EX-10.1 2004 INCENTIVE STOCK PLAN



 



 






EXHIBIT 10.1




ROCK-TENN COMPANY




2004 INCENTIVE STOCK PLAN



 






 




TABLE OF CONTENTS



	 	 	 	 	 	 	 	 	 
					Page
					

	
    § 1. BACKGROUND AND PURPOSE
    	 	 	1	 
	 
	
    § 2. DEFINITIONS
    	 	 	1	 
	 	
2.1	 	 	
    Affiliate
    	 	 	1	 
	 	
2.2	 	 	
    Board
    	 	 	1	 
	 	
2.3	 	 	
    Change Effective Date
    	 	 	1	 
	 	
2.4	 	 	
    Change in Control
    	 	 	1	 
	 	
2.5	 	 	
    Code
    	 	 	2	 
	 	
2.6	 	 	
    Committee
    	 	 	2	 
	 	
2.7	 	 	
    Company
    	 	 	2	 
	 	
2.8	 	 	
    Director
    	 	 	2	 
	 	
2.9	 	 	
    Eligible Employee
    	 	 	2	 
	 	
2.10	 	 	
    Fair Market Value
    	 	 	2	 
	 	
2.11	 	 	
    ISO
    	 	 	2	 
	 	
2.12	 	 	
    1933 Act
    	 	 	2	 
	 	
2.13	 	 	
    1934 Act
    	 	 	2	 
	 	
2.14	 	 	
    Non-ISO
    	 	 	2	 
	 	
2.15	 	 	
    Option
    	 	 	2	 
	 	
2.16	 	 	
    Option Certificate
    	 	 	2	 
	 	
2.17	 	 	
    Option Price
    	 	 	2	 
	 	
2.18	 	 	
    Parent
    	 	 	2	 
	 	
2.19	 	 	
    Plan
    	 	 	2	 
	 	
2.20	 	 	
    Preexisting Plan
    	 	 	2	 
	 	
2.21	 	 	
    Rule 16b-3
    	 	 	2	 
	 	
2.22	 	 	
    SAR Value
    	 	 	2	 
	 	
2.23	 	 	
    Stock
    	 	 	3	 
	 	
2.24	 	 	
    Stock Appreciation Right
    	 	 	3	 
	 	
2.25	 	 	
    Stock Appreciation Right Certificate
    	 	 	3	 
	 	
2.26	 	 	
    Stock Grant
    	 	 	3	 
	 	
2.27	 	 	
    Stock Grant Certificate
    	 	 	3	 
	 	
2.28	 	 	
    Stock Unit Grant
    	 	 	3	 
	 	
2.29	 	 	
    Subsidiary
    	 	 	3	 
	 	
2.30	 	 	
    Ten Percent Shareholder
    	 	 	3	 
	  
	
    § 3. SHARES AND GRANT LIMITS
    	 	 	3	 
	 	
3.1	 	 	
    Shares Reserved
    	 	 	3	 
	 
	 	
3.2	 	 	
    Source of Shares
    	 	 	3	 












 




	 	 	 	 	 	 	 	 	 
					Page
					

	 	
3.3	 	 	
    Use of Proceeds
    	 	 	3	 
	 	
3.4	 	 	
    Grant Limits
    	 	 	4	 
	 	
3.5	 	 	
    Preexisting Plan
    	 	 	4	 
	 
	
    § 4. EFFECTIVE DATE
    	 	 	4	 
	 
	
    § 5. COMMITTEE
    	 	 	4	 
	 
	
    § 6. ELIGIBILITY
    	 	 	4	 
	 
	
    § 7. OPTIONS
    	 	 	4	 
	 	
7.1	 	 	
    Committee Action
    	 	 	4	 
	 	
7.2	 	 	
    $100,000 Limit
    	 	 	5	 
	 	
7.3	 	 	
    Option Price
    	 	 	5	 
	 	
7.4	 	 	
    Payment
    	 	 	5	 
	 	
7.5	 	 	
    Exercise
    	 	 	5	 
	 
	
    § 8. STOCK APPRECIATION RIGHTS
    	 	 	5	 
	 	
8.1	 	 	
    Committee Action
    	 	 	5	 
	 	
8.2	 	 	
    Terms and Conditions
    	 	 	5	 
	 	
8.3	 	 	
    Exercise
    	 	 	6	 
	 
	
    § 9. STOCK GRANTS
    	 	 	6	 
	 	
9.1	 	 	
    Committee Action
    	 	 	6	 
	 	
9.2	 	 	
    Conditions
    	 	 	6	 
	 	
9.3	 	 	
    Dividends, Voting Rights and Creditor Status
    	 	 	7	 
	 	
9.4	 	 	
    Satisfaction of Forfeiture Conditions
    	 	 	7	 
	 	
9.5	 	 	
    Income Tax Deduction
    	 	 	8	 
	 
	
    § 10. NON-TRANSFERABILITY
    	 	 	8	 
	 
	
    § 11. SECURITIES REGISTRATION
    	 	 	9	 
	 
	
    § 12. LIFE OF PLAN
    	 	 	9	 
	 
	
    § 13. ADJUSTMENT
    	 	 	9	 
	 	
13.1	 	 	
    Capital Structure
    	 	 	9	 
	 	
13.2	 	 	
    Available Shares
    	 	 	10	 
	 	
13.3	 	 	
    Transactions Described in § 424 of the
    Code
    	 	 	10	 
	 	
13.4	 	 	
    Fractional Shares
    	 	 	10	 
	 
	
    § 14. CHANGE IN CONTROL
    	 	 	10	 
	 
	
    § 15. AMENDMENT OR TERMINATION
    	 	 	11	 
	 
	
    § 16. MISCELLANEOUS
    	 	 	11	 
	 	
16.1	 	 	
    Shareholder Rights
    	 	 	11	 
	 	
16.2	 	 	
    No Contract of Employment
    	 	 	11	 
	 	
16.3	 	 	
    Withholding
    	 	 	11	 




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					Page
					

	 	
16.4	 	 	
    Construction
    	 	 	11	 
	 	
16.5	 	 	
    Other Conditions
    	 	 	11	 
	 	
16.6	 	 	
    Rule 16b-3
    	 	 	11	 
	 	
16.7	 	 	
    Coordination with Employment Agreements and Other
    Agreements
    	 	 	12	 




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§ 1.




BACKGROUND AND PURPOSE



     
The purpose of this Plan is to promote the
interest of the Company by authorizing the Committee to grant
Options and Stock Appreciation Rights and to make Stock Grants
and Stock Unit Grants to Eligible Employees and Directors in
order (1) to attract and retain Eligible Employees and
Directors, (2) to provide an additional incentive to each
Eligible Employee or Director to work to increase the value of
Stock and (3) to provide each Eligible Employee or Director
with a stake in the future of the Company which corresponds to
the stake of each of the Company’s shareholders.




§ 2.




DEFINITIONS



     
2.1     Affiliate — means
any organization (other than a Subsidiary) that would be treated
as under common control with the Company under
§ 414(c) of the Code if “50 percent”
were substituted for “80 percent” in the income
tax regulations under § 414(c) of the Code.



     
2.2     Board — means
the Board of Directors of the Company.



     
2.3     Change
Effective Date — means either the date which
includes the “closing” of the transaction which makes
a Change in Control effective if the Change in Control is made
effective through a transaction which has a “closing”
or the date a Change in Control is reported in accordance with
applicable law as effective to the Securities and Exchange
Commission if the Change in Control is made effective other than
through a transaction which has a “closing”.



     
2.4     Change in
Control — means a change in control of the
Company of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the 1934 Act as in
effect at the time of such “change in control”,
provided that such a change in control shall be deemed to have
occurred at such time as




		
	 	     
    (a) any “person” (as that term is
    used in Sections 13(d) and 14(d)(2) of the 1934 Act), is or
    becomes the beneficial owner (as defined in Rule 13d-3
    under the 1934 Act) directly or indirectly, of securities
    representing 20% or more of the combined voting power for
    election of directors of the then outstanding securities of the
    Company or any successor to the Company;
    
	 
	 	     
    (b) during any period of two consecutive
    years or less, individuals who at the beginning of such period
    constitute the Board cease, for any reason, to constitute at
    least a majority of the Board, unless the election or nomination
    for election of each new director was approved by a vote of at
    least two-thirds of the directors then still in office who were
    directors at the beginning of the period;
    
	 
	 	     
    (c) the shareholders of the Company approve
    any reorganization, merger, consolidation or share exchange as a
    result of which the common stock of the Company shall be
    changed, converted or exchanged into or for securities of
    another corporation (other than a merger with a wholly-owned
    subsidiary of the Company) or any dissolution or liquidation of
    the Company or any sale or the disposition of 50% or more of the
    assets or business of the Company; or
    
	 
	 	     
    (d) the shareholders of the Company approve
    any reorganization, merger, consolidation or share exchange
    unless (A) the persons who were the beneficial owners of
    the outstanding shares of the common stock of the Company
    immediately before the consummation of such transaction
    beneficially own more than 50% of the outstanding shares of the
    common stock of the successor or survivor corporation in such
    transaction immediately following the consummation of such
    transaction and (B) the number of shares of the common
    stock of such successor or survivor corporation beneficially
    owned by the persons described in § 2.4(d)(A)
    immediately following the consummation of such transaction is
    beneficially owned by each such person in substantially the same
    proportion that each such person had beneficially owned shares
    of the Company common stock immediately before the consummation
    of such transaction, provided (C) the percentage described
    in § 2.4(d)(A) of the beneficially owned shares of
    




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    the successor or survivor corporation and the
    number described in § 2.4 (d)(B) of the beneficially
    owned shares of the successor or survivor corporation shall be
    determined exclusively by reference to the shares of the
    successor or survivor corporation which result from the
    beneficial ownership of shares of common stock of the Company by
    the persons described in § 2.4(d)(A) immediately
    before the consummation of such transaction.
    




     
2.5     Code — means
the Internal Revenue Code of 1986, as amended.



     
2.6     Committee — means
a committee of the Board which shall have at least 2 members,
each of whom shall be appointed by and shall serve at the
pleasure of the Board and shall come within the definition of a
“non-employee director” under Rule 16b-3 and an
“outside director” under § 162(m) of the
Code.



     
2.7     Company — means
Rock-Tenn Company and any successor to Rock-Tenn Company.



     
2.8     Director — means
any member of the Board who is not an employee of the Company or
a Parent or Subsidiary or affiliate (as such term is defined in
Rule 405 of the 1933 Act) of the Company.



     
2.9     Eligible
Employee — means an employee of the Company
or any Subsidiary or Parent or Affiliate to whom the Committee
decides for reasons sufficient to the Committee to make a grant
under this Plan.



     
2.10     Fair Market
Value — means either (a) the closing
price on any date for a share of Stock as reported by The
Wall Street Journal or, if The Wall Street Journal no
longer reports such closing price, such closing price as
reported by a newspaper or trade journal selected by the
Committee or, if no such closing price is available on such
date, (b) such closing price as so reported in accordance
with § 2.10(a) for the immediately preceding business
day, or, if no newspaper or trade journal reports such closing
price or if no such price quotation is available, (c) the
price which the Committee acting in good faith determines
through any reasonable valuation method that a share of Stock
might change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or to sell and both
having reasonable knowledge of the relevant facts.



     
2.11     ISO — means
an option granted under this Plan to purchase Stock which is
intended to satisfy the requirements of § 422 of the
Code.



     
2.12     1933 Act — means
the Securities Act of 1933, as amended.



     
2.13     1934 Act — means
the Securities Exchange Act of 1934, as amended.



     
2.14     Non-ISO — means
an option granted under this Plan to purchase Stock which is
intended to fail to satisfy the requirements of § 422
of the Code.



     
2.15     Option — means
an ISO or a Non-ISO which is granted under § 7.



     
2.16     Option
Certificate — means the certificate (whether
in electronic or written form) which sets forth the terms and
conditions of an Option granted under this Plan.



     
2.17     Option
Price — means the price which shall be paid
to purchase one share of Stock upon the exercise of an Option
granted under this Plan.



     
2.18     Parent — means
any corporation which is a parent corporation (within the
meaning of § 424(e) of the Code) of the Company.



     
2.19     Plan — means
this Rock-Tenn Company 2004 Incentive Stock Plan as effective as
of the date approved by the shareholders of the Company and as
amended from time to time thereafter.



     
2.20     Preexisting
Plan — means the following plan, as such plan
has been amended from time to time up to the date this Plan is
effective: the 2000 Rock-Tenn Company Incentive Stock Plan.



     
2.21     Rule 16b-3 — means
the exemption under Rule 16b-3 to Section 16(b) of the
1934 Act or any successor to such rule.



     
2.22     SAR
Value — means the value assigned by the
Committee to a share of Stock in connection with the grant of a
Stock Appreciation Right under § 8.



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2.23     Stock — means
the Class A common stock of the Company.



     
2.24     Stock
Appreciation Right — means a right which is
granted under § 8 to receive the appreciation in a
share of Stock.



     
2.25     Stock
Appreciation Right Certificate — means the
certificate (whether in electronic or written form) which sets
forth the terms and conditions of a Stock Appreciation Right
which is not granted as part of an Option.



     
2.26     Stock
Grant — means a grant under § 9
which is designed to result in the issuance of the number of
shares of Stock described in such grant rather than a payment in
cash based on the Fair Market Value of such shares of Stock.



     
2.27     Stock Grant
Certificate — means the certificate (whether
in electronic or written form) which sets forth the terms and
conditions of a Stock Grant or a Stock Unit Grant.



     
2.28     Stock Unit
Grant — means a grant under § 9
which is designed to result in the payment of cash based on the
Fair Market Value of the number of shares of Stock described in
such grant rather than the issuance of the number of shares of
Stock described in such grant.



     
2.29     Subsidiary — means
a corporation which is a subsidiary corporation (within the
meaning of § 424(f) of the Code) of the Company.



     
2.30     Ten Percent
Shareholder — means a person who owns (after
taking into account the attribution rules of § 424(d)
of the Code) more than ten percent of the total combined voting
power of all classes of stock of either the Company, a
Subsidiary or Parent.




§ 3.




SHARES AND GRANT LIMITS



     
3.1     Shares
Reserved — There shall (subject to
§ 13) be reserved for issuance under this Plan
(a) 2.0 million shares of Stock plus (b) the
number of shares of Stock which would remain available for
issuance under each Preexisting Plan if shares were issued on
the effective date of this Plan sufficient to satisfy grants
then outstanding under such plan plus (c) the number of
shares of Stock subject to grants under any Preexisting Plan
which are outstanding on the effective date of this Plan and
which are forfeited or expire on or after such effective date in
accordance with the terms of such grants; provided, however,
(d) no more than the number of shares of Stock described in
§ 3.1(a) shall be issued in connection with the
exercise of ISOs and (e) nothing in this Plan shall affect
any grants under any Preexisting Plan which are outstanding on
the effective date of this Plan until such time, if any, that
any shares of Stock subject to such grants are forfeited or
grants respecting any shares of Stock expire on or after such
effective date in accordance with the terms of such grants.



     
3.2     Source of
Shares — The shares of Stock described in
§ 3.1 shall be reserved to the extent that the Company
deems appropriate from authorized but unissued shares of Stock
and from shares of Stock which have been reacquired by the
Company. All shares of Stock described in § 3.1 shall
remain available for issuance under this Plan until issued
pursuant to the exercise of an Option or a Stock Appreciation
Right or issued pursuant to a Stock Grant, and any such shares
of stock which are issued pursuant to an Option, a Stock
Appreciation Right or a Stock Grant which are forfeited
thereafter shall again become available for issuance under this
Plan. Finally, if the Option Price under an Option is paid in
whole or in part in shares of Stock or if shares of Stock are
tendered to the Company in satisfaction of any condition to a
Stock Grant, such shares thereafter shall become available for
issuance under this Plan and shall be treated the same as any
other shares available for issuance under this Plan.



     
3.3     Use of
Proceeds — The proceeds which the Company
receives from the sale of any shares of Stock under this Plan
shall be used for general corporate purposes and shall be added
to the general funds of the Company.



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3.4     Grant
Limits. No Eligible Employee or Director in any calendar
year shall be granted an Option to purchase (subject to
§ 13) more than 500,000 shares of Stock or a
Stock Appreciation Right based on the appreciation with respect
to (subject to § 13) more than 500,000 shares of
Stock, and no Stock Grant or Stock Unit Grant shall be made to
any Eligible Employee or Director in any calendar year where the
Fair Market Value of the Stock subject to such grant on the date
of the grant exceeds $2,000,000. No more than 1,000,000
non-forfeitable shares of Stock shall (subject to
§ 13) be issued pursuant to Stock Grants under
§ 9.



     
3.5     Preexisting
Plan. No grants shall be made under any Preexisting Plan on
or after the date this Plan becomes effective.




§ 4.




EFFECTIVE DATE



     
The effective date of this Plan shall be the date
the shareholders of the Company (acting at a duly called meeting
of such shareholders) approve the adoption of this Plan.




§ 5.




COMMITTEE



     
This Plan shall be administered by the Committee.
The Committee acting in its absolute discretion shall exercise
such powers and take such action as expressly called for under
this Plan and, further, the Committee shall have the power to
interpret this Plan and (subject to § 14 and
§ 15 and Rule 16b-3) to take such other action in
the administration and operation of this Plan as the Committee
deems equitable under the circumstances, which action shall be
binding on the Company, on each affected Eligible Employee or
Director and on each other person directly or indirectly
affected by such action. Furthermore, the Committee as a
condition to making any grant under this Plan to any Eligible
Employee or Director shall have the right to require him or her
to execute an agreement which makes the Eligible Employee or
Director subject to non-competition provisions and other
restrictive covenants which run in favor of the Company.




§ 6.




ELIGIBILITY



     
Only Eligible Employees who are employed by the
Company or a Subsidiary or Parent shall be eligible for the
grant of ISOs under this Plan. All Eligible Employees and all
Directors shall be eligible for the grant of Non-ISOs and Stock
Appreciation Rights and for Stock Grants and Stock Unit Grants
under this Plan.




§ 7.




OPTIONS



     
7.1     Committee
Action. The Committee acting in its absolute discretion
shall have the right to grant Options to Eligible Employees and
to Directors under this Plan from time to time to purchase
shares of Stock, but the Committee shall not (subject to
§ 13) take any action, whether through amendment,
cancellation, replacement grants, or any other means, to reduce
the Option Price of any outstanding Options absent the approval
of the Company’s shareholders. Each grant of an Option to a
Eligible Employee or Director shall be evidenced by an Option
Certificate, and each Option Certificate shall set forth whether
the Option is an ISO or a Non-ISO and shall set forth such other
terms and conditions of such grant as the Committee acting in
its absolute discretion deems consistent with the terms of this
Plan; however, (a) if the Committee grants an ISO and a
Non-ISO to a Eligible Employee on the same date, the right of
the Eligible Employee to exercise the ISO shall not be
conditioned on his or her failure to exercise the Non-ISO and
(b) if the only condition to exercise of the Option is the
completion of a period of service, such period of service shall
be no less than the



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one (1) year period which starts on the date
as of which the Option is granted unless the Committee
determines that a shorter period of service (or no period of
service) better serves the Company’s interest.




     
7.2     $100,000
Limit. No Option shall be treated as an ISO to the extent
that the aggregate Fair Market Value of the Stock subject to the
Option which would first become exercisable in any calendar year
exceeds $100,000. Any such excess shall instead automatically be
treated as a Non-ISO. The Committee shall interpret and
administer the ISO limitation set forth in this § 7.2
in accordance with § 422(d) of the Code, and the
Committee shall treat this § 7.2 as in effect only for
those periods for which § 422(d) of the Code is in
effect.



     
7.3     Option
Price. The Option Price for each share of Stock subject to
an Option shall be no less than the Fair Market Value of a share
of Stock on the date the Option is granted; provided, however,
if the Option is an ISO granted to an Eligible Employee who is a
Ten Percent Shareholder, the Option Price for each share of
Stock subject to such ISO shall be no less than 110% of the Fair
Market Value of a share of Stock on the date such ISO is granted.



     
7.4     Payment.
The Option Price shall be payable in full upon the exercise of
any Option and, at the discretion of the Committee, an Option
Certificate can provide for the payment of the Option Price
either in cash, by check or in Stock which has been held for at
least 6 months and which is acceptable to the Committee, or
through any cashless exercise procedure which is effected by an
unrelated broker through a sale of Stock in the open market and
which is acceptable to the Committee, or in any combination of
such forms of payment. Any payment made in Stock shall be
treated as equal to the Fair Market Value of such Stock on the
date the certificate for such Stock (or proper evidence of such
certificate) is presented to the Committee or its delegate in
such form as acceptable to the Committee.



     
7.5     Exercise.



     
(a) Exercise Period. Each Option
granted under this Plan shall be exercisable in whole or in part
at such time or times as set forth in the related Option
Certificate, but no Option Certificate shall make an Option
exercisable on or after the earlier of




		
	 	     
    (1) the date which is the fifth anniversary
    of the date the Option is granted, if the Option is an ISO and
    the Eligible Employee is a Ten Percent Shareholder on the date
    the Option is granted, or
    
	 
	 	     
    (2) the date which is the tenth anniversary
    of the date the Option is granted, if the Option is (a) a
    Non-ISO or (b) an ISO which is granted to an Eligible
    Employee who is not a Ten Percent Shareholder on the date the
    Option is granted.
    




     
(b) Termination of Status as Eligible
Employee or Director. Subject to § 7.5(a), an
Option Certificate may provide for the exercise of an Option
after an Eligible Employee’s or a Director’s status as
such has terminated for any reason whatsoever, including death
or disability.




§ 8.




STOCK APPRECIATION RIGHTS



     
8.1     Committee
Action. The Committee acting in its absolute discretion
shall have the right to grant Stock Appreciation Rights to
Eligible Employees and to Directors under this Plan from time to
time, and each Stock Appreciation Right grant shall be evidenced
by a Stock Appreciation Right Certificate or, if such Stock
Appreciation Right is granted as part of an Option, shall be
evidenced by the Option Certificate for the related Option.



     
8.2     Terms and
Conditions.



     
(a) Stock Appreciation Right
Certificate. If a Stock Appreciation Right is granted
independent of an Option, such Stock Appreciation Right shall be
evidenced by a Stock Appreciation Right Certificate, and such
certificate shall set forth the number of shares of Stock on
which the Eligible Employee’s or Director’s right to
appreciation shall be based and the SAR Value of each share of
Stock. Such SAR Value shall be no less than



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the Fair Market Value of a share of Stock on the
date that the Stock Appreciation Right is granted. The Stock
Appreciation Right Certificate shall set forth such other terms
and conditions for the exercise of the Stock Appreciation Right
as the Committee deems appropriate under the circumstances, but
no Stock Appreciation Right Certificate shall make a Stock
Appreciation Right exercisable on or after the date which is the
tenth anniversary of the date such Stock Appreciation Right is
granted.




     
(b) Option Certificate. If a Stock
Appreciation Right is granted together with an Option, such
Stock Appreciation Right shall be evidenced by an Option
Certificate, the number of shares of Stock on which the Eligible
Employee’s or Director’s right to appreciation shall
be based shall be the same as the number of shares of Stock
subject to the related Option, and the SAR Value for each such
share of Stock shall be no less than the Option Price under the
related Option. Each such Option Certificate shall provide that
the exercise of the Stock Appreciation Right with respect to any
share of Stock shall cancel the Eligible Employee’s or
Director’s right to exercise his or her Option with respect
to such share and, conversely, that the exercise of the Option
with respect to any share of Stock shall cancel the Eligible
Employee’s or Director’s right to exercise his or her
Stock Appreciation Right with respect to such share. A Stock
Appreciation Right which is granted as part of an Option shall
be exercisable only while the related Option is exercisable. The
Option Certificate shall set forth such other terms and
conditions for the exercise of the Stock Appreciation Right as
the Committee deems appropriate under the circumstances.



     
(c) Minimum Period of Service. If the
only condition to exercise of a Stock Appreciation Right is the
completion of a period of service, such period of service shall
be no less than the one (1) year period which starts on the
date as of which the Stock Appreciation Right is granted unless
the Committee determines that a shorter period of service (or no
period of service) better serves the Company’s interest.



     
8.3     Exercise.
A Stock Appreciation Right shall be exercisable only when the
Fair Market Value of a share of Stock on which the right to
appreciation is based exceeds the SAR Value for such share, and
the payment due on exercise shall be based on such excess with
respect to the number of shares of Stock to which the exercise
relates. An Eligible Employee or Director upon the exercise of
his or her Stock Appreciation Right shall receive a payment from
the Company in cash or in Stock issued under this Plan, or in a
combination of cash and Stock, and the number of shares of Stock
issued shall be based on the Fair Market Value of a share of
Stock on the date the Stock Appreciation Right is exercised. The
Committee acting in its absolute discretion shall have the right
to determine the form and time of any payment under this
§ 8.3.




§ 9.




STOCK GRANTS



     
9.1     Committee
Action. The Committee acting in its absolute discretion
shall have the right to make Stock Grants and Stock Unit Grants
to Eligible Employees and to Directors. Each Stock Grant and
each Stock Unit Grant shall be evidenced by a Stock Grant
Certificate, and each Stock Grant Certificate shall set forth
the conditions, if any, under which Stock will be issued under
the Stock Grant or cash will be paid under the Stock Unit Grant
and the conditions under which the Eligible Employee’s or
Director’s interest in any Stock which has been issued will
become non-forfeitable.



     
9.2     Conditions.



     
(a) Conditions to Issuance of Stock.
The Committee acting in its absolute discretion may make the
issuance of Stock under a Stock Grant subject to the
satisfaction of one, or more than one, condition which the
Committee deems appropriate under the circumstances for Eligible
Employees or Directors generally or for an Eligible Employee or
a Director in particular, and the related Stock Grant
Certificate shall set forth each such condition and the deadline
for satisfying each such condition. Stock subject to a Stock
Grant shall be issued in the name of an Eligible Employee or
Director only after each such condition, if any, has been timely
satisfied, and any Stock which is so issued shall be held by the
Company pending the satisfaction of the forfeiture conditions,
if any, under § 9.2(b) for the related Stock Grant.



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(b) Conditions on Forfeiture of Stock or
Cash Payment. The Committee acting in its absolute
discretion may make any cash payment due under a Stock Unit
Grant or Stock issued in the name of an Eligible Employee or
Director under a Stock Grant non-forfeitable subject to the
satisfaction of one, or more than one, objective employment,
performance or other condition that the Committee acting in its
absolute discretion deems appropriate under the circumstances
for Eligible Employees or Directors generally or for an Eligible
Employee or a Director in particular, and the related Stock
Grant Certificate shall set forth each such condition, if any,
and the deadline, if any, for satisfying each such condition. An
Eligible Employee’s or a Director’s non-forfeitable
interest in the shares of Stock underlying a Stock Grant or the
cash payable under a Stock Unit Grant shall depend on the extent
to which he or she timely satisfies each such condition. If a
share of Stock is issued under this § 9.2(b) before a
Eligible Employee’s or Director’s interest in such
share of Stock is non-forfeitable, (1) such share of Stock
shall not be available for re-issuance under § 3 until
such time, if any, as such share of Stock thereafter is
forfeited as a result of a failure to timely satisfy a
forfeiture condition and (2) the Company shall have the
right to condition any such issuance on the Eligible Employee or
Director first signing an irrevocable stock power in favor of
the Company with respect to the forfeitable shares of Stock
issued to such Eligible Employee or Director in order for the
Company to effect any forfeiture called for under the related
Stock Grant Certificate.



     
(c) Minimum Period of Service. If the
only condition to the forfeiture of a Stock Grant or a Stock
Unit Grant is the completion of a period of service, such period
of service shall be no less than the three (3) year period
which starts on the date as of which the Stock Grant or Stock
Unit Grant is made unless the Committee determines that a
shorter period of service (or no period of service) better
serves the Company’s interest.



     
9.3     Dividends,
Voting Rights and Creditor Status.



     
(a) Cash Dividends. Except as
otherwise set forth in a Stock Grant Certificate, if a dividend
is paid in cash on a share of Stock after such Stock has been
issued under a Stock Grant but before the first date that an
Eligible Employee’s or a Director’s interest in such
Stock (1) is forfeited completely or (2) becomes
completely non-forfeitable, the Company shall pay such cash
dividend directly to such Eligible Employee or Director.



     
(b) Stock Dividends. If a dividend is
paid on a share of Stock in Stock after such Stock has been
issued under a Stock Grant but before the first date that an
Eligible Employee’s or a Director’s interest in such
Stock (1) is forfeited completely or (2) becomes
completely non-forfeitable, the Company shall hold such dividend
Stock subject to the same conditions under § 9.2(b) as
the related Stock Grant.



     
(c) Other. If a dividend (other than
a dividend described in § 9.3(a) or
§ 9.3(b)) is paid with respect to a share of Stock
after such Stock has been issued under a Stock Grant but before
the first date that an Eligible Employee’s or a
Director’s interest in such Stock (1) is forfeited
completely or (2) becomes completely non-forfeitable, the
Company shall distribute or hold such dividend in accordance
with such rules as the Committee shall adopt with respect to
each such dividend.



     
(d) Voting. Except as otherwise set
forth in a Stock Grant Certificate, an Eligible Employee or a
Director shall have the right to vote the Stock issued under his
or her Stock Grant during the period which comes after such
Stock has been issued under a Stock Grant but before the first
date that an Eligible Employee’s or Director’s
interest in such Stock (1) is forfeited completely or
(2) becomes completely non-forfeitable.



     
(e) General Creditor Status. Each
Eligible Employee and each Director to whom a Stock Unit grant
is made shall be no more than a general and unsecured creditor
of the Company with respect to any cash payable under such Stock
Unit Grant.



     
9.4     Satisfaction
of Forfeiture Conditions. A share of Stock shall cease to be
subject to a Stock Grant at such time as an Eligible
Employee’s or a Director’s interest in such Stock
becomes non-forfeitable under this Plan, and the certificate or
other evidence of ownership representing such share shall be
transferred to the Eligible Employee or Director as soon as
practicable thereafter.



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9.5     Income Tax
Deduction.



     
(a) General. The Committee shall
(where the Committee under the circumstances deems in the
Company’s best interest) either (1) make Stock Grants
and Stock Unit Grants to Eligible Employees subject to at least
one condition related to one, or more than one, performance goal
based on the performance goals described in § 9.5(b)
which seems likely to result in the Stock Grant or Stock Unit
Grant qualifying as “performance-based compensation”
under § 162(m) of the Code or (2) make Stock
Grants and Stock Unit Grants to Eligible Employees under such
other circumstances as the Committee deems likely to result in
an income tax deduction for the Company with respect such Stock
Grant or Stock Unit Grant. A performance goal may be set in any
manner determined by the Committee, including looking to
achievement on an absolute or relative basis in relation to peer
groups or indexes.



     
(b) Performance Goals. A performance
goal is described in this § 9.5(b) if such goal
relates to (1) the Company’s return over capital costs
or increases in return over capital costs, (2) the
Company’s safety record, (3) the Company’s
customer satisfaction survey, (4) the Company’s total
earnings or the growth in such earnings, (5) the
Company’s consolidated earnings or the growth in such
earnings, (6) the Company’s earnings per share or the
growth in such earnings, (7) the Company’s net
earnings or the growth in such earnings, (8) the
Company’s earnings before interest expense, taxes,
depreciation, amortization and other non-cash items or the
growth in such earnings, (9) the Company’s earnings
before interest and taxes or the growth in such earnings,
(10) the Company’s consolidated net income or the
growth in such income, (11) the value of the Company’s
common stock or the growth in such value, (12) the
Company’s stock price or the growth in such price,
(13) the tons of paperboard produced or converted by the
Company, (14) the Company’s return on assets or the
growth on such return, (15) the Company’s cash flow or
the growth in such cash flow, (16) the Company’s total
shareholder return or the growth in such return, (17) the
Company’s expenses or the reduction of such expenses,
(18) the Company’s sales growth, (19) the
Company’s overhead ratios or changes in such ratios,
(20) the Company’s expense-to-sales ratios or the
changes in such ratios, or (21) the Company’s economic
value added or changes in such value added. The performance
goals for the participants will (as the Committee deems
appropriate) be based on criteria related to company-wide
performance, division-specific or other business unit-specific
performance (where the Committee can apply the business criteria
on such basis), plant or facility-specific performance,
department-specific performance, personal goal performance or
any combination of the performance-based criteria.



     
(c) Adjustments. When the Committee
determines whether a performance goal has been satisfied for any
period, the Committee may exclude any or all “extraordinary
items” as determined under U.S. generally accepted
accounting principles and any other unusual or non-recurring
items, including, without limitation, the charges or costs
associated with restructurings of the Company, discontinued
operations, and the cumulative effects of accounting changes.
The Committee may also adjust any performance goal for a period
as it deems equitable in recognition of unusual or non-recurring
events affecting the Company, changes in applicable tax laws or
accounting principles, or such other factors as the Committee
may determine (including, without limitation, any adjustments
that would result in the Company’s paying non-deductible
compensation to an Eligible Employee).




§ 10.




NON-TRANSFERABILITY



     
No Option, Stock Grant, Stock Unit Grant or Stock
Appreciation Right shall (absent the Committee’s consent)
be transferable by an Eligible Employee or a Director other than
by will or by the laws of descent and distribution, and any
Option or Stock Appreciation Right shall (absent the
Committee’s consent) be exercisable during a Eligible
Employee’s or Director’s lifetime only by the Eligible
Employee or Director. The person or persons to whom an Option or
Stock Grant or Stock Unit Grant or Stock Appreciation Right is
transferred by will or by the laws of descent and distribution
(or with the Committee’s consent) thereafter shall be
treated as the Eligible Employee or Director.



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§ 11.




SECURITIES REGISTRATION



     
As a condition to the receipt of shares of Stock
under this Plan, the Eligible Employee or Director shall, if so
requested by the Company, agree to hold such shares of Stock for
investment and not with a view of resale or distribution to the
public and, if so requested by the Company, shall deliver to the
Company a written statement satisfactory to the Company to that
effect. Furthermore, if so requested by the Company, the
Eligible Employee or Director shall make a written
representation to the Company that he or she will not sell or
offer for sale any of such Stock unless a registration statement
shall be in effect with respect to such Stock under the
1933 Act and any applicable state securities law or he or
she shall have furnished to the Company an opinion in form and
substance satisfactory to the Company of legal counsel
satisfactory to the Company that such registration is not
required. Certificates or other evidence of ownership
representing the Stock transferred upon the exercise of an
Option or Stock Appreciation Right or upon the lapse of the
forfeiture conditions, if any, on any Stock Grant may at the
discretion of the Company bear a legend to the effect that such
Stock has not been registered under the 1933 Act or any
applicable state securities law and that such Stock cannot be
sold or offered for sale in the absence of an effective
registration statement as to such Stock under the 1933 Act
and any applicable state securities law or an opinion in form
and substance satisfactory to the Company of legal counsel
satisfactory to the Company that such registration is not
required.




§ 12.




LIFE OF PLAN



     
No Option or Stock Appreciation Right shall be
granted or Stock Grant or Stock Unit Grant made under this Plan
on or after the earlier of:




		
	 	     
    (1) the tenth anniversary of the effective
    date of this Plan (as determined under § 4), in which
    event this Plan otherwise thereafter shall continue in effect
    until all outstanding Options and Stock Appreciation Rights have
    been exercised in full or no longer are exercisable and all
    Stock issued under any Stock Grants under this Plan have been
    forfeited or have become non-forfeitable, or
    
	 
	 	     
    (2) the date on which all of the Stock
    reserved under § 3 has (as a result of the exercise of
    Options or Stock Appreciation Rights granted under this Plan or
    the satisfaction of the forfeiture conditions, if any, on Stock
    Grants) been issued or no longer is available for use under this
    Plan, in which event this Plan also shall terminate on such date.
    





§ 13.




ADJUSTMENT



     
13.1     Capital
Structure. The grant caps described in § 3.4, the
number, kind or class (or any combination thereof) of shares of
Stock subject to outstanding Options and Stock Appreciation
Rights granted under this Plan and the Option Price of such
Options and the SAR Value of such Stock Appreciation Rights as
well as the number, kind or class (or any combination thereof)
of shares of Stock subject to outstanding Stock Grants and Stock
Unit Grants made under this Plan shall be adjusted by the
Committee in a reasonable and equitable manner to preserve
immediately after




		
	 	     
    (a) any equity restructuring or change in
    the capitalization of the Company, including, but not limited
    to, spin offs, stock dividends, large non-reoccurring dividends,
    rights offerings or stock splits, or
    
	 
	 	     
    (b) any other transaction described in
    § 424(a) of the Code which does not constitute a
    Change in Control of the Company
    





the aggregate intrinsic value of each such
outstanding Option, Stock Appreciation Right, Stock Grant and
Stock Unit Grant immediately before such restructuring or
recapitalization or other transaction.



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13.2     Available
Shares. If any adjustment is made with respect to any
outstanding Option, Stock Appreciation Right, Stock Grant or
Stock Unit Grant under § 13.1, then the Committee
shall adjust the number, kind or class (or any combination
thereof) of shares of Stock reserved under § 3.1 so
that there is a sufficient number, kind and class of shares of
Stock available for issuance pursuant to each such Option, Stock
Appreciation Right, Stock Grant and Stock Unit Grant as adjusted
under § 13.1 without seeking the approval of the
Company’s shareholders for such adjustment unless such
approval is required under applicable law or the rules of the
stock exchange on which shares of Stock are traded. Furthermore,
the Committee shall have the absolute discretion to further
adjust such number, kind or class (or any combination thereof)
of shares of Stock reserved under § 3.1 in light of
any of the events described in § 13.1(a) and
§ 13.1(b) to the extent the Committee acting in good
faith determinates that a further adjustment would be
appropriate and proper under the circumstances and in keeping
with the purposes of this Plan without seeking the approval of
the Company’s shareholders for such adjustment unless such
approval is required under applicable law or the rules of the
stock exchange on which shares of Stock are traded.



     
13.3     Transactions
Described in § 424 of the Code. If there is a
corporate transaction described in § 424(a) of the
Code which does not constitute a Change in Control of the
Company, the Committee as part of any such transaction shall
have right to make Stock Grants, Stock Unit Grants and Option
and Stock Appreciation Right grants (without regard to any
limitations set forth under 3.4 of this Plan) to effect the
assumption of, or the substitution for, outstanding stock
grants, stock unit grants and option and stock appreciation
right grants previously made by any other corporation to the
extent that such corporate transaction calls for such
substitution or assumption of such outstanding stock grants,
stock unit grants and stock option and stock appreciation right
grants. Furthermore, if the Committee makes any such grants as
part of any such transaction, the Committee shall have the right
to increase the number of shares of Stock available for issuance
under § 3.1 by the number of shares of Stock subject
to such grants without seeking the approval of the
Company’s shareholders for such adjustment unless such
approval is required under applicable law or the rules of the
stock exchange on which shares of Stock are traded.



     
13.4     Fractional
Shares. If any adjustment under this § 13 would
create a fractional share of Stock or a right to acquire a
fractional share of Stock under any Option, Stock Appreciation
Right or Stock Grant, such fractional share shall be disregarded
and the number of shares of Stock reserved under this Plan and
the number subject to any Options or Stock Appreciation Right
grants and Stock Grants shall be the next lower number of shares
of Stock, rounding all fractions downward. An adjustment made
under this § 13 by the Committee shall be conclusive
and binding on all affected persons.




§ 14.




CHANGE IN CONTROL



     
If there is a Change in Control of the Company,
then as of the Change Effective Date for such Change in Control
any and all conditions to the exercise of all outstanding
Options and Stock Appreciation Rights on such date and any and
all outstanding issuance and forfeiture conditions on any Stock
Grants and Stock Unit Grants on such date automatically shall be
deemed 100% satisfied as of such Change Effective Date, and the
Board shall have the right (to the extent expressly required as
part of such transaction) to cancel such Options, Stock
Appreciation Rights, Stock Grants and Stock Unit Grants after
providing each Eligible Employee and Director a reasonable
period to exercise his or her Options and Stock Appreciation
Rights and to take such other action as necessary or appropriate
to receive the Stock subject to any Stock Grants and the cash
payable under any Stock Unit Grants; provided, if any issuance
or forfeiture condition described in this § 14 relates
to satisfying any performance goal and there is a target for
such goal, such issuance or forfeiture condition shall be deemed
satisfied under this § 14 only to the extent of such
target unless such target has been exceeded before the Change
Effective Date, in which event such issuance or forfeiture
condition shall be deemed satisfied to the extent such target
had been so exceeded.



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§ 15.




AMENDMENT OR 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, (a) no amendment shall be
made absent the approval of the shareholders of the Company to
the extent such approval is required under applicable law or the
rules of the stock exchange on which shares of Stock are listed
and (b) no amendment shall be made to § 14 on or
after the date of any Change in Control which might adversely
affect any rights which otherwise would vest on the related
Change Effective Date. The Board also may suspend granting
Options or Stock Appreciation Rights or making Stock Grants or
Stock Unit Grants under this Plan at any time and may terminate
this Plan at any time; provided, however, the Board shall not
have the right unilaterally to modify, amend or cancel any
Option or Stock Appreciation Right granted or Stock Grant made
before such suspension or termination unless (1) the
Eligible Employee or Director consents in writing to such
modification, amendment or cancellation or (2) there is a
dissolution or liquidation of the Company or a transaction
described in § 13.1 or § 14.




§ 16.




MISCELLANEOUS



     
16.1     Shareholder
Rights. No Eligible Employee or Director shall have any
rights as a shareholder of the Company as a result of the grant
of an Option or a Stock Appreciation Right pending the actual
delivery of the Stock subject to such Option or Stock
Appreciation Right to such Eligible Employee or Director. An
Eligible Employee’s or a Director’s rights as a
shareholder in the shares of Stock which remain subject to
forfeiture under § 9.2(b) shall be set forth in the
related Stock Grant Certificate.



     
16.2      No Contract
of Employment. The grant of an Option or a Stock
Appreciation Right or a Stock Grant or Stock Unit Grant to an
Eligible Employee or Director under this Plan shall not
constitute a contract of employment or a right to continue to
serve on the Board and shall not confer on an Eligible Employee
or Director any rights upon his or her termination of employment
or service in addition to those rights, if any, expressly set
forth in this Plan or the related Option Certificate, Stock
Appreciation Right Certificate, or Stock Grant Certificate.



     
16.3     Withholding.
Each Option, Stock Appreciation Right, Stock Grant and Stock
Unit Grant shall be made subject to the condition that the
Eligible Employee or Director consents to whatever action the
Committee directs to satisfy the minimum statutory federal and
state tax withholding requirements, if any, which the Company
determines are applicable to the exercise of such Option or
Stock Appreciation Right or to the satisfaction of any
forfeiture conditions with respect to Stock subject to a Stock
Grant or Stock Unit Grant issued in the name of the Eligible
Employee or Director. No withholding shall be effected under
this Plan which exceeds the minimum statutory federal and state
withholding requirements.



     
16.4     Construction.
All references to sections (§) are to sections (§) of
this Plan unless otherwise indicated. This Plan shall be
construed under the laws of the State of Georgia. Each term set
forth in § 2 shall, unless otherwise stated, have the
meaning set forth opposite such term for purposes of this Plan
and, for purposes of such definitions, the singular shall
include the plural and the plural shall include the singular.
Finally, if there is any conflict between the terms of this Plan
and the terms of any Option Certificate, Stock Appreciation
Right Certificate or Stock Grant Certificate, the terms of this
Plan shall control.



     
16.5     Other
Conditions. Each Option Certificate, Stock Appreciation
Right Certificate or Stock Grant Certificate may require that an
Eligible Employee or a Director (as a condition to the exercise
of an Option or a Stock Appreciation Right or the issuance of
Stock subject to a Stock Grant) enter into any agreement or make
such representations prepared by the Company, including (without
limitation) any agreement which restricts the transfer of Stock
acquired pursuant to the exercise of an Option or a Stock
Appreciation Right or a Stock Grant or provides for the
repurchase of such Stock by the Company.



     
16.6     Rule 16b-3.
The Committee shall have the right to amend any Option, Stock
Grant or Stock Appreciation Right to withhold or otherwise
restrict the transfer of any Stock or cash under this Plan to an



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Eligible Employee or Director as the Committee
deems appropriate in order to satisfy any condition or
requirement under Rule 16b-3 to the extent Rule 16 of
the 1934 Act might be applicable to such grant or transfer.




     
16.7     Coordination
with Employment Agreements and Other Agreements. If the
Company enters into an employment agreement or other agreement
with an Eligible Employee or Director which expressly provides
for the acceleration in vesting of an outstanding Option, Stock
Appreciation Right, Stock Grant or Stock Unit Grant or for the
extension of the deadline to exercise any rights under an
outstanding Option, Stock Appreciation Right, Stock Grant or
Stock Unit Grant, any such acceleration or extension shall be
deemed effected pursuant to, and in accordance with, the terms
of such outstanding Option, Stock Appreciation Right, Stock
Grant or Stock Unit Grant and this Plan even if such employment
agreement or other agreement is first effective after the date
the outstanding Option or Stock Appreciation Right was granted
or the Stock Grant or Stock Unit Grant was made.



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