JOHN H. HARLAND COMPANY

SENIOR MANAGEMENT INCENTIVE PLAN

 

 

1.

Purpose

      The purpose of this Senior Management Incentive Plan (the “Plan”) of John H. Harland Company (the “Company”) is to give each Participant the opportunity to receive a bonus for each Measurement Period payable in cash if, and to the extent, the Committee determines that the Performance Goals set by the Committee for such Participant for such Measurement Period have been met.

 

 

2.

Definitions

      Each term set forth in this § 2 shall have the meaning set forth opposite such term.

      2.1.     Board — the board of directors of the Company.

      2.2.     Business Criteria — Earnings per Share, Net Income, Operating Income, Earnings Growth, Revenue, Return on Assets, Return on Equity, Return on Investment, Return on Capital Employed, Cash Flow, Operating Margins, Working Capital and/or Total Shareholder Return.

      2.3.     Committee — the Governance Committee of the Board (or a subcommittee thereof), each member of which is an “outside director” under § 162(m) of the Internal Revenue Code (the “Code”).

      2.4.     Key Employee — an executive officer of the Company or any subsidiary of the Company who the Committee reasonably believes is or will become a “covered employee” under Code § 162(m) as of the last day of the Measurement Period.

      2.5.     Measurement Period — the calendar year or years designated by the Committee for a Participant.

      2.6.     Participant — each Key Employee designated by the Committee under § 3 as eligible for a bonus under this Plan for a Measurement Period.

      2.7.     Performance Goals — the goal, or the combination of goals, set under § 4 by the Committee for each Participant for each Measurement Period with respect to the Business Criteria selected by the Committee for such Measurement Period.

 

 

3.

Participation; Bonus Cap

      The Committee for each Measurement Period shall have the right to designate any Key Employee as eligible for a bonus under this Plan; provided such designation is made no later than 90 days after the beginning of such Measurement Period. No bonus shall be paid to any Participant for any calendar year under this Plan to the extent such bonus would exceed $3 million.

 

 

4.

Performance Goals

      The Committee shall establish written Performance Goals for each Participant for a Measurement Period no later than 90 days after the beginning of such Measurement Period based on such Business Criteria as the Committee deems appropriate under the circumstances. The Committee shall have the right to use different

Business Criteria for different Participants and to set different Performance Goals for Participants whose goals look to the same Business Criteria. Performance Goals may be based (as the Committee deems appropriate) on (1) Company-wide performance, (2) performance of a subsidiary, division, region, department, function, plant, facility or other operational unit of the Company, (3) individual performance (if applicable), or (4) any combination of the foregoing. Performance Goals may be set in any manner determined by the Committee, including looking to achievement of Business Criteria on an absolute basis or on a relative basis to prior periods or in relation to peer group, indexes or other external measure of the selected criteria. When the Committee sets a Participant’s Performance Goals, the Committee shall establish the general, objective rules that the Committee will use to determine the extent, if any, that such Performance Goals have been met. In establishing the objective rules, the Committee may take into account any extraordinary or one-time or other non-recurring items of income or expense or gain or loss or any events, transactions or other circumstances that the Committee deems relevant in light of the nature of the Performance Goals set for the Participant or the assumptions made by the Committee regarding such goals.

 

 

5.

Individual Stretch Objectives

      The Committee, in its discretion, may establish one or more individual performance “stretch objectives” for a Participant for a Measurement Period, and the Committee shall have the right, in its discretion, to reduce the bonus that otherwise would be payable to the Participant as a result of satisfaction of his or her Performance Goals for the Measurement Period if the Committee determines that the Participant has not met one or more such stretch objectives.

 

 

6.

Certification and Payment

      The Committee shall certify the extent, if any, to which the Performance Goals set for each Participant for a Measurement Period have been met and shall determine the bonus payable to a Participant based on the extent to which he or she met his or her Performance Goals. However, the Committee shall have the right, in its discretion, to reduce the bonus determined under this § 6 if the Committee determines a Participant has not met one or more individual performance stretch objectives that otherwise applied to the Participant during the Measurement Period pursuant to § 5. If the Committee certifies that a bonus is payable to a Participant for any Measurement Period, such bonus shall be paid in cash as soon as practical after such certification has been made, but in no event later than 60 days after the end of the calendar year in which the Measurement Period ends. However, no Participant shall have a right to the payment of a bonus for any Measurement Period if his or her employment with the Company has terminated for any reason whatsoever (other than death, disability or retirement) before the end of the Measurement Period.

 

 

7.

Miscellaneous

      7.1.     Administration. The Committee shall have the power to interpret and administer this Plan as the Committee in its absolute discretion deems in the best interest of the Company, and the Committee shall interpret and administer this Plan in such a manner as to protect the Company’s right to deduct, in light of Code § 162(m), any bonus payable under this Plan.

      7.2.     Amendment and Termination. This Plan may be amended by the Board from time to time to the extent that the Board deems necessary or appropriate; provided, however, to the extent required by applicable law, or deemed necessary or advisable by the Committee, such amendment shall be subject to shareholder approval. The Board may terminate this Plan at any time.

      7.3.     General Assets; General Creditor Status. Any bonus payable under this Plan shall be paid exclusively from the Company’s general assets. The status of each Participant with respect to his or her claim for the payment of a bonus under this Plan shall be the same as the status of a general and unsecured creditor of the Company.

      7.4.     No Assignment. No Participant shall have the right to assign or otherwise alienate or commute all or any part of the bonus which might be payable to such Participant under this Plan, and any attempt to do so shall be null and void.

      7.5.     No Contract of Employment. The designation of any individual as a Participant in this Plan or the payment of a bonus to such Participant under this Plan shall not constitute a contract of employment and shall not confer on such Participant any rights upon his or her termination of employment in addition to those rights, if any, expressly set forth in this Plan.

      7.6.     Other Benefit Programs. Awards under this Plan are in addition to, and not in lieu of, awards made under any other employee benefit plan, program or arrangement in which any Participant may be or become eligible to participate, including any other bonus program or arrangement that may not be performance-based under Code § 162(m).

      7.7.     Governing Law. This Plan shall be construed under the laws of the State of Georgia.