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Exhibit 10.7
STOCK OPTION AGREEMENT*
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THIS STOCK OPTION AGREEMENT, entered into as of this ___ day of
________, 19___, by and between RPM, Inc., an Ohio corporation (the "Company"),
and _________________ (the "Optionee").
WITNESSETH:
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WHEREAS, the Board of Directors of the Company has designated the
Compensation Committee of the Board of Directors (the "Committee") to serve as
the Committee to administer the RPM, Inc. 1996 Key Employees Stock Option Plan
(the "Plan"); and
WHEREAS, the Committee has determined that the Optionee, as a Key
Employee, should be granted a stock option under the Plan upon the terms and
conditions set forth in this Agreement, and for the number of Common Shares,
without par value (the "Shares"), of the Company set forth hereinafter;
NOW, THEREFORE, the Company and the Optionee hereby agree as follows:
1. DEFINITIONS. Capitalized terms shall have the meanings set forth in
the Plan (as defined below) unless otherwise specifically set forth below or
elsewhere herein:
(a) The word "Agreement" shall mean this instrument.
(b) The word "Code" shall mean the United States Internal
Revenue Code of 1986, as amended, or successor
provisions of future United States revenue laws
(Title 26 of the United States Code).
(c) The words "Incentive Stock Option" shall mean any
Option which qualifies as an Incentive Stock Option
under terms of Section 422 of the Code.
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* PARAGRAPH 5 OF THIS AGREEMENT CONTAINS INFORMATION REGARDING THE EXERCISE
PERIOD FOR INCENTIVE STOCK OPTION GRANTS UPON CESSATION OF EMPLOYMENT WITH THE
COMPANY BY REASON OF NORMAL RETIREMENT (AS DEFINED HEREIN). FAILURE TO COMPLY
WITH THE EXERCISE PERIOD LIMITATION DESCRIBED THEREIN WILL HAVE THE EFFECT OF
DISQUALIFYING ANY SUCH OPTION AS AN INCENTIVE STOCK OPTION.
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(d) The word "Option" shall mean the right and option of
the Optionee to purchase Shares pursuant to the terms
of this Agreement.
(e) The words "Option Price" shall mean the price at
which Shares may be acquired upon the exercise of any
Option.
(f) The words "Personal Representative" shall mean,
following the Optionee's death, such person or
persons who shall have acquired, by Will or by the
laws of descent and distribution, the right to
exercise any Option.
(g) The word "Plan" shall mean the RPM, Inc. 1996 Key
Employees Stock Option Plan, as amended from time to
time, and in effect on the date of this Agreement (a
copy of which is attached as Exhibit A).
2. GRANT OF OPTION. Effective as of the date of this Agreement, the
Company grants to the Optionee, upon the terms and conditions set forth
hereinafter, the right and option to purchase all or any number of an aggregate
of _____________ (______) Shares. The number of Shares subject to an Incentive
Stock Option, the number of Shares subject to a non-qualified stock option, and
the respective Option Prices are as set forth below:
(a) _____________ (_____) Shares shall be subject to an
Incentive Stock Option at an Option Price of $_____
per share; and
(b) _____________ (_____) Shares shall be subject to a
non-qualified stock option at an Option Price of
$____ per Share.
3. TERM OF OPTION. The term of the Option shall be for a period of ten
(10) years from the date hereof, and the Option shall expire at the close of
regular business hours at the Company's principal office in Medina, Ohio, on the
last day of the term of the Option, or, if earlier, on the applicable expiration
date provided for in Sections 5 and 6 hereof.
4. EXERCISE DATES. Except as provided in Sections 5, 6 and 8 hereof,
the Option shall not be exercisable to any extent until one (1) year from the
date hereof. The Optionee shall be entitled to exercise the Option with respect
to the number of Shares indicated below on or after the date indicated opposite
such number below:
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(a)
Number of Shares
as to
Which Incentive Date as of
Stock Option May Which Option
Be Exercised May Be Exercised
------------ ----------------
(b) Number of Shares
as to Which
Non-Qualified Date as of
Stock Option May Which Option
Be Exercised May Be Exercised
------------ ----------------
To the extent that the Option becomes exercisable with respect to any Shares, as
provided above, the Option may thereafter be exercised by the Optionee either as
to all or any number of such Shares at any time or from time to time prior to
the expiration of the Option pursuant to Section 3 hereof. Except as provided in
Sections 5 and 6 hereof, the Option may not be exercised at any time unless the
Optionee shall be an employee at such time.
5. TERMINATION OF EMPLOYMENT, ETC. So long as the Optionee shall
continue to be an employee of the Company or one of its subsidiaries, the Option
shall not be affected by (a) any temporary leave of absence approved in writing
by the Company or one of its subsidiaries, or (b) any change of duties or
position (including transfer to or from a subsidiary). If the Optionee ceases to
be an employee of the Company or one of its subsidiaries for any reason other
than death or Normal Retirement (as defined below), the Option may be exercised
only to the extent of the purchase rights, if any, which had accrued as of the
date of such cessation pursuant to Section 4 hereof and which have not
theretofore been exercised; provided, however, that upon written request to the
Committee it may in its absolute discretion determine (but shall not be under
any obligation to determine) that such accrued purchase rights shall be deemed
to include additional Shares covered by the Option. Upon any such cessation of
employment by reason of discharge, such accrued purchase rights shall in any
event terminate upon the earlier of the date thirty (30) days from the date of
such cessation of employment or the last day of the term of the Option. Upon any
such cessation of employment by reason of a voluntary quit, such accrued
purchase rights shall terminate on the date of such cessation of
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employment. Upon any such cessation of employment by reason of the voluntary
retirement of an employee who is at least 55 years of age and who has completed
at least five consecutive years of service with the Company and/or its
subsidiaries ("Normal Retirement"), the Optionee shall have the immediate right
and option (notwithstanding the provisions of Section 4 hereof) to exercise the
Option with respect to all of the Shares covered by the Option. Upon any such
"Normal Retirement," the purchase rights shall terminate upon the earlier of
three (3) years from the date of such cessation of employment or the last day of
the term of the Option; provided, however, that, IN THE CASE OF AN INCENTIVE
STOCK OPTION, THE OPTION MUST BE EXERCISED IN FULL WITHIN THREE (3) MONTHS AFTER
CESSATION OF EMPLOYMENT OR SUCH OPTION WILL NO LONGER QUALIFY AS AN INCENTIVE
STOCK OPTION AND SHALL THEREAFTER BE, AND RECEIVE THE TAX TREATMENT APPLICABLE
TO, A NON-QUALIFIED STOCK OPTION. In no event shall any employee who is
terminated by the Company, with or without cause, qualify for the "Normal
Retirement" provisions described in this Section 5. Nothing contained in this
Agreement shall confer upon the Optionee any right to continue in the employ of
the Company or any of its subsidiaries, or to limit or interfere in any way with
the right of the Company or any such subsidiary to terminate his or her
employment at any time, with or without cause.
6. DEATH OF OPTIONEE. If the Optionee dies while an employee or within
thirty (30) days of the Optionee's having ceased to be an employee by reason of
discharge, the Optionee's Personal Representative shall have the immediate right
and option (notwithstanding the provisions of Section 4 hereof) to exercise the
Option with respect to all Shares covered by the Option. Such purchase rights
shall in any event terminate upon the earlier of the date one (1) year from the
date of the Optionee's cessation of employment by reason of discharge or death
or the last day of the term of the Option
7. LIMITATIONS ON EXERCISE OF INCENTIVE STOCK OPTION Notwithstanding
the foregoing, any Incentive Stock Option granted pursuant to this Agreement is
exercisable only to the extent that the aggregate fair market value (determined
at the time such Incentive Stock Option is granted) of the shares with respect
to which such Incentive Stock Options first become exercisable during any
calendar year does not exceed $100,000 (the "$100,000 Exercise Limitation");
provided, however, that (a) if the aggregate fair market value of the shares
with respect to which such Incentive Stock Options first became exercisable
exceeds the $100,000 Exercise Limitation as a result of the accelerated vesting
of the Option pursuant to Sections 5 or 6 hereof, the maximum number of whole
shares with an aggregate fair market value not in excess of $100,000 shall be
treated as shares issued pursuant to an Incentive Stock Option and the remaining
aggregate fair market value in excess of such amount shall be treated as shares
issued pursuant to a non-qualified stock option and (b) the $100,000 Exercise
Limitation shall not
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apply if the Option no longer qualified as an Incentive Stock Option as a result
of the failure of the Optionee to exercise the Option within the three (3) month
period contained in Section 5 hereof.
8. CHANGE OF CONTROL. In the event of a "change in control" as defined
in the Plan and as determined by the Committee, the Optionee shall have the
immediate right and option (notwithstanding the provisions of Section 4 hereof)
to exercise the Option with respect to all Shares covered by the Option.
9. EXERCISE OF OPTION. The Option may be exercised by delivery to the
Secretary of the Company at its principal office, 0000 Xxxxx Xxxx, X.X. Xxx 000,
Xxxxxx, Xxxx 00000, of a completed Notice of Exercise of Option (obtainable from
the Secretary of the Company) setting forth the number of Shares with respect to
which the Option is being exercised, together with either a certified or
cashier's check payable to the Company or certificates for RPM, Inc. Common
Shares, without par value, properly endorsed for transfer, or a combination
thereof, in the amount of the total purchase price of such Shares.
10. ISSUANCE OF SHARE CERTIFICATES. Upon receipt by the Company prior
to expiration of the Option of a duly completed Notice of Exercise of Option
accompanied by a certified or cashier's check, or properly endorsed certificates
for RPM, Inc. Common Shares, without par value, as provided in Section 9 hereof,
in full payment for the Shares being purchased pursuant to such Notice (and,
with respect to any Option exercised pursuant to Section 6 hereof by the
Personal Representative, accompanied in addition by proof satisfactory to the
Committee of the right of the Personal Representative to exercise the Option),
the Company shall cause to be mailed or otherwise delivered to the Optionee or
the Personal Representative, as the case may be, within thirty (30) days of such
receipt, a certificate or certificates for the number of Shares so purchased.
The Optionee or the Personal Representative shall not have any of the rights of
a shareholder with respect to the Shares covered by the Option unless and until
one or more certificates representing such Shares shall be issued to the
Optionee or the Personal Representative.
11. SUCCESSORS IN INTEREST, ETC. This Agreement shall be binding upon
and inure to the benefit of any successor or successors of the Company and the
heirs, estate, and Personal Representatives of the Optionee. The Option shall
not be transferable other than by Will or the laws of descent and distribution,
and the Option may be exercised during the lifetime of the Optionee only by the
Optionee or his guardian or legal representative. A deceased Optionee's Personal
Representative shall act in the place and stead of the deceased Optionee with
respect to exercising an Option or taking any other action pursuant to this
Agreement.
12. PROVISIONS OF PLAN CONTROL. This Agreement is subject to all of the
terms, conditions, and provisions of the Plan, as amended from time to time, and
to such rules, regulations, and interpretations relating to the Plan as may be
adopted by
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the Committee and in effect from time to time. A copy of the Plan is attached
hereto as Exhibit "A" and is incorporated herein by reference. In the event and
to the extent that this Agreement conflicts or is inconsistent with the terms,
conditions, and provisions of the Plan, the Plan shall control, and this
Agreement shall be deemed to be modified accordingly.
13. NO LIABILITY UPON DISTRIBUTION OF SHARES. The liability of the
Company under this Agreement and any distribution of Shares made hereunder is
limited to the obligations set forth herein with respect to such distribution
and no term or provision of this Agreement shall be construed to impose any
liability on the Company or the Committee in favor of any person with respect to
any loss, cost or expense which the person may incur in connection with or
arising out of any transaction in connection with this Agreement.
14. WITHHOLDING. The Optionee agrees that the Company may make
appropriate provision for tax withholding with respect to the transactions
contemplated by this Agreement including such withholding as may be appropriate
with respect to any disqualifying disposition of an Incentive Stock Option.
15. NOTICE OF DISQUALIFYING DISPOSITION. Optionee agrees that if he
should dispose of any Shares acquired upon the exercise of an Incentive Stock
Option, including a disposition by sale, exchange, gift or transfer of legal
title within two (2) years after the date such Option was granted to the
Optionee or within one (1) year after the transfer of such Shares to the
Optionee upon the exercise of such Option, the Optionee shall notify the Company
within three (3) days after such disposition.
16. CAPTIONS. The captions and section numbers appearing in this
Agreement are inserted only as a matter of convenience. They do not define,
limit, construe or describe the scope or intent of the provisions of this
Agreement.
17. NUMBER. The use of the singular or plural herein shall not be
restrictive as to number and shall be interpreted in all cases as the context
shall require.
18. GENDER. The use of the feminine, masculine or neuter pronoun shall
not be restrictive as to gender and shall be interpreted in all cases as the
context may require.
19. INVESTMENT REPRESENTATION. Optionee hereby represents and warrants
that any Shares which he may acquire by virtue of the exercise of the Option
shall be acquired for investment purposes only and not with a view to
distribution or resale; provided, however, that this restriction shall become
inoperative in the event the Shares which are subject to the Option shall be
registered under the Securities Act of 1933, as amended, or in the event there
is presented to the Company an opinion of counsel satisfactory to the Company to
the effect that the offer or sale of the Shares
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which are subject to the Option may lawfully be made without registration under
the Securities Act of 1933, as amended.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officer, and the Optionee has
hereunto set his hand, all as of the day and year first above written.
RPM, INC.
("Company")
By
--------------------------------
Its
-----------------------------------
-----------------------------------
("Optionee")
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RPM, INC.
1996 KEY EMPLOYEES STOCK OPTION PLAN
RPM, Inc. hereby adopts a stock option plan for the benefit of certain
persons and subject to the terms and provisions set forth below.
1. DEFINITIONS. The following terms shall have the meanings set forth below
whenever used in this instrument:
(a) The word "Board" shall mean the Board of Directors of the Company.
(b) The word "Code" shall mean the United States Internal Revenue Code of 1986, as
amended, or successor provisions of future United States revenue laws (Title 26 of
the United States Code).
(c) The word "Committee" shall mean the Compensation Committee appointed by the Board.
(d) The words "Common Shares" shall mean the Common Shares, without par value, of the
Company.
(e) The word "Company" shall mean RPM, Inc., an Ohio corporation, and any successor
thereto which shall maintain this Plan.
(f) The word "Disability" shall mean the Optionee's inability to engage in substantial
gainful activity for the Company by reason of any medically determinable physical
or mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months, as
determined by the Committee pursuant to written certification of such Disability
from a physician acceptable to the Committee.
(g) The words "Incentive Stock Option" shall mean any option which qualifies as an
Incentive Stock Option under terms of Section 422 of the Code.
(h) The words "Key Employee" shall mean any person who is an executive officer or other
valuable managerial or other employee of either the Company or any Subsidiary.
(i) The word "Optionee" shall mean any Key Employee to whom a stock option has been
granted pursuant to this Plan.
(j) The word "Plan" shall mean this instrument, the RPM, Inc. 1996 Key Employees Stock
Option Plan, as it is originally adopted and as it may be amended hereafter.
(k) The word "Subsidiary" shall mean any domestic or foreign corporation at least 50%
of the common stock of which is owned directly or indirectly by the Company.
(l) The words "Substantial Shareholder" shall mean any employee who owns directly and
through attribution more than 10% of the total combined voting power of all classes
of stock of either the Company or any Subsidiary. Ownership shall be determined in
accordance with Section 424(d) of the Code and lawful applicable regulations.
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2. PURPOSE OF THE PLAN. The purpose of the Plan is to provide Key Employees
of the Company and its Subsidiaries with greater incentive to serve and promote
the interests of the Company and its shareholders. The premise of the Plan is
that, if such persons acquire a proprietary interest in the business of the
Company or increase such proprietary interest as they may already hold, then the
incentive of such persons to work toward the Company's continued success will be
commensurately increased. Accordingly, the Company will, from time to time
during the effective period of the Plan, grant to such Key Employees as may be
selected to participate in the Plan options to purchase Common Shares on the
terms and subject to the conditions set forth in the Plan. Key Employees may be
granted either Incentive Stock Options or nonqualified stock options.
3. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective on August
15, 1996 subject to approval by holders of a majority of the outstanding shares
of voting capital stock of the Company entitled to vote thereon represented in
person or by proxy at a meeting of shareholders. In the event that such
shareholder approval has not occurred on or before August 15, 1997, the Plan and
any options granted hereunder shall be null and void. If, however, the Plan is
so approved, subject to the provisions of Section 8, no further shareholder
approval shall be required with respect to the granting of any options pursuant
to the Plan.
4. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Committee. The Committee shall consist of no fewer than three (3) members, who
shall be designated by and be members of the Board. Each member of the Committee
shall be a "disinterested person" within the meaning of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934 or any amendment of or successor to
such Rule as may be in effect from time to time and an "outside director" within
the meaning of Section 162(m) of the Code or any amendment of or successor to
such provision as may be in effect from time to time. A majority of the
Committee shall constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in writing
by all of the members, shall be acts of the Committee. Subject to the terms and
conditions of the Plan, the Committee shall have full and final authority in its
absolute discretion:
(a) To select the Key Employees to whom options will be granted;
(b) To determine the number of Common Shares subject to any option;
(c) To determine the time or times when options will be granted;
(d) To determine the option price of Common Shares subject to an option;
(e) To determine the time or times when each option may be exercised and the duration
of the exercise period;
(f) To determine at the time of grant of an option whether and to what extent such
option is an Incentive Stock Option under Section 422 of the Code and regulations
thereunder as the same or any successor statute or regulations may at the time be
in effect;
(g) To determine whether stock appreciation rights shall be made part of any option
grant pursuant to Section 9 hereof, the method of valuing the stock appreciation
rights and whether the stock appreciation rights may be exercised in lieu of or in
addition to the related option;
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(h) To prescribe the form of the option agreements governing the options which are
granted under the Plan and to set the provisions of such option agreements as the
Committee may deem necessary or desirable provided such provisions are not contrary
to the terms and conditions of either the Plan or, where the option is an Incentive
Stock Option, Section 422 of the Code and regulations thereunder as the same or any
successor statute or regulations may at the time be in effect;
(i) To adopt, amend and rescind such rules and regulations as, in the Committee's
opinion, may be advisable in the administration of the Plan; and
(j) To construe and interpret the Plan, the rules and regulations and the instruments
evidencing options granted under the Plan and to make all other determinations
deemed necessary or advisable for the administration of the Plan.
Any decision made or action taken by the Committee in connection with the
administration, interpretation, and implementation of the Plan and of its rules
and regulations, shall, to the extent permitted by law, be conclusive and
binding upon all Optionees under the Plan and upon any person claiming under or
through such an Optionee. Neither the Committee nor any of its members shall be
liable for any act taken by the Committee pursuant to the Plan. No member of the
Committee shall be liable for the act of any other member.
5. PERSONS ELIGIBLE FOR OPTIONS. Subject to the restrictions herein
contained, options may be granted from time to time in the discretion of the
Committee only to such Key Employees, as designated by the Committee, whose
initiative and efforts contribute or may be expected to contribute to the
continued growth and future success of the Company and/or its Subsidiaries.
Notwithstanding the preceding sentence, a Key Employee who renounces in writing
any right he or she may have to receive stock options under the Plan shall not
be eligible to receive any stock options under the Plan. No option shall be
granted to any Key Employee during any period of time when he or she is on leave
of absence. The Committee may grant more than one option, with or without stock
appreciation rights, to the same Key Employee.
6. SHARES SUBJECT TO THE PLAN. Subject to the provisions of Section 9
concerning payment for stock appreciation rights in Common Shares and subject to
the provisions of the next succeeding paragraph of this Section 6, the aggregate
number of Common Shares for which options may be granted under the Plan shall be
Three Million Six Hundred Thousand (3,600,000) Common Shares. The maximum number
of Common Shares for which options may be granted under the Plan to any one
person shall be Five Hundred Thousand (500,000) Common Shares. Either treasury
or authorized and unissued Common Shares, or both, in such amounts, within the
maximum limits of the Plan, as the Committee shall from time to time determine,
may be so issued. All Common Shares which are the subject of any lapsed, expired
or terminated options shall not thereafter be available for reoffering under the
Plan. If an option granted under this Plan is exercised pursuant to the terms
and conditions determined by the Committee under Subsection 7(d), any Common
Shares which are the subject thereof shall not thereafter be available for
reoffering under the Plan to any Key Employee. If a stock appreciation right is
granted in conjunction with an option pursuant to Section 9, and if the option
agreement with the Optionee provides that exercise of the stock appreciation
right shall be in lieu of exercise of the options, and the stock appreciation
right is thereafter exercised in whole or in part, then the option or the
portion thereof with respect to which the stock
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appreciation right was exercised shall be deemed to have been exercised and
shall not thereafter be available for reoffering under the Plan.
In the event that subsequent to the date of effectiveness of the Plan, the
outstanding Common Shares are, as a result of a stock split, stock dividend,
combination or exchange of shares, exchange for other securities,
reclassification, reorganization, redesignation, merger, consolidation,
recapitalization, spin-off, split-off, split-up or other such change (including,
without limitation, any transaction described in Section 424(a) of the Code) or
a special dividend or other distribution to the Company's shareholders,
increased or decreased or changed into or exchanged for a different number or
kind of shares of stock or other securities of the Company, then (i) there shall
automatically be substituted for each Common Share subject to an unexercised
option granted under the Plan and each Common Share available for additional
grants of options under the Plan the number and kind of shares of stock or other
securities into which each outstanding Common Share shall be exchanged, (ii) the
option price per Common Share or unit of securities shall be increased or
decreased proportionately so that the aggregate purchase price for the
securities subject to the option shall remain the same as immediately prior to
such event, and (iii) the Committee shall make such other adjustments to the
securities subject to options, the provisions of the Plan, and option agreements
as may be appropriate or equitable, in order to prevent dilution or enlargement
of option rights and in compliance with the provisions of Section 424(a) of the
Code to the extent applicable and any such adjustment shall be final, binding
and conclusive as to each Optionee. Any such adjustment may, in the discretion
of the Committee, provide for the elimination of fractional shares.
7. OPTION PROVISIONS.
(a) Option Price. The option price per Common Share which is the subject of
an Incentive Stock Option under the Plan shall be determined by the Committee at
the time of grant but shall not be less than one hundred percent (100%) of the
fair market value of a Common Share at the close of business on the date the
Incentive Stock Option is granted; provided, however, that if a Key Employee to
whom an Incentive Stock Option is granted is at the time of the grant a
Substantial Shareholder, the option price per Common Share shall be determined
by the Committee but shall never be less than one hundred ten percent (110%) of
the fair market value of a Common Share on the date the option is granted. The
option price per Common Share under each option granted pursuant to the Plan
which is not an Incentive Stock Option shall be determined by the Committee at
the time of grant, and may be above or below the fair market value of a Common
Share on the date the option is granted. Such fair market value shall be
determined in accordance with procedures to be established by the Committee. The
date on which the Committee approves the granting of an option shall be deemed
for all purposes hereunder the date on which the option is granted.
(b) Period of Option. The Committee shall determine when each option is to
expire but no option shall be exercisable after ten (10) years have elapsed from
the date upon which the option is granted. Each option shall be subject to
earlier termination as provided in Subsection 7(e) hereunder.
(c) Limitation on Exercise and Transfer of Option. Except as otherwise
provided in the event of an Optionee's death, only the Optionee may exercise an
option, provided that a guardian or other legal representative who has been duly
appointed for such Optionee may exercise an option on behalf of the Optionee. No
option granted hereunder shall be transferable other than (i) by the Last
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Will and Testament of the Optionee or, if the Optionee dies intestate, by the
applicable laws of descent and distribution, or (ii) to the extent approved by
the Committee, pursuant to a qualified domestic relations order as defined by
the Code or the rules thereunder. No option granted hereunder may be pledged or
hypothecated, nor shall any such option be subject to execution, attachment or
similar process.
(d) Conditions Governing Exercise of Option. The Committee may, in its
absolute discretion, either require that, prior to the exercise of any option
granted hereunder, the Optionee shall have been an employee for a specified
period of time after the date such option was granted, or make any option
granted hereunder immediately exercisable. Each option shall be subject to such
additional restrictions or conditions with respect to the right to exercise and
the time and method of exercise as shall be prescribed by the Committee. Upon
satisfaction of any such conditions, the option may be exercised in whole or in
part at any time during the option period, but this right of exercise shall be
limited to whole shares, unless the Committee shall otherwise provide. Options
shall be exercised by the Optionee (i) giving written notice to the Secretary of
the Company at its principal office of the Optionee's exercise of the option and
the number of shares with respect to which the option is being exercised,
accompanied by full payment of the purchase price either in cash or, with the
consent of the Committee, in whole or in part in Common Shares having a fair
market value on the date the option is exercised equal to that portion of the
purchase price for which payment in cash is not made, and (ii) making
appropriate arrangements with the Company with respect to income tax
withholding, as required, which arrangements may include, in lieu of other
withholding arrangements, (a) the Company withholding from issuance to the
Optionee such number of Common Shares otherwise issuable upon exercise of the
option as the Company and the Optionee may agree; provided that such Optionee,
if subject to Section 16 of the Securities Exchange Act of 1934 or any successor
provision, has had on file with the Committee, for at least six (6) months prior
thereto, an effective standing election to satisfy said Optionee's tax
withholding obligations in such a fashion, which election form by its terms
shall not be revocable or amendable for at least six (6) months, or (b) with the
consent of the Committee, the Optionee's delivery to the Company of Common
Shares having a fair market value on the date the option is exercised equal to
that portion of the withholding obligation for which payment in cash is not
made. Such notice shall be deemed delivered when deposited in the mails.
Notwithstanding anything in the foregoing to the contrary, in the event of a
"change in control" the Committee shall have the authority and power: (i) to
cause all outstanding options to be immediately exercisable notwithstanding any
vesting limitation otherwise previously imposed on such options; and (ii) to
accelerate the termination date of all such options. Thereafter, upon such
determination, an Optionee may exercise any and all outstanding options (in
whole or in part), whether or not such options are by their terms fully
exercisable at such time, and the Committee may authorize the acceptance of the
surrender of the right to exercise such option or any portion thereof, but in no
event after the expiration of the term of the option. The term "change in
control" shall include, but not be limited to: (i) the first purchase of shares
pursuant to a tender offer or exchange (other than a tender offer or exchange by
the Company) for all or part of the Company's Common Shares or of any class or
any securities convertible into such Common Shares; (ii) the receipt by the
Company of a Schedule 13D or other advice indicating that a person is the
"beneficial owner" (as that term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of twenty percent (20%) or more of the Company's Common
Shares calculated as provided in paragraph (d) of said Rule 13d-3; (iii) the
date of approval by shareholders of the Company of an agreement providing for
any consolidation or merger of the Company in which the Company will
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not be the continuing or surviving corporation or pursuant to which capital
stock, or any class or any securities convertible into such capital stock, of
the Company would be converted into cash, securities, or other property, other
than a merger of the Company in which the holders of common stock of all classes
of the Company immediately prior to the merger would have the same proportion of
ownership of common stock of the surviving corporation immediately after the
merger; (iv) the date of the approval by shareholders of the Company of any
sale, lease, exchange, or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the Company; (v)
the adoption of any plan or proposal for the liquidation (but not a partial
liquidation) or dissolution of the Company; or (vi) such other event as the
Committee shall, in its sole and absolute discretion, deem to be a "change in
control." The manner of application and interpretation of the foregoing
provisions shall be determined by the Committee in its sole and absolute
discretion.
(e) Termination of Employment, Etc. If an Optionee ceases to be an employee
of the Company or its Subsidiaries, his or her option shall, unless otherwise
provided for by an action of the Committee or in the option agreement between
the Optionee and the Company, terminate on the date he or she ceases to be an
employee and neither he nor she nor any other person shall have any rights after
the date he or she ceases to be an employee to exercise all or any part of the
option. An Optionee's employment shall not be deemed to have terminated while he
or she is on a temporary military, sick or other bona fide leave of absence from
the Company or a Subsidiary approved in writing by the Company, such as a leave
of absence as is described in Section 1.421-7(h) of the Federal Income Tax
Regulations or any lawful successor regulations thereto; provided, however, that
the Committee may impose such terms and conditions with respect to such leaves
as it deems proper as are consistent with such regulations. If the stock option
is an Incentive Stock Option, no option agreement shall:
(i) permit any Optionee to exercise any Incentive Stock Option more
than three (3) months after the date the Optionee ceased to be an
employee of the Company and all Subsidiaries (but not beyond the
original term of the option) if the reason for the Optionee's
cessation as an employee was other than his or her death or his
or her Disability; or
(ii) permit any Optionee to exercise any Incentive Stock Option more
than one (1) year after the date the Optionee ceased to be an
employee of the Company and all Subsidiaries (but not beyond the
original term of the option) if the reason for the Optionee's
cessation as an employee was the Optionee's Disability; or
(iii) permit any person to exercise any Incentive Stock Option more
than one (1) year after the date the Optionee ceased to be an
employee of the Company and all Subsidiaries (but not beyond the
original term of the option) if either (A) the reason for the
Optionee's cessation as an employee was his or her death or (B)
the Optionee died within three (3) months after ceasing to be an
employee of the Company and all Subsidiaries.
If any option is by the terms of the option agreement exercisable following the
Optionee's death, then such option shall be exercisable by the Optionee's
estate, or the person designated in the Optionee's Last Will and Testament, or
the person to whom the option was transferred by the applicable laws of descent
and distribution.
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(f) Limitations on Grant of Incentive Stock Options. During the calendar
year in which any Incentive Stock Options granted by the Company or any
Subsidiary first become exercisable by any Optionee, the aggregate fair market
value of the Common Shares which are subject to such Incentive Stock Options
(determined as of the date the Incentive Stock Options were granted) shall not
exceed the sum of One Hundred Thousand Dollars ($100,000.00). Options which are
not designated as Incentive Stock Options shall not be subject to the limitation
described in the preceding sentence and shall not be counted when applying such
limitation.
(g) Prohibition of Alternative Options. It is intended that Key Employees
may be granted, simultaneously or from time to time, Incentive Stock Options or
other stock options, but no Key Employees shall be granted alternative rights in
Incentive Stock Options and other stock options so as to prevent options granted
as Incentive Stock Options under the Plan from qualifying as such within the
meaning of Section 422 of the Code.
(h) Waiver by Committee of Conditions Governing Exercise of Option. The
Committee may, in its sole discretion, waive any restrictions or conditions set
forth in an option agreement concerning an Optionee's right to exercise any
option and/or the time and method of exercise.
8. AMENDMENTS TO THE PLAN. The Committee is authorized to interpret the
Plan and from time to time adopt any rules and regulations for carrying out the
Plan that it may deem advisable. Subject to the approval of the Board, the
Committee may at any time amend, modify, suspend or terminate the Plan. In no
event, however, without the approval of the Company's shareholders, shall any
action of the Committee or the Board result in:
(a) Amending, modifying or altering the eligibility requirements provided in Section 5
hereof;
(b) Increasing or decreasing, except as provided in Section 6 hereof, the maximum
number of shares for which options may be granted;
(c) Decreasing the minimum option price per share at which certain options may be
granted under the Plan, as provided in Section 7(a) hereof;
(d) Extending either the maximum period during which an option is exercisable as
provided in Section 7(b) hereof or the date on which the Plan shall terminate as
provided in Section 12 hereof;
(e) Changing the requirements relating to the Committee; or
(f) Making any other change, without the Optionee's consent, which would cause any
option granted under the Plan as an Incentive Stock Option not to qualify as an
Incentive Stock Option within the meaning of Section 422 of the Code;
except as necessary to conform the Plan and the option agreements to changes in
the Code or other governing law. No option may be granted during any suspension
of this Plan or after this Plan has terminated and no amendment, suspension or
termination shall, without the Optionee's consent, alter or impair any of the
rights or obligations under an option theretofore granted to such Optionee under
this Plan.
9. STOCK APPRECIATION RIGHTS. The Committee may provide, at the time of the
grant of a stock option and upon such terms and conditions as it deems
appropriate, that an Optionee shall have the
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right with respect to all or a portion of the options granted to him or her to
elect to surrender such options in exchange for the consideration set forth in
this Section 9 in lieu of exercising such options. Alternatively, the Committee
may provide, at the time of the grant of a stock option and upon such terms and
conditions as it deems appropriate, that an Optionee shall have the right with
respect to all or a portion of the options granted to him or her to receive the
consideration set forth in this Section 9 upon exercising such options in
addition to any Common Shares purchased upon exercise thereof. Stock
appreciation rights must be specifically granted by the Committee; provided,
however, the Committee shall have no authority to grant stock appreciation
rights except in connection with the grant of a stock option pursuant to the
Plan, and no Optionee shall be entitled to such rights solely as a result of the
grant of an option to him or her. Stock appreciation rights, if granted, may be
exercised either with respect to all or a portion of the option to which they
relate. Stock appreciation rights shall not be transferable separate from the
option with respect to which they were granted and shall be subject to all of
the restrictions on transfer applicable to the said options. Stock appreciation
rights shall be exercisable only at such times and by such persons as are
specified in the option agreement governing the stock option with respect to
which the stock appreciation rights were granted. A stock appreciation right
shall provide that an Optionee shall have the right to receive a percentage, not
greater than One Hundred Percent (100%), of the excess over the option price, if
any, of the fair market value of the Common Shares covered by the option, as
determined by the Committee as of the date of exercise of the stock appreciation
right, in the manner provided for herein. Such amount shall be payable in one or
more of the following manners, as shall be determined by the Committee:
(a) in cash;
(b) in Common Shares having a fair market value equal to such amount;
or
(c) in a combination of cash and Common Shares.
Any payment made pursuant to this Section 9, whether in cash or in Common
Shares, shall thereby reduce the number of shares available for the grant of
options under this Plan.
In no event may any Optionee exercise any stock appreciation rights granted
hereunder unless such Optionee is then permitted to exercise the option or the
portion thereof with respect to which such stock appreciation rights relate. If
the option agreement with the Optionee provides that exercise of the stock
appreciation right shall be in lieu of exercise of the option, then (i) upon the
exercise of any stock appreciation rights, the option or that portion thereof to
which the stock appreciation rights relate shall be cancelled, and (ii) upon the
exercise of the option or that portion thereof to which the stock appreciation
rights relate, the stock appreciation rights shall be cancelled, and the option
agreement governing such option shall be deemed amended as appropriate without
any further action by the Committee or the Optionee. If the option agreement
with the Optionee provides that exercise of the stock appreciation right shall
be in addition to exercise of the option, then (i) upon the exercise of any
stock appreciation rights, the option or that portion thereof to which the stock
appreciation rights relate shall be deemed exercised, and (ii) upon the exercise
of the option, the stock appreciation rights corresponding thereto shall be
deemed exercised to the extent the option is exercised. The terms of any stock
appreciation rights granted hereunder shall be incorporated into the option
agreement which governs the option with respect to which the stock appreciation
rights are granted, and shall be on such terms as the Committee shall prescribe
which are not inconsistent with this Plan. The granting of an option or stock
appreciation right shall impose
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no obligation upon the Optionee to exercise such option or right. The Company's
obligation to satisfy stock appreciation rights shall not be funded or secured
in any manner.
10. INVESTMENT REPRESENTATION, APPROVALS AND LISTING. The Committee may
condition its grant of any option hereunder upon receipt of an investment
representation from the Optionee which shall be substantially similar to the
following:
"Optionee agrees that any Common Shares of RPM, Inc. which
Optionee may acquire by virtue of the exercise of this option shall
be acquired for investment purposes only and not with a view to
distribution or resale; provided, however, that this restriction shall
become inoperative in the event the Common Shares of RPM, Inc. which
are subject to this option shall be registered under the Securities Act
of 1933, as amended, or in the event RPM, Inc. is otherwise satisfied
that the offer or sale of the Common Shares of RPM, Inc. which are
subject to this option may lawfully be made without registration under
the Securities Act of 1933, as amended."
The Company shall not be required to issue any certificates for Common Shares
upon the exercise of an option or a stock appreciation right granted under the
Plan prior to (i) obtaining any approval from any governmental agency which the
Committee shall, in its sole discretion, determine to be necessary or advisable,
(ii) the admission of such Common Shares to listing on any national securities
exchange on which the Common Shares may be listed, (iii) completion of any
registration or other qualification of the Common Shares under any state or
federal law or ruling or regulations of any governmental body which the
Committee shall, in its sole discretion, determine to be necessary or advisable,
or the determination by the Committee, in its sole discretion, that any
registration or other qualification of the Common Shares is not necessary or
advisable and (iv) obtaining an investment representation from the Optionee in
the form set forth above or in such other form as the Committee, in its sole
discretion, shall determine to be adequate.
11. GENERAL PROVISIONS.
(a) Option Agreements Need Not Be Identical. The form and substance of
option agreements and grants of stock appreciation rights, whether granted at
the same or different times, need not be identical.
(b) No Right To Be Employed, Etc. Nothing in the Plan or in any option
agreement shall confer upon any Optionee any right to continue as an employee of
the Company or a Subsidiary, or to serve as a member of the Board, or to be
entitled to receive any remuneration or benefits not set forth in the Plan or
such option agreement, or to interfere with or limit either the right of the
Company or a Subsidiary to terminate the Optionee's employment at any time or
the right of the shareholders of the Company to remove him or her as a member of
the Board, with or without cause.
(c) Optionee Does Not Have Rights Of Shareholder. Nothing contained in the
Plan or in any option agreement shall be construed as entitling any Optionee to
any rights of a shareholder as a result of the grant of an option until such
time as Common Shares are actually issued to such Optionee pursuant to the
exercise of an option or stock appreciation right.
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(x) Successors In Interest. The Plan shall be binding upon the successors
and assigns of the Company.
(e) No Liability Upon Distribution Of Shares. The liability of the Company
under the Plan and any distribution of Common Shares made hereunder is limited
to the obligations set forth herein with respect to such distribution and no
term or provision of the Plan shall be construed to impose any liability on the
Company or the Committee in favor of any person with respect to any loss, cost
or expense which the person may incur in connection with or arising out of any
transaction in connection with the Plan, including, but not limited to, any
liability to any Federal, state, or local tax authority and/or any securities
regulatory authority.
(f) Taxes. Appropriate provisions shall be made for all taxes required to
be withheld and/or paid in connection with the options or the exercise thereof,
and the transfer of Common Shares pursuant thereto, under the applicable laws or
other regulations of any governmental authority, whether Federal, state or local
and whether domestic or foreign.
(g) Use Of Proceeds. The cash proceeds received by the Company from the
issuance of Common Shares pursuant to the Plan will be used for general
corporate purposes, or in such other manner as the Board deems appropriate.
(h) Expenses. The expenses of administering the Plan shall be borne by the
Company.
(i) Captions. The captions and section numbers appearing in the Plan are
inserted only as a matter of convenience. They do not define, limit, construe or
describe the scope or intent of the provisions of the Plan.
(j) Number. The use of the singular or plural herein shall not be
restrictive as to number and shall be interpreted in all cases as the context
may require.
(k) Gender. The use of the feminine, masculine or neuter pronoun shall not
be restrictive as to gender and shall be interpreted in all cases as the context
may require.
12. TERMINATION OF THE PLAN. The Plan shall terminate on August 15, 2006,
and thereafter no options shall be granted under the Plan. All options
outstanding at the time of termination of the Plan shall continue in full force
and effect according to the terms of the option agreements governing such
options and the terms and conditions of the Plan.
13. GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of Ohio and any applicable federal law.
14. VENUE. The venue of any claim brought hereunder by a Key Employee shall
be Cleveland, Ohio.
15. CHANGES IN GOVERNING RULES AND REGULATIONS. All references herein to
the Code or sections thereof, or to rules and regulations of the Department of
Treasury or of the Securities and Exchange Commission, shall mean and include
the Code sections thereof and such rules and regulations as are now in effect or
as they may be subsequently amended, modified, substituted or superseded.
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