Exhibit 10(d)
KIMBALL INTERNATIONAL,
INC.
2003 STOCK OPTION AND INCENTIVE PLAN
1. Plan Purpose . The purpose of the Kimball
International, Inc. 2003 Stock Option and Incentive Plan is (i) to
align the personal interests of Plan Participants with those of the
shareholders of the Company, (ii) to encourage key individuals to
accept or continue employment or service with the Company and its
subsidiaries, and (iii) to furnish incentive to such key
individuals to improve operations and increase profits by providing
such key individuals the opportunity to acquire Common Stock of the
Company or to receive monetary payments based on the value of such
Common Stock. It is intended that certain Awards granted under the
Plan will qualify as performance-based compensation within the
meaning of section 162(m) of the Code, to the extent
applicable.
2. Definitions . The following definitions are
applicable to the Plan:
" Affiliate " means any "parent corporation" or "subsidiary
corporation" of the Company as such terms are defined in Code
sections 424(e) and (f), respectively.
" Award " means the grant by the Committee of Incentive
Stock Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Unrestricted Shares, Restricted Shares, Deferred Share
Units, Performance Shares, Performance Units, Exchange Rights or
any combination thereof, as provided in the Plan.
" Award Agreement " means the written agreement setting
forth the terms and provisions applicable to each Award granted
under the Plan.
" Board " means the Board of Directors of the Company.
" Code " means the Internal Revenue Code of 1986, as
amended, and its interpretive regulations.
" Committee " means the Committee appointed by the Board
pursuant to Section 3 of the Plan.
" Common Stock " means shares of Class A common stock, par
value of $.05 per share, of the Company and/or shares of Class B
common stock, par value of $.05 per share, of the Company, as
constituted on the effective date of the Plan, and any other shares
into which such Common Stock shall thereafter be changed by reason
of a recapitalization, merger, consolidation, split-up,
combination, exchange of shares or the like.
" Company " means Kimball International, Inc., an Indiana
corporation.
" Continuous Service " means, in the case of an Employee,
the absence of any interruption or termination of service as an
Employee of the Company or an Affiliate; and in the case of an
individual who is not an Employee, the absence of any interruption
or termination of the service relationship between the individual
and the Company or an Affiliate. Service will not be considered
interrupted in the case of sick leave, military leave or any other
leave of absence approved by the Company or in the case of a
Participant's transfer between the Company and an Affiliate or any
successor to the Company.
" Deferred Share Unit " means an Award, granted to a
Participant pursuant to Section 14 of the Plan, of a right to
receive a payment in the future based on the value of Common
Stock.
" Director " means any individual who is a member of the
Board.
" EBITDA " means earnings before interest, taxes,
depreciation and amortization.
" Economic Profit " means net income of the Company less the
Company's cost of capital. Economic Profit shall be calculated
under this Plan in the same manner in which it is calculated for
purposes of the Company's Annual Profit Sharing Bonus Plan.
" Employee " means any person, including an officer, who is
employed by the Company or any Affiliate.
" Exchange Act " means the Securities Exchange Act of 1934,
as amended.
" Exchange Rights " means an Award granted to a Participant
pursuant to Section 16 of the Plan.
" Exercise Price " means the price per Share at which the
Shares subject to an Option may be purchased upon exercise of the
Option.
" Incentive Stock Option " means an option to purchase
Shares granted by the Committee pursuant to the terms of the Plan
that is intended to qualify under Code section 422.
" Market Value " means, with respect to any Share of Common
Stock (regardless of whether it is Class A common stock or Class B
common stock), the average of the last reported sale prices during
the ten trading-day period preceding the date in question of one
Share of Class B common stock on the Nasdaq National Market, or, if
the Shares of Class B common stock are not then listed on the
Nasdaq National Market, on the principal exchange on which the
Shares of Class B common stock are then listed for trading, or, if
no Shares of Class B common stock are then listed for trading on
any exchange, the average of the means between the closing high bid
and low asked quotations of one Share of Class B common stock
during the ten reporting-day period preceding the date in question
as reported by NASDAQ or any similar system then in use, or, if no
such quotations are available, the fair market value on such date
of one Share of Common Stock as the Committee shall determine
consistently with the standards for determining fair market value
under Code section 409A and its interpretive regulations.
" Non-Qualified Stock Option " means an option to purchase
Shares granted by the Committee pursuant to the terms of the Plan,
which option is not intended to qualify under Code section 422.
" Option " means an Incentive Stock Option or a
Non-Qualified Stock Option.
" Participant " means any individual selected by the
Committee to receive an Award.
" Performance Cycle " means the period of time, designated
by the Committee, over which Performance Shares or Performance
Units may be earned.
" Performance Shares " means Shares awarded pursuant to
Section 15 of the Plan.
" Performance Unit " means an Award granted to a Participant
pursuant to Section 15 of the Plan.
" Plan " means the Kimball International, Inc. 2003 Stock
Option and Incentive Plan.
" Reorganization " means the liquidation or dissolution of
the Company, or any merger, share exchange, consolidation or
combination of the Company (other than a merger, share exchange,
consolidation or combination in which the Company is the continuing
entity and which does not result in the outstanding Shares being
converted into or exchanged for different securities, cash or other
property or any combination thereof).
" Restricted Period " means the period of time selected by
the Committee for the purpose of determining when restrictions are
in effect under Section 13 of the Plan with respect to Restricted
Shares.
" Restricted Shares " means Shares that have been
contingently awarded to a Participant by the Committee subject to
the restrictions referred to in Section 13 of the Plan, so long as
such restrictions are in effect.
" Securities Act " means the Securities Act of 1933, as
amended.
" Shares " means the shares of Common Stock.
" Stock Appreciation Rights " means an Award granted to a
Participant pursuant to Section 12 the Plan.
" Unrestricted Shares " means Shares awarded to a
Participant by the Committee without any restrictions.
3. Administration . The Plan will be administered by
a Committee of the Board, which will consist of three or more
members of the Board, each of whom will be a "non-employee
director" as provided under Rule 16b-3 of the Exchange Act, and an
"outside director" as provided under Code section 162(m). The
members of the Committee will be appointed by the Board. Except as
limited by the express provisions of the Plan, the Committee will
have sole and complete authority and discretion to (a) select
Participants and grant Awards; (b) determine the number of Shares
to be subject to types of Awards generally, as well as to
individual Awards granted under the Plan; (c) determine the terms
and conditions upon which Awards will be granted under the Plan;
(d) prescribe the form and terms of Award Agreements; (e) establish
procedures and regulations for the administration of the Plan; (f)
interpret the Plan; and (g) make all determinations deemed
necessary or advisable for the administration of the Plan.
Notwithstanding the foregoing, the Committee may delegate to
certain executive officers of the Company selected by the Committee
the authority to grant Awards to Employees or consultants of the
Company or its Affiliates, subject to specified volume limitations
and other conditions determined by the Committee. The Committee may
not delegate authority to grant Awards to any "Officer," as such
term is defined in Rule 16a-1(f) of the Exchange Act.
A majority of the Committee will constitute a quorum, and the acts
of a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by all members of
the Committee without a meeting, will be acts of the Committee. All
determinations and decisions made by the Committee pursuant to the
provisions of the Plan will be final, conclusive, and binding on
all persons, and will be given the maximum deference permitted by
law.
4. Participants . The Committee may select from time
to time Participants in the Plan from those Directors, Employees or
consultants of the Company or its Affiliates who, in the opinion of
the Committee, have the capacity for contributing in a substantial
measure to the successful performance of the Company or its
Affiliates.
5. Substitute Options . In the event the Company or
an Affiliate consummates a transaction described in Code Section
424(a), persons who become Employees or Directors on account of
such transaction may be granted Options in substitution for Options
granted by the former employer. The Committee, in its sole
discretion and consistent with Code Section 424(a) shall determine
the Exercise Price of the substitute Options.
6. Shares Subject to Plan and Limitations on Grants .
Subject to adjustment by the operation of Section 17 hereof:
(a) The maximum number of Shares that may be issued with respect to
Awards made under the Plan is Two Million Five Hundred Thousand
(2,500,000) Shares. The number of Shares that may be granted under
the Plan to any Participant during any year under all forms of
Awards will not exceed 400,000 Shares.
(b) The Shares with respect to which Awards may be made under the
Plan may either be authorized and unissued Shares or issued Shares
heretofore or hereafter reacquired and held as treasury Shares. Any
Award that expires, terminates or is surrendered for cancellation,
or with respect to Restricted Shares, which is forfeited (so long
as any cash dividends paid on such Shares are also forfeited), may
be subject to new Awards under the Plan with respect to the number
of Shares as to which an expiration, termination, cancellation or
forfeiture has occurred. Additionally, Shares that are withheld by
the Company or delivered by the Participant to the Company in order
to satisfy payment of the Exercise Price or any tax withholding
obligation and Shares granted pursuant to an Award Agreement which
is subsequently settled in cash rather than Shares, may be subject
to new Awards under the Plan.
7. General Terms and Conditions of Options .
(a) The Committee will have full and complete authority and
discretion, except as expressly limited by the Plan, to grant
Options and to prescribe the terms and conditions (which need not
be identical among Participants) of the Options. Each Option will
be evidenced by an Award Agreement that will specify: (i) the
Exercise Price, (ii) the number of Shares subject to the Option,
(iii) the expiration date of the Option, (iv) the manner, time and
rate (cumulative or otherwise) of exercise of the Option, (v) the
restrictions, if any, to be placed upon the Option or upon Shares
that may be issued upon exercise of the Option, (vi) the
conditions, if any, under which a Participant may transfer or
assign Options, and (vii) any other terms and conditions as the
Committee, in its sole discretion, may determine.
(b) The Committee shall not, without the further approval of the
shareholders of the Company, authorize the amendment of any
outstanding Option Award Agreement to reduce the Exercise Price.
Furthermore, no Option shall be cancelled and replaced with an
Option having a lower Exercise Price without further approval of
the shareholders of the Company. Notwithstanding any other
provision under the Plan, the Exercise Price for any Option awarded
under the Plan may not be less than the Market Value of the Shares
on the date of grant.
8. Exercise of Options .
(a) Except as provided in Section 19, an Option granted under the
Plan will be exercisable only by the Participant, and except as
provided in Section 9 of the Plan or as otherwise set forth in the
Award Agreement, no Option may be exercised unless at the time the
Participant exercises the Option, the Participant has maintained
Continuous Service since the date of the grant of the Option.
(b) To exercise an Option under the Plan, the Participant must give
written notice to the Company specifying the number of Shares with
respect to which the Participant elects to exercise the Option
together with full payment of the Exercise Price. The date of
exercise will be the date on which the notice is received by the
Company. Payment may be made either (i) in cash (including check,
bank draft or money order), (ii) by tendering Shares already owned
by the Participant for at least six (6) months prior to the date of
exercise and having a Market Value on the date of exercise equal to
part or all of the Exercise Price, (iii) by the delivery of a
certificate of ownership in which the Participant certifies
ownership of Shares already owned by the Participant for at least
six (6) months prior to the date of exercise and having a Market
Value on the date of exercise equal to part or all of the Exercise
Price (in which case the Company shall withhold the number of
Shares certified from the number delivered pursuant to such
exercise), or (iv) by any other means determined by the Committee
in its sole discretion.
9. Termination of Options . Unless otherwise
specifically provided elsewhere in the Plan or by the Committee in
the Award Agreement or any amendment thereto, Options will
terminate as provided in this Section.
(a) Unless sooner terminated under the provisions of this Section,
Options will expire on the earlier of the date specified in the
Award Agreement or the expiration of ten (10) years from the date
of grant.
(b) If the Continuous Service of a Participant is terminated by the
Company for any reason whatsoever, or is terminated by the
Participant for any reason other than death, disability or
retirement, all rights under any Options granted to the Participant
will terminate immediately upon the Participant's cessation of
Continuous Service.
(c) In the event of the Participant's death or disability, the
Participant or the Participant's beneficiary, as the case may be,
may exercise outstanding Options to the extent that the Participant
was entitled to exercise the Options at the date of cessation of
Continuous Service, but only within the one-year period immediately
succeeding the Participant's cessation of Continuous Service by
reason of death or disability, and in no event after the applicable
expiration date of the Options.
(d) In the event of the Participant's retirement, all of the
Participant's outstanding Options shall vest immediately and become
exercisable, but only within the two-year period immediately
succeeding the date of retirement, and in no event after the
applicable expiration date of the Options.
(e) Notwithstanding the provisions of the foregoing paragraphs of
this Section 9, the Committee may, in its sole discretion,
establish different terms and conditions pertaining to the effect
of the cessation of Continuous Service, to the extent permitted by
applicable federal and state law and in no event after the
applicable expiration date of the Options.
10. Restrictive Covenants . In its discretion, the
Committee may condition the grant of any Option under the Plan upon
the Participant agreeing to reasonable covenants in favor of the
Company and/or any Affiliate (including, without limitation,
covenants not to compete, not to solicit employees and customers,
and not to disclose confidential information) that may have effect
following the termination of employment with the Company or any
Affiliate, and after the Option has been exercised, including,
without limitation, the requirement to disgorge any profit, gain or
other benefit received upon exercise of the Option prior to any
breach of any covenant.
11. Incentive Stock Options .
(a) The maximum number of Shares that may be issued with respect to
Incentive Stock Options under the Plan is Two Million Five Hundred
Thousand (2,500,000) Shares. Incentive Stock Options may be granted
only to Participants who are Employees. Any provisions of the Plan
to the contrary notwithstanding, (i) no Incentive Stock Option will
be granted more than ten (10) years from the earlier of the date
the Plan is adopted by the Board or approved by the Company's
shareholders, (ii) no Incentive Stock Option will be exercisable
more than ten (10) years from the date the Incentive Stock Option
is granted, (iii) the Exercise Price of any Incentive Stock Option
will not be less than the Market Value per Share on the date such
Incentive Stock Option is granted, (iv) any Incentive Stock Option
will not be transferable by the Participant to whom such Incentive
Stock Option is granted other than by will or the laws of descent
and distribution and will be exercisable during the Participant's
lifetime only by such Participant, (v) no Incentive Stock Option
will be granted that would permit a Participant to acquire, through
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