to the date of the change in Composition of the Board, as
reported on the New York Stock Exchange - Composite Transactions Tape.
Notwithstanding the foregoing, in no event shall the exercise value of a
Limited Right issued in connection with an Incentive Stock Option exceed
the maximum permissible exercise value for such a right
for purposes of Section 422 of the Code and the regulations and
interpretations issued pursuant thereto. Any securities or property which
form part or all of the consideration paid for Shares pursuant to a Tender
Offer or Acquisition Transaction shall be valued at the higher of (1) the
valuation placed on such securities or property by the person making such
Tender Offer or the other party to such Acquisition Transaction, or (2) the
value placed on such securities or property by the Committee.
(d) Compliance with Law. The exercise of Limited Rights by directors
-------------------
and officers of the Company shall be subject to, and comply with, the
applicable requirements of Rule 16b-3 (e) under the 1934 Act (or any
successor provision), as the same may be amended, modified or superseded
from time to time.
Section 10. Transfers Upon Death; Nonassignability.
----------- --------------------------------------
Except as provided in this Section 10, options granted under the Plan
may not be sold, pledged, assigned, hypothecated or transferred other than
by Designation of Beneficiary, or, if none, then by will or the laws of
descent and distribution and may be exercised during the lifetime of the
Grantee only by such Grantee or by his guardian or legal representative.
Upon the death of an Option Holder, outstanding Options held by such
Holder may be exercised only by Designation of Beneficiary, or, if none,
then by the executor or administrator of the Holder's estate or by a person
who shall have acquired the right to such exercise by will or by the laws
of descent and distribution.
Subject to such conditions as the Committee may prescribe, during an
option Grantee's lifetime, the Committee may permit the transfer or
assignment of an outstanding option by such Grantee; provided, that such
transfer or assignment shall not apply to (y) an option which is an
Incentive Stock Option (but only if nontransferability is necessary in
order for the option to qualify as an Incentive Stock Option) and (z) an
option granted to a person subject to Section 16 of the 1934 Act (but only
if nontransferability is necessary in order for the option to qualify for
the exemption under Rule 16b-3 of the 1934 Act)
Section 11. Adjustments Upon Changes in Capitalization.
----------- ------------------------------------------
In the event of a change in outstanding Shares by reason of a Share
dividend, recapitalization, merger, consolidation, split-up, combination or
exchange of Shares, or the like, or in the event of any similar corporate
transaction which the Committee determines requires the adjustments
described herein, the maximum number of Shares subject to option during the
existence of the Plan, the number of Limited Rights which may be granted
under the Plan, the number of Shares subject to, and the option price of,
each outstanding option, the maximum number of Shares or Limited Rights
which may be granted to any individual over the term of the Plan, the
number of Limited Rights outstanding, the Fair Market Value of a Share on
the date a Limited Right is granted, and the like shall be appropriately
adjusted by the Committee (disregarding any fractional Shares resulting
therefrom), whose determination in each case shall be conclusive.
Section 12. Conditions Upon Granting and Exercise of Options and Limited
----------- ------------------------------------------------------------
Rights and Issuance of Shares.
-----------------------------
No option or Limited Right shall be granted, no option or Limited
Right shall be exercised and Shares shall not be issued or delivered
upon the exercise of an option unless the grant and exercise thereof, and
the issuance and/or delivery of Shares pursuant thereto, or the payment
therefor, shall comply with all relevant provisions of state and federal
law, including, without limitation, the Securities Act of 1933, as amended,
the 1934 Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares then may be
listed.
Section 13. Amendment and Termination of Plan.
----------- ---------------------------------
(a) Amendment. The Board of Directors may from time to time amend
---------
the Plan, or any provision thereof, in such respects as the Board of
Directors may deem advisable; provided, however, that any such amendment
shall be approved by the holders of Shares by such vote and otherwise in
compliance with applicable federal or state law (including Rule 16b-3 (or
any successor provision) under the 1934 Act) or the requirements of any
stock exchange upon which the Shares may then be listed.
(b) Termination. The Board may at any time terminate the Plan.
------------
(c) Effect of Amendment or Termination. No amendment to or
----------------------------------
termination of the Plan shall adversely affect any option or Limited Right
previously granted under the Plan without the consent of the Holder
thereof.
Section 14. Notices.
----------- -------
Each notice relating to this Plan shall be in writing and delivered in
person or by mail to the proper address. Except as otherwise provided by
the Committee, each notice shall be deemed to have been given on the date
it is delivered or mailed, provided, however, that for a notice of exercise
given in accordance with Section 8 (b), which shall be deemed to have been
given on the date it is received by the Committee with payment of the
option price. Each notice to the Committee shall be addressed as follows:
The Mead Corporation, Mead World Headquarters, Courthouse Plaza Northeast,
Dayton, Ohio 45463, Attention: Compensation Committee. Each notice to the
Holder of an option or other person or persons then entitled to exercise an
option shall be addressed to such person or persons at The Holder's address
as set forth in the records of the Company. Anyone to whom a notice may be
given under this Plan may designate a new address by written notice to the
party to that effect.
Section 15. Benefits of Plan.
----------- ----------------
This Plan shall inure to the benefit of and be binding upon each
successor and assign of the Company. All rights and obligations imposed
upon the Holder of an option and all rights granted to the Company under
this Plan shall be binding upon such Holder's heirs, legal representatives
and successors.
Section 16. Pronouns and Plurals.
----------- ---------------------
All pronouns shall be deemed to refer to the masculine, feminine,
singular or plural, as the identity of the person or persons may require.
Section 17. Shareholder Approval and Term of Plan.
----------- -------------------------------------
The Plan shall become effective upon its approval by the affirmative
vote of the holders of a majority of the Shares entitled to vote thereon
held by shareholders present in person or by proxy at any shareholders'
meeting at which a quorum is present. The Plan shall
expire on September 30, 2005, unless sooner terminated in accordance with
Section 13.
Section 18. Interpretation.
----------- --------------
The Plan is designed and intended to comply with Rule 16b-3
promulgated under the 1934 Act and Section 162(m) of the Code and all
provisions hereof shall be construed in a manner to so comply.
___________________________________________
NOTES:
- -----
(1) Adopted by the Board of Directors of the Company on October 28, 1995, and
approved by the Company's shareholders on April 25, 1996.
(2) Amendments to Sections 2, 6 (b) and (e), 8 (a) and (d), 10 and 14 to allow
for the designation of a beneficiary of the stock option grant.
(3) Amendments to Section 2(b), with an addition of subsection (z); Section
6(a), (f); Section 9(b) with addition of subsections (i), (ii), (iii), (iv)
as adopted by the Board of Directors on June 24, 1998.
(4) Administrative Amendment to Section 8(d) as adopted by the Compensation
Committee of the Board of Directors on June 24, 1999.
AMENDMENT
TO
THE MEAD CORPORATION
1996 STOCK OPTION PLAN
THIS AMENDMENT (this "Amendment") is made as of February 22, 2001 to The
Mead Corporation 1996 Stock Option Plan (the "Plan").
WHEREAS, the Board of Directors of the Company has determined that it is in
the best interests of The Mead Corporation (the "Company"), its shareholders and
Grantees that the Plan be amended, in accordance with Section 13 thereof, as
provided herein;
NOW, THEREFORE, the Plan is hereby amended as follows, provided that this
Amendment shall be subject to the approval of the Company's shareholders at the
Company's annual shareholder's meeting on April 26, 2001:
1. The first sentence of Section 3 (a) of the Plan is hereby amended in
its entirety to read as follows:
Number of Shares. Subject to adjustment as provided in Section 11, the
----------------
maximum number of Shares that may be issued and/or delivered under the Plan
upon the exercise of options is 10,500,000.
2. The second paragraph of Section 4 of the Plan is hereby amended by
adding the phrase "under option agreements entered into prior to April 26, 2001"
after the phrase "Reload Options" in the second sentence thereof.
3. Section 4 of the Plan is hereby amended by the addition of the
following sentence at the end of the second paragraph thereof:
Notwithstanding the foregoing, except in connection with an adjustment
pursuant to Section 11 hereof, in no event shall the Committee have the
authority to take any action which would have the result of adjusting
downward the exercise price of any Incentive Stock Option or Nonqualified
Option granted hereunder, whether through any amendment of the terms of
such option, through the cancellation and subsequent replacement of such
option with a new option in connection therewith or through any other
means.
4. The first sentence of Section 5 of the Plan is hereby amended in its
entirety to read as follows:
From time to time during the term of the Plan, the Committee may grant one
or more Incentive Stock Options, Nonqualified Options and Reload Options
under option agreements entered into prior to April 26, 2001 to any person
who is then an officer or other key employee of the Company.
17
5. Section 6 (b) (5) of the Plan is hereby amended in its entirety to
read as follows:
At the time the option is granted, or at such other time as the Committee
may determine, the Committee may provide that, if the Grantee of the option
ceases to be employed by the Company for any reason (including, but not
limited to, the Grantee's disability), other than death or retirement of
the Grantee, the option will continue to be exercisable by the Holder
(including a Transferee under Section 10 hereof) for such additional period
(not to exceed the remaining term of such option) as the Committee may
provide. Unless otherwise determined by the Committee at the time an option
is granted, if the Grantee of an option granted after April 26, 2001 ceases
to be employed by the Company due to the Grantee's retirement, all options
granted after April 26, 2001 which are then exercisable by such Grantee
shall remain exercisable by the Holder for up to five (5) years after the
date of such termination of employment, but in no event may the option be
exercised later than its otherwise applicable expiration date.
6. Section 6 (d) of the Plan is hereby amended by adding the phrase
"under option agreements entered into prior to April 26, 2001" immediately
before the defined term "(the "Original Option")."
7. Section 6 (e) of the Plan is hereby amended by adding the phrase
"under option agreements entered into prior to April 26, 2001" after the phrase
"including a Reload Option" from the first parenthetical contained therein.
This Amendment shall be effective as of the date first written above to
options first granted after April 26, 2001, but shall be subject to the approval
of the Company's shareholders at the Company's annual shareholder's meeting in
the year 2001. Except as modified by this Amendment, the Plan shall remain in
full force and effect.
18