TBC CORPORATION

 

 

                                                 AMENDED AND RESTATED

                                              1989 STOCK INCENTIVE PLAN

 

 

 

 

 

--------------------------------

 

Effective April 27, 1989

Amended April 26, 1990 and April 23, 1992

Amended and Restated April 23, 1997

Amended and Restated August 9, 2002

 

 

 

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                                                  Table of Contents

 

                                                                                                                  Page

 

 

Section  1.           Purpose........................................................................................1

 

Section  2.           Definitions....................................................................................1

 

Section  3.           Shares Subject to the Plan.................................................................... 3

 

Section  4.           Administration.................................................................................4

 

Section  5.           Eligibility....................................................................................5

 

Section  6.           Options........................................................................................5

 

Section  7.           Restricted Share Awards........................................................................7

 

Section  8.           Performance Awards.............................................................................9

 

Section  9.           Stock Appreciation Rights.....................................................................10

 

Section 10.           Restricted Shares for Eligible Directors......................................................12

 

Section 11.           Non-Assignability of Incentive Awards.........................................................15

 

Section 12.           Change of Control.............................................................................15

 

Section 13.           Taxes.........................................................................................16

 

Section 14.           Compliance with Laws and Exchange

                      Requirements..................................................................................16

 

Section 15.           Amendment and Termination of Plan............................................................ 16

 

Section 16.           Notices.......................................................................................17

 

Section 17.           Benefits of Plan..............................................................................17

 

Section 18.           Pronouns and Plurals......................................................................... 17

 

Section 19.           Stockholder Approval and Term of Plan.........................................................17

 

 

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                                           1989 STOCK INCENTIVE PLAN

 

 

 

Section 1.  Purpose.

 

             The purpose of this 1989 Stock Incentive Plan (the "Plan") is to promote

the long-term success of TBC Corporation (the "Company") by providing financial

incentives to officers, key employees and non-employee directors of the Company

and its subsidiaries who are in positions to make significant contributions toward

such success.  The Plan is designed to attract individuals of outstanding ability to

employment with the Company and its subsidiaries and to encourage such

individuals to acquire a proprietary interest in the Company through stock ownership,

to continue employment with the Company and its subsidiaries, and to render

superior performance during such employment.  To accomplish the purposes of the

Plan, the Board of Directors of the Company may grant Incentive Awards, as

hereinafter defined, in such amounts and on such conditions as it deems

appropriate, subject to the provisions of the Plan.

 

Section 2.  Definitions.

 

             (a)      "Board" means the Board of Directors of the Company.

 

             (b)      "Change of Control" means and shall be deemed to have occurred

on (i) the date upon which the Company is provided a copy of a Schedule 13D, filed

pursuant to Section 13(d) of the Securities Exchange Act of 1934 indicating that a

group or person, as defined in Rule 13d-3 under said Act, has become the beneficial

owner of 20% or more of the outstanding Voting Shares of the Company or the date

upon which the Company first learns that a person or group has become the

beneficial owner of 20% or more of the outstanding Voting Shares of the Company if

a Schedule 13D is not filed; (ii) the date of a change in the composition of the Board

such that individuals who were members of the Board on the date two years prior to

such change (or who were subsequently elected to fill a vacancy in the Board, or

were subsequently nominated for election by the Company's stockholders, by the

affirmative vote of at least two-thirds of the directors then still in office who were

directors at the beginning of such two year period) no longer constitute a majority of

the Board; (iii) the date the stockholders of the Company approve a merger or

consolidation of the Company with any other corporation, other than a merger or

consolidation which would result in the Voting Shares of the Company outstanding

immediately prior thereto continuing to represent (either by remaining outstanding or

by being converted into Voting Shares of the surviving or parent entity) at least 80%

of the total voting

 

 

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power represented by the Voting Shares of the Company or such surviving or parent

entity outstanding immediately after such merger or consolidation; or (iv) the date

stockholders of the Company approve a plan of complete Liquidation of the

Company or an agreement for the sale or disposition by the Company of all or

substantially all the Company's assets.

 

             (c)      "Code" means the Internal Revenue Code of 1986, as amended.

 

             (d)      "Committee" means the committee referred to in Section 4.

 

             (e)      "Eligible Director" means any director of the Company or any

Subsidiary who is not also an employee of the Company or any Subsidiary.

 

             (f)      "Employee" means officers and any other full-time employees of the

Company or any of its Subsidiaries.

 

             (g)      "Fair Market Value" means the mean of the closing bid and asked

quotations in the over-the-counter market on the date the value of a Share is to be

determined, as reported by the National Association of Securities Dealers, through

NASDAQ; or in the event the Shares are listed on any exchange or on the NASDAQ

National Market System, the closing price on such exchange or in the over-the-

counter market, as reported by the National Association of Securities Dealers, Inc.

through NASDAQ, on the date the value of a Share is to be determined or, if there

are no sales on such date, the mean of the bid and asked price for Shares on such

exchange or in the over-the-counter market, as reported by the National Association

of Securities Deals, Inc. through NASDAQ, at the close of business on such date.  In

the event there is no public market for the Shares, then Fair Market Value of a Share

shall be determined by the Committee by such method as is consistent with the

provisions of the Code or the regulations of the Treasury Department promulgated

thereunder.

 

             (h)      "Incentive Award" means an Option, Restricted Share Award

(granted under either Section 7 or Section 10 of the Plan), Performance Award or

Stock Appreciation Right granted under the Plan.

 

             (i)      "Incentive Stock Option" means an Option that is an Incentive Stock

Option, as defined in Section 422 of the Code.

 

             (j)      "Meeting" means the Annual Meeting of the Stockholders of the

Company.

 

             (k)      "Nonqualified Stock Option" means an Option that is not an

Incentive Stock Option.

 

 

 

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             (l)      "Option" means a right to purchase Shares at a Specified price;

"Optionee" means the holder of an Option.

 

             (m)      "Participant" means an Employee or Eligible Director selected to

receive an Incentive Award.

 

             (n)      "Performance Award" means a right to receive Shares, cash, or a

combination thereof, contingent upon the attainment of performance objectives

determined in the discretion of the Committee as more fully set forth at Section 8

hereof.

 

             (o)      "Restricted Share Award" means a right, granted under either

Section 7 or Section 10 hereof, to receive Shares that is nontransferable and subject

to substantial risk of forfeiture until specific conditions are met; "Restricted Shares"

means Shares which are the subject of a Restricted Share Award; and "Restricted

Period" means, in the case of Employees, the period established by the Committee

pursuant to Section 7(a) and, in the case of Eligible Directors, the period established

pursuant to Section 10(b).

 

             (p)      "Shares" means the shares of Common Stock of the Company.

 

             (q)      "Stock Appreciation Right" shall have the meaning set forth at

Section 9.

 

             (r)      "Subsidiary" means any entity more than 50% of the voting control of

which is held, directly or indirectly, by the Company.

 

             (s)      "Tax Date" means the date as of which the amount of the

withholding tax payment with respect to the exercise of a Nonqualified Stock Option,

the termination of the Restricted Period of Restricted Shares or the payment of a

Performance Award is calculated.

 

             (t)      "Voting Shares" means any securities of the

Company which vote generally in the election of directors.

 

             (u)      "Valuation Date" means the date that the election to exercise the

Stock Appreciation Right is received by the Committee.

 

Section 3.  Shares Subject to the Plan.

 

             (a)      Maximum Number.  The maximum number of Shares that may be

subject to Incentive Awards granted pursuant to the Plan

 

 

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shall be 1,125,000 (1)  less the number of Shares subject to options granted under the

Company's 1983 Stock Option Plan through the date of its termination on April 27,

1989 and further subject to adjustment in accordance with Section 3(b).  The Shares

which may be issued pursuant to Incentive Awards may be authorized and unissued

Shares or Shares held in the Company's treasury.  In the event of a lapse,

expiration, termination, or cancellation of any Incentive Award granted under the

Plan without the issuance of Shares or the payment of cash, or if Shares are issued

under a Restricted Share Award and are reacquired by the Company as a result of

rights reserved upon the issuance thereof, or if the exercise of a Stock Appreciation

Right results in the cancellation of an Option granted in tandem with the Stock

Appreciation Right, the Shares subject to or reserved for such Incentive Award shall

no longer be charged against said maximum number of Shares and may again be

used for new Incentive Awards.

 

             (b)      Recapitalization Adjustment.  In the event of any change affecting

the Shares by reason of any stock dividend or split, recapitalization, merger,

consolidation, spin-off, combination or exchange of stock or other corporate change,

or any distribution to a holder of Shares other than ordinary cash dividends, the

Committee shall make such adjustment, if any, as it may deem appropriate to avoid

dilution in the number and kind of shares authorized for issuance under the Plan, in

the number and kind of shares covered by Incentive Awards and, in the case of

options, in the option price.

 

Section 4.  Administration.

 

             (a)      Committee.  The Plan shall be administered by a Committee of the

Board, comprised of three or more directors, who shall from time to time be

appointed by, and serve at the pleasure of, the Board.

 

             (b)      Authority.  The Committee shall have and exercise all the power and

authority granted to it under the Plan.  Subject to the provisions of the Plan, the

Committee shall have authority in its sole discretion from time to time (i) to designate

from Employees the persons who shall be granted Incentive Awards; (ii) to prescribe

such limitations, restrictions and conditions upon any such awards as the Committee

shall deem appropriate; (iii) to interpret the Plan and to adopt, amend and rescind

rules and regulations relating to the Plan; and (iv) to make all other determinations

and take all other actions necessary or advisable for the implementation and

administration of the Plan.

 

 

(1)   Not adjusted for stock splits after the adoption of the Plan.

 

 

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             (c)      Committee Actions.  A majority of the Committee shall constitute a

quorum, and the acts of a majority of the members present at a meeting at which a

quorum is present, or acts reduced to or approved in writing by all members of the

Committee, shall be acts of the Committee.  All such actions shall be final,

conclusive, and binding.  No member of the Committee shall be liable for any action

taken or decision made in good faith relating to the Plan or any Incentive Award

thereunder.  In the performance of their duties, the members of this Committee shall

be fully protected in relying in good faith upon information provided by the

Company's officers or auditors.

 

Section 5.  Eligibility and Incentive Awards.

 

             (a)      Eligible Employees and Directors.  The Committee may grant

Incentive Awards to officers and other key Employees. Incentive Awards shall be

granted to Eligible Directors in accordance with Section 10 hereof.

 

             (b)      Incentive Awards.  Incentive Awards may be granted in any one or

more combinations of (i) Incentive Stock Options, (ii) Nonqualified Stock Options, (iii)

Restricted Share Awards, and (iv) Performance Awards.  All Incentive Awards shall

be subject to such other terms and conditions as may be established by the

Committee.  Determinations by the Committee under the Plan, including, without

limitation, designation of Employees, the form, amount and timing of Incentive

Awards, the terms and provisions of Incentive Awards, and the written agreements

evidencing Incentive Awards, need not be uniform and may be made selectively

among Employees who receive, or are eligible to receive, Incentive Awards

hereunder, whether or not such Employees are similarly situated.

 

             (c)      Employment.  The Plan and the Incentive Awards granted hereunder

shall not confer upon any Participant the right to continued employment with the

Company or affect in any way the right of the Company to terminate the employment

of a Participant at any time and for any reason.

 

Section 6.  Options.

 

             The Committee may grant Incentive Stock Options and Nonqualified Stock

Options and such Options shall be subject to the following terms and conditions and

such other terms and conditions as the Committee may prescribe:

 

             (a)      Written Agreement.  The terms and conditions of each Option

      granted under the Plan shall be set forth in a written

 

 

 

 

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      agreement, the form of which shall be approved by the Committee.

 

             (b)      Option Price.  The Option price per Share with respect to each

      Option shall be determined by the Committee but shall not be less than the par

      value of a Share.

 

             (c)      Period of Option.  The period of each Option shall be fixed by the

      Committee subject to the limitations in Section 6(e) with respect to Incentive

      Stock Options.

 

             (d)      Exercise of Option.  An Option may be exercised with respect to all

      Shares covered thereby or may be exercised with respect to a specified number

      of Shares over a specified period or periods as determined by the Committee.

      Any Shares not purchased during a specified period may be purchased

      thereafter at any time prior to the expiration of the Option unless the Committee

      determines otherwise.

 

             (e)      Limits on Incentive Stock Options.

 

                       (i)   The option price of an Incentive Stock Option shall not be less

             than the Fair Market Value of a Share on the date such option is granted.

 

                      (ii)   No Incentive Stock Option shall be granted to an Employee

             who possesses, directly or indirectly, at the time of grant more than 10% of

             the combined voting power of all classes of stock of the Company unless

             the option price is at least 110% of the Fair Market Value of the Shares

             subject to the Option on the date such Option is granted and such

             Incentive Stock Option is not exercisable after the expiration of five years

             from the date of grant.

 

                      (iii)  No Incentive Stock Option may be granted on or after the tenth

             anniversary of the adoption of the Plan by the Board.

 

                      (iv)   No Incentive Stock Option may be exercised more than ten

             years after the date of grant.

 

                       (v)   The aggregate Fair Market Value (determined as of the time an

             Incentive Stock Option is granted) of Shares with respect to which

             Incentive Stock Options are exercisable for the first time by such individual

             in any calendar year (under the Plan and all other plans of the Company

             and any Subsidiary) shall not exceed $100,000, or such other maximum

             amount permitted by the Code.  In the event that the ability to exercise an

             Incentive Stock Option would otherwise violate this Subsection, then (a)

 

 

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             the cumulative amount of Incentive Stock Options exercisable in a

             calendar year shall be limited as provided in this Subsection (with the

             determination of exercisable Incentive Stock Options being made in order

             of grant), and (b) the portion of any Incentive Stock Options thereby

             rendered nonexercisable shall, subject to the foregoing, become

             exercisable during the remaining period of the Option.

 

             (f)      Notice of Exercise and Payment.  An Option granted under the Plan

      may be exercised by the Optionee giving written notice of exercise to the

      Committee and paying the option price in full at such time.  An Option shall be

      deemed exercised on the date the Committee receives written notice of

      exercise, together with full payment for the Shares purchased.  The option price

      shall be paid to the Company either in cash, by delivery to the Company of

      Shares already-owned by the Optionee or any combination of cash and such

      Shares.  In addition, payment may be made by delivering an exercise notice

      together with irrevocable instructions to a broker promptly to deliver to the

      Company the amount of sale or loan proceeds to pay the exercise price.  The

      Committee may, however, at any time and in its discretion, adopt guidelines

      limiting or restricting the use of already-owned Shares to pay all or any portion

      of the option price.  In the event already-owned Shares are used to pay all or a

      portion of the option price, the amount credited to payment of the option price

      shall be the Fair Market Value of the already-owned Shares on the date the

      Option is exercised.

 

             (g)      Special Payment Provisions for Nonqualified Options.  Upon the

      exercise of a Nonqualified Option, the Company, at the discretion of the

      Committee, may pay the exercising party a cash lump sum which is equivalent to

      the net tax savings to the Company, as determined by the Committee, arising

      from the tax deduction available to the Company through such exercise, where

      applicable, under the Code.

 

             (h)      Fractional Shares.  No fractional Shares shall be issued pursuant to

      the exercise of an Option, nor shall any cash payment be made in lieu of

      fractional Shares.

 

Section 7.  Restricted Share Awards.

 

             The Committee may issue Shares to an Employee subject to the following

terms and conditions and such other terms and conditions as the Committee may

prescribe in connection with the grant of a Restricted Share Award:

 

 

 

 

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             (a)      General.  With respect to each grant of Restricted Shares, the

      Committee, in its sole discretion, shall determine the period during which the

      restrictions set forth at Subsection 7(b) shall apply to the Restricted Shares (the

      "Restricted Period").

 

             (b)      Restrictions.  At the time of grant of Restricted Shares to an

      Employee, the number of Shares granted shall be issued in the Employee's

      name in uncertificated form.  The Employee shall have the entire beneficial

      ownership interest in, and all rights and privileges of a stockholder as to, such

      Restricted Shares, including the right to receive dividends and the right to vote

      such Restricted Shares, subject to the following restrictions: (i) subject to

      Section 7(c), the Employee shall not be entitled to delivery of a Share certificate

      until the expiration of the Restricted Period; (ii) none of the Restricted Shares

      may be sold, transferred, assigned, pledged, or otherwise encumbered or

      disposed of during the Restricted Period; and (iii) all of the Restricted Shares

      shall be forfeited and all rights of the Employee to such Restricted Shares shall

      terminate without further obligation on the part of the Company unless the

      Employee remains in the continuous employment of the Company for the entire

      Restricted Period in relation to which such Restricted Shares were granted,

      except as provided by Section 7(c).  Any Shares received with respect to

      Restricted Shares as a result of a recapitalization adjustment defined in Section

      3(b) shall be subject to the same restrictions as such Restricted Shares.

 

             (c)      Termination of Employment.

 

                       (i)   Retirement.  If an Employee ceases to be employed by the

      Company prior to the end of a Restricted Period by reason of normal retirement

      under a retirement plan of the Company or the Employee otherwise retires with

      the consent of the Company, the number of Restricted Shares granted to such

      Employee for such Restricted Period shall be reduced in proportion to the

      Restricted Period (determined on a quarterly basis) remaining after the

      Employee ceases to be an Employee and all restrictions on such reduced

      number of Shares shall lapse.  A certificate for such Shares shall be delivered to

      the Employee in accordance with the provisions of Section 7(d) hereof.  The

      Committee may, if it deems appropriate, direct that the Employee receive a

      greater number of Shares free of all restrictions but not exceeding the number of

      Restricted Shares then subject to the restrictions of Section 7(b).

 

                      (ii)   Death.  If an Employee ceases to be employed by the

      Company prior to the end of a Restricted Period by

 

 

 

 

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      reason of death, the Restricted Shares granted to such Employee shall

      immediately vest in his beneficiary or estate and all restrictions applicable to

      such Shares shall lapse.  A certificate for such Shares shall be delivered to the

      Employee's beneficiary or estate in accordance with the provisions of

      Subsection 7(d).

 

                      (iii)  All Other Terminations.  If an Employee ceases to be an

      Employee prior to the end of a Restricted Period for any reason other than

      retirement or death, the Employee shall immediately forfeit all Restricted Shares

      then subject to the restrictions of Section 7(b) in accordance with the provisions

      thereof, except that the Committee may, if it finds that the circumstances in the

      particular case so warrant, allow an Employee whose employment has so

      terminated to retain any or all of the Restricted Shares then subject to the

      restrictions of Section 7(b) and all restrictions applicable to such retained

      Shares shall lapse.  A certificate for such retained Shares shall be delivered to

      the Employee in accordance with the provisions of Section 7(d).

 

             (d)      Delivery of Restricted Shares; Payment for Fractional Shares.  At

      the end of the Restricted Period or at such earlier time as provided for in

      Subsection 7(c), all restrictions applicable to the Restricted Shares shall lapse

      and a Share certificate for a number of Shares equal to the number of Restricted

      Shares, free of all restrictions, shall be delivered to the Employee or his

      beneficiary or estate, as the case may be.  The Company shall not be required

      to deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value

      (measured as of the date the restrictions lapse) of such fractional Share to the

      Employee or his beneficiary or estate, as the case may be.

 

Section 8.  Performance Awards.

 

             The Committee may grant to Employees Performance Awards which shall

be subject to the following terms and conditions and such other terms and conditions

as the Committee may prescribe in connection with the grant of a Performance

Award:

 

             (a)      Award Period and Performance Goals.  The Committee shall

      determine and include in a Performance Award the period of time during which a

      Performance Award may be earned ("Award Period").  The Committee shall also

      establish performance objectives ("Performance Goals") to be met by the

      Company, Subsidiary or division during the Award Period as a condition to

      payment of the Performance Award.  The Performance Goals may include

      earnings per share, return on

 

 

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      stockholders' equity, return on assets, net income, or any other financial or other

      measurement established by the Committee.  The Performance Goals may

      include minimum and optimum objectives or a single set of objectives.

 

             (b)      Payment of Performance Awards.  The Committee shall establish

      the method of calculating the amount of payment to be made under a

      Performance Award if the Performance Goals are met, including the fixing of a

      maximum payment.  The Performance Award shall be expressed in terms of

      Shares and referred to as "Performance Shares."  After the completion of an

      Award Period, the performance of the Company, Subsidiary or division shall be

      measured against the Performance Goals, and the Committee shall determine

      whether all, none or any portion of a Performance Award shall be paid.  The

      Committee, in its discretion, may elect to make payment in Shares, cash or any

      combination of Shares and cash.  Any payment shall be based on the Fair

      Market Value of Performance Shares on the last day of the Award Period.

 

             (c)      Revision of Performance Goals.  At any time prior to the end of an

      Award Period, the Committee may revise the Performance Goals and the

      computation of payment if unforeseen events occur which have a substantial

      effect on the performance of the Company, Subsidiary or division and which in

      the judgment of the Committee make the application of the Performance Goals

      inappropriate unless a revision is made.

 

             (d)      Requirement of Employment.  A grantee of a Performance Award

      must remain in the employment of the Company until the completion of the

      Award Period in order to be entitled to payment under the Performance Award;

      provided that the Committee may, in its sole discretion, provide for a full or

      partial payment where such an exception is deemed equitable.

 

             (e)      Dividends.  The Committee may, in its discretion, at the time of the

      granting of a Performance Award, or thereafter, provide that any dividends

      declared on Shares during the Award Period, and which would have been paid

      with respect to Performance Shares had they been owned by a grantee, be (i)

      paid to the grantee, or (ii) used to increase the number of Performance Shares

      of the grantee subject to the provisions of the Performance Award.

 

Section 9.  Stock Appreciation Rights.

 

             The Committee may, at any time, in its discretion, grant a right to receive

the appreciation in the Fair Market Value of

 

 

 

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Shares ("Stock Appreciation Right") either separately or in tandem with Options.

Stock Appreciation Rights shall be subject to the following terms and conditions and

such other terms and conditions as the Committee may prescribe:

 

             (a)      Time and Period of Grant.  A Stock Appreciation Right granted in

      tandem with an Option may be granted either at the time the Option is granted

      or at any time thereafter prior to the expiration of the Option.  If a Stock

      Appreciation Right is granted in tandem with an Option, the Committee may limit

      the exercise period for such Stock Appreciation Right, provided that the Stock

      Appreciation Right may not be exercised after the expiration of the Option to

      which the Stock Appreciation Right is attached.

 

             (b)      Value of Stock Appreciation Right.  If a Stock Appreciation Right is

      granted in tandem with an Option, the Optionee will be entitled to surrender the

      Option which is then exercisable and receive in exchange therefor an amount in

      cash equal to the excess of the Fair Market Value of a Share on the Valuation

      Date over the Option price multiplied by the number of Shares covered by the

      Option or portion thereof which is surrendered.  In the event a Stock

      Appreciation Right granted in tandem with an Option is exercised, the right of

      the Optionee to exercise the related Option shall be cancelled to the extent

      Shares covered by such Option are used to calculate cash paid upon exercise

      of the related Stock Appreciation Right.  The right of an Optionee to exercise a

      Stock Appreciation Right shall be canceled if and to the extent that the related

      option is exercised.  If a Stock Appreciation Right is granted separately from an

      Option, the Optionee will receive upon exercise of the Stock Appreciation Right

      an amount in cash equal to the excess of the Fair Market Value of a Share on

      the Valuation Date over the Fair Market Value of a Share on the date of grant

      multiplied by the number of Shares as to which the Stock Appreciation Right is

      being exercised.  Notwithstanding the foregoing, in no event shall the exercise

      value of a Stock Appreciation Right issued in connection with an Incentive Stock

      Option exceed the maximum permissible exercise value for such a right under

      the Code and the regulations and interpretations issued pursuant thereto.

 

             (c)      Exercise of Rights and Payment.  A Stock Appreciation Right which

      is in tandem with an option may be exercised when the related Option is

      exercisable, provided, however, such a Stock Appreciation Right may only be

      exercised on a date or dates on which the Fair Market Value of a Share exceeds

      the Option price per Share applicable to the related Option.  A Stock

      Appreciation Right which is granted separate from an Option may be exercised

      at such

 

 

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      times as specified in the written instrument evidencing such right.  An Employee

      may exercise a Stock Appreciation Right by giving written notice of exercise,

      specifying the number of Shares as to which the right is exercised, to the

      Committee.  Provided the exercise is valid and in accordance with the terms of

      the Plan, the Company shall promptly, after the receipt of such a notice, pay to

      the Employee the cash to which he is entitled.  If a Stock Appreciation Right has

      not been exercised, cancelled, terminated or expired on the last day of the term

      of such Stock Appreciation Right, the holder of such Stock Appreciation Right

      will automatically receive a cash payment from the Company in an amount, if

      any, that would be payable if the Stock Appreciation Right is exercised on such

      date.

 

Section 10.  Restricted Shares for Eligible Directors.

 

             (a)      Grant of Restricted Shares to Eligible Directors.  On the date of the

1989 Meeting and on the date of each Meeting thereafter while the Plan is in effect

(each such date is hereinafter referred to as a "Grant Date"), the Company shall

grant to each then Eligible Director a number of Restricted Shares determined by

dividing $5,000 (in the case of Grant Dates prior to 2003) or $10,000 (in the case of

Grant Dates occurring in 2003 and thereafter) by the Fair Market Value of a Share

on the Grant Date (rounded to the nearest whole Share).

 

             (b)      Terms and Conditions of Restricted Shares.

 

                             (i) Subject to the provisions of paragraph (ii) of this Section

             10(b), Restricted Shares issued to  Eligible Directors pursuant to the Plan

             shall be subject to the following restrictions:

 

                                  (1)  the restrictions on the Restricted Shares shall apply for

                      the period ("Restricted Period") commencing on the Grant Date (as

                      defined in Section 10(a)) and ending on (i) the third anniversary of

                      the Grant Date for one-third (1/3) of the Restricted Shares to the

                      nearest whole Share, (ii) the fourth anniversary of the Grant Date for

                      one-third (1/3) of the Restricted Shares to the nearest whole Share,

                      and (iii) the fifth anniversary of the Grant Date for the balance of

                      such Restricted Shares.

 

                                  (2)  the Eligible Director shall not be entitled to receive

                      delivery of a certificate or certificates for such Restricted Shares

                      until the expiration of the Restricted Period;

 

 

 

 

                                                     -31-

 

 

 

 

 

 

 

 

 

 

 

 

                                  (3)  such Restricted Shares shall not be sold, transferred,

                      assigned, pledged or otherwise encumbered or disposed of during

                      the Restricted Period; and

 

                                  (4)  all such Restricted Shares shall be forfeited and all

                      right of the Eligible Director to such Restricted Shares shall

                      terminate without further obligation on the part of the Company if the

                      Eligible Director ceases to be a director of the Company prior to the

                      end of the Restricted Period.

 

                      (ii)   Notwithstanding the provisions of subparagraph (b)(i) of this

             Section 10, in the event an Eligible Director ceases to be a director of the

             Company prior to the end of a Restricted Period as a result of such Eligible

             Director's death, disability, normal retirement in accordance with the

             Company's policies, or failure to obtain sufficient votes at a Meeting to be

             re-elected as a director, then the restrictions set forth in subparagraph

             (b)(i) of this Section 10 shall cease to apply on a date 30 days thereafter, if

             the associated Tandem Options are not exercised pursuant to Section

             10(d)(iv)(b).

 

                      (iii)  Upon the occurrence of a Change in Control, all of the

             restrictions set forth in subparagraph (b)(i) of this Section 10 shall cease to

             apply on a date thirty days thereafter, if the associated Tandem Options

             are not exercised pursuant to Section 10(d)(iv)(b), to all Restricted Shares

             issued pursuant to the Plan, except to the extent that the lapse of such

             restrictions would, in the opinion of counsel selected by the Company's

             independent auditors, constitute "parachute payments" in the meaning of

             Section 28OG(b)(2)(A) of the Code and, when added to any other

             "parachute payments" which would be received by the Eligible Director

             pursuant to the terms of any other plan, arrangement or agreement with

             the Company, any person whose actions result in a change in control of

             the Company or any person affiliated with the Company or such person,

             would be subject to the tax imposed by Section 4999 of the Code.

 

                      If the lapse of the restrictions arising from a Change in Control

             would so subject an Eligible Director to Section 4999 of the Code, the

             Restricted Shares of the Eligible Director (to the extent otherwise subject

             to Section 4999) shall be forfeited and returned to the status of authorized

             and unissued Shares.  At the time of such forfeiture, the Company shall

             transfer to a trust for the benefit of the Eligible Director cash in an

 

 

 

 

                                                     -32-

 

 

 

 

 

 

 

 

 

 

 

             amount determined by multiplying the number of Restricted Shares

             forfeited by the Market Value of a Share on the date of the Change in

             Control.  If the Eligible Director remains a director of the Company until the

             date that the restrictions on the forfeited Restricted Shares would have

             ceased to apply, then, on such date, such cash and all amounts earned

             thereon shall be distributed to the Eligible Director.  If the Eligible Director

             does not remain a director of the Company until such date, such cash and

             the earnings thereon shall be paid over to the Company.  The selection of

             the trustee(s), the determination of the terms of the trust, and all other

             matters relating to the creation and operation of the trust shall, subject to

             the express provisions of this paragraph, be at the discretion of the

             Committee.

 

                      (iv)   At the end of the Restricted Period, or at such earlier time as is

             provided for in subparagraphs (b)(ii) or (b)(iii) of this Section 10, the

             restrictions applicable to the Restricted Shares pursuant to this Section 10

             shall cease and a Share certificate for the number of Restricted Shares

             with respect to which the restrictions have ceased shall be delivered, free

             of all such restrictions and all restrictive legends, to the Eligible Director or

             the Eligible Director's beneficiary or estate, as the case may be.

 

             (c)      Additional Restrictions.  At the time of grant of Restricted Shares to

an Eligible Director, the number of Shares granted shall be issued in his name in

uncertificated form.  The Eligible Director shall have the entire beneficial ownership

interest in, and all rights and privileges of a stockholder as to, such Restricted

Shares, including the right to receive dividends and the right to vote such Restricted

Shares.  Any Shares received with respect to Restricted Shares as a result of a

recapitalization adjustment pursuant to Section 3(b) shall be subject to the same

restrictions as such Restricted Shares.

 

             (d)      Grant of Non-Statutory Stock Options to Eligible Directors.  The

Company shall grant to the Eligible Director in tandem with each Restricted Share

granted pursuant to Section 10(a) four (4) Nonqualified Stock Options ("Tandem

Options") subject to the following terms and conditions:

 

                       (i)   The option price of the Tandem option shall be the Fair Market

             Value of a Share on the date of grant.

 

                      (ii)   The right of the Optionee to exercise a Tandem Option shall be

             cancelled if and to the extent that the related Restricted Share is no longer

             subject to the restrictions in Section 10.  In the event that Tandem

 

 

 

                                                     -33-

 

 

 

 

 

 

 

 

 

 

 

 

             Options are exercised, the right of the Eligible Director to receive the

             Restricted Shares granted in tandem with said Options shall be forfeited.

 

                      (iii)  The four Tandem Options granted in tandem with each

             Restricted Share must be exercised at the same time.  No Tandem Options

             shall be exercisable within 12 months of the Grant Date of the Option.

 

                      (iv)   Tandem Options may only be exercised on a date or dates on

             which the aggregate Option Spread (measured as the difference between

             the Fair Market Value of a Share on the date of exercise less the option

             exercise price) for the four Tandem Options equals or exceeds 110% of

             the Fair Market Value of the associated Restricted Share on the date of

             exercise of the Tandem Options.  Notwithstanding the preceding sentence,

             Tandem Options may be exercised (a) during the 60 day period preceding

             the date on which the Restricted Period applicable to the associated

             Restricted Share ends and (b) during the 30-day period following the

             termination of restrictions on the Restricted Shares pursuant to Section

             10(b)(ii) or 10(b)(iii).

 

                       (v)   The exercise of and payment for the Shares issuable upon

             exercise of a Tandem Option shall be in accordance with the provisions of

             Section 6(f) of the Plan.

 

Section 11.  Non-Assignability of Incentive Awards.

 

             No Incentive Award granted under the Plan shall be assigned, transferred,

pledged, or otherwise encumbered by the Participant, otherwise than by will, by

designation of a beneficiary after death, or the laws of descent and distribution, or be

made subject to execution, attachment or similar process.  Each Incentive Award

shall be exercisable during the Participant's lifetime only by the Participant or, if

permissible under applicable law, by the Participant's guardian or legal

representative.

 

Section 12.  Change of Control.

 

             In order to maintain all of the Participant's rights in the event of a Change

of Control of the Company, the Committee, in its sole discretion, may, as to any

Incentive Award, either at the time that an Incentive Award is made or any time

thereafter, take any one or more of the following actions:

 

 

 

 

                                                     -34-

 

 

 

 

 

 

 

 

 

 

 

 

 

             (a)      provide for the acceleration of any time periods relating to the

      exercise or realization of any such award, so that such award may be exercised

      or realized in full on or before a date fixed by the Committee,

 

             (b)      provide for the purchase of any such award by the Company for an

      amount of cash equal to the amount that could have been attained upon the

      exercise of such award or realization of such Employee's rights had such award

      been currently exercisable or payable,

 

             (c)      make such adjustment to any such award then outstanding as the

      Committee deems appropriate in light of a Change of Control, or

 

             (d)      cause any such award then outstanding to be assumed, or new

      rights substituted therefor, by the acquiring or surviving corporation, if any, in

      connection with a Change of Control.

 

Section 13.  Taxes.

 

             (a)      Withholding for Taxes.  The Company shall be entitled, if necessary

or desirable, to withhold from any Incentive Award the amount of any tax attributable

to any amounts payable under any Incentive Award and the Company may defer

making payment of any Incentive Award if any such tax, charge, or assessment may

be pending until indemnified to its satisfaction.

 

             (b)      Use of Shares to Pay Withholding Taxes.  With the approval of the

Committee, the holder of a Nonqualified Stock Option, a Restricted Share Award

(under either Section 7 or Section 10 of the Plan) or a Performance Award may elect

to have the Company retain from the Shares to be issued upon the exercise of such

an Option, the termination of the restrictions on a Restricted Share Award, or the

payment of a Performance Award, as the case may be, Shares having a Fair Market

Value on the Tax Date equal to all or any part of the federal, state and local

withholding tax payments (whether mandatory or permissive) to be made by the

holder with respect to such option (up to a maximum amount determined by the

holder's top marginal tax rate) in lieu of making such payments in cash.  The

Committee may establish from time to time rules or limitations with respect to the

right of a holder to elect to have the Company retain Shares in satisfaction of

withholding payments.

 

 

 

 

 

                                                     -35-

 

 

 

 

 

 

 

 

 

 

 

Section 14.  Compliance With Laws and Exchange Requirements.

 

             No Option or Stock Appreciation Right shall be granted and no Shares

shall be issued in connection with any Incentive Award unless the grant of the

Option or the Stock Appreciation Right and the issuance and delivery of Shares or

cash pursuant to the Incentive Award shall comply with all relevant provisions of

state and federal law, including, without limitation, the Securities Act of 1933, the

Securities Exchange Act of 1934, the rules and regulations promulgated thereunder,

and the requirements of any stock exchange upon which the Shares may then be

listed.

 

Section 15.  Amendment and Termination of Plan.

 

             (a)      Amendment.  The Board may from time to time amend the Plan, or

any provision thereof, in such respects as the Board may deem advisable except

that it may not amend the Plan without stockholder approval so as to increase the

maximum number of Shares that may be issued under the Plan except in accordance

with Section 3(b).

 

             (b)      Termination.  The Board may at any time terminate the Plan.

 

             (c)      Effect of Amendment or Termination.  Any amendment or the

termination of the Plan shall not adversely affect any Incentive Award previously

granted and such Incentive Award shall remain in full force and effect as if the Plan

had not been amended or terminated.

 

Section 16.  Notices.

 

             Each notice relating to the Plan shall be in writing and delivered in person

or by certified or registered mail to the proper address.  Each notice to the

Committee shall be addressed as follows: TBC Corporation, 4770 Hickory Hill Drive,

Post Office Box 18342, Memphis, Tennessee 38181-0342, Attention: Compensation

Committee.  Each notice to a Participant shall be addressed to the Participant at the

address of the Participant maintained by the Company on its books and records.

Anyone to whom a notice may be given under this Plan may designate a new

address by written notice to the other party to that effect.

 

Section 17.  Benefits of Plan.

 

             This Plan shall inure to the benefit of and be binding upon each successor

of the Company.  All rights and obligations imposed upon a Participant and all rights

granted to the Company

 

 

 

                                                     -36-

 

 

 

 

 

 

 

 

 

 

 

under this Plan shall be binding upon the Participant's heirs, legal representatives

and successors.

 

Section 18.  Pronouns and Plurals.

 

             All pronouns shall be deemed to refer to the masculine, feminine, singular

or plural, as the identity of the person or persons may require.

 

Section 19.  Stockholder Approval and Term of Plan.

 

             The Plan shall become effective upon its approval by the affirmative vote

of the holders of a majority of the outstanding Shares and shall continue in effect

until terminated pursuant to Section 15.

 

 

                                                  * * * * * *

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                     -37-