THE B.F.GOODRICH COMPANY
STOCK OPTION PLAN
(Amended February 16, 1998)
1. PURPOSE. The purpose of the Plan is to promote the interests of the
shareholders by providing stock-based incentives to selected employees to align
their interests with shareholders and to motivate them to put forth maximum
efforts toward the continued growth, profitability and success of the Company.
In furtherance of this objective, stock options, stock appreciation rights,
performance shares, restricted shares, common stock, and/or other incentive
awards may be granted in accordance with the provisions of this Plan.
2. ADMINISTRATION. The Plan is to be administered by the Compensation
Committee or any successor committee (the 'Committee') of the Board of Directors
of the Company. The Committee shall consist of at least three members who shall
not be eligible to participate in the Plan. The Committee shall have full power
and authority to construe, interpret and administer the Plan. All decisions,
actions or interpretations of the Committee shall be final, conclusive and
binding on all parties.
The Committee may delegate to the Chief Executive Officer and to
other senior officers of the Company the authority to make awards under the Plan
with respect to not more than ten percent of the shares authorized under the
Plan, pursuant to such conditions and limitations as the Committee may
establish, except that only the Committee may make awards to Participants who
are subject to Section 16 of the Securities Exchange Act of 1934.
3. SHARES AVAILABLE FOR THE PLAN. An aggregate of 3,200,000 shares of
common stock of the Company shall be available for delivery pursuant to the
provisions of the Plan. Such shares may be either authorized but unissued shares
or treasury shares. Any shares awarded under the Plan which are not issued or
otherwise are returned to the Company, whether because awards have been
forfeited, lapsed, expired, been canceled, withheld to satisfy withholding tax
obligations or otherwise, shall again be available for other awards under the
Plan. However, upon surrender of a stock option or exercise of any related stock
appreciation right, the number of shares subject to the surrendered option shall
be charged against the maximum number of shares issuable under the Plan and
shall not be available for future awards.
4. LIMITATION ON AWARDS. No individual employee may receive awards
under this Plan with respect to more than 200,000 shares in any calendar year.
5. TERM. No awards may be made under this Plan after April 15, 2001.
6. ELIGIBILITY. Awards under the Plan may be made to any salaried,
full-time employee of the Company or any subsidiary corporation of which more
than 50% of the voting stock is owned by the Company.
Directors who are not full-time employees are not eligible to participate.
7. STOCK OPTIONS. The Committee may in its discretion from time to time
grant to eligible employees options to purchase, at a price not less than 100%
of the fair market value on the date of grant (the 'option price'), common stock
of the Company, subject to the conditions set forth in this Plan. The Committee
may not reduce the option price of any stock option grant after it is made,
except in connection with a Corporate Reorganization, nor may the Committee
agree to exchange a new lower priced option for an outstanding higher priced
option
The Committee, at the time of granting to any employee an
option to purchase shares or any related stock appreciation right or limited
stock appreciation right under the Plan, shall fix the terms and conditions upon
which such option or appreciation right may be exercised, and may designate
options incentive stock options pursuant to Section 422 of the Internal Revenue
Code of 1986, as amended (the 'Internal Revenue Code') or any other statutory
stock option that may be permitted under the Internal Revenue Code from time to
time, provided, however that (i) the date on which such options and related
appreciation rights shall expire, if not exercised, may not be later than ten
years after the date of grant of the option, (ii) in the case of options
designated as incentive stock options (as defined in Section 422 of the Internal
Revenue Code), the aggregate fair market value of stock optioned to an employee
(determined at time of grant) under this plan or any other plan of this Company
and its subsidiaries with respect to which incentive stock options are
exercisable for the first time by such employee during any calendar year shall
be limited to $100,000 (unless such Section 422 limit is revised, then in
conformance with such revision) and (iii) in case of any other statutory stock
option permitted under the Internal Revenue Code, then in accordance with such
provisions as in effect from time to time.
Within the foregoing limitations, the Committee shall have the
authority in its discretion to specify all other terms and conditions, including
but not limited to provisions for the exercise of options in installments, the
time limits during which options may be exercised, and in lieu of payment in
cash, the exercise in whole or in part of options by tendering common stock of
the Company owned by the employee, valued at the fair market value on the date
of exercise or other acceptable forms of consideration equal in value to the
option price. The Committee may, in its discretion, issue rules or conditions
with respect to utilization of common stock for all or part of the option price,
including limitations on the pyramiding of shares.
8. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion,
grant stock appreciation rights and limited stock appreciation rights (as
hereinafter described) in connection with any stock option, either at the time
of grant of such stock option or any
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time thereafter during the term of such stock option. Except for the terms of
this Plan with respect to limited stock appreciation rights, each stock
appreciation right shall be subject to the same terms and conditions as the
related stock option and shall be exercisable at such times and to such extent
as the Committee shall determine, but only so long as the related option is
exercisable. The number of stock appreciation rights or limited stock
appreciation rights shall be reduced not only by the number of appreciation
rights exercised but also by the number of shares purchased upon the exercise of
a related option. A related stock option shall cease to be exercisable to the
extent the stock appreciation rights or limited stock appreciation rights are
exercised. Upon surrender to the Company of the unexercised related stock
option, or any portion thereof, a stock appreciation right shall entitle the
optionee to receive from the Company in exchange therefor (a) a payment in stock
as determined below, or (b) to the extent determined by the Committee, the cash
equivalent of the fair market value of such payment in stock on the exercise
date had the employee been awarded a payment in stock instead of cash, or any
combination of stock and cash. The number of shares which shall be issued
pursuant to the exercise of stock appreciation rights shall be determined by
dividing (1) the total number of stock appreciation rights being exercised
multiplied by the amount by which the fair market value of a share of common
stock of the Company on the exercise date exceeds the option price of the
related option, by (2) the fair market value of a share of common stock of the
Company on the exercise date. No fractional shares shall be issued.
The grant of limited stock appreciation rights will permit a
grantee to exercise such limited stock appreciation rights for cash during a
sixty-day period commencing on the date on which any of the events described in
the definition of Change of Control occurs. The amount of cash received upon the
exercise of any limited stock appreciation rights shall equal the excess, if
any, of the fair market value of a share of the Company's common stock on the
date of exercise of the limited stock appreciation rights, over the option price
of the stock option to which the limited stock appreciation rights relate.
9. PERFORMANCE SHARE AWARDS. The Committee may make awards in common
stock subject to conditions established by the Committee which may include
attainment of specific performance objectives ('Performance Share Awards').
Performance Share Awards may include the awarding of additional shares upon
attainment of the specified performance objectives.
10. PERFORMANCE OBJECTIVES. Performance objectives that may be used
under the Plan include Net Income, Pretax Income, Consolidated Operating Income,
Segment Operating Income, Return on Equity, Operating Income Return on Net
Capital Employed, Return on Assets, Cash Flow, Working Capital and Earnings per
Share of Common Stock of the Company (the 'Performance Objectives'). The
Performance Objectives shall be calculated without regard to any change in
accounting standards adopted pursuant to the Financial Accounting Standards
Board after the goal for a Performance Objective is adopted which will affect
the performance measure by 10 percent or more.
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11. RESTRICTED SHARES. The Committee may make awards in common stock
subject to conditions, if any, established by the Committee which may include
continued service with the Company or its subsidiaries. Any award of Restricted
Shares which is conditioned upon continued employment shall be conditioned upon
continued employment for a minimum period of two years and ten months following
the award, except in the case of death, disability or retirement. The maximum
number of Restricted Shares that may be awarded under the plan shall be 800,000
shares.
12. OTHER AWARDS. The Committee may make awards authorized under this
Plan in Units, the value of which is based, in whole or in part, on the value of
the Company's common stock, in lieu of making such awards in common stock. The
Committee may provide for the deferral of cash-based awards under such terms and
conditions as in its discretion it deems appropriate.
12A. DEFERRED AWARDS. The Committee may permit recipients of awards to
elect to defer receipt of such awards under such terms and conditions that the
Committee may prescribe. The Committee may authorize the Company to establish
various trusts or make other arrangements with respect to any deferred awards.
13. FAIR MARKET VALUE. For all purposes of this Plan the fair market
value of a share of stock shall be the mean of the high and low prices of the
Company's common stock on the relevant date as reported on the New York Stock
Exchange -- Composite Transactions listing (or similar report), or, if no sale
was made on such date, then on the next preceding day on which such a sale was
made.
14. TERMINATION OF EMPLOYMENT. Upon the termination of employment of
any employee for any reason, his or her options and any related appreciation
rights shall terminate at that time with respect to all shares which were not
then purchasable by him or her, provided, however, that if the termination of
employment is by reason of death, disability or retirement the Committee may in
its sole discretion provide that such options and related appreciation rights
shall not terminate upon death, disability or retirement and may become
immediately exercisable or continue to become exercisable in accordance with the
terms of the original grant.
15. ASSIGNABILITY. Options and any related appreciation rights and
other awards granted under this Plan shall not be transferable other than by
will or the laws of descent and distribution or by such other means as the
Committee may approve from time to time.
16. CORPORATE REORGANIZATION. The number and kind of shares authorized
for delivery under the Plan and the price at which shares may be purchased may
be adjusted appropriately in the event of any stock split, stock dividend,
combination of
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shares, merger, consolidation, reorganization, or other change in the structure
of the Company or the nature of the shares of the Company. The determination of
what adjustments, if any, are appropriate shall be made in the discretion of the
Board of Directors or the Committee.
In the event of a dissolution or liquidation of the Company or a
merger, consolidation, sale of all or substantially all of its assets, or other
corporate reorganization in which the Company is not the surviving corporation
or any merger in which the Company is the surviving corporation but the holders
of its common stock receive securities of another corporation, any outstanding
options hereunder shall terminate, provided that each optionee shall, in such
event, have the right immediately prior to such dissolution, liquidation,
merger, consolidation, sale of assets or reorganization in which the Company is
not the surviving corporation or any merger in which the Company is the
surviving corporation but the holders of its common stock receive securities of
another corporation, to exercise any unexpired option and/or stock appreciation
right in whole or in part without regard to the exercise date contained in such
option. Nothing herein contained shall prevent the assumption and continuation
of any outstanding option or the substitution of a new option by the surviving
corporation.
17. COMMITTEE'S DETERMINATION. The Committee's determinations under the
Plan including without limitation, determinations of the employees to receive
awards or grants, the form, amount and timing of such awards or grants, the
terms and provisions of such awards or grants and the agreements evidencing
same, and the establishment of Performance Objectives need not be uniform and
may be made by it selectively among employees who receive, or are eligible to
receive awards or grants under the Plan whether or not such employees are
similarly situated.
18. LEAVE OF ABSENCE OR OTHER CHANGE IN EMPLOYMENT STATUS. The
Committee shall be entitled to make such rules, regulations and determinations
as it deems appropriate under the Plan in respect of any leave of absence taken
by an employee or any other change in employment status, such as a change from
full time employment to a consulting relationship, of an employee relative to
any grant or award. Without limiting the generality of the foregoing, the
Committee shall be entitled to determine (i) whether or not any such leave of
absence or other change in employment status shall constitute a termination of
employment within the meaning of the Plan and (ii) the impact, if any, of any
such leave of absence or other change in employment status on awards under the
Plan theretofore made to any employee who takes such leave of absence or
otherwise changes his or her employment status.
19. WITHHOLDING TAXES. The Committee shall have the right to require
any Federal, state or local withholding tax requirements to be satisfied by
withholding shares of common stock or other amounts which would otherwise be
payable under the Plan.
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20. RETENTION OF SHARES. If shares of common stock are awarded subject
to attainment of Performance Objectives, continued service with the Company or
other conditions, the shares may be registered in the employees' names when
initially awarded, but possession of certificates for the shares shall be
retained by the Secretary of the Company for the benefit of the employees, or
shares may be registered in book entry form only, in both cases subject to the
terms of this Plan and the conditions of the particular awards. In either event,
each employee shall have the right to receive all dividends and other
distributions made with respect to such awards registered in his or her name and
shall have the right to vote or execute proxies with respect to such registered
shares.
21. FORFEITURE OF AWARDS. Any awards or parts thereof made under this
plan which are subject to Performance Objectives or other conditions which are
not satisfied, shall be forfeited, and any shares of common stock issued shall
revert to the Treasury of the Company.
22. CONTINUED EMPLOYMENT. Nothing in the Plan or in any agreement
entered into pursuant to the Plan shall confer upon any employee the right to
continue in the employment of the Company or affect any right which the Company
may have to terminate the employment of such employee.
23. CHANGE IN CONTROL. For purposes of the Plan, a Change in
Control shall mean:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the 'Exchange Act')), of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the
then outstanding shares of common stock of the Company (the 'Outstanding Company
Common Stock') or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the 'Outstanding Company Voting Securities'); provided, however, that
the following acquisitions shall not constitute a Change of Control: (A) any
acquisition directly from the Company (other than by exercise of a conversion
privilege), (B) any acquisition by the Company or any of its subsidiaries, (C)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (D) any acquisition by
any corporation with respect to which, following such acquisition, more than 70%
of, respectively, the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Company Voting Securities immediately prior to such
acquisition in substantially the same proportions as their ownership,
immediately prior to such acquisition, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be; or
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(ii) During any period of two consecutive years, individuals
who, as of the beginning of such period, constitute the Board (the 'Incumbent
Board'), cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
beginning of such period whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or
(iii) approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to which all
or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger or
consolidation, do not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 70% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
reorganization, merger or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger or
consolidation of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be; or
(iv) Approval by the shareholders of the Company of (A) a
complete liquidation or dissolution of the Company or (B) a sale or other
disposition of all or substantially all of the assets of the Company, other than
to a corporation, with respect to which following such sale or other
disposition, more than 70% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation to vote generally in the
election of directors is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be.
24. EFFECT OF CHANGE IN CONTROL. Options and any related appreciation
rights that are not then exercisable shall become immediately exercisable in the
event of a Change in Control. The Committee may make such provision with respect
to other awards under this Plan as it deems appropriate in its discretion.
25. COMPLIANCE WITH LAWS AND REGULATIONS. Notwithstanding any other
provisions of the Plan, the issuance or delivery of any shares may be postponed
for
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such period as may be required to comply with any applicable requirements of any
national securities exchange or any requirements under any other law or
regulation applicable to the issuance or delivery of such shares, and the
Company shall not be obligated to issue or deliver any such shares if the
issuance or delivery thereof shall constitute a violation of any provision of
any law or any regulation of any governmental authority, whether foreign or
domestic, or any national securities exchange.
26. AMENDMENT. The Board of Directors of the Company may alter or amend
the Plan, in whole or in part, from time to time, or terminate the Plan at any
time, provided however, that no amendment shall be made without the approval of
the shareholders which has the effect of increasing the number of shares subject
to this Plan (other than in connection with a Corporate Reorganization), but no
such action shall adversely affect any rights or obligations with respect to
awards previously made under the Plan.
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Stock Option Plan - BFGoodrich Co.
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