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KEY EMPLOYEE STOCK PLAN 2004
EXHIBIT A
JOHN WILEY &
SONS, INC.
2004 KEY EMPLOYEE STOCK PLAN
| 1. | Name/Purpose and Overview. This Plan shall be known as the 2004 Key Employee Stock Plan (the ?Plan?). The Plan is intended to provide the officers and other key employees of John Wiley & Sons, Inc. (the ?Company?) and of its Subsidiaries, Affiliates and certain Joint Venture Companies, upon whose judgment, initiative and efforts the Company depends for its growth and for the profitable conduct of its business, with additional incentive to promote the success of the Company, and to that end to encourage such employees to acquire or increase their proprietary interest in the Company. The Plan provides for the grant of options to purchase shares of the Company's stock, for the grant of Performance-Based Stock Awards and Performance Awards, which are contingent rights to receive shares of the Company's stock, and for the grant of shares of the Company's stock, (?Restricted Stock?). Performance-Based Stock Awards and Performance Awards shall be subject to forfeiture, in whole or in part, if the objectives established in the award are not met, or if employment is terminated during the ?Plan Cycle.? Restricted Stock shall be subject to forfeiture, in whole or in part, if employment is terminated during the ?Restricted Period? and may also be made subject to forfeiture in whole or in part if objectives established in the award are not met. | |||||||
| 2. | Shares of Stock. Subject to adjustment as provided in Paragraph 12, the aggregate number of shares of Common Stock which may be made subject to awards granted under this Plan shall not exceed 8,000,000. Any shares granted as options or stock appreciation rights shall be counted against this limit as one (1) share for every one (1) share granted. Any shares granted as awards other than options or stock appreciation rights shall be counted against this limit as two and seventeen hundredths (2.17) share for every one (1) share granted. No more than 600,000 shares of Common Stock shall be cumulatively available for grants of options, Performance-Based Stock Awards, Restricted Stock or Performance Awards in any one calendar year to any one individual. Shares subject to unexercised portions of terminated or expired stock options granted under the Plan, shares of Restricted Stock which have been forfeited, or shares included in Performance-Based Stock Awards or Performance Awards which have been forfeited or otherwise not earned shall again be available for grant under the Plan. The preceding sentence shall apply only for purposes of determining the aggregate number of shares of Common Stock available for grants of options or awards over the life of the Plan but shall not apply for purposes of determining the maximum number of shares of Common Stock available for grants of options or awards in any one calendar year to any one individual. Shares issued pursuant to the exercise of options, Restricted Stock pursuant to Performance-Based Stock Awards, or Performance Stock may be treasury shares or authorized but unissued shares. All shares granted or awarded under the Plan, whether treasury shares or authorized but unissued shares, will be charged against the total available for grant under the Plan. The holder of an option or the recipient of a Performance-Based Stock Award or Performance Award shall not have any of the rights of a shareholder with respect to the shares covered by his or her option or award until a certificate for such shares shall be issued upon the due exercise of the option or pursuant to the terms of the Performance-Based Stock Award, as the case may be. | |||||||
| 3. | Common Stock. The term ?Common Stock? as used in this Plan shall refer solely to the Class A Common Stock (par value of $1 per share) and not the Class B Common Stock. | |||||||
| 4. | Eligibility. All officers and other key employees of the Company, its Subsidiaries, Affiliates or Joint Venture Companies, are eligible to receive stock options (except that only employees of the Company and its Subsidiaries are eligible to receive incentive stock options), Performance-Based Stock Awards, Performance Awards, or Restricted Stock. The term ?Subsidiary(ies)? as used in this Plan means a company in which the Company and/or its Subsidiaries hold 50% or more of the total combined voting power; the term ?Affiliate(s)? means any company in which the Company and/or its Subsidiaries hold 10% or more (but less than 50%) of the total combined voting power; and the term ?Joint Venture Company(ies)? means any partnership, limited liability company, or joint venture in which the Company has a 10% or more interest. | |||||||
A-1
A-2 A-3 A-4 A-5 A-6 A-7 A-8 A-9 A-10
5. Administration
of the Plan. The Compensation
Committee, or such other sub-committee of not less than two ?qualified
outside directors? as the Compensation Committee may appoint (the
?Committee?), shall administer and interpret the Plan. With respect
to the administration of the Plan, in addition to the authority
specifically granted to the Committee herein, and subject to the rules
provided in the By-Laws and such rules as the Committee may prescribe,
the Committee shall have authority to adopt, amend and rescind such
rules and regulations as, in its opinion, may be advisable in the
administration of the Plan and to construe and interpret the Plan, the
rules and regulations which it may promulgate and the instruments
evidencing options and awards granted under the Plan, and to make all
other determinations deemed necessary or advisable in the administration
of the Plan. The Committee's interpretation of the Plan and of any
options issued or awards granted under it shall be final and binding
upon all persons. 6. Stock
Options a. Grant
of Options. Subject to the provisions
of the Plan, including but not limited to the provisions of
Subparagraphs (b) and (c) of this Paragraph 6, the Committee shall have
full and final authority in its discretion (i) to determine the
employees to be granted options; (ii) to determine the number of
shares of Common Stock subject to each option; (iii) to determine
the time or times at which options will be granted; (iv) to
determine the purchase price of the shares subject to each option (but
not less than fair market value on the date of grant as stated in
6.b.i); (v) to determine the time or times when or any conditions
upon which each option becomes exercisable and the duration of the
exercise period; (vi) to determine whether the option shall be an
?incentive stock option? as defined in Section 422(b) of the
Internal Revenue Code of 1986 (the ?Code?) or an option not intended
to qualify as an incentive stock option (a ?non-qualified stock
option?); and (vii) to prescribe the form or forms of the
instruments evidencing any options granted under the Plan (which forms
shall be consistent with this Plan but need not be identical), except
that each option shall be clearly identified as an incentive stock
option or a non-qualified stock option. The date of an option shall be
the date of the authorization of such grant by the Committee or such
later date as may be fixed for that purpose by the Committee at the time
of the authorization of such grant. An individual may hold more than one
option. b. Terms
of all Options. All options granted
under the Plan (including non-qualified options) shall be subject to the
following provisions: i. Purchase
Price. The purchase price of shares under each such option shall be
fixed by the Committee at not less than 100% of the fair market value of
the shares on the date of grant of such option. ii. Payment.
Shares shall be paid in full at the time the option is exercised and no
shares shall be issued until such payment has been received. Payment may
be made (A) in cash, (B) by the delivery to the Company of
shares of the Company's Common Stock (duly endorsed for transfer) valued
at fair market value on the date of exercise, or (C) by a
combination of cash and delivery of shares of the Company's Common Stock
valued as herein provided. The Committee may, from time to time,
restrict or impose limits and conditions on the use of the Company's
Common Stock for payment. iii. Stock
Appreciation Rights. Notwithstanding the foregoing Subparagraph (ii),
any non-qualified option granted under the Plan may provide the right to
exercise such option in whole or in part without any payment of the
purchase price. If an option is exercised without a payment of the
purchase price, the optionee shall be entitled to receive a payment
equal to the excess of the fair market value, on the date of exercise,
of the shares covered by the option over the total purchase price of
such shares. Such payment shall be in whole shares of Common Stock, in
cash, or partly in such shares and partly in cash as determined by the
Committee. The number of shares with respect to which any option is
exercised under this Subparagraph (iii) shall reduce the number of
shares thereafter available for exercise under the option and such
shares may not again be optioned under the Plan. iv. Ten Year
Maximum Term. Notwithstanding any other provision in this Paragraph 6,
no option granted under the Plan shall be exercisable either by the
optionee, or in the event of the optionee's death, by his or her estate
or by any other person, after the expiration of ten years from the date
of its grant, except as provided in Subparagraphs (b) (vi) or (vii).
v. Termination
of Employment Other Than by Death or Retirement at or after Age 55.
Except as otherwise expressly provided in the Plan, each option may be
exercised only while the optionee is regularly employed by the Company,
a Subsidiary, an Affiliate, or a Joint Venture Company, as the case may
be, or within three months after the optionee's employment has been
terminated (but no later than the expiration date of the option),
whether such termination was by the Company (unless such termination was
for cause) or by the optionee for any reason. If the optionee's
employment is terminated for cause (as determined by the Committee), the
option may not be exercised after the optionee's employment has been
terminated. An optionee's employment shall not be deemed to have
terminated for purposes of this Subparagraph as long as the optionee is
employed by the Company, or any Subsidiary, Affiliate or Joint Venture
Company. For purposes of non-qualified options, employment shall mean
continuous employment (either full or part time), except that leaves of
absence for such periods and purposes as may be approved by the Company
or the Subsidiary, Affiliate, or Joint Venture Company shall not be
deemed to terminate employment. If a non-qualified optionee is
permanently disabled (as described in Section 22(e)(3) of the Code)
as of the date of termination of employment, the option may be exercised
within three years after such date. The Committee may require evidence
of permanent disability, including medical examinations by physicians
selected by it. Notwithstanding the foregoing, the Committee, in its
discretion, may permit the exercise of the non-qualified option for such
period after such termination of employment as the Committee may specify
and may also increase the number of shares subject to exercise up to the
full number of shares covered by the non-qualified option. In no event
(except as hereinafter provided in the case of the death of an optionee)
may an option be exercised after the expiration date of the option. vi. Retirement
at or after Age 55. If a non-qualified optionee shall retire after
attaining 55 years of age, the option shall terminate three years after
the date of the optionee's retirement (but no later than the expiration
date of the option). If the non-qualified optionee shall die within such
three year (or shorter) period, the optionee's estate or any person who
acquires the right to exercise such option by bequest, inheritance or by
reason of the death of the optionee shall have the right to exercise the
option during such period, or during the period ending one year after
the optionee's death, if longer, to the same extent as the optionee
would have had if he or she had survived. vii. Termination
of Employment by Death. If a non-qualified optionee shall die while in
the employ of the Company or a Subsidiary, Affiliate or Joint Venture
Company the optionee's estate or any person who acquires the right to
exercise such option by bequest, inheritance or by reason of the death
of the optionee shall have the right to exercise the option within three
years from the date of the optionee's death (but not later than the
expiration date of the option or one year after the optionee's death,
whichever is later), without regard to whether the right to exercise
such option shall have otherwise accrued. viii. Non-Transferability.
No stock option shall be transferable other than by last will and
testament, or by the laws of descent and distribution. During the
optionee's lifetime, the option shall be exercisable only by the
optionee. ix. Deferral
of Delivery of Shares. The Committee (in its sole discretion) may permit
an optionee to have shares of Common Stock that otherwise would be
delivered to such optionee as a result of the exercise of an option
converted into amounts credited to a deferred compensation account
established for such optionee by the Committee as an entry on the
Company's books. Such amounts shall be determined by reference to the
fair market value of such shares of Common Stock as of the date when
they otherwise would have been delivered to such optionee. A deferred
compensation account established under this Subparagraph (b)(ix) may be
credited with interest or other forms of investment return, as
determined by the Committee. An optionee for whom such an account is
established shall have no rights other than those of a general creditor
of the Company. Such an account shall represent an unfunded and
unsecured obligation of the Company and shall be subject to the terms
and conditions of the applicable agreement between such optionee and the
Company. If the conversion of options is permitted or required, the
Committee (in its sole discretion) may establish rules, procedures and
forms pertaining to such conversion, including (without limitation) the
settlement of deferred compensation accounts established under this
Subparagraph (b)(ix).
c. Incentive
Stock Options. An option which is
designated as an ?incentive stock option? is intended to qualify as
an incentive stock option as defined in subsection (b) of Section 422
of the Code, and the provisions of this Plan and the terms of any such
option shall be interpreted accordingly. An incentive stock option may
only be issued to employees of the Company or its Subsidiaries, may only
be exercised until the date which is three months after the optionee's
employment by the Company or its Subsidiaries has been terminated
(except where such termination is by reason of disability (as described
above), where the three month period is extended to one year, or death,
where this requirement does not apply), and for purposes of incentive
stock options, employment shall mean continuous employment (either full
or part time) within the meaning of Treasury Regulation Section
1.4217(h)(2). Incentive stock options shall expire in all events after
the expiration of ten years from the date of its grant. 7. Performance-Based
Stock Awards a. Grants.
Subject to the provisions of the Plan,
including but not limited to the provisions of Subparagraphs (b), (c)
and (d) of this Paragraph 7 of the Plan, the Committee shall have
full and final authority in its discretion (a) to determine the
employees to be awarded Performance-Based Stock Awards; (b) to
determine the number of shares of Common Stock which may be issued
pursuant to each Performance-Based Stock Award; (c) to determine
the time or times at which the Performance-Based Stock Awards will be
granted; (d) to determine the Plan Cycle and Award Period
Objectives, as such terms are hereinafter defined, with respect to each
Performance-Based Stock Award; and (e) to prescribe the form or
forms of the instruments evidencing the awards under the Plan (which
forms shall be consistent with the Plan but need not be identical). b. Term of
Performance-Based Stock Awards. All
Performance-Based Stock Awards granted under the Plan shall be subject
to the following provisions: i. General.
The Committee may award Performance-Based Stock Awards which will
entitle the employee to whom the award is made to be issued shares of
Common Stock upon the expiration of the Plan Cycle if the Award Period
Objectives with respect to such Performance-Based Stock Awards specified
in the award are attained. It is intended that any Performance-Based
Stock Awards under the Plan satisfy all requirements for
?performance-based compensation? within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended. ii. Award
Period Objectives. Each fiscal year that awards are made under the Plan,
the Committee shall establish a schedule of Award Period Objectives
applicable to Awards granted in that year. A. A separate schedule of
Award Period Objectives may be established for Awards to (I) a
defined group of employees, such as the employees of a Subsidiary,
Affiliate, Joint Venture Company or division or group within the
Company, or (II) an individual employee. B. As determined by the
Committee in its sole discretion, either the granting or vesting of such
Performance-Based Stock Awards shall be based on achievement of hurdle
rates and/or growth rates in one or more business criteria that apply to
the individual participant, one or more business units, or the Company
as a whole. The business criteria shall be as follows, individually or
in combination: (I) net income; (II) earnings per share; (III) revenue
targets; (IV) net sales growth; (V) market share; (VI) operating
income; (VII) expense targets; (VIII) working capital targets;
(IX) operating margin; (X) return on equity; (XI) return
on assets; (XII) market price per share; (XIII) total return
to stockholders; (XIV) cash flow; (XV) free cash flow; (XVI) return
on investment; (XVII) earnings before interest, taxes, depreciation
and amortization; (XVIII) earnings before interest, taxes and
amortization; (XIX) global profit contribution; (XX) global
profit cash flow; (XXI) economic value added; and (XXII) objectively
quantifiable customer or constituency satisfaction. In addition, the
performance targets may include comparisons to performance of other
companies using one or more of the foregoing business criteria. The
Committee may provide in any target award that any evaluation of
performance exclude any of the following events that occurs during a
performance period: (a) asset write-downs; (b) litigation or
claim judgments or settlements; (c) the effect of changes in tax
law, accounting principles or methodology, or other laws or provisions
affecting reported results; (d) accruals for reorganization and
restructuring programs; (e) any extraordinary non-recurring items
as described in management's discussion and analysis of financial
condition and results of operations appearing in the Company's annual
report to stockholders for the applicable year; (f) acquisitions or
divestitures; (g) any extraordinary (i.e. non-required)
contributions to the Company pension plan; (h) foreign exchange
gains and losses; and (i) cash capital expenditures for facilities
acquisition or construction.
C. The Committee will
establish in writing the Award Period Objectives applicable to a given
period. Such Award Period Objectives will state, in terms of an
objective formula or standard, the method for computing the amount of
compensation payable to the participant if such Award Period Objectives
are obtained. The Committee will also establish in writing the
individual employees or class of employees to which such Award Period
Objectives apply. The Committee will establish such Award Period
Objectives and the employees to which such Award Period Objectives apply
no later than 90 days after the commencement of the relevant period. D. No Performance-Based
Stock Award will be payable to, or vest with respect to, as the case may
be, any participant for a given fiscal period until the Committee
certifies in writing that the Award Period Objectives (and any other
material terms) applicable to such period have been satisfied. E. After establishment of
an Award Period Objective, the Committee shall not revise such Award
Period Objective or increase the amount of compensation payable
thereunder (as determined in accordance with Section 162(m) of the Code)
upon the attainment of such Award Period Objective. Nothwithstanding the
preceding sentence, the Committee may reduce or eliminate the number of
shares of Common Stock or cash granted or the number of shares of Common
Stock vested upon the attainment of such Award Period Objective. F. Award Period
Objectives may be stated in terms of results at the end of the Plan
Cycle, of cumulative results during the entire Plan Cycle, in terms of
results during each fiscal year within the Plan Cycle, or any
combination of the above. G. The attainment of any
Award Period Objectives established by the Committee shall be determined
by the Committee and its determination shall be conclusive and binding
on the employee, any beneficiary of the employee, and the Company. In
making such determination, the Committee may refer to and rely upon the
certified financial statements contained in the Company's annual report
filed with the Securities and Exchange Commission, other financial
statements of the Company, relevant economic or financial indices,
reports prepared by the Company's independent public accountants or,
with respect to business objectives not stated in financial terms, upon
reports or statements of officers of the Company. iii. Termination
of Employment. If the employment of any employee to whom a
Performance-Based Stock Award is made (the ?grantee?) shall be
terminated by the Company, Subsidiary, an Affiliate, or a Joint Venture
Company, as the case may be, with or without cause, or by the grantee
for any reason during the performance period, or as result of death, the
Performance-Based Stock Award and the right to receive shares of Common
Stock which may have been earned under the Award shall be forfeited.
Notwithstanding the foregoing, in the case of termination due to death
or disability (as described above), the Committee, in its discretion,
may waive such forfeiture, or may determine that only a portion of the
Performance-Based Stock Award shall be forfeited pursuant to the
foregoing provisions of this Subparagraph. Performance-Based Stock
Awards which are not forfeited pursuant to the provisions of this
subparagraph shall remain subject to forfeiture pursuant to the terms of
the Award.
iv. Plan
Cycle. All Performance-Based Stock Awards under the Plan shall have a
Plan Cycle of not less than two fiscal years nor more than five fiscal
years. The first fiscal year of the Plan shall be the year in which the
award is made or the year following, as designated. c. Rights
under Performance-Based Stock Awards. Until
shares of Common Stock are issued pursuant to a Performance-Based Stock
Award, the grantee shall have no right to receive dividends or other
distributions with respect to such shares or to vote such shares. The
grantee's rights with respect to a Performance-Based Stock Award shall
not be transferable other than by last will and testament, or by the
laws of descent and distribution. In the event of the death of the
grantee, his or her estate or any person who acquires his or her
interest in the Performance-Based Stock Award by bequest or inheritance
or by reason of the death of the grantee, shall only have such rights,
if any, with respect to the decedent's Performance-Based Stock Award as
the Committee, pursuant to Subparagraph 7(b)(iii) may determine. d. Alternative
Cash Awards. The Committee may provide
in the terms of the Performance-Based Stock Award that a grantee of
Performance-Based Stock Awards may elect, at such time as the Committee
may specify, to receive cash in lieu of, and in an amount equal in value
to, all or part of the shares of Common Stock which would otherwise be
issued to the grantee. 8. Restricted
Stock a. Awards.
Subject to the provisions of the Plan,
the Committee shall have full and final authority in its discretion (i) to
determine the employees to be awarded shares of Common Stock as
Restricted Stock (shares subject to forfeiture); (ii) to determine
the number of shares of Common Stock which shall be issued pursuant to
each award; (iii) to determine the time or times at which the
awards will be granted; (iv) to determine whether the vesting of
the Restricted Stock will be based upon, in any manner, achievement of
performance targets; (v) to determine the period (the ?Restricted
Period?) during which the shares of Restricted Stock shall be subject
to forfeiture in whole or part; (vi) to provide or not to provide
for forfeiture of Restricted Stock in whole or in part (in addition to
forfeiture on account of termination of employment as provided in
Subparagraph 8(d)) if specified Award Period Objectives (of the kind
described in Paragraph 7(b)(ii)) are not met during the Restricted
Period; and (vii) to prescribe the form or forms of the instruments
evidencing the awards of Restricted Stock under the Plan (which forms
shall be consistent with the Plan but need not be identical). b. Restricted
Period. During the Restricted Period
the grantee shall not be permitted to sell, transfer, pledge or assign
the shares of Restricted Stock, except that such shares may be used, if
the award permits, to pay the option price of any option granted under
the Plan (or any prior stock option plan of the Company), provided an
equal number of shares delivered to the optionee shall carry the same
restrictions and be subject to the same provisions regarding forfeiture
as the shares so used. c. Death
or Permanent Disability. Shares of
Restricted Stock shall not be forfeited as a result of the grantee's
death or his or her termination of employment by reason of permanent
disability, as determined by the Committee. The Committee may require
medical evidence of permanent disability, including medical examinations
by physicians selected by it. Such shares shall remain subject to
forfeiture if the Award Period Objectives, if any, specified in the
award are not met. d. Termination
of Employment. Shares of Restricted
Stock shall be forfeited and revert to the Company upon the grantee's
termination of employment during the Restricted Period for any reason
other than death or permanent disability, except to the extent the
Committee, in its discretion, determines that a lesser number of shares
of Restricted Stock or no shares of Restricted Stock shall be forfeited
pursuant to the foregoing provisions of this subparagraph (d).
e. Stock
Certificates. Stock certificates for
Restricted Stock shall be registered in the name of the grantee but
shall be appropriately legended and returned to the Company by the
grantee, together with a stock power, endorsed in blank by the grantee.
The grantee shall be entitled to vote shares of Restricted Stock and
shall be entitled to all dividends paid thereon, except that dividends
paid in Common Stock or other property (other than cash) shall also be
subject to the same restrictions. f. Lapse
of Restrictions. Restricted Stock shall
become free of the foregoing restrictions upon expiration of the
applicable Restricted Period and the Company shall deliver new
certificates with the restrictive legend deleted evidencing such stock. 9. Performance
Awards a. Performance
Awards may be granted at any time and from time to time, as shall be
determined by the Committee. The Committee shall have complete
discretion in determining the number, amount and timing of such
Performance Awards granted to each employee. Such Performance Awards may
be in the form of shares of Common Stock or cash. Performance Awards may
be granted as either long-term or short-term incentives. Performance
targets may be based upon, without limitation, Company-wide, divisional
and/or individual performance. b. The
Committee shall have the authority at any time to make adjustments to
performance targets for any outstanding Performance Awards which the
Committee deems necessary or desirable unless at the time of
establishment of such targets the Committee shall have precluded its
authority to make such adjustments. c. Payment of
earned Performance Awards shall be made in accordance with terms and
conditions prescribed or authorized by the Committee. 10. Change
of Control a. Definitions: i. A
?Change of Control? shall be deemed to have occurred if (a) any
?Person? (as hereinafter defined) hereafter becomes the beneficial
owner (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the ?Exchange Act?)), directly or indirectly, of
25% or more of the Company's then outstanding shares of Class B
Common Stock and the number of shares of Class B Common Stock so
owned is equal to or greater than the number of shares of Class B
Common Stock then owned by any other Person, or (b) individuals who
constituted the Board on January 1, 1991 (the ?Incumbent
Board?) cease for any reason to constitute at least 64% of the full
Board. Any person becoming a director subsequent to such date whose
election or nomination for election by the Company's shareholders was
approved by a vote of at least 64% of the directors comprising the
Incumbent Board (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee for
director, without objection to such nomination) shall, for purposes of
this clause (b), be considered as though such person were a member of
the Incumbent Board. ii. The term
?Person? shall mean and include any individual, corporation,
partnership, group, association or other ?person,? as such term is
used in Section 14(d) of the Exchange Act, other than the Company, an
affiliate of the Company, any employee stock ownership plan, or other
employee benefit plan(s) sponsored or maintained by the Company or any
affiliate, except that for purposes of clause (a) of Subparagraph
10(a)(i), a Person shall not be deemed to be a new or different Person
by reason of a change or changes in the composition of the ?persons?
constituting a Person unless a majority of the Incumbent Board (at a
meeting of the directors or by written action signed by such majority)
determines that a Change of Control has occurred. b. Effect
on Stock Options. Notwithstanding any
other provision to the contrary, upon a Change of Control (as
hereinabove defined), all options granted under the Plan shall become
immediately exercisable up to the full number of shares covered by the
option. In addition, following a Change of Control, the optionee may
elect to surrender such option (in whole or in part) and to receive in
exchange for the option (or the part thereof) surrendered within five
days after such surrender, an amount in cash equal to the number of
shares covered by the option (or the part thereof) surrendered
multiplied by the excess of (a) the higher of (x) the closing price for
the shares covered by the option (or the part thereof) surrendered as
reported by the New York Stock Exchange (or any exchange on which the
shares may be listed) on the date of such surrender or, if no shares
were traded on that date, on the next preceding date on which the shares
were traded, or (y) the highest per share price for shares of the same
class actually paid in connection with any such Change of Control, over
(b) the exercise price of the shares covered by the option (or the part
thereof) surrendered. The optionee must exercise the election granted
herein within 60 days after such Change of Control.
c. Effect
on Performance-Based Stock Awards and Performance Awards. The
Committee shall specify in the award whether, and to what extent, in the
event of a Change of Control, an employee shall be issued shares of
Common Stock or cash with regard to Performance-Based Stock Awards and
Performance Awards held by such employee. d. Effect
on Restricted Stock. Following a Change
of Control, all shares of Restricted Stock which would otherwise remain
subject to the restrictions provided for in the Award shall be free of
such restrictions. 11. Legal
Requirements. The exercise of an
option, payment by delivery of the Company's Common Stock, the issuance
of shares pursuant to such exercise or pursuant to a Performance-Based
Stock Award or Performance Award, and the subsequent transfer of shares
of Restricted Stock shall be conditioned upon compliance with the
listing requirements of any securities exchange upon which the Common
Stock of the Company may be listed, the requirements of the Securities
Act of 1933, as amended, and the Exchange Act, and the requirements of
applicable state laws relating to authorization, issuance or sale of
securities, and the Committee may take such measures as it deems
desirable to secure compliance with the foregoing. 12. Change
in Capital Stock. The total number of
shares for which options may be granted under the Plan, the number of
shares of Common Stock which may be awarded under the Plan generally or
to any individual (directly or pursuant to Performance-Based Stock Award
or Performance Award), the number of shares covered and the purchase
price of any option granted under the Plan, the number of shares covered
by a Performance-Based Stock Award or a Performance Award, or the number
of shares of Restricted Stock which are subject to forfeiture, and the
Award Period Objectives or performance targets shall be appropriately or
equitably adjusted for any change in the outstanding shares of Common
Stock of the Company through recapitalization, stock split, stock
dividend or other change in the corporate structure, or through merger
or consolidation in which the Company is the surviving corporation;
provided, however, that any such arithmetic adjustment to a
Performance-Based Stock Award or Award Period Objective shall not cause
the amount of compensation payable thereunder to be increased from what
otherwise would have been due upon attainment of the unadjusted award or
objective. Such adjustments and the manner of application thereof shall
be determined by the Committee in its discretion. Any such adjustment
may provide for the elimination of any fractional share, which might
otherwise become subject to an option or to be issued pursuant to a
Performance-Based Stock Award, Performance Award, or Restricted Stock. 13. Dissolution,
Liquidation or Merger. In the event of
dissolution or liquidation of the Company, or a merger or consolidation
in which the Company is not the surviving corporation, or in the event
of a sale of all or substantially all of the assets of the Company, any
outstanding options hereunder shall terminate, provided that each
optionee shall, in such event, have the right upon the adoption by the
Board of Directors or shareholders of the Company of a plan or
resolutions approving or authorizing such dissolutions, liquidation, or
merger, consolidation in which the Company is not the surviving
corporation, or such sale of assets, to exercise his or her option in
whole or in part, without regard to whether the right to exercise such
option shall have otherwise accrued. The Committee may specify in each
Performance Award, or may thereafter determine whether, and to what
extent, the employee shall be issued shares of Common Stock with respect
to such award in the event such plan or resolutions are adopted. In the
event such plan or resolutions are adopted, all shares of Restricted
Stock shall fully vest and no longer be subject to forfeiture. 14. Right
to Terminate Employment; Benefits Under Other Plans. The
right of the Company or any of its Subsidiaries, Affiliates or Joint
Venture Companies, to terminate or change the employment of any employee
at any time with or without cause shall not be restricted by this Plan
or the grant of an option or the grant of Performance-Based Stock Awards
or Performance Awards or Restricted Stock hereunder. No employee shall
be deemed to receive compensation or realize earnings for purposes of
determining benefits under any pension, profit sharing, life insurance,
salary continuation or other employee benefit plan as a result of
receiving or exercising an option pursuant to the Plan or as a result of
receiving or retaining a Performance-Based Stock Award, Restricted Stock
or cash in lieu thereof.
15. Competition
with the Company. a. The
Committee, in its discretion, may include as a term of any employee's
option agreement a provision that, if the employee voluntarily
terminates his or her employment with the Company or its Subsidiaries,
Affiliates, or Joint Venture Companies, or is terminated for cause (as
determined by the Committee), and within a period of six months after
such termination, shall directly or indirectly, engage in a competing
activity (as defined hereinafter), the employee shall be required to
remit to the Company, with respect to the exercise of any option by the
employee on or after the date six months prior to such termination an
amount equal to the excess of: i. the fair
market value per shares of the Company's Common Stock on the date of
exercise of such option multiplied by the number of shares with respect
to which the option is exercised, over ii. the
aggregate purchase price of such number of shares. b. The
Committee may, at its discretion, as a condition of any award to an
employee of a Performance-Based Stock Award, Performance Award or
Restricted Stock, provide that, if the employee voluntarily terminates
his or her employment with the Company or is terminated for cause (as
determined by the Committee) and within a period of six months after
such termination shall, directly or indirectly, engage in a competing
activity (as hereinafter defined), the employee shall be required to
remit to the company, with respect to any shares of Common Stock issued
or if issued subject to any conditions, with respect to any shares which
became fully vested on or after the date six months prior to such
termination, the fair market value of such shares on the date of
issuance or vesting, applicable. c. Any
remittance to the Company required by Subparagraphs (b) or (c) shall be
payable in cash or by delivery of shares of Common Stock of the Company
duly assigned to the Company or by a combination of the foregoing. Any
such shares so delivered shall be deemed to have a value per shares
equal to the fair market value of the shares on such date of issuance or
vesting. d. Neither of
the foregoing provisions of this Paragraph 15 shall apply in the event
of a ?Change of Control? as defined in Subparagraph 10(a) or in the
event of a dissolution, liquidation, merger or consolidation referred to
in Paragraph 13. e. For
purposes of this Paragraph 15 (except as otherwise defined in the option
agreement) an employee is deemed to be ?engaged in a competing
activity? if he or she owns, manages, controls, is employed by, or
otherwise engages in or assists another to engage in any activity or
which competes with any business or activity of the Company in which the
employee was engaged or involved, at the time of the employee's
termination. 16. Withholding
Tax. The Committee may adopt and apply
rules that will ensure that it will be able to comply with applicable
provisions of any federal, state or local law relating withholding of
tax on amounts includible in the employee's income, including but not
limited to the amount, if any, includible in income on the exercise of
an option or the expiration of the Plan Cycle or the Restricted Period.
A grantee of a Performance-Based Stock Award, Performance Award or
Restricted Stock shall be required to pay withholding taxes to the
Company; in the case of Restricted Stock upon the expiration of the
Restricted Period or such earlier date as may be required by an election
pursuant to Section 83 of the Code, and in the case of a
Performance-Based Stock Award or Performance Award upon issuance of the
Common Stock or cash. The grantee of a non-qualified option shall be
required to pay withholding taxes to the Company upon the exercise of
the option. The Company shall have the right in its discretion, with the
consent of the grantee, and subject to compliance with any applicable
rules and regulations of the Securities and Exchange Commission, to
satisfy the withholding tax liability arising from the exercise of a
non-qualified option, the issuance of stock arising from a
Performance-Based Stock Award, or a Performance Award, or the release of
Restricted Stock, by retaining shares of Common Stock or cash otherwise
deliverable to the grantee pursuant to procedures approved by the
Committee.
17. Modification
and Termination of Plan. The Board of
Directors may at any time terminate, in whole or in part, or from time
to time modify the Plan. Notwithstanding the foregoing, the Board of
Directors shall not, without the approval of the shareholders, increase
the number of shares of stock available for grants of options or grants
of awards under the Plan or the number of shares of available for grants
of options or awards in any one calendar year to any one individual
under the Plan; disqualify any incentive stock options granted under the
Plan; increase the maximum amount which can be paid to an individual
under the Plan; change the types of business criteria on which
Performance-Based Stock Awards are to be based under the Plan; or modify
the requirements as to eligibility for participation in the Plan. Notwithstanding
any such modification of the Plan, any option or award theretofore
granted to an employee under the Plan shall not be affected except
pursuant to Paragraph 18, below. 18. Modification
of Options and Awards. Subject to all
of the provisions of Plan, the Committee may at any time and from time
to time, with the consent of the optionee or grantee, amend any stock
options or awards theretofore granted under the Plan provided that the
option or award as amended, together with any other consideration
provided, is reasonably deemed to be of equivalent economic value to the
option or award prior to such amendment, and further provided that in no
event will a stock option be repriced. 19. Effective
and Termination Dates. The Plan shall
be effective as of June 17, 2004, the date it was adopted by the
Committee and ratified by the Board of Directors, but shall be subject
to the approval of the shareholders of the Company. The Plan shall be
submitted for approval of the shareholders at the first annual meeting
of shareholders held subsequent to the adoption of the Plan. If at said
meeting or adjournment thereof the shareholders do not approve the Plan,
the Plan shall terminate and any Stock Options, Performance-Based Stock
Awards, Performance Awards or Restricted Stock granted under this Plan
shall be forfeited. No awards shall be granted under the Plan after five
(5) years after the Effective Date.
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