1997 Equity and Performance Incentive Plan - American Greetings Corp.
APPENDIX A
APPROVAL OF 1997
AMERICAN GREETINGS CORPORATION
1997 Equity and Performance Incentive Plan
1. PURPOSE. The purpose of the 1997 Equity and Performance Incentive Plan (the
"Plan") is to attract and retain directors, officers and other key
employees for American Greetings Corporation (the "Company") and its
Subsidiaries and to provide to such persons incentives and rewards for
superior performance.
2. DEFINITIONS. As used in this Plan,
"Appreciation Right" means a right granted pursuant to Section 5 of this
Plan, and shall include both Tandem Appreciation Rights and Free-Standing
Appreciation Rights.
"Board" means the Board of Directors of the Company and, to the extent of
any delegation by the Board to a committee (or subcommittee thereof)
pursuant to Section 16 of this Plan, such committee (or subcommittee).
"Change in Control" shall have the meaning provided in Section 12 of this
Plan.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Class A Common Shares" means Class A Common Shares, par value $1 per
share, of the Company or any security into which such Common Shares may be
changed by reason of any transaction or event of the type referred to in
Section 11 of this Plan.
"Class B Common Shares" means Class B Common Shares, par value $1 per
share, of the Company or any security into which such Common Shares may be
changed by reason of any transaction or event of the type referred to in
Section 11 of this Plan.
"Common Shares" means Class A Common Shares, Class B Common Shares or both.
"Covered Employee" means a Participant who is, or is determined by the
Board to be likely to become, a "covered employee" within the meaning of
Section 162(m) of the Code (or any successor provision).
"Date of Grant" means the date specified by the Board on which a grant of
Option Rights, Appreciation Rights, Performance Shares or Performance Units
or a grant or sale of Restricted Shares or Deferred Shares shall become
effective (which date shall not be earlier than the date on which the Board
takes action with respect thereto).
"Deferral Period" means the period of time during which Deferred Shares are
subject to deferral limitations under Section 7 of this Plan.
"Deferred Shares" means an award made pursuant to Section 7 of this Plan of
the right to receive Common Shares at the end of a specified Deferral
Period.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder, as such law, rules and regulations
may be amended from time to time.
"Exercise Right" means the price payable upon exercise of a Free-Standing
Appreciation Right.
"Free-Standing Appreciation Right" means an Appreciation Right not granted
in tandem with an Option Right.
"Incentive Stock Options" means Option Rights that are intended to qualify
as "incentive stock options" under Section 422 of the Code or any successor
provision.
"Management Objectives" means the measurable performance objective or
objectives established pursuant to this Plan for Participants who have
received grants of Performance Shares or Performance Units or, when so
determined by the Board, Option Rights, Appreciation Rights, Restricted
Shares and dividend credits pursuant to this Plan. Management Objectives
may be described in terms of Company-wide objectives or objectives that are
related to the performance of the individual Participant or of the
Subsidiary, division, department, region or function within the Company or
Subsidiary in which the Participant is employed. The Management Objectives
may be made relative to the performance of other corporations. The
Management Objectives applicable to any award to a Covered Employee shall
be based on specified levels of or growth in one or more of the following
criteria:
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1. cash flow/net assets ratio;
2. debt/capital ratio;
3. return on total capital;
4. return on equity;
5. earnings per share growth;
6. revenue growth; and
7. total return to shareholders.
Except where a modification would result in an award no longer qualifying
as performance based compensation within the meaning of Section 162(m) of
the Code, the Board may in its discretion modify such Management Objectives
or the related minimum acceptable level of achievement, in whole or in
part, as the Board deems appropriate and equitable.
"Market Value per Share" means, as of any particular date, the fair market
value of the Class A Common Shares as listed on NASDAQ as of the close of
business on such date or the latest such date in which there is a listing.
"Non-Employee Director" means a Director of the Company who is not an
employee of the Company or any Subsidiary.
"Optionee" means the optionee named in an agreement evidencing an
outstanding Option Right.
"Option Price" means the purchase price payable on exercise of an Option
Right.
"Option Right" means the right to purchase Common Shares upon exercise of
an option granted pursuant to Section 4 or Section 9 of this Plan.
"Participant" means a person who is selected by the Board to receive
benefits under this Plan and who is at the time an officer, or other key
employee of the Company or any one or more of its Subsidiaries, or who has
agreed to commence serving in any of such capacities within 90 days of the
Date of Grant, and shall also include each Non-Employee Director who
receives an award of Option Rights or Restricted Shares.
"Performance Period" means, in respect of a Performance Share or
Performance Unit, a period of time established pursuant to Section 8 of
this Plan within which the Management Objectives relating to such
Performance Share or Performance Unit are to be achieved.
"Performance Share" means a bookkeeping entry that records the equivalent
of one Common Share awarded pursuant to Section 8 of this Plan.
"Performance Unit" means a bookkeeping entry that records a unit equivalent
to $1.00 awarded pursuant to Section 8 of this Plan.
"Reload Option Rights" means additional Option Rights granted automatically
to an Optionee upon the exercise of Option Rights pursuant to Section 4(g)
of this Plan.
"Restricted Shares" means Common Shares granted or sold pursuant to
Section 6 or Section 9 of this Plan as to which neither the substantial
risk of forfeiture nor the prohibition on transfers referred to in such
Section 6 has expired.
"Rule l6b-3" means Rule 16b-3 of the Securities and Exchange Commission (or
any successor rule to the same effect) as in effect from time to time.
"Spread" means the excess of the Market Value per Share on the date when an
Appreciation Right is exercised, or on the date when Option Rights are
surrendered in payment of the Option Price of other Option Rights, over the
Option Price or Exercise Price provided for in the related Option Right or
Free-Standing Appreciation Right, respectively.
"Subsidiary" means a corporation, company or other entity (i) more than 50%
of whose outstanding shares or securities (representing the right to vote
for the election of directors or other managing authority) are, or (ii)
which does not have outstanding shares or securities (as may be the case in
a partnership, joint venture or unincorporated association), but more than
50% of whose ownership interest representing the right generally to make
decisions for such other entity is, now or hereafter, owned or controlled,
directly or indirectly, by the Company except that for purposes of
determining whether any person may be a Participant for purposes of any
grant of Incentive Stock Options, "Subsidiary" means any corporation in
which at the time the Company owns or controls, directly or indirectly,
more than 50% of the total combined voting power represented by all classes
of stock issued by such corporation.
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"Tandem Appreciation Right" means an Appreciation Right granted in tandem
with an Option Right.
"Voting Power" means at any time, the total votes relating to the
then-outstanding securities entitled to vote generally in the election of
directors of the Company.
3. SHARES AVAILABLE UNDER THE PLAN.
(a) Subject to adjustment as provided in paragraph (b) below and Section 11
of this Plan, the number of Class A Common Shares and Class B Common
Shares that may be issued or transferred (i) upon the exercise of
Option Rights or Appreciation Rights; (ii) as Restricted Shares and
released from substantial risk of forfeiture thereof; (iii) as Deferred
Shares; (iv) in payment of Performance Shares or Performance Units that
have been earned; (v) as awards to Non-Employee Directors; or (vi) in
payment of dividend equivalents paid with respect to awards made under
the Plan, shall not exceed in the aggregate 4,500,000 Class A Common
Shares and 500,000 Class B Common Shares, respectively, plus any shares
described in paragraph (b) below. Such shares may be shares of original
issuance or treasury shares or a combination of the foregoing.
(b) The number of shares available in paragraph (a) above shall be adjusted
to account for shares relating to awards that expire; are forfeited; or
are transferred, surrendered, or relinquished upon the payment of any
Option Price by the transfer to the Company of Common Shares or upon
satisfaction of any withholding amount.
(c) Notwithstanding anything in this Section 3 or elsewhere in this Plan to
the contrary, the aggregate number of Common Shares actually issued or
transferred by the Company upon the exercise of Incentive Stock Options
shall not exceed 4,500,000 Class A Common Shares or 500,000 Class B
Common Shares, respectively, subject to adjustments as provided in
Section 11 of this Plan. Further, no Participant shall be granted
Option Rights for more than 500,000 Common Shares during any period of
five years, subject to adjustments as provided in Section 11 of this
Plan.
(d) Upon payment in cash of the benefit provided by any award granted under
this Plan, any shares that were covered by that award shall again be
available for issue or transfer hereunder.
(e) Notwithstanding any other provision of this Plan to the contrary, in no
event shall any Participant in any period of five years receive more
than 500,000 Appreciation Rights, subject to adjustments as provided in
Section 11 of this Plan.
(f) Notwithstanding any other provision of this Plan to the contrary, the
number of shares issued as Restricted Shares shall not in the aggregate
exceed 450,000 Class A Common Shares and 50,000 Class B Common Shares,
respectively, subject to adjustments as provided in Section 11 of this
Plan; and, in no event shall any Participant in any period of five
years receive more than 500,000 Restricted Shares or 500,000 Deferred
Shares, subject to adjustments as provided in Section 11 of this Plan.
(g) Notwithstanding any other provision of this Plan to the contrary, in no
event shall any Participant in any calendar year receive an award of
Performance Shares or Performance Units having an aggregate maximum
value as of their respective Dates of Grant in excess of $3,000,000.
4. OPTION RIGHTS. The Board may, from time to time and upon such terms and
conditions as it may determine, authorize the granting to Participants of
options to purchase Common Shares. Each such grant may utilize any or all
of the authorizations, and shall be subject to all of the requirements,
contained in the following provisions:
(a) Each grant shall specify the number of Class A Common Shares or Class B
Common Shares to which it pertains subject to the limitations set forth
in Section 3 of this Plan.
(b) Each grant shall specify an Option Price per share, which may not be
less than the Market Value per Share on the Date of Grant.
(c) Each grant shall specify whether the Option Price shall be payable (i)
in cash or by check acceptable to the Company; (ii) by the actual or
constructive transfer to the Company of nonforfeitable, unrestricted
Common Shares owned by the Optionee (or other consideration authorized
pursuant to subparagraph (d) below) having a value at the time of
exercise equal to the total Option Price; or (iii) by a combination of
such methods of payment.
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(d) The Board may determine, at or after the Date of Grant, that payment of
the Option Price of any option (other than an Incentive Stock Option)
may also be made in whole or in part in the form of Restricted Shares
or other Common Shares that are forfeitable or subject to restrictions
on transfer, Deferred Shares, Performance Shares (based, in each case,
on the Market Value per Share on the date of exercise), other Option
Rights (based on the Spread on the date of exercise) or Performance
Units. Unless otherwise determined by the Board at or after the Date of
Grant, whenever any Option Price is paid in whole or in part by means
of any of the forms of consideration specified in this paragraph, the
Common Shares received upon the exercise of the Option Rights shall be
subject to such risk of forfeiture or restrictions on transfer as may
correspond to any that apply to the consideration surrendered, but only
to the extent of (i) the number of shares or Performance Shares;
(ii) the Spread of any unexercisable portion of Option Rights; or
(iii) the stated value of Performance Units surrendered.
(e) Any grant may provide for deferred payment of the Option Price from the
proceeds of sale through a bank or broker on a date satisfactory to the
Company of some or all of the shares to which such exercise relates.
(f) Any grant may provide for payment of the Option Price, at the election
of the Optionee, in installments, with or without interest, upon terms
determined by the Board.
(g) Any grant may, at or after the Date of Grant, provide for the automatic
grant of Reload Option Rights to an Optionee upon the exercise of
Option Rights (including Reload Option Rights) using Common Shares or
other consideration specified in paragraph (d) above. Reload Option
Rights shall cover up to the number of Common Shares, Deferred Shares,
Option Rights or Performance Shares (or the number of Common Shares
having a value equal to the value of any Performance Units) surrendered
to the Company upon any such exercise in payment of the Option Price or
to meet any withholding obligations. Reload Options may have an Option
Price that is no less than the applicable Market Value per Share at the
time of exercise and shall be on such other terms as may be specified
by the Directors, which may be the same as or different from those of
the original Option Rights.
(h) Successive grants may be made to the same Participant whether or not
any Option Rights previously granted to such Participant remain
unexercised.
(i) Each grant shall specify the period or periods of continuous service by
the Optionee with the Company or any Subsidiary following the grant
which is necessary before the Option Rights or installments thereof
will become exercisable and may provide for the earlier exercise of
such Option Rights in the event of a Change in Control or other similar
transaction or event.
(j) Any grant of Option Rights may specify Management Objectives that must
be achieved as a condition to the exercise of such rights.
(k) Option Rights granted under this Plan may be (i) options, including,
without limitation, Incentive Stock Options, that are intended to
qualify under particular provisions of the Code; (ii) options that are
not intended to so qualify; or (iii) combinations of the foregoing.
(l) The Board may, at or after the Date of Grant of any Option Rights
(other than Incentive Stock Options), provide for the payment of
dividend equivalents to the Optionee on either a current or deferred or
contingent basis or may provide that such equivalents shall be credited
against the Option Price.
(m) The exercise of an Option Right shall result in the cancellation on a
share-for-share basis of any Tandem Appreciation Right authorized under
Section 5 of this Plan.
(n) No Option Right shall be exercisable more than ten years from the Date
of Grant.
(o) Each grant of Option Rights shall be evidenced by an agreement executed
on behalf of the Company by an officer and delivered to the Optionee
and containing such terms and provisions, consistent with this Plan, as
the Board may approve.
5. APPRECIATION RIGHTS.
(a) The Board may also authorize the granting to any Optionee of Tandem
Appreciation Rights in respect of Option Rights granted hereunder at
any time prior to the exercise or termination of such related Option
Rights; provided, however, that a Tandem Appreciation Right awarded in
relation to an Incentive Stock Option must be granted concurrently with
such Incentive Stock Option. A Tandem Appreciation Right shall be a
right of the Optionee, exercisable by surrender of the related Option
Right, to receive from the Company an amount determined by the Board,
which shall be expressed as a percentage of the Spread (not exceeding
100%) at the time of exercise.
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(b) The Board may also authorize the granting to any Participant of
Free-Standing Appreciation Rights. A Free-Standing Appreciation Right
shall be a right of the Participant to receive from the Company an
amount determined by the Board, which shall be expressed as a
percentage of the Spread (not exceeding 100%) at the time of exercise.
(c) Each grant of Appreciation Rights may utilize any or all of the
authorizations, and shall be subject to all of the requirements,
contained in the following provisions:
(i) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Company in cash, in Common
Shares or in any combination thereof and may either grant to the
Participant or retain in the Board the right to elect among those
alternatives.
(ii) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum specified by the
Board at the Date of Grant.
(iii) Any grant may specify waiting periods before exercise and
permissible exercise dates or periods and shall provide that no
Appreciation Right may be exercised except at a time when the
related Option Right (if applicable) is also exercisable and at a
time when the Spread is positive.
(iv) Any grant may specify that such Appreciation Right may be
exercised only in the event of a Change in Control or other
similar transaction or event.
(v) Each grant of Appreciation Rights shall be evidenced by an
agreement executed on behalf of the Company by an officer and
delivered to and accepted by the Participant, which agreement
shall describe such Appreciation Rights, identify the related
Option Rights (if applicable), state that such Appreciation
Rights are subject to all the terms and conditions of this Plan,
and contain such other terms and provisions, consistent with this
Plan, as the Board may approve.
(vi) Any grant of Appreciation Rights may specify Management
Objectives that must be achieved as a condition of the exercise
of such rights.
6. RESTRICTED SHARES. The Board may also authorize the grant or sale of
Restricted Shares to Participants. Each such grant or sale may utilize any
or all of the authorizations, and shall be subject to all of the
requirements, contained in the following provisions:
(a) Each such grant or sale shall constitute an immediate transfer of the
ownership of Common Shares to the Participant in consideration of the
performance of services, entitling such Participant to voting, dividend
and other ownership rights, but subject to the substantial risk of
forfeiture and restrictions on transfer hereinafter referred to.
(b) Each such grant or sale may be made without additional consideration or
in consideration of a payment by such Participant that is less than
Market Value per Share at the Date of Grant.
(c) Each such grant or sale shall provide that the Restricted Shares
covered by such grant or sale shall be subject to a "substantial risk
of forfeiture" within the meaning of Section 83 of the Code except (if
the Board shall so determine) in the event of a Change in Control or
other similar transaction or event, for a period of not less than three
years to be determined by the Board at the Date of Grant.
(d) Each such grant or sale shall provide that during the period for which
such substantial risk of forfeiture is to continue, the transferability
of the Restricted Shares shall be prohibited or restricted in the
manner and to the extent prescribed by the Board at the Date of Grant
(which restrictions may include, without limitation, rights of
repurchase or first refusal in the Company or provisions subjecting the
Restricted Shares to a continuing substantial risk of forfeiture in the
hands of any transferee).
(e) Any grant of Restricted Shares may specify Management Objectives which,
if achieved, will result in termination or early termination of the
restrictions applicable to such shares, and each grant may specify in
respect of such specified Management Objectives, a minimum acceptable
level of achievement and shall set forth a formula for determining the
number of Restricted Shares on which restrictions will terminate if
performance is at or above the minimum level, but falls short of full
achievement of the specified Management Objectives.
(f) Any such grant or sale of Restricted Shares may require that any or all
dividends or other distributions paid thereon during the period of such
restrictions be automatically deferred and reinvested in additional
Restricted Shares, which may be subject to the same restrictions as the
underlying award.
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(g) Each grant or sale of Restricted Shares shall be evidenced by an
agreement executed on behalf of the Company by any officer and
delivered to and accepted by the Participant and shall contain such
terms and provisions, consistent with this Plan, as the Board may
approve. Unless otherwise directed by the Board, all certificates
representing Restricted Shares shall be held in custody by the Company
until all restrictions thereon shall have lapsed, together with a stock
power or powers executed by the Participant in whose name such
certificates are registered, endorsed in blank and covering such
shares.
7. DEFERRED SHARES. The Board may also authorize the granting or sale of
Deferred Shares to Participants. Each such grant or sale may utilize any or
all of the authorizations, and shall be subject to all of the requirements,
contained in the following provisions:
(a) Each such grant or sale shall constitute the agreement by the Company
to deliver Common Shares to the Participant in the future in
consideration of the performance of services, but subject to the
fulfillment of such conditions during the Deferral Period as the Board
may specify.
(b) Each such grant or sale may be made without additional consideration or
in consideration of a payment by such Participant that is less than the
Market Value per Share at the Date of Grant.
(c) Each such grant or sale shall be subject to a Deferral Period of not
less than one year, as determined by the Board at the Date of Grant
except (if the Board shall so determine) in the event of a Change in
Control or other similar transaction or event.
(d) During the Deferral Period, the Participant shall have no right to
transfer any rights under his or her award and shall have no rights of
ownership in the Deferred Shares and shall have no right to vote them,
but the Board may, at or after the Date of Grant, authorize the payment
of dividend equivalents on such shares on either a current or deferred
or contingent basis, either in cash or in additional Common Shares.
(e) Each grant or sale of Deferred Shares shall be evidenced by an
agreement executed on behalf of the Company by any officer and
delivered to and accepted by the Participant and shall contain such
terms and provisions, consistent with this Plan, as the Board may
approve.
8. PERFORMANCE SHARES AND PERFORMANCE UNITS. The Board may also authorize the
granting of Performance Shares and Performance Units that will become
payable to a Participant upon achievement of specified Management
Objectives. Each such grant may utilize any or all of the authorizations,
and shall be subject to all of the requirements, contained in the following
provisions:
(a) Each grant shall specify the number of Performance Shares or
Performance Units to which it pertains, which number may be subject to
adjustment to reflect changes in compensation or other factors;
provided, however, that no such adjustment shall be made in the case of
a Covered Employee.
(b) The Performance Period with respect to each Performance Share or
Performance Unit shall be such period of time (not less than three
years, except in the event of a Change in Control or other similar
transaction or event, if the Board shall so determine) commencing with
the Date of Grant (as shall be determined by the Board at the time of
grant).
(c) Any grant of Performance Shares or Performance Units shall specify
Management Objectives which, if achieved, will result in payment or
early payment of the award, and each grant may specify in respect of
such specified Management Objectives a minimum acceptable level of
achievement and shall set forth a formula for determining the number of
Performance Shares or Performance Units that will be earned if
performance is at or above the minimum level, but falls short of full
achievement of the specified Management Objectives. The grant of
Performance Shares or Performance Units shall specify that, before the
Performance Shares or Performance Units shall be earned and paid, the
Board must certify that the Management Objectives have been satisfied.
(d) Each grant shall specify a minimum acceptable level of achievement in
respect of the specified Management Objectives below which no payment
will be made and shall set forth a formula for determining the amount
of payment to be made if performance is at or above such minimum but
short of full achievement of the Management Objectives.
(e) Each grant shall specify the time and manner of payment of Performance
Shares or Performance Units which have been earned. Any grant may
specify that the amount payable with respect thereto may be paid by the
Company in cash, in Common Shares or in any combination thereof and may
either grant to the Participant or retain in the Board the right to
elect among those alternatives.
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(f) Any grant of Performance Shares may specify that the amount payable
with respect thereto may not exceed a maximum specified by the Board at
the Date of Grant. Any grant of Performance Units may specify that the
amount payable or the number of Common Shares issued with respect
thereto may not exceed maximums specified by the Board at the Date of
Grant.
(g) The Board may, at or after the Date of Grant of Performance Shares,
provide for the payment of dividend equivalents to the holder thereof
on either a current or deferred or contingent basis, either in cash or
in additional Common Shares.
(h) Each grant of Performance Shares or Performance Units shall be
evidenced by an agreement executed on behalf of the Company by any
officer and delivered to and accepted by the Participant, which
agreement shall state that such Performance Shares or Performance Units
are subject to all the terms and conditions of this Plan, and contain
such other terms and provisions, consistent with this Plan, as the
Board may approve.
9. AWARDS TO NON-EMPLOYEE DIRECTORS. The Board may, from time to time and upon
such terms and conditions as it may determine, authorize the granting to
Non-Employee Directors of Option Rights and may also authorize the grant or
sale of Restricted Shares to Non-Employee Directors.
(a) Each grant of Option Rights awarded pursuant to this Section 9 shall be
upon terms and conditions consistent with Section 4 of this Plan and
shall be evidenced by an agreement in such form as shall be approved by
the Board. Each grant shall specify an Option Price per share, which
shall not be less than the Market Value per Share on the Date of Grant.
Each such Option Right granted under the Plan shall expire not more
than ten years from the Date of Grant and shall be subject to earlier
termination as hereinafter provided. Unless otherwise determined by the
Board, such Option Rights shall be subject to the following additional
terms and conditions:
(i) Each grant shall specify the number of Common Shares to which it
pertains, subject to the limitations set forth in Section 3 of
this Plan.
(ii) Each such Option Right shall become exercisable to the extent of
one-fourth of the number of shares covered thereby one year after
the Date of Grant and to the extent of an additional one-fourth
of such shares after each of the next three successive years
thereafter. Such Option Rights shall become exercisable in full
immediately in the event of a Change in Control or other similar
transaction or event.
(iii) In the event of the termination of service on the Board by the
holder of any such Option Rights, other than by reason of
disability or death, the then-outstanding Option Rights of such
holder may be exercised to the extent that they would be
exercisable on the date that is six months and one day after the
date of such termination and shall expire six months and one day
after such termination, or on their stated expiration date,
whichever occurs first.
(iv) In the event of the death or disability of the holder of any such
Option Rights, each of the then-outstanding Option Rights of such
holder may be exercised at any time within one year after such
death or disability, but in no event after the expiration date of
the term of such Option Rights.
(v) If a Non-Employee Director subsequently becomes an employee of
the Company or a Subsidiary while remaining a member of the
Board, any Option Rights held under the Plan by such individual
at the time of such commencement of employment shall not be
affected thereby.
(vi) Option Rights may be exercised by a Non-Employee Director only
upon payment to the Company in full of the Option Price of the
Common Shares to be delivered. Such payment shall be made in cash
or in Common Shares then-owned by the Optionee for at least six
months, or in a combination of cash and such Common Shares.
(vii) Common Shares acquired upon the exercise of these Option Rights
may not be transferred for one year except in the case of the
director's death, disability or other termination of service as a
director.
(b) Each grant or sale of Restricted Shares pursuant to this Section 9
shall be upon terms and conditions consistent with Section 6 of this
Plan.
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10. TRANSFERABILITY.
(a) Except as otherwise determined by the Board on a case-by-case basis, no
Option Right, Appreciation Right or other derivative security granted
under the Plan shall be transferable by an Optionee other than by will
or the laws of descent and distribution. Except as otherwise determined
by the Board on a case-by-case basis, Option Rights and Appreciation
Rights shall be exercisable during the Optionee's lifetime only by him
or her or by his or her guardian or legal representative.
(b) The Board may specify at the Date of Grant that part or all of the
Common Shares that are (i) to be issued or transferred by the Company
upon the exercise of Option Rights or Appreciation Rights, upon the
termination of the Deferral Period applicable to Deferred Shares or
upon payment under any grant of Performance Shares or Performance Units
or (ii) no longer subject to the substantial risk of forfeiture and
restrictions on transfer referred to in Section 6 of this Plan, shall
be subject to further restrictions on transfer.
11. ADJUSTMENTS. The Board may make or provide for such adjustments in the
numbers of Common Shares covered by outstanding Option Rights, Appreciation
Rights, Deferred Shares, and Performance Shares granted hereunder, in the
prices per share applicable to such Option Rights and Appreciation Rights
and in the kind of shares covered thereby, as the Board, in its sole
discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the rights of Participants or Optionees
that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital
structure of the Company; or (b) any merger, consolidation, spin-off,
split-off, spin-out, split-up, reorganization, partial or complete
liquidation or other distribution of assets, issuance of rights or warrants
to purchase securities; or (c) any other corporate transaction or event
having an effect similar to any of the foregoing. Moreover, in the event of
any such transaction or event, the Board, in its discretion, may provide in
substitution for any or all outstanding awards under this Plan such
alternative consideration as it, in good faith, may determine to be
equitable in the circumstances and may require in connection therewith the
surrender of all awards so replaced. The Board may also make or provide for
such adjustments in the numbers of shares specified in Section 3 of this
Plan as the Board, in its sole discretion, exercised in good faith, may
determine is appropriate to reflect any transaction or event described in
this Section 11.
12. CHANGE IN CONTROL. For purposes of this Plan, a "Change in Control" shall
mean if at any time any of the following events shall have occurred:
(a) The Company is merged or consolidated or reorganized into or with
another corporation or other legal person, and as a result of such
merger, consolidation or reorganization less than a majority of the
combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction is held in the
aggregate by the holders of Common Shares immediately prior to such
transaction;
(b) The Company sells or otherwise transfers all or substantially all of
its assets to any other corporation or other legal person, and less
than a majority of the combined voting power of the then-outstanding
securities of such corporation or person immediately after such sale or
transfer is held in the aggregate by the holders of Common Shares
immediately prior to such sale or transfer;
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), each as promulgated pursuant to
the Exchange Act, disclosing that any person (as the term "person" is
used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has
become the beneficial owner (as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) of securities representing 20% or more of the Voting
Power;
(d) The Company files a report or proxy statement with the Securities and
Exchange Commission pursuant to the Exchange Act disclosing in response
to Form 8-K or Schedule 14A (or any successor schedule, form or report
or item therein) that a change in control of the Company has or may
have occurred or will or may occur in the future pursuant to any
then-existing contract or transaction; or
(e) If during any period of two consecutive years, individuals who at the
beginning of any such period constitute the directors of the Company
cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election by the Company's
shareholders, of each director of the Company first elected during such
period was approved by a vote of at least two-thirds of the directors
of the Company then still in office who were directors of the Company
at the beginning of any such period.
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Notwithstanding the foregoing provisions of Section 12(c) and (d) above, a
"Change in Control" shall not be deemed to have occurred for purposes of
this Plan (i) solely because (A) the Company; (B) a Subsidiary; (C) any
Company-sponsored employee stock ownership plan or other employee benefit
plan of the Company; or (D) any family member of Jacob Sapirstein
(including lineal descendants, spouses of such descendants, the lineal
descendants of any such spouses, the spouses of any such spouses' lineal
descendants and trusts [including voting trusts]) either files or becomes
obligated to file a report or proxy statement under or in response to
Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Exchange Act,
disclosing beneficial ownership by it of shares, whether in excess of 20%
of the Voting Power or otherwise, or because the Company reports that a
Change in Control of the Company has or may have occurred or will or may
occur in the future by reason of such beneficial ownership or (ii) solely
because of a Change in Control of any Subsidiary.
13. FRACTIONAL SHARES. The Company shall not be required to issue any
fractional Common Shares pursuant to this Plan. The Board may provide for
the elimination of fractions or for the settlement of fractions in cash.
14. WITHHOLDING TAXES. To the extent that the Company is required to withhold
federal, state, local or foreign taxes in connection with any payment made
or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Company for such withholding are insufficient,
it shall be a condition to the receipt of such payment or the realization
of such benefit that the Participant or such other person make arrangements
satisfactory to the Company for payment of the balance of such taxes
required to be withheld, which arrangements (in the discretion of the
Board) may include relinquishment of a portion of such benefit. The Company
and a Participant or such other person may also make similar arrangements
with respect to the payment of any taxes with respect to which withholding
is not required.
15. FOREIGN EMPLOYEES. In order to facilitate the making of any grant or
combination of grants under this Plan, the Board may provide for such
special terms for awards to Participants who are foreign nationals or who
are employed by the Company or any Subsidiary outside of the United States
of America as the Board may consider necessary or appropriate to
accommodate differences in local law, tax policy or custom. Moreover, the
Board may approve such supplements to or amendments, restatements or
alternative versions of this Plan as it may consider necessary or
appropriate for such purposes, without thereby affecting the terms of this
Plan as in effect for any other purpose, and the Secretary or other
appropriate officer of the Company may certify any such document as having
been approved and adopted in the same manner as this Plan. No such special
terms, supplements, amendments or restatements, however, shall include any
provisions that are inconsistent with the terms of this Plan as then in
effect unless this Plan could have been amended to eliminate such
inconsistency without further approval by the shareholders of the Company.
16. ADMINISTRATION OF THE PLAN.
(a) This Plan shall be administered by the Board, which may from time to
time delegate all or any part of its authority under this Plan to a
committee of the Board (or subcommittee thereof) consisting of not less
than three Non-Employee Directors appointed by the Board. A majority of
the committee (or subcommittee) shall constitute a quorum, and the
action of the members of the committee (or subcommittee) present at any
meeting at which a quorum is present, or acts unanimously approved in
writing, shall be the acts of the committee (or subcommittee). To the
extent of any such delegation, references in this Plan to the Board
shall be deemed to be references to any such committee or subcommittee.
(b) The interpretation and construction by the Board of any provision of
this Plan or of any agreement, notification or document evidencing the
grant of Option Rights, Appreciation Rights, Restricted Shares,
Deferred Shares, Performance Shares or Performance Units and any
determination by the Board pursuant to any provision of this Plan or of
any such agreement, notification or document shall be final and
conclusive. No member of the Board shall be liable for any such action
or determination made in good faith.
17. AMENDMENTS, ETC.
(a) The Board may at any time and from time to time amend this Plan in
whole or in part; provided, however, that any amendment which must be
approved by the shareholders of the Company in order to comply with
applicable law or the rules of the NASD or, if the Common Shares are
not traded on NASDAQ, the principal national securities exchange upon
which the Common Shares are traded or quoted, shall not be effective
unless and until such approval has been obtained. Presentation of this
Plan or any amendment hereof for shareholder approval shall not be
construed to limit the Company's authority to offer similar or
dissimilar benefits under other plans without shareholder approval.
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(b) The Board shall not, without the further approval of the shareholders
of the Company, authorize the amendment of any outstanding Option Right
to reduce the Option Price. Furthermore, no Option Right shall be
cancelled and replaced with awards having a lower Option Price without
further approval of the shareholders of the Company. This section 17(b)
is intended to prohibit the repricing of "underwater" Option Rights and
shall not be construed to prohibit the adjustments provided for in
Section 11 of this Plan.
(c) The Board also may permit Participants to elect to defer the issuance
of Common Shares or the settlement of awards in cash under the Plan
pursuant to such rules, procedures or programs as it may establish for
purposes of this Plan. The Board also may provide that deferred
issuances and settlements include the payment or crediting of dividend
equivalents or interest on the deferral amounts.
(d) The Board may condition the grant of any award or combination of awards
authorized under this Plan on the surrender or deferral by the
Participant of his or her right to receive a cash bonus or other
compensation otherwise payable by the Company or a Subsidiary to the
Participant.
(e) In case of termination of employment by reason of death, disability or
normal or early retirement, or in the case of hardship or other special
circumstances, of a Participant who holds an Option Right or
Appreciation Right not immediately exercisable in full, or any
Restricted Shares as to which the substantial risk of forfeiture or the
prohibition or restriction on transfer has not lapsed, or any Deferred
Shares as to which the Deferral Period has not been completed, or any
Performance Shares or Performance Units which have not been fully
earned, or of a Participant who holds Common Shares subject to any
transfer restriction imposed pursuant to Section 10(b) of this Plan,
the Board may, in its sole discretion, accelerate the time at which
such Option Right or Appreciation Right may be exercised or the time at
which such substantial risk of forfeiture or prohibition or restriction
on transfer will lapse or the time when such Deferral Period will end
or the time at which such Performance Shares or Performance Units will
be deemed to have been fully earned or the time when such transfer
restriction will terminate or may waive any other limitation or
requirement under any such award.
(f) This Plan shall not confer upon any Participant any right with respect
to continuance of employment or other service with the Company or any
Subsidiary, nor shall it interfere in any way with any right the
Company or any Subsidiary would otherwise have to terminate such
Participant's employment or other service at any time.
(g) To the extent that any provision of this Plan would prevent any Option
Right that was intended to qualify as an Incentive Stock Option from
qualifying as such, that provision shall be null and void with respect
to such Option Right. Such provision, however, shall remain in effect
for other Option Rights and there shall be no further effect on any
provision of this Plan.
18. TERMINATION. No grant shall be made under this Plan more than ten years
after the date on which this Plan is first approved by the shareholders of
the Company, but all grants made on or prior to such date shall continue in
effect thereafter subject to the terms thereof and of this Plan.