Exhibit 10.5

 

 

TREDEGAR INDUSTRIES, INC.

1989 INCENTIVE STOCK OPTION PLAN

 

ARTICLE I

DEFINITIONS

1.01.    Affiliate means any Subsidiary or “parent corporation” (within the
meaning of Section 422A of the Code) of the Company.

1.02.    Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of an Option or SAR granted to such Participant.

1.03.    Board means the Board of Directors of the Company.

1.04.    Code means the Internal Revenue Code of 1986 as amended, and any
successor thereto.

1.05.    Committee means a committee, consisting of not less than three members
of the Board, appointed by the Board to administer the Plan. No member of the
Committee shall be eligible to participate in the Plan.

1.06.    Common Stock means the common stock of the Company.

1.07.    Company means Tredegar Industries, Inc.

1.08.    Fair Market Value means, on any given date, the fair market value of a
share of Common Stock determined by the Committee using any reasonable method in
good faith.

1.09.    Option means a stock option that entitles the holder to purchase from
the Company a stated number of shares of Common Stock at the price set forth in
an Agreement.

1.10.    Participant means an employee of the Company or of a Subsidiary,
including an employee who is a member of the Board, who satisfies the
requirements of Article IV and is selected by the Committee to receive an
Option.

1.11.    Plan means the Tredegar Industries, Inc. 1989 Incentive Stock Option
Plan.

1.12.    SAR means a stock appreciation right (which may be granted only in
conjunction with an Option) that entitles the holder to receive, with respect to
each share of Common Stock encompassed by the exercise of such SAR, the lesser
of (a) the excess of the Fair Market Value at the time of exercise over the
option price of the related Option or (b) the fair Market Value on the date of
grant. Such payment shall be made in Common Stock or in cash and Common Stock as
determined by the Committee in accordance with Section 8.03.

1.13.    Subsidiary means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations in the chain (other than the last corporation) owns stock
possessing at least 50 percent of the total combined voting power of all classes
of stock in one of the other corporations in such chain.

 

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ARTICLE II

PURPOSES

This Plan is intended to assist the Company in recruiting and retaining key
employees with ability and initiative by enabling employees who contribute
significantly to the Company to participate in its future success and to
associate their interests with those of the Company. It is further intended that
Options granted under this Plan (unless otherwise designated by their terms)
shall constitute “incentive stock options” within the meaning of Section 422A of
the Code. No Option shall be invalid for failure to qualify as an incentive
stock option. The proceeds received by the Company from the sale of Common Stock
pursuant to this Plan shall be used for general corporate purposes.

ARTICLE III

ADMINISTRATION

This Plan shall be administered by the Committee. The Committee shall have
authority to grant Options and SARs upon such terms (not inconsistent with the
provisions of this Plan) as the Committee may consider appropriate. Such terms
may include conditions (in addition to those contained in this Plan) on the
exercisability of all or any part of an Option or SAR. Notwithstanding any such
conditions, the Committee may, in its discretion, accelerate the time at which
any Option or SAR may be exercised. In addition, the Committee shall have
complete authority to interpret all provisions of this Plan; to prescribe the
form of Agreements; to adopt, amend, and rescind rules and regulations
pertaining to the administration of this Plan; and to make all other
determinations necessary or advisable for the administration of this Plan. The
express grant in this Plan of any specific power to the Committee shall not be
construed as limiting any power or authority of the Committee. Any decision
made, or action taken, by the Committee in or in connection with the
administration of this Plan shall be final and conclusive. No member of the
Committee shall be liable for any act done in good faith with respect to this
Plan or any Agreement, Option, or SAR. All expenses of administering this Plan
shall be borne by the Company.

ARTICLE IV

ELIGIBILITY

4.01.     General. Any employee of the Company or of any Subsidiary (including
any corporation that becomes a Subsidiary after the adoption of this Plan) who,
in the judgment of the Committee, has contributed or can be expected to
contribute to the profits or growth of the Company or a Subsidiary may be
granted one or more Options and SARs. Directors of the Company who are employees
and are not members of the Committee are eligible to participate in this Plan.

4.02.     Grants. The Committee will designate employees to whom Options and
SARs are to be granted and will specify the number of shares of Common Stock
subject to each grant. An Option may be granted with or without a related SAR.
An SAR may be granted only in conjunction with an Option and for a number of
shares not exceeding the number of shares subject to the related Option. All
Options and SARs granted under this Plan shall be evidenced by Agreements which
shall be subject to applicable provisions of this Plan and to such other
provisions as the Committee may adopt.

 

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No Participant may be granted incentive stock options (under all incentive stock
option plans of the Company and Affiliates) which are first exercisable in any
calendar year for stock having an aggregate fair market value (determined as of
the date an option is granted) exceeding $100,000. The preceding annual
limitation shall not apply with respect to Options that are not incentive stock
options.

ARTICLE V

STOCK SUBJECT TO OPTIONS OR SARS

Upon the exercise of any Option or SAR, the Company may deliver to the
Participant authorized but unissued stock, or any combination thereof. The
maximum aggregate number of shares of Common Stock that may be issued pursuant
to Options and SARs granted under this Plan is 600,000, subject to adjustment as
provided by Article IX. If an Option is terminated, in whole or in part, for any
reason other than its exercise or the exercise of a related SAR, the number of
shares of Common Stock allocated to the Option or portion thereof may be
reallocated to other Options or SARs to be granted under this Plan. If an SAR is
terminated, in whole or in part, for any reason other than its exercise or the
exercise of a related Option, the number of shares of Common Stock allocated to
the SAR or portion thereof may be reallocated to other SARs or Options to be
granted under this Plan.

ARTICLE VI

OPTION PRICE

The price per share for Common Stock purchased on the exercise of any Option
granted under this Plan shall be not less than the Fair Market Value on the date
the Option is granted.

ARTICLE VII

EXERCISE OF OPTIONS AND SARS

7.01.     Maximum Option or SAR Period. No Option or related SAR shall be
exercisable after the expiration of 10 years from the date the Option was
granted. The terms of any Option or SAR may provide that it is exercisable for a
period less than such maximum period.

7.02.      Nontransferability. Any Option or SAR granted under this Plan shall
be nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, the Option and related SAR must be transferred
to the same person(s). During the lifetime of the Participant to whom the Option
is granted, the Option or SAR may be exercised only by the Participant. No right
or interest of a Participant in any Option or SAR shall be liable for, or
subject to, any lien, obligation, or liability of such Participant.

7.03.      Employee Status. For purposes of determining the applicability of
Section 422A of the Code (relating to incentive stock options), or in the event
that the terms of any Option provide that it may be exercised only during
employment or within a specified period of time after termination of employment,
the Committee may decide in each case to what extent leaves of absence for
governmental or military service, illness, temporary disability, or other
reasons shall not be deemed interruptions of continuous employment.

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ARTICLE VIII

METHOD OF EXERCISE

8.01.      Exercise. Subject to the provisions of Articles VII and X, an Option
or SAR may be exercised in whole at any time or in part from time to time at
such times and in compliance with such requirements as the Committee shall
determine; provided, however, that an SAR may be exercised only to the extent
the related Option is exercisable and when the Fair Market Value exceeds the
option price of the related Option. An Option or SAR granted under this Plan may
be exercised with respect to any number of whole shares less than the full
number for which the Option or SAR could be exercised. Such partial exercise of
an Option or SAR shall not affect the right to exercise the Option or SAR from
time to time in accordance with this Plan with respect to the remaining shares
subject to the Option or related to the SAR. The exercise of either an Option or
SAR shall result in the termination of the other to the extent of the number of
shares with respect to which the Option or SAR is exercised.

8.02.      Payment. Unless otherwise provided by the Agreement or permitted by
the Committee, payment of the Option price shall be made in cash or such cash
equivalent as shall be acceptable to the Committee. If the Agreement provides or
the Committee permits, payment of all or a part of the Option price may be made
by surrendering shares of Common Stock to the Company. If Common Stock is used
to pay all or part of the Option price, the shares surrendered must have a Fair
Market Value (as of the day preceding the date of exercise) that is not less
than such price or part thereof.

8.03.      Determination of Payment of Cash and/or Common Stock Upon exercise of
SAR. If the Agreement provides or the Committee so determines, up to one-half of
the amount payable as a result of the exercise of an SAR may be settled by the
payment of cash and the remainder by the issuance of Common Stock having an
aggregate Fair Market Value equal thereto. In the absence of such provision or
determination, a Participant exercising an SAR shall be entitled to receive
Common Stock equal in aggregate Fair Market Value to the amount payable as a
result of the exercise of an SAR.

8.04.      Shareholder Rights. No Participant shall, as a result of receiving
any Option or SAR, have any rights as a shareholder until the date he exercises
such Option or SAR.

ARTICLE IX

ADJUSTMENT UPON CHANGE IN COMMON STOCK

The maximum number of shares as to which Options and SARs may be granted under
this Plan shall be proportionately adjusted and the terms of Options and SARs
shall be adjusted as the Committee shall determine to be equitably required in
the event that (a) the Company (i) effects one or more stock dividends, stock
split-ups, subdivisions or consolidations of shares or (ii) engages in a
transaction to which Section 425 of the Code applies, or (b) there occurs any
other event which, in the judgment of the Committee, necessitates such action.
Any determination made under this Article IX by the Committee shall be final and
conclusive.

The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, Options or
SARs.

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ARTICLE X

COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES

No Option or SAR shall be exercisable, no Common Stock shall be issued, no
certificate for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitation, withholding tax
requirements) and the rules of all domestic stock exchanges on which the
Company’s shares may be listed. The Company shall have the right to rely on an
opinion of its counsel as to such compliance. Any share certificate issued to
evidence Common Stock for which an Option or SAR is exercised may bear such
legends and statements as the Committee may deem advisable to assure compliance
with federal and state laws and regulations. No Option or SAR shall be
exercisable, no Common Stock shall be issued, no certificate for shares shall be
delivered, and no payment shall be made under this Plan until the Company has
obtained such consent or approval as the Committee may deem advisable from
regulatory bodies having jurisdiction over such matters.

ARTICLE XI

GENERAL PROVISIONS

11.01.     Effect on Employment. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any employee any right to continue in the employ of
the Company or a Subsidiary or in any way affect any right and power of the
Company or a Subsidiary to terminate the employment of any employee at any time
with or without assigning a reason therefor.

 

11.02.     Unfunded Plan. This Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under the Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall he based
solely upon any contractual obligations which may be created pursuant to this
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.

11.03.     Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.

ARTICLE XII

AMENDMENT

The Board may amend or terminate this Plan from time to time; provided, however,
that no amendment may become effective until shareholder approval is obtained if
(i) the amendment increases the aggregate number of shares that may be issued
pursuant to Options and SARs, (ii) the amendment reduces the option price, or
(iii) the amendment changes the class of employees eligible to become
Participants. No amendment shall, without a Participant’s consent, adversely
affect any rights of such Participant under any Option or SAR outstanding at the
time such amendment is made.

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ARTICLE XIII

DURATION OF PLAN

No Option or SAR may be granted under this Plan more than ten years after the
earlier of (i) the date this Plan is adopted by the Board or (ii) the date this
Plan is approved (at a duly held shareholders’ meeting) by shareholders holding
a majority of the Company’s outstanding voting stock or the effective date of a
unanimous consent of shareholders approving the Plan. Options and SARs granted
before that date shall remain valid in accordance with their terms.

ARTICLE XIV

EFFECTIVE DATE OF PLAN

Options and SARs may be granted under this Plan upon its adoption by the Board,
provided that no Option or SAR will be effective unless this Plan is approved
(at a duly held shareholders’ meeting) by shareholders holding a majority of the
Company’s outstanding voting stock or by the unanimous consent of shareholders
within twelve months of such adoption.

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