<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 19, 1999.
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Ohio 34-1723097
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
3300 Enterprise Parkway, Beachwood, Ohio 44122
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
--------
AMENDED AND RESTATED
1998 DEVELOPERS DIVERSIFIED REALTY CORPORATION
EQUITY-BASED AWARD PLAN
(Full title of the plan)
--------
SCOTT A. WOLSTEIN, PRESIDENT
Developers Diversified Realty Corporation
3300 Enterprise Parkway
Beachwood, Ohio 44122
(Name and address of agent for service)
(216) 755-5500
(Telephone number, including area code, of agent for service)
--------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Title of Amount Proposed maximum Proposed maximum Amount of
securities to be offering aggregate registration
to be registered price per offering fee(1)
registered unit(1) price(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares,
Without par
Value 2,000,000 Shares $15.375 $30,750,000 $8,549
====================================================================================================================================
</TABLE>
(1) The registration fee has been calculated pursuant to Rule 457(c) and
(h) based on the average of the high and low sale prices on April 15,
1999 of the Registrant's Common Shares as reported on the New York
Stock Exchange.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed in (a) through (c) below are incorporated by
reference in this Registration Statement. All documents filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), subsequent to the date of the filing of
this Registration Statement and prior to the filing of a post-effective
amendment that indicates that all securities registered hereunder have been
sold, or that deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of the filing of such documents.
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998;
(b) The Company's Current Report on Form 8-K filed on March 8, 1999;
and
(c) The description of the Company's Common Shares contained in the
Company's Registration Statement on Form 8-A dated January 26,
1993.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The legality of the Common Shares offered hereby has been passed upon
for the Company by Baker & Hostetler LLP, Cleveland, Ohio. Albert T. Adams, a
director of the Company, is a partner of Baker & Hostetler LLP.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Ohio Revised Code ("Ohio Code") authorizes Ohio corporations to
indemnify officers and directors from liability if the officer or director acted
in good faith and in a manner reasonably believed by the officer or director to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal actions, if the officer or director had no reason to believe his
action was unlawful. In the case of an action by or on behalf of a corporation,
indemnification may not be made (i) if the person seeking indemnification is
adjudged liable for negligence or misconduct, unless the court in which such
action was brought determines such person is fairly and reasonably entitled to
indemnification, or (ii) if liability asserted against such person concerns
certain unlawful distributions. The indemnification provisions of the Ohio Code
require indemnification if a director or officer has been successful on the
merits or otherwise in defense of any action, suit or proceeding that he or she
was a party to by reason of the fact that he or she is or was a director or
officer of the corporation. The indemnification authorized under Ohio law is not
exclusive and is in addition to any other rights granted to officers and
directors under the articles of incorporation or code of regulations of the
corporation or any agreement between officers and directors and the corporation.
A corporation may purchase and maintain insurance or furnish similar protection
on behalf of any officer or director against any liability asserted against him
and incurred by him in his capacity, or arising out of his status, as an officer
or director, whether or not the corporation would have the power to indemnify
him against such liability under the Ohio Code.
The Registrant's Code of Regulations provides for the indemnification
of directors and officers of the Registrant to the maximum extent permitted by
Ohio law as authorized by the Board of Directors of the Registrant and for the
advancement of expenses incurred in connection with the defense of any action,
suit or proceeding that he or she was a party to by reason of the fact that he
or she is or was a director or officer of the Registrant upon the receipt of an
undertaking to repay such amount unless it is ultimately determined that the
director or officer is entitled to indemnification.
1
<PAGE> 3
The Registrant maintains a directors' and officers' insurance policy
which insures the officers and directors of the Registrant from claims arising
out of an alleged wrongful act by such persons in their respective capacities as
officers and directors of the Registrant, subject to certain exceptions.
The Registrant has entered into indemnification agreements with its
officers and directors which provide for indemnification to the fullest extent
permitted under Ohio law.
ITEM 8. EXHIBITS.
Exhibit Number Description of Exhibit
- -------------- ----------------------
4.01 Amended and Restated Articles of
Incorporation of Developers Diversified
Realty Corporation(1)
4.02 Code of Regulations of Developers
Diversified Realty Corporation, as
amended(2)
5.01 Opinion of Baker & Hostetler LLP
23.01 Consent of PricewaterhouseCoopers LLP
23.02 Consent of Baker & Hostetler LLP (included
in Exhibit 5.01 hereto)
24.01 Powers of Attorney (included at page II-4)
99.01 Amended and Restated 1998 Developers
Diversified Realty Corporation Equity-Based
Award Plan
- --------------
(1) Incorporated by reference from the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended September 30, 1998.
(2) Incorporated by reference from the Registrant's Annual Report on Form 10-K
filed on March 31, 1999 for the fiscal year ended December 31, 1998.
ITEM 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement: (i) to include any prospectus
required by Section 10(a)(3) of the Securities Act of
1933 (the "Securities Act"); (ii) to reflect in the
prospectus any facts or events arising after the
effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the Registration Statement; notwithstanding the
foregoing, any increase or decrease in the volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price
2
<PAGE> 4
represent no more than a 20% change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective Registration Statement; (iii) to include
any material information with respect to the plan of
distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement; provided,
however, that clauses (i) and (ii) do not apply if
the information required to be included in a
post-effective amendment by those clauses is
contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered herein,
and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
The undersigned Registrant further undertakes that, for the purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 6 above or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cleveland, State of Ohio, on this 19th day of April,
1999.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
By /s/ SCOTT A. WOLSTEIN
-------------------------------------------------------
Scott A. Wolstein, Chairman of the Board, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Scott A. Wolstein, James A.
Schoff and Albert T. Adams, or any one of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all pre- and post-effective amendments to this
Registration Statement and to sign any Registration Statements and amendments
thereto for the same offering pursuant to Rule 462(b) under the Securities Act
of 1933, and to file the same, with all exhibits hereto, and other documents in
connection herewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES
INDICATED ON THIS 19TH DAY OF APRIL, 1999.
<TABLE>
<S> <C>
/s/ SCOTT A. WOLSTEIN Chairman of the Board, President, Chief Executive
- --------------------------------- Officer and Director (Principal Executive Officer)
Scott A. Wolstein
/s/ JAMES A. SCHOFF Vice Chairman of the Board, Chief Investment Officer
- --------------------------------- and Director
James A. Schoff
/s/ WILLIAM H. SCHAFER Vice President and Chief Financial Officer (Principal
- --------------------------------- Financial Officer and Principal Accounting Officer)
William H. Schafer
/s/ WILLIAM N. HULETT III Director
- ---------------------------------
William N. Hulett III
Director
- ---------------------------------
Ethan Penner
</TABLE>
4
<PAGE> 6
<TABLE>
<S> <C>
/s/ ALBERT T. ADAMS Director
- ---------------------------------
Albert T. Adams
/s/ BARRY A. SHOLEM Director
- ---------------------------------
Barry A. Sholem
Director
- ---------------------------------
Dean S. Adler
</TABLE>
5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<S> <C>
4.01 Amended and Restated Articles of Incorporation of Developers Diversified Realty Corporation(1)
4.02 Code of Regulations of Developers Diversified Realty Corporation, as amended(2)
5.01 Opinion of Baker & Hostetler LLP
23.01 Consent of PricewaterhouseCoopers LLP
23.02 Consent of Baker & Hostetler LLP (included in Exhibit 5.01 hereto)
24.01 Powers of Attorney (included at page II-4)
99.01 Amended and Restated 1998 Developers Diversified Realty Corporation Equity-Based Award Plan
</TABLE>
- ------------
(1) Incorporated by reference from the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 1998.
(2) Incorporated by reference from the Registrant's Annual Report on Form
10-K filed on March 31, 1999 for the fiscal year ended December 31,
1998.
6
<PAGE> 1
Exhibit 5.01
April 19, 1999
Developers Diversified Realty Corporation
3300 Enterprise Parkway
Beachwood, Ohio 44122
Re: DEVELOPERS DIVERSIFIED REALTY CORPORATION
AMENDED AND RESTATED 1998 EQUITY-BASED AWARD PLAN
-------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Developers Diversified Realty
Corporation, an Ohio corporation (the "Company"), in connection with the
Company's Registration Statement on Form S-8 (the "Registration Statement")
being filed under the Securities Act of 1933, as amended (the "Act"), relating
to the offering of up to 2,000,000 Common Shares, without par value (the "Common
Shares"), of the Company pursuant to the Developers Diversified Realty
Corporation Amended and Restated 1998 Equity-Based Award Plan (the "Plan").
We have examined the Plan and such documents, records and
matters of law as we have deemed necessary for purposes of this opinion and,
based solely thereon, we are of the opinion that the Common Shares available for
issuance under the Plan, when issued, delivered and paid for pursuant to the
Plan, will be duly authorized, validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5
to the Registration Statement and to the reference to our firm in Item 5 of Part
II to the Registration Statement. In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ Baker & Hostetler LLP
Baker & Hostetler LLP
<PAGE> 1
Exhibit 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of our report dated March 4, 1999, which appears on page
F-2 of the Developers Diversified Realty Corporation's Annual Report on Form
10-K for the year ended December 31, 1998.
PricewaterhouseCoopers LLP
Cleveland, Ohio
April 19, 1999
<PAGE> 1
Exhibit 99.01
AMENDED AND RESTATED
1998 DEVELOPERS DIVERSIFIED REALTY CORPORATION
EQUITY-BASED AWARD PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Amended and Restated 1998 Developers
Diversified Realty Corporation Equity-Based Award Plan (the "Plan") is to enable
Developers Diversified Realty Corporation (the "Company") and its Subsidiaries
(as defined below) to attract, retain and reward employees of the Company and
its Subsidiaries and strengthen the mutuality of interests between those
employees and the Company's shareholders by offering the employees equity or
equity-based incentives thereby increasing their proprietary interest in the
Company's business and enhancing their personal interest in the Company's
success.
For purposes of the Plan, the following terms are defined as
follows:
(a) "Affiliate" means any entity (other than the Company and
any Subsidiary) that is designated by the Board as a
participating employer under the Plan.
(b) "Award" means any award of Stock Options, Share
Appreciation Rights, Restricted Shares, Deferred Shares, Share
Purchase Rights or Other Share-Based Awards under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" has the meaning set forth in Section
11(b).
(e) "Change in Control Price" has the meaning set forth in
Section 11(d).
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
(g) "Committee" means the Granting Committee of the Board of
the Company.
(h) "Company" means Developers Diversified Realty Corporation,
an Ohio corporation, or any successor corporation.
(i) "Deferred Shares" means an Award of the right to receive
Shares at the end of a specified deferral period granted
pursuant to Section 8.
(j) "Disability" means a permanent and total disability as
defined in Section 22(e)(3) of the Code.
(k) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(l) "Fair Market Value" means, as of a given date, (in order
of applicability): (i) the closing price of a Common Share on
the principal exchange on which the
<PAGE> 2
Common Shares are then trading, if any, on the day immediately
prior to such date, or if Common Shares were not traded on the
day previous to such date, then on the next preceding trading
day during which a sale occurred; or (ii) if Common Shares are
not traded on an exchange but are quoted on NASDAQ or a
successor quotation system, (A) the last sale price (if Common
Shares are then listed as a National Market Issue under the
NASD National Market System) or (B) if Common Shares are not
then so listed, the mean between the closing representative
bid and asked prices for Common Shares on the day previous to
such date as reported by NASDAQ or such successor quotation
system; or (iii) if Common Shares are not publicly traded on
an exchange and not quoted on NASDAQ or a successor quotation
system, the mean between the closing bid and asked prices for
Common Shares, on the day previous to such date, as determined
in good faith by the Committee; or (iv) if Common Shares are
not publicly traded, the fair market value established by the
Committee acting in good faith.
(m) "Incentive Stock Option" means any Stock Option intended
to be and designated as, and that otherwise qualifies as, an
"Incentive Stock Option" within the meaning of Section 422 of
the Code or any successor section thereto.
(n) "Non-Qualified Stock Option" means any Stock Option that
is not an Incentive Stock Option.
(o) "Other Share-Based Awards" means an Award granted pursuant
to Section 10 that is valued, in whole or in part, by
reference to, or is otherwise based on, Shares.
(p) "Outside Director" has the meaning set forth in Section
162(m) of the Code and the regulations promulgated thereunder.
(q) "Plan" means the Amended and Restated 1998 Developers
Diversified Realty Corporation Equity-Based Award Plan, as
amended from time to time.
(r) "Potential Change in Control" has the meaning set forth in
Section 11(c).
(s) "Restricted Shares" means an Award of Shares that is
granted pursuant to Section 7 and is subject to restrictions.
(t) "Section 16 Participant" means a participant under the
Plan who is subject to Section 16 of the Exchange Act.
(u) "Share Appreciation Right" means an Award of a right to
receive an amount from the Company that is granted pursuant to
Section 6.
(v) "Shares" means the Common Shares, without par value, of
the Company.
(w) "Stock Option" or "Option" means any option to purchase
Shares (including Restricted Shares and Deferred Shares, if
the Committee so determines) that is granted pursuant to
Section 5.
(x) "Share Purchase Right" means an Award of the right to
purchase Shares that is granted pursuant to Section 9.
- --------------------------------------------------------------------------------
Page 2
<PAGE> 3
(y) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with
the Company if each of the corporations (other than the last
corporation in the unbroken chain) owns stock possessing 50%
or more of the total combined voting power of all classes of
stock in one of the other corporations in that chain.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee
shall consist of not less than three directors of the Company, all of whom shall
be Outside Directors. Those directors shall be appointed by the Board and shall
serve as the Committee at the pleasure of the Board. The functions of the
Committee specified in the Plan shall be exercised by the Board if and to the
extent that no Committee exists that has the authority to so administer the
Plan.
The Committee shall have full power to interpret and
administer the Plan and full authority to select the individuals to whom Awards
will be granted and to determine the type and amount of any Award to be granted
to each participant, the consideration, if any, to be paid for any Award, the
timing of each Award, the terms and conditions of any Award granted under the
Plan, and the terms and conditions of the related agreements that will be
entered into with participants. As to the selection of and grant of Awards to
participants who are not executive officers of the Company or any Subsidiary or
Affiliate, or Section 16 Participants, the Committee may delegate its
responsibilities to members of the Company's management in any manner consistent
with applicable law.
The Committee shall have the authority to adopt, alter and
repeal such rules, guidelines and practices governing the Plan as it shall, from
time to time, deem advisable; to interpret the terms and provisions of the Plan
and any Award issued under the Plan (and any agreement relating thereto); to
direct employees of the Company or other advisors to prepare such materials or
perform such analyses as the Committee deems necessary or appropriate; and
otherwise to supervise the administration of the Plan.
Any interpretation or administration of the Plan by the
Committee, and all actions and determinations of the Committee, shall be final,
binding and conclusive on the Company, its shareholders, Subsidiaries,
Affiliates, all participants in the Plan, their respective legal
representatives, successors and assigns, and all persons claiming under or
through any of them. No member of the Board or of the Committee shall incur any
liability for any action taken or omitted, or any determination made, in good
faith in connection with the Plan.
SECTION 3. SHARES SUBJECT TO THE PLAN.
(a) Aggregate Shares Subject to the Plan. Subject to
adjustment as provided in Section 3(c), the total number of
Shares reserved and available for Awards under the Plan is
2,000,000. Any Shares issued hereunder may consist, in whole
or in part, of authorized and unissued shares or treasury
shares.
(b) Forfeiture or Termination of Awards of Shares. If any
Shares subject to any Award granted hereunder are forfeited or
an Award otherwise terminates or expires without the issuance
of Shares, the Shares subject to that Award shall again be
available for distribution in connection with future Awards
under the Plan as set forth in Section 3(a), unless the
participant who had been awarded those forfeited Shares or the
expired or terminated Award has theretofore received dividends
or other benefits of ownership with respect to those
- --------------------------------------------------------------------------------
Page 3
<PAGE> 4
Shares. For purposes hereof, a participant shall not be deemed
to have received a benefit of ownership with respect to those
Shares by the exercise of voting rights, or by the
accumulation of dividends that are not realized because of the
forfeiture of those Shares or the expiration or termination of
the related Award without issuance of those Shares.
(c) Adjustment. In the event of any merger, reorganization,
consolidation, recapitalization, share dividend, share split,
combination of shares or other change in corporate structure
of the Company affecting the Shares, such substitution or
adjustment shall be made in the aggregate number of Shares
reserved for issuance under the Plan, in the number and option
price of Shares subject to outstanding options granted under
the Plan, in the number and purchase price of Shares subject
to outstanding Share Purchase Rights granted under the Plan,
in the number of Share Appreciation Rights granted under the
Plan and in the number of Shares subject to Restricted Share
Awards, Deferred Share Awards and any other outstanding Awards
granted under the Plan as may be approved by the Committee, in
its sole discretion, but the number of Shares subject to any
Award shall always be a whole number. Any fractional Shares
shall be eliminated.
(d) Annual Award Limit. No participant may be granted Stock
Options or other Awards under the Plan with respect to an
aggregate of more than 500,000 Shares (subject to adjustment
as provided in Section 3(c) hereof) during any calendar year.
SECTION 4. ELIGIBILITY.
Grants may be made from time to time to those officers and
employees of the Company, and of its Subsidiaries and Affiliates, who are
designated by the Committee in its sole and exclusive discretion. Eligible
persons may include, but shall not necessarily be limited to, officers of the
Company, any Subsidiary and/or any Affiliate, excluding members of the
Committee; however, Stock Options intended to qualify as Incentive Stock Options
shall be granted only to eligible persons while actually employed by the Company
or a Subsidiary. The Committee may grant more than one Award to the same
eligible person. No Award shall be granted to any eligible person during any
period of time when such eligible person is on a leave of absence.
SECTION 5. STOCK OPTIONS.
(a) Grant. Stock Options may be granted alone, in addition to
or in tandem with other Awards granted under the Plan or cash
awards made outside the Plan. The Committee shall determine
the individuals to whom, and the time or times at which,
grants of Stock Options will be made, the number of Shares
purchasable under each Stock Option, and the other terms and
conditions of the Stock Options in addition to those set forth
in Sections 5(b) and 5(c). Any Stock Option granted under the
Plan shall be in such form as the Committee may from time to
time approve.
Stock Options granted under the Plan may be of two types which
shall be indicated on their face: (i) Incentive Stock Options
and (ii) Non-Qualified Stock Options. Subject to Section 5(c),
the Committee shall have the authority to grant to any
participant Incentive Stock Options, Non-Qualified Stock
Options or both types of Stock Options.
(b) Terms and Conditions. Options granted under the Plan shall
be evidenced by an agreement ("Option Agreements"), shall be subject to
the following terms and conditions and shall
- --------------------------------------------------------------------------------
Page 4
<PAGE> 5
contain such additional terms and conditions, not inconsistent with the
terms of the Plan, as the Committee shall deem desirable:
(1) Option Price. The option price per share of
Shares purchasable under a Non-Qualified Stock Option or an
Incentive Stock Option shall be determined by the Committee at
the time of grant and shall be not less than 100% of the Fair
Market Value of the Shares at the date of grant (or, with
respect to an Incentive Stock Option, 110% of the Fair Market
Value of the Shares at the date of grant in the case of a
participant who at the date of grant owns Shares possessing
more than 10% of the total combined voting power of all
classes of stock of the Company or its parent or Subsidiary
corporations (as determined under Sections 424(d), (e) and (f)
of the Code)).
(2) Option Term. The term of each Stock Option shall
be determined by the Committee and may not exceed ten years
from the date the Option is granted (or, with respect to an
Incentive Stock Option, five years in the case of a
participant who at the date of grant owns Shares possessing
more than 10% of the total combined voting power of all
classes of stock of the Company or its parent or Subsidiary
corporations (as determined under Sections 424(d), (e) and (f)
of the Code)).
(3) Exercise. Stock Options shall be exercisable at
such time or times and shall be subject to such terms and
conditions as shall be determined by the Committee at or after
grant; but, except as provided in Section 5(b)(6) and Section
11, unless otherwise determined by the Committee at or after
grant, no Stock Option shall be exercisable prior to six
months and one day following the date of grant. If any Stock
Option is exercisable only in installments or only after
specified exercise dates, the Committee may waive, in whole or
in part, such installment exercise provisions, and may
accelerate any exercise date or dates, at any time at or after
grant, based on such factors as the Committee shall determine
in its sole discretion.
(4) Method of Exercise. Subject to any installment
exercise provisions that apply with respect to any Stock
Option, and the six month and one day holding period set forth
in Section 5(b)(3), that Stock Option may be exercised in
whole or in part, at any time during the Option period, by the
holder thereof giving to the Company written notice of
exercise specifying the number of Shares to be purchased.
That notice shall be accompanied by payment in full
of the Option price of the Shares for which the Option is
exercised, in cash or Shares or by check or such other
instrument as the Committee may accept. The value of each such
Share surrendered or withheld shall be 100% of the Fair Market
Value of the Shares on the date the option is exercised.
No Shares shall be issued on an exercise of an Option
until full payment has been made. A participant shall not have
rights to dividends or any other rights of a shareholder with
respect to any Shares subject to an Option unless and until
the participant has given written notice of exercise, has paid
in full for those Shares, has given, if requested, the
representation described in Section 14(a), and those Shares
have been issued to him.
(5) Non-Transferability of Options. No Stock Option
shall be transferable by any participant other than by will or
by the laws of descent and distribution or pursuant to a
qualified domestic relations order (as defined in the Code or
the Employment Retirement Income Security Act of 1974, as
amended) except that, if so provided in the Option Agreement,
the participant may transfer the Option, other than an
Incentive Stock Option,
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during his lifetime to one or more members of his family, to
one or more trusts for the benefit of one or more of his
family, or to a partnership or partnerships of members of his
family, provided that no consideration is paid for the
transfer and that the transfer would not result in the loss of
any exemption under Rule 16b-3 of the Exchange Act with
respect to any Option. The transferee of an Option will be
subject to all restrictions, terms and conditions applicable
to the Option prior to its transfer, except that the Option
will not be further transferable by the transferee other than
by will or by the laws of descent and distribution.
(6) Termination of Employment
(i) Termination by Death.
Subject to Section 5(c), if any participant's
employment with the Company or any Subsidiary or
Affiliate terminates by reason of death, any Stock
Option held by that participant shall become
immediately and automatically vested and exercisable.
If termination of a participant's employment is due
to death, then any Stock Option held by that
participant may thereafter be exercised for a period
of one year (or such other period as the Committee
may specify at or after grant) from the date of
death. Notwithstanding the foregoing, in no event
will any Stock Option be exercisable after the
expiration of the option period of such Option. The
balance of the Stock Option shall be forfeited if not
exercised within one year.
(ii) Termination by Reason
of Disability. Subject to Sections 5(b)(3) and 5(c),
if a participant's employment with the Company or any
Subsidiary or Affiliate terminates by reason of
Disability, any Stock Option held by that participant
shall become immediately and automatically vested and
exercisable. If termination of a participant's
employment is due to Disability, then any Stock
Option held by that participant may thereafter be
exercised by the participant or by the participant's
duly authorized legal representative if the
participant is unable to exercise the Option as a
result of the participant's Disability, for a period
of one year (or such other period as the Committee
may specify at or after grant) from the date of such
termination of employment, but in no event may any
such Option be exercised prior to six months and one
day from the date of grant; and if the participant
dies within that one-year period (or such other
period as the Committee may specify at or after
grant), any unexercised Stock Option held by that
participant shall thereafter be exercisable by the
estate of the participant (acting through its
fiduciary) for a period of one year from the date of
that termination of employment. Notwithstanding the
foregoing, in no event will any Stock Option be
exercisable after the expiration of the option period
of such Option. The balance of the Stock Option shall
be forfeited if not exercised within one year.
(iii) Termination by
Retirement. Unless otherwise determined by the
Committee at or after the time of granting any Stock
Option, if a participant terminates employment with
the Company or any Subsidiary or Affiliate because of
normal or early retirement, all Stock Options held by
that participant shall terminate one year after the
date of retirement. Notwithstanding the foregoing, in
no event will any Stock Option be exercisable after
the expiration of the option period of such Option.
The balance of the Stock Option shall be forfeited if
not exercised within one year.
(iv) Other Termination.
Unless otherwise determined by the Committee at or
after the time of granting any Stock Option, if a
participant's
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employment with the Company or any Subsidiary or
Affiliate terminates for any reason other than death,
Disability or retirement, all Stock Options held by
that participant shall terminate 30 days after the
date employment terminates. Notwithstanding the
foregoing, in no event will any Stock Option be
exercisable after the expiration of the option period
of such Option. The balance of the Stock Option shall
be forfeited.
In the event a participant
is granted a leave of absence by the Company or any
Subsidiary or Affiliate to enter military service or
because of sickness, his employment with the Company
or such Subsidiary or Affiliate will not be
considered terminated, and he shall be deemed an
employee of the Company or such Subsidiary or
Affiliate during such leave of absence or any
extension thereof granted by the Company or such
Subsidiary or Affiliate.
(c) Incentive Stock Options. Notwithstanding Sections 5(b)(6)
and (7), an Incentive Stock Option shall be exercisable by (i)
a participant's authorized legal representative (if the
participant is unable to exercise the Incentive Stock Option
as a result of the participant's Disability) only if, and to
the extent, permitted by Section 422 of the Code and (ii) by
the participant's estate, in the case of death, or authorized
legal representative, in the case of Disability, no later than
10 years from the date the Incentive Stock Option was granted
(in addition to any other restrictions or limitations that may
apply). Anything in the Plan to the contrary notwithstanding,
no term or provision of the Plan relating to Incentive Stock
Options shall be interpreted, amended or altered, nor shall
any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 422 of
the Code, or, without the consent of the participants
affected, to disqualify any Incentive Stock Option under that
Section 422 or any successor Section thereto.
(d) Buyout Provisions. The Committee may at any time buy out
for a payment in cash, Shares, Deferred Shares or Restricted
Shares an Option previously granted, based on such terms and
conditions as the Committee shall establish and agree upon
with the participant, but no such transaction involving a
Section 16 Participant shall be structured or effected in a
manner that would result in any liability on the part of the
participant under Section 16(b) of the Exchange Act or the
rules and regulations promulgated thereunder.
(e) Certain Reissuance of Stock Options. To the extent Common
Shares are surrendered by a participant in connection with the
exercise of a Stock Option in accordance with Section 5(b),
the Committee may, in its sole discretion, grant new Stock
Options to such participant (to the extent Common Shares
remain available for Awards), subject to the following terms
and conditions:
(1) The number of Common Shares shall be equal to the
number of Common Shares being surrendered by the participant;
(2) The option price per Common Share shall be equal
to the Fair Market Value of Common Shares, determined on the
date of exercise of the Stock Options whose exercise caused
such Award; and
(3) The terms and conditions of such Stock Options
shall in all other respects replicate such terms and
conditions of the Stock Options whose exercise caused such
Award, except to the extent such terms and conditions are
determined to not be wholly consistent
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with the general provisions of this Section 5, or in conflict
with the remaining provisions of this Plan.
SECTION 6. SHARE APPRECIATION RIGHTS.
(a) Grant. Share Appreciation Rights may be granted in
connection with all or any part of an Option, either
concurrently with the grant of the Option or, if the Option is
a Non-Qualified Stock Option, by an amendment to the Option at
any time thereafter during the term of the Option. Share
Appreciation Rights may be exercised in whole or in part at
such times under such conditions as may be specified by the
Committee in the participant's Option Agreement.
(b) Terms and Conditions. The following terms and conditions
will apply to all Share Appreciation Rights that are granted
in connection with Options:
(1) Rights. Share Appreciation Rights shall entitle
the participant, upon exercise of all or any part of the Share
Appreciation Rights, to surrender to the Company, unexercised,
that portion of the underlying Option relating to the same
number of Shares as is covered by the Share Appreciation
Rights (or the portion of the Share Appreciation Rights so
exercised) and to receive in exchange from the Company an
amount equal to the excess of (x) the Fair Market Value, on
the date of exercise, of the Shares covered by the surrendered
portion of the underlying Option over (y) the exercise price
of the Shares covered by the surrendered portion of the
underlying Option. The Committee may limit the amount that the
participant will be entitled to receive upon exercise of the
Share Appreciation Right.
(2) Surrender of Option. Upon the exercise of the
Share Appreciation Right and surrender of the related portion
of the underlying Option, the Option, to the extent
surrendered, will not thereafter be exercisable. The
underlying Option may provide that such Share Appreciation
Rights will be payable solely in cash. The terms of the
underlying Option shall provide a method by which an
alternative fair market value of the Shares on the date of
exercise shall be calculated based on one of the following:
(x) the closing price of the Shares on the national exchange
on which they are then traded on the business day immediately
preceding the day of exercise; (y) the highest closing price
of the Shares on the national exchange on which they have been
traded during the 90 days immediately preceding the Change in
Control; or (z) the greater of (x) and (y).
(3) Exercise. In addition to any further conditions
upon exercise that may be imposed by the Committee, the Share
Appreciation Rights shall be exercisable only to the extent
that the related Option is exercisable, except that in no
event will a Share Appreciation Right held by a Section 16
Participant be exercisable within the first six months after
it is awarded even though the related Option is or becomes
exercisable, and each Share Appreciation Right will expire no
later than the date on which the related Option expires. A
Share Appreciation Right may be exercised only at a time when
the Fair Market Value of the Shares covered by the Share
Appreciation Right exceeds the exercise price of the Shares
covered by the underlying Option. No Share Appreciation Right
held by a Section 16 Participant shall be exercisable by its
terms within the first six months after it is granted, and a
Section 16 Participant may exercise a Share Appreciation Right
only during a period beginning on the third business day and
ending on the twelfth business day following the release for
publication of quarterly or annual summary statements of the
Company's sales and earnings.
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(4) Method of Exercise. Share Appreciation Rights may
be exercised by the participant giving written notice of the
exercise to the Company, stating the number of Share
Appreciation Rights the participant has elected to exercise
and surrendering the portion of the underlying Option relating
to the same number of Shares as the number of Share
Appreciation Rights elected to be exercised.
(5) Payment. The manner in which the Company's
obligation arising upon the exercise of the Share Appreciation
Right will be paid will be determined by the Committee and
shall be set forth in the participant's Option Agreement. The
Committee may provide for payment in Shares or cash, or a
fixed combination of Shares or cash, or the Committee may
reserve the right to determine the manner of payment at the
time the Share Appreciation Right is exercised. Shares issued
upon the exercise of a Share Appreciation Right will be valued
at their Fair Market Value on the date of exercise.
SECTION 7. RESTRICTED SHARES.
(a) Grant. Restricted Shares may be issued alone, in addition
to or in tandem with other Awards under the Plan or cash
awards made outside the Plan. The Committee shall determine
the individuals to whom, and the time or times at which,
grants of Restricted Shares will be made, the number of
Restricted Shares to be awarded to each participant, the price
(if any) to be paid by the participant (subject to Section
7(b)), the date or dates upon which Restricted Share Awards
will vest, the period or periods within which those Restricted
Share Awards may be subject to forfeiture, and the other terms
and conditions of those Awards in addition to those set forth
in Section 7(b).
The Committee may condition the grant of Restricted
Shares upon the attainment of specified performance goals or
such other factors as the Committee may determine in its sole
discretion.
(b) Terms and Conditions. Restricted Shares awarded under the
Plan shall be subject to the following terms and conditions
and such additional terms and conditions, not inconsistent
with the provisions of the Plan, as the Committee shall deem
desirable. A participant who receives a Restricted Share Award
shall not have any rights with respect to that Award, unless
and until the participant has executed an agreement evidencing
the Award in the form approved from time to time by the
Committee, has delivered a fully executed copy thereof to the
Company, and has otherwise complied with the applicable terms
and conditions of that Award.
(1) The purchase price (if any) for Restricted Shares
shall be determined by the Committee at the time of grant.
(2) Awards of Restricted Shares must be accepted by
executing a Restricted Share Award agreement and paying the
price (if any) that is required under Section 7(b)(1).
(3) Each participant receiving a Restricted Share
Award shall be issued a stock certificate in respect of those
Restricted Shares. The certificate shall be registered in the
name of the participant and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable
to the Award.
(4) The Committee shall require that the stock
certificates evidencing the Restricted Shares be held in
custody by the Company until the restrictions thereon shall
have
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lapsed, and that, as a condition of any Restricted Shares
Award, the participant shall have delivered to the Company a
stock power, endorsed in blank, relating to the Shares covered
by that Award.
(5) Subject to the provisions of this Plan and the
Restricted Share Award agreement, during a period set by the
Committee commencing with the date of any Award (the
"Restriction Period"), the participant shall not be permitted
to sell, transfer, pledge, assign or otherwise encumber the
Restricted Shares covered by that Award. The Restriction
Period shall not be less than three years in duration
("Minimum Restriction Period") unless otherwise determined by
the Committee at the time of grant. Subject to these
limitations and the Minimum Restriction Period requirement,
the Committee, in its sole discretion, may provide for the
lapse of restrictions in installments and may accelerate or
waive restrictions, in whole or in part, based on service,
performance or such other factors and criteria as the
Committee may determine in its sole discretion.
(6) Except as provided in this Section 7(b)(6) and
Section 7(b)(5) and Section 7(b)(7), the participant shall
have, with respect to the Restricted Shares awarded, all of
the rights of a shareholder of the Company, including the
right to vote the Shares and the right to receive any
dividends. The Committee, in its sole discretion, as
determined at the time of Award, may permit or require the
payment of cash dividends to be deferred and subject to
forfeiture and, if the Committee so determines, reinvested,
subject to Section 14(f), in additional Restricted Shares to
the extent Shares are available under Section 3, or otherwise
reinvested. Unless the Committee or Board determines
otherwise, Share dividends issued with respect to Restricted
Shares shall be treated as additional Restricted Shares that
are subject to the same restrictions and other terms and
conditions that apply to the Shares with respect to which such
dividends are issued.
(7) No Restricted Shares shall be transferable by a
participant other than by will or by the laws of descent and
distribution.
(8) If a participant's employment with the Company or
any Subsidiary or Affiliate terminates by reason of death, any
Restricted Shares held by that participant shall thereafter
vest and any restriction shall lapse to the extent such
Restricted Shares would have become vested or no longer
subject to restriction within one year from the time of death
had the participant continued to fulfill all of the conditions
of the Restricted Share Award during that period (or on such
accelerated basis as the Committee may determine at or after
grant). The balance of the Restricted Shares shall be
forfeited.
(9) If a participant's employment with the Company or
any Subsidiary or Affiliate terminates by reason of
Disability, any Restricted Shares held by that participant
shall thereafter vest and any restriction shall lapse to the
extent such Restricted Shares would have become vested or no
longer subject to restriction within one year from the time of
termination had the participant continued to fulfill all of
the conditions of the Restricted Share Award during that
period (or on such accelerated basis as the Committee may
determine at or after grant), subject in all cases to the
Minimum Restriction Period requirement. The balance of the
Restricted Shares shall be forfeited.
(10) Unless otherwise determined by the Committee at
or after the time of granting any Restricted Shares, if a
participant's employment with the Company or any Subsidiary or
Affiliate terminates for any reason other than death or
Disability, the Restricted
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Shares held by that participant that are unvested or subject
to restriction at the time of termination shall thereupon be
forfeited.
(c) Minimum Value. In order to better ensure that Award
payments actually reflect the performance of the Company and
service of the participant, the Committee may provide, in its
sole discretion, for a tandem performance-based or other award
designed to guarantee a minimum value, payable in cash or
Shares, to the recipient of a Restricted Share Award, subject
to such performance, future service, deferral and other terms
and conditions as may be specified by the Committee.
SECTION 8. DEFERRED SHARES.
(a) Grant. Deferred Shares may be awarded alone, in addition
to or in tandem with other Awards granted under the Plan or
cash awards made outside the Plan. The Committee shall
determine the individuals to whom, and the time or times at
which, Deferred Shares shall be awarded, the number of
Deferred Shares to be awarded to any participant, the duration
of the period (the "Deferral Period") during which, and the
conditions under which, receipt of the Shares will be
deferred, and the other terms and conditions of the Award in
addition to those set forth in Section 8(b).
The Committee may condition the grant of Deferred Shares upon
the attainment of specified performance goals or such other
factors as the Committee shall determine in its sole
discretion.
(b) Terms and Conditions. Deferred Share Awards shall be
subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent
with the terms of the Plan, as the Committee shall deem
desirable:
(1) The purchase price for Deferred Shares shall be
determined at the time of grant by the Committee. Subject to
the provisions of the Plan and the Award agreement referred to
in Section 8(b)(9), Deferred Share Awards may not be sold,
assigned, transferred, pledged or otherwise encumbered during
the Deferral Period. At the expiration of the Deferral Period
(or the Elective Deferral Period referred to in Section
8(b)(8), where applicable), stock certificates shall be
delivered to the participant, or the participant's legal
representative, for the Shares covered by the Deferred Share
Award. The Deferral Period applicable to any Deferred Share
Award shall not be less than six months and one day ("Minimum
Deferral Period").
(2) Unless otherwise determined by the Committee at
grant, amounts equal to any dividends declared during the
Deferral Period with respect to the number of Shares covered
by a Deferred Share Award will be paid to the participant
currently, or deferred and deemed to be reinvested in
additional Deferred Shares, or otherwise reinvested, all as
determined by the Committee, in its sole discretion, at or
after the time of the Award.
(3) No Deferred Shares shall be transferable by a
participant other than by will or by the laws of descent and
distribution.
(4) If a participant's employment by the Company or
any Subsidiary or Affiliate terminates by reason of death, any
Deferred Shares held by such participant shall thereafter vest
or any restriction shall lapse to the extent such Deferred
Shares would have become vested or no longer subject to
restriction within one year from the time of death had the
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participant continued to fulfill all of the conditions of the
Deferred Share Award during that period (or on such
accelerated basis as the Committee may determine at or after
grant). The balance of the Deferred Shares shall be forfeited.
(5) If a participant's employment by the Company or
any Subsidiary or Affiliate terminates by reason of
Disability, any Deferred Shares held by such participant shall
thereafter vest or any restriction lapse to the extent such
Deferred Shares would have become vested or no longer subject
to restriction within one year from the time of termination
had the participant continued to fulfill all of the conditions
of the Deferred Shares Award during that period (or on such
accelerated basis as the Committee may determine at or after
grant), subject in all cases to the Minimum Deferral Period
requirement. The balance of the Deferred Shares shall be
forfeited.
(6) Unless otherwise determined by the Committee at
or after the time of granting any Deferred Share Award, if a
participant's employment by the Company or any Subsidiary or
Affiliate terminates for any reason other than death or
Disability, all Deferred Shares held by such participant which
are unvested or subject to restriction shall thereupon be
forfeited.
(7) Based on service, performance or such other
factors or criteria as the Committee may determine, the
Committee may, at or after grant, accelerate the vesting of
all or any part of any Deferred Share Award or waive a portion
of the Deferral Period for all or any part of such Award,
subject in all cases to the Minimum Deferral Period
requirement.
(8) A participant may elect to further defer receipt
of a Deferred Share Award (or an installment of an Award) for
a specified period or until a specified event (the "Elective
Deferral Period"), subject in each case to the Committee's
approval and the terms of this Section 8 and such other terms
as are determined by the Committee, all in its sole
discretion. Subject to any exceptions approved by the
Committee, such election must be made at least 12 months prior
to completion of the Deferral Period for such Deferred Share
Award (or such installment).
(9) Each such Award shall be confirmed by, and
subject to the terms of, a Deferred Share Award agreement
evidencing the Award in the form approved from time to time by
the Committee.
(c) Minimum Value Provisions. In order to better ensure that
Award payments actually reflect the performance of the Company
and service of the participant, the Committee may provide, in
its sole discretion, for a tandem performance-based or other
Award designed to guarantee a minimum value, payable in cash
or Shares to the recipient of a Deferred Share Award, subject
to such performance, future service, deferral and other terms
and conditions as may be specified by the Committee.
SECTION 9. SHARE PURCHASE RIGHTS.
(a) Grant. Share Purchase Rights may be granted alone, in
addition to or in tandem with other Awards granted under the
Plan or cash awards made outside the Plan. The Committee shall
determine the individuals to whom, and the time or times at
which, grants of Share Purchase Rights will be made, the
number of Shares which may be purchased pursuant to the Share
Purchase Rights, and the other terms and conditions of the
Share Purchase Rights in
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addition to those set forth in Section 9(b). The Shares
subject to the Share Purchase Rights may be purchased, as
determined by the Committee at the time of grant:
(1) at the Fair Market Value of such Shares on the
date of grant; or
(2) at 85% of the Fair Market Value of such Shares on
the date of grant if the grant of Share Purchase Rights is
made in lieu of cash compensation.
Subject to Section 9(b) hereof, the Committee may also impose
such deferral, forfeiture or other terms and conditions as it shall
determine, in its sole discretion, on such Share Purchase Rights or the
exercise thereof.
Each Share Purchase Right Award shall be confirmed by, and be
subject to the terms of, a Share Purchase Rights Agreement
which shall be in form approved by the Committee.
(b) Terms and Conditions. Share Purchase Rights may contain
such additional terms and conditions not inconsistent with the
terms of the Plan as the Committee shall deem desirable, and
shall generally be exercisable for such period as shall be
determined by the Committee. However, Share Purchase Rights
granted to Section 16 Participants shall not become
exercisable earlier than six months and one day after the
grant date. Share Purchase Rights shall not be transferable by
a participant other than by will or by the laws of descent and
distribution.
SECTION 10. OTHER SHARE-BASED AWARDS.
(a) Grant. Other Awards of Shares and other Awards that are
valued, in whole or in part, by reference to, or are otherwise
based on, Shares, including, without limitation, performance
shares, convertible preferred shares, convertible debentures,
exchangeable securities and Share Awards or options valued by
reference to Book Value or Subsidiary performance, may be
granted alone, in addition to or in tandem with other Awards
granted under the Plan or cash awards made outside the Plan.
At the time the Shares or Other Share-Based Awards are
granted, the Committee shall determine the individuals to whom
and the time or times at which such Shares or Other
Share-Based Awards shall be awarded, the number of Shares to
be used in computing an Award or which are to be awarded
pursuant to such Awards, the consideration, if any, to be paid
for such Shares or Other Share-Based Awards, and all other
terms and conditions of the Awards in addition to those set
forth in Section 10(b).
The provisions of Other Share-Based Awards need not be the
same with respect to each participant.
(b) Terms and Conditions. Other Share-Based Awards shall be
subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent
with the terms of the Plan, as the Committee shall deem
desirable:
(1) Subject to the provisions of this Plan and the
Award agreement referred to in Section 10(b)(5) below, Shares
awarded or subject to Awards made under this Section 10 may
not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the Shares are issued,
or, if later, the date on which any applicable restriction,
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performance, holding or deferral period or requirement is
satisfied or lapses. All Shares or Other Share-Based Awards
granted under this Section 10 shall be subject to a minimum
holding period (including any applicable restriction,
performance and/or deferral periods) of six months and one day
("Minimum Holding Period").
(2) Subject to the provisions of this Plan and the
Award agreement and unless otherwise determined by the
Committee at the time of grant, the recipient of an Other
Share-Based Award shall be entitled to receive, currently or
on a deferred basis, interest or dividends or interest or
dividend equivalents with respect to the number of Shares
covered by the Award, as determined at the time of the Award
by the Committee, in its sole discretion, and the Committee
may provide that such amounts (if any) shall be deemed to have
been reinvested in additional Shares or otherwise reinvested.
(3) Subject to the Minimum Holding Period, any Other
Share-Based Award and any Shares covered by any such Award
shall vest or be forfeited to the extent, at the times and
subject to the conditions, if any, provided in the Award
agreement, as determined by the Committee in its sole
discretion.
(4) In the event of the participant's Disability or
death, or in cases of special circumstances, the Committee
may, in its sole discretion, waive, in whole or in part, any
or all of the remaining limitations imposed hereunder or under
any related Award agreement (if any) with respect to any part
or all of any Award under this Section 10, provided that the
Minimum Holding Period requirement may not be waived, except
in case of a participant's death.
(5) Each Award shall be confirmed by, and subject to
the terms of, an agreement or other instrument evidencing the
Award in the form approved from time to time by the Committee,
the Company and the participant.
(6) Shares (including securities convertible into
Shares) issued on a bonus basis under this Section 10 shall be
issued for no cash consideration. Shares (including securities
convertible into Shares) purchased pursuant to a purchase
right awarded under this Section 10 shall bear a price of at
least 85% of the Fair Market Value of the Shares on the date
of grant. The purchase price of such Shares, and of any Other
Share-Based Award granted hereunder, or the formula by which
such price is to be determined, shall be fixed by the
Committee at the time of grant.
(7) In the event that any "derivative security," as
defined in Rule 16a-1(c) (or any successor thereto)
promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act, is awarded pursuant to this
Section 10 to any Section 16 Participant, such derivative
security shall not be transferrable other than by will or by
the laws of descent and distribution.
SECTION 11. CHANGE IN CONTROL PROVISION.
(a) Impact of Event. In the event of: (i) a "Change in
Control" as defined in Section 11(b) or (ii) a "Potential
Change in Control" as defined in Section 11(c), the following
acceleration and valuation provisions shall apply:
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(1) Any Stock Options awarded under the Plan not
previously exercisable and vested shall become fully
exercisable and vested;
(2) Any Share Appreciation Rights shall become
immediately exercisable;
(3) The restrictions applicable to any Restricted
Share Awards, Deferred Shares, Share Purchase Rights and Other
Share-Based Awards shall lapse and such Shares and Awards
shall be deemed fully vested; and
(4) The value of all outstanding Awards, in each case
to the extent vested, shall, unless otherwise determined by
the Committee in its sole discretion at or after grant but
prior to any Change in Control or Potential Change in Control,
be cashed out on the basis of the "Change in Control Price" as
defined in Section 11(d) as of the date such Change in Control
or such Potential Change in Control is determined to have
occurred;
but the provisions of Sections 11(a)(l) through (3) shall not apply
with respect to Awards granted to any Section 16 Participant which have
been held by such participant for less than six months and one day as
of the date that such Change in Control or Potential Change in Control
is determined to have occurred.
(b) Definition of Change in Control. For purposes of Section
11(a), a "Change in Control" means the occurrence of any of
the following: (i) the Board or shareholders of the Company
approve a consolidation or merger in which the Company is not
the surviving corporation, the sale of substantially all of
the assets of the Company, or the liquidation or dissolution
of the Company; (ii) any person or other entity (other than
the Company or a Subsidiary or any Company employee benefit
plan (including any trustee of any such plan acting in its
capacity as trustee)) purchases any Shares (or securities
convertible into Shares) pursuant to a tender or exchange
offer without the prior consent of the Board of Directors, or
becomes the beneficial owner of securities of the Company
representing 20% or more of the voting power of the Company's
outstanding securities; or (iii) during any two-year period,
individuals who at the beginning of such period constitute the
entire Board of Directors cease to constitute a majority of
the Board of Directors, unless the election or the nomination
for election of each new director is approved by at least
two-thirds of the directors then still in office who were
directors at the beginning of that period.
(c) Definition of Potential Change in Control. For purposes of
Section 11(a), a "Potential Change in Control" means the
happening of any one of the following:
(1) The approval by the shareholders of the Company
of an agreement by the Company, the consummation of which
would result in a Change in Control of the Company as defined
in Section 11(b); or
(2) The acquisition of beneficial ownership, directly
or indirectly, by any entity, person or group (other than the
Company or a Subsidiary or any Company employee benefit plan
(including any trustee of any such plan acting in its capacity
as trustee)) of securities of the Company representing 5% or
more of the combined voting power of the Company's outstanding
securities and the adoption by the Board of a resolution to
the effect that a Potential Change in Control of the Company
has occurred for purposes of this Plan.
(d) Change in Control Price. For purposes of this Section 11,
"Change in Control Price" means the highest price per share
paid in any transaction reported on the New York Stock
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Exchange Composite Index (or, if the Shares are not then
traded on the New York Stock Exchange, the highest price paid
as reported for any national exchange on which the Shares are
then traded) or paid or offered in any bona fide transaction
related to a Change in Control or Potential Change in Control
of the Company, at any time during the 60-day period
immediately preceding the occurrence of the Change in Control
(or, when applicable, the occurrence of the Potential Change
in Control event), in each case as determined by the
Committee.
SECTION 12. AMENDMENTS AND TERMINATION.
The Board may at any time, in its sole discretion, amend,
alter or discontinue the Plan, but no such amendment, alteration or
discontinuation shall be made that would impair the rights of a participant
under an Award theretofore granted, without the participant's consent. The
Company shall submit to the shareholders of the Company, for their approval, any
amendments to the Plan required pursuant to Section 162(m) of the Code or which
would materially increase the benefits accruing to participants under the Plan
so long as such approval is required by law or regulation.
The Committee may at any time, in its sole discretion, amend
the terms of any Award, but no such amendment shall be made that would impair
the rights of a participant under an Award theretofore granted, without the
participant's consent; nor shall any such amendment be made that would make the
applicable exemptions provided by Rule 16b-3 under the Exchange Act unavailable
to any Section 16 Participant holding the Award without the participant's
consent.
Subject to the above provisions, the Board shall have all
necessary authority to amend the Plan to take into account changes in applicable
securities and tax laws and accounting rules, as well as other developments.
SECTION 13. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for
incentive and deferred compensation. With respect to any payment not yet made to
a participant by the Company, nothing contained herein shall give that
participant any rights that are greater than those of a general creditor of the
Company.
SECTION 14. GENERAL PROVISIONS.
(a) The Committee may require each participant acquiring
Shares pursuant to an Award under the Plan to represent to and
agree with the Company in writing that the participant is
acquiring the Shares without a view to distribution thereof.
The certificates for any such Shares may include any legend
which the Committee deems appropriate to reflect any
restrictions on transfer.
All Shares or other securities delivered under the Plan shall
be subject to such stop-transfer orders and other restrictions
as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Shares
are then listed, and any applicable federal or state
securities laws, and the Committee may cause a legend or
legends to be put on any certificate for any such Shares to
make appropriate reference to those restrictions.
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(b) Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required,
and such arrangements may be either generally applicable or
applicable only in specific cases.
(c) Neither the adoption of the Plan, nor its operation, nor
any document describing, implementing or referring to the
Plan, or any part thereof, shall confer upon any participant
under the Plan any right to continue in the employ, or as a
director, of the Company or any Subsidiary or Affiliate, or
shall in any way affect the right and power of the Company or
any Subsidiary or Affiliate to terminate the employment, or
service as a director, of any participant under the Plan at
any time with or without assigning a reason therefor, to the
same extent as the Company or any Subsidiary or Affiliate
might have done if the Plan had not been adopted.
(d) For purposes of this Plan, a transfer of a participant
between the Company and any Subsidiary or Affiliate shall not
be deemed a termination of employment.
(e) No later than the date as of which an amount first becomes
includable in the gross income of the participant for federal
income tax purposes with respect to any Award under the Plan,
the participant shall pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any
federal, state or local taxes or other items of any kind
required by law to be withheld with respect to that amount.
Subject to the following sentence, unless otherwise determined
by the Committee, withholding obligations may be settled with
Shares, including unrestricted Shares previously owned by the
participant or Shares that are part of the Award that gives
rise to the withholding requirement. Notwithstanding the
foregoing, any election by a Section 16 Participant to settle
any tax withholding obligation with Shares that are part of an
Award shall be subject to approval by the Committee in its
sole discretion. The obligations of the Company under the Plan
shall be conditional on those payments or arrangements and the
Company and its Subsidiaries and Affiliates shall, to the
extent permitted by law, have the right to deduct any such
taxes from any payment of any kind otherwise payable to the
participant.
(f) The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Shares (or in Deferred
Shares or other types of Awards) at the time of any dividend
payment shall be permissible only if sufficient Shares are
available under Section 3 for reinvestment (taking into
account then outstanding Stock Options).
(g) The Plan, all Awards made and actions taken thereunder and
any agreements relating thereto shall be governed by and
construed in accordance with the laws of the State of Ohio.
(h) All agreements entered into with participants pursuant to
the Plan shall be subject to the Plan.
(i) The provisions of Awards need not be the same with respect
to each participant.
SECTION 15. SHAREHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.
The Plan was adopted by the Board on March 2, 1998 and is
subject to approval by a majority of the holders of the Company's outstanding
Shares, in accordance with applicable law. If the Plan is not so approved within
twelve (12) months after the date the Plan is adopted by the Board of Directors,
the Plan and
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any Grants made hereunder shall be null and void. However, if the Plan is so
approved, no further shareholder approval shall be required with respect to the
granting of Awards pursuant to the Plan.
SECTION 16. TERM OF PLAN.
No Award shall be granted pursuant to the Plan on or after
March 1, 2008, but Awards granted prior to that date may extend beyond that
date.
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