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8-K - Allis Chalmers Energy Inc. | v165614_8k.htm |
SECOND
AMENDED AND RESTATED
ALLIS-CHALMERS
ENERGY INC.
2006
INCENTIVE PLAN
SECTION 1. Purpose of the
Plan.
This Second Amended and Restated
Allis-Chalmers Energy Inc. 2006 Incentive Plan (the “Plan”) is intended to
promote the interests of Allis-Chalmers Energy Inc., a Delaware corporation (the
“Company”), and its stockholders by encouraging officers, employees,
non-employee directors and consultants of the Company and its Affiliates to
acquire or increase their equity interests in the Company and to provide a means
whereby they may develop a sense of proprietorship and personal involvement in
the development and financial success of the Company, and to encourage them to
remain with and devote their best efforts to the business of the Company thereby
advancing the interests of the Company and its stockholders. The
Board of Directors of the Company also contemplates that through the Plan, the
Company and its Affiliates will be better able to attract and retain the
services of individuals who are essential for the growth and profitability of
the Company. The Plan provides for payment of various forms of
incentive compensation and accordingly is not intended to be a plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, and
shall be administered accordingly.
SECTION 2. Definitions.
As used in the Plan, the following
terms shall have the meanings set forth below:
“Affiliate” shall mean (i) any “parent
corporation” of the Company (as defined in Section 424(e) of the Code), (ii) any
“subsidiary corporation” of any such parent corporation (as defined in Section
424(f) of the Code) of the Company and (iii) any trades or businesses, whether
or not incorporated, which are members of a controlled group or are under common
control (as defined in Sections 414(b) or (c) of the Code) with the Company;
provided, that, for the purpose of issuing Options or Stock Appreciation Rights,
“Affiliate” means any corporation or other entity in a chain of corporations
and/or other entities in which the Company has a “controlling interest” within
the meaning of Treas. Reg. § 1.414(c)-2(b)(2)(i), but using the threshold
of 50% ownership wherever 80% appears.
“Award” shall mean any Option,
Restricted Stock, Performance Award, Bonus Shares or Other Stock-Based
Award.
“Award Agreement” shall mean any
written agreement, contract, or other instrument or document evidencing any
Award, which may, but need not, be executed or acknowledged by a
Participant.
“Board” shall mean the Board of
Directors of the Company.
“Bonus Shares” shall mean an award of
Shares granted pursuant to Section 6(d) of the Plan.
“Change in Control” shall mean, subject
to the last paragraph of this definition, the occurrence of any one (1) of the
following events:
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(a)
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any
“person” (as defined in Section 3(a)(9) of the Exchange Act, and as
modified in Section 13(d) and 14(d) of the Exchange Act) other than
(i) the Company or any of its subsidiaries; (ii) any employee
benefit plan of the Company or any of its subsidiaries; (iii) or any
Affiliate; (iv) a company owned, directly or indirectly, by
stockholders of the Company in substantially the same proportions as their
ownership of the Company; or (v) an underwriter temporarily holding
securities pursuant to an offering of such securities (a “Person”),
becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange
Act), directly or indirectly, of securities of the Company representing
more than fifty percent (50%) of the shares of voting stock of the Company
then outstanding;
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(b)
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the
consummation of any merger, organization, business combination or
consolidation of the Company or one (1) of its subsidiaries with or into
any other
company, other than a merger, reorganization, business combination or
consolidation which would result in the holders of the voting securities
of the Company outstanding immediately prior thereto holding securities
which represent immediately after such merger, reorganization, business
combination or consolidation more than fifty percent (50%) of the combined
voting power of the voting securities of the Company or the surviving
company or the parent of such surviving
company;
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(c)
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the
consummation of a sale, lease, transfer, conveyance or other disposition
(including by merger or consolidation) by the Company in one (1) or a
series of related transactions, of all or substantially all of the
Company’s assets, other than any such transaction if the holders of the
voting securities of the Company outstanding immediately prior thereto
hold securities immediately thereafter which represent more than fifty
percent (50%) of the combined voting power of the voting securities of the
acquiror, or parent of the acquiror, of such
assets;
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(d)
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the
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company; or
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(e)
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individuals
who, as of the Effective Date, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the Effective Date whose election by the Board, was approved
by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
(i) an actual or threatened election contest (as such terms are used in
Rule 14A-11 of Regulation 14A promulgated under the Exchange Act) with
respect to the election or removal of directors or an actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board or (ii) a plan or agreement to replace a majority of the
members of the Board then comprising the Incumbent
Board.
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Except as
otherwise expressly provided in an Award, solely with respect to any Award that
constitutes deferred compensation that is subject to Section 409A of the Code
and payment of such Award is contingent upon the occurrence of a Change in
Control, the above definition of Change in Control shall be inoperative with
respect to such Award and is hereby replaced by the definition of such term set
forth in Treas. Reg. §1.409A-3(i)(5) or any successor thereto, but using 50%
wherever 30% appears in Treas. Reg. §1.409A-3(i)(5)(vi) or any successor thereto
and 50% wherever 40% appears in Treas. Reg. §1.409A-3(i)(5)(vii) or any
successor thereto, which regulation, as modified herein, is hereby incorporated
by reference into and shall form part of this Plan solely for the limited
purpose of this sentence, and the Plan, solely as it relates to such Award, and
such Award shall be operated in accordance with such modified definition of
Change in Control.
“Code” shall mean the Internal Revenue
Code of 1986, as amended from time to time, and the rules and regulations
thereunder.
“Committee” shall mean the compensation
committee of the Board which, for any period in which the Company is subject to
the reporting requirements of the Exchange Act, shall consist of not less than
two (2) members of the Board, each of whom shall qualify as a “non-employee
director” (as that term is defined in Rule 16b-3 of the General Rules and
Regulations under the Exchange Act) appointed by and serving at the pleasure of
the Board to administer the Plan or, if none, the Board; provided however, that
with respect to any Award granted to a Covered Employee which is intended to be
“performance-based compensation” as described in Section 162(m)(4)(C) of the
Code, the Committee shall consist solely of two (2) or more “outside directors”
as described in Section 162(m)(4)(C)(i) of the Code.
“Company”
shall mean the corporation described in Section 1 of the Plan or any
successor thereto that assumes and continues the Plan.
“Consultant” shall mean any individual,
other than a Director or an Employee, who renders consulting services to the
Company or an Affiliate for a fee.
“Covered
Employee” shall mean for fiscal years ending on or after December 15, 2006, any
of the Chief Executive Officer of the Company and each other officer of the
Company other than the Chief Executive Officer who is treated as a “covered
employee” for purposes of applying Section 162(m) of the Code to Awards or any
individual Consultant, Director or other Employee, or class of Consultants,
Directors or Employees, who the Committee specifies in an Award shall be treated
as a Covered Employee.
“Director” shall mean a member of the
Board who is not an Employee of the Company.
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“Effective
Date” means the date that the Allis-Chalmers Energy Inc. 2006 Incentive Plan
(the “Prior Plan”) was initially (i) adopted by the Board; and (ii) approved by
stockholders of the Company not more than one (1) year prior to or after the
date of such adoption. The provisions of the Prior Plan, as amended
and restated from time to time, are applicable to all Awards granted on or after
the Effective Date. The Plan, as adopted by the Board, shall be
effective as of December 31, 2008.
“Employee” shall mean any employee of
the Company or an Affiliate.
“Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.
“Fair Market Value” shall mean, with
respect to Shares, the closing sales price of a Share on the applicable date (or
if there is no trading in the Shares on such date, on the next preceding date on
which there was trading) as reported in The Wall Street Journal (or other
reporting service approved by the Committee). In the event the Shares
are not publicly traded at the time a determination of its fair market value is
required to be made hereunder, the determination of fair market value shall be
made in good faith by the Committee.
“Option” shall mean an option granted
under Section 6(a) of the Plan. Options granted under the Plan may
constitute “incentive stock options” for purposes of Section 422 of the Code or
nonqualified stock options.
“Other Stock-Based Award” shall mean an
award granted pursuant to Section 6(e) of the Plan that is not otherwise
specifically provided for, the value of which is based in whole or in part upon
the value of a Share.
“Participant” shall mean any Director,
Employee or Consultant granted an Award under the Plan.
“Performance Award” shall mean any
right granted under Section 6(c) of the Plan.
“Performance Objectives” means the
objectives, if any, established by the Committee that are to be achieved with
respect to an Award granted under this Plan, which may be described in terms of
Company-wide objectives, in terms of objectives that are related to performance
of a business, division, subsidiary, department, unit or function within the
Company or an Affiliate in which the Participant receiving the Award is employed
or in individual or other terms, and which will relate to the period of time
determined by the Committee. Which objectives to use with respect to
an Award, the weighting of the objectives if more than one (1) is used, and
whether the objective is to be measured against a Company-established budget or
target, an index or a peer group of companies, shall be determined by the
Committee in its discretion at the time of grant of the Award. One or
more of the following business criteria for the Company shall be used by the
Committee in establishing Performance Objectives for Performance Awards granted
to a Participant: (i) earnings per share; (ii) increase in
price per share, (iii) increase in revenues; (iv) increase in cash
flow; (v) return on net assets; (vi) return on assets;
(vii) return on investment; (viii) return on equity;
(ix) economic value added; (x) gross margin; (xi) net income;
(xii) pretax earnings; (xiii) pretax earnings before interest,
depreciation, depletion and amortization; (xiv) pretax operating earnings
after interest expense and before incentives, service fees, and extraordinary or
special items; (xv) operating income; (xvi) total stockholder return;
(xvii) debt reduction; and (xviii) any of the above goals determined
on the absolute or relative basis or as compared to the performance of a
published or special index deemed applicable by the Committee including, but not
limited to, the Standard & Poor’s 500 Stock Index or components thereof
or a group of comparable companies. A Performance Objective need not
be based on an increase or a positive result and may include, for example,
maintaining the status quo or limiting economic losses.
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“Person” shall mean an individual or a
corporation, limited liability company, partnership, association, joint-stock
company, trust, unincorporated organization, government or political subdivision
thereof or other entity.
“Plan” means the plan described in
Section 1 of the Plan and set forth in this document, as amended from time
to time.
“Restricted Period” shall mean the
period established by the Committee with respect to an Award during which the
Award remains subject to forfeiture and/or is not exercisable by the
Participant.
“Restricted Stock” shall mean any
Share, prior to the lapse of restrictions thereon, granted under Sections 6(b)
of the Plan.
“Rule 16b-3” shall mean Rule 16b-3
promulgated by the SEC under the Exchange Act, or any successor rule or
regulation thereto as in effect from time to time.
“SEC” shall mean the Securities and
Exchange Commission, or any successor thereto.
“Shares” or “Common Shares” or “Common
Stock” shall mean the common stock of the Company, $0.01 par value, and such
other securities or property as may become the subject of Awards under the
Plan.
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SECTION
3. Administration.
The Plan shall be administered by the
Committee. A majority of the Committee shall constitute a quorum, and
the acts of the members of the Committee who are present at any meeting thereof
at which a quorum is present, or acts unanimously approved by the members of the
Committee in writing, shall be the acts of the Committee. No member
of the Committee shall vote or act upon any matter relating solely to
himself. Grants of Awards to members of the Committee must be
ratified by the Board. Subject to the terms of the Plan and
applicable law, and in addition to other express powers and authorizations
conferred on the Committee by the Plan,
the Committee shall have full power and authority to: (i) designate
Participants; (ii)
determine the type or types of Awards to be granted to a Participant; (iii)
determine the number of Shares to be covered by, or with respect to which
payments, rights, or other matters are to be calculated in connection with,
Awards; (iv) determine the terms and conditions of any Award; (v) determine
whether, to what extent, and under what circumstances Awards may be settled or
exercised in cash, Shares, other securities, other Awards or other property, or
canceled, forfeited, or suspended and the method or methods by which Awards may
be settled, exercised, canceled, forfeited, or suspended; (vi) determine
whether, to what extent, and under what circumstances cash, Shares, other
securities, other Awards, other property, and other amounts payable with respect
to an Award shall be deferred either automatically or at the election of the
holder thereof or of the Committee; (vii) interpret and administer the Plan and
any instrument or agreement relating to an Award made under the Plan; (viii)
establish, amend, suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the
Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive, and binding
upon all Persons, including the Company, any Affiliate, any Participant, any
holder or beneficiary of any Award, any stockholder and any Employee, Consultant
or Director. No member of the Board or the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any Award granted hereunder and the members of the Board and the Committee shall
be entitled to indemnification and reimbursement by the Company and its
Affiliates in respect of any claim, loss, damage or expense (including legal
fees) arising therefrom to the full extent permitted by law.
SECTION 4. Shares Available
for Awards.
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(a)
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Shares
Available. Subject to adjustment as provided in Section
4(c), the number of Shares with respect to which Awards may be granted
under the Plan shall be 8,500,000 Shares, all of which may be granted as
incentive stock options. In addition, during any calendar year
in which Section 162(m) of the Code shall apply to the Company, the
maximum number of Shares reserved for issuance under the Plan that may be
granted to any one (1) Participant as Options, stock appreciation rights,
or any other Share-based award shall not exceed 3,000,000 Shares as to
each type of award. If any Award is exercised, paid, forfeited,
terminated or canceled without the delivery of Shares, then the Shares
covered by such Award, to the extent of such exercise, payment,
forfeiture, termination or cancellation, shall again be Shares with
respect to which Awards may be granted; provided, however, that Shares not
delivered due to withholding or payment of taxes or payment of exercise
price shall not again be Shares with respect to which Awards may be
granted.
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(b)
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Sources of Shares
Deliverable Under Awards. Any Shares delivered pursuant
to an Award may consist, in whole or in part, of authorized and unissued
Shares or of treasury Shares. No fractional Shares shall be
issued under the Plan; payment for any fractional Shares shall be made in
cash.
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(c)
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Adjustments. In
the event that any dividend or other distribution (whether in the form of
cash, Shares, other securities, or other property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares or
other securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that an adjustment
is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to
be made available under the Plan, then the Committee shall, in such manner
as it may deem equitable, adjust any or all of (i) the number and type of
Shares (or other securities or property) with respect to which Awards may
be granted; (ii) the number and type of Shares (or other securities or
property) subject to outstanding Awards; and (iii) the grant or exercise
price with respect to any Award or, if deemed appropriate, make provision
for a cash payment to the holder of an outstanding
Award.
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SECTION 5. Eligibility.
Any Employee, Director or Consultant
shall be eligible to be designated a Participant and receive an Award under the
Plan.
SECTION 6. Awards.
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(a)
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Options. Subject
to the provisions of the Plan, the Committee shall have the authority to
determine the Participants to whom Options shall be granted, the number of
Shares to be covered by each Option, the purchase price therefor and the
conditions and limitations applicable to the exercise of the Option,
including the following terms and conditions and such additional terms and
conditions, as the Committee shall determine, that are not inconsistent
with the provisions of the Plan.
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(i)
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Exercise
Price. The purchase price per Share purchasable under an
Option shall be determined by the Committee at the time the Option is
granted, but shall not be less than one hundred percent (100%) of the Fair
Market Value per Share on such grant date if the Option is not an
incentive stock option, and not less than one hundred percent (100%) of
the Fair Market Value per Share on such date if the Option is an incentive
stock option. If any Employee to whom an Option that is an
incentive stock option is granted owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock
of the Company or any parent corporation, within the meaning of Section
424(e) of the Code, or any subsidiary corporation of the Company, within
the meaning of Section 424(f) of the Code, then the exercise price per
share shall not be less than one hundred ten percent (110%) of the Fair
Market Value per Share on the date of grant and the option term shall not
exceed five (5) years measured from the date of grant. For
purposes of the immediately preceding sentence, the attribution rules
under Section 424(d) of the Code shall apply for purposes of determining
an Employee’s ownership.
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(ii)
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Time and Method of
Exercise. The Committee shall determine the time or
times at which an Option may be exercised in whole or in part (which may
include the achievement of one (1) or more Performance Objectives), and
the method or methods by which, and the form or forms in which payment of
the exercise price with respect thereto may be made. In that
connection, in order to exercise an Option, the person or persons entitled
to exercise it shall deliver to the Company payment in full for (i) the
shares being purchased and (ii) unless other arrangements have been made
with the Committee, any required withholding taxes. The payment
of the exercise price for each Option shall either be (i) in cash or by
check payable and acceptable to the Company (ii) with the consent of the
Committee, by tendering to the Company shares of Common Stock owned by the
person for more than six (6) months having an aggregate Fair Market Value
as of the date of exercise that is not greater than the full exercise
price for the shares with respect to which the Option is being exercised
and by paying any remaining amount of the exercise price as provided in
(i) above, or (iii) with the consent of the Committee and compliance with
such instructions as the Committee may specify, by delivering to the
Company and to a broker a properly executed exercise notice and
irrevocable instructions to such broker to deliver to the Company cash or
a check payable and acceptable to the Company to pay the exercise price
and any applicable withholding taxes. Upon receipt of the cash
or check from the broker, the Company will deliver to the broker the
shares for which the Option is exercised. In the event that the
person elects to make payment as allowed under clause (ii) above, the
Committee may, upon confirming that the optionee owns the number of
additional shares being tendered, authorize the issuance of a new
certificate for the number of shares being acquired pursuant to the
exercise of the Option less the number of shares being tendered upon the
exercise and return to the person (or not require surrender of) the
certificate for the shares being tendered upon the
exercise. The date of sale of the shares by the broker pursuant
to a cashless exercise under (iii) above shall be the date of exercise of
the Option.
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(iii)
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Option
Repricing. With stockholder approval, the Committee, in
its absolute discretion, may grant to holders of outstanding Options that
are not incentive stock options, in exchange for the surrender and
cancellation of such Options that are not incentive stock options, new
Options that are not incentive stock options having exercise prices lower
(or higher with any required consent) than the exercise price provided in
the Options so surrendered and canceled and containing such other terms
and conditions as the Committee may deem
appropriate.
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(iv)
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Incentive Stock
Options. The terms of any Option granted under the Plan
intended to be an incentive stock option shall comply in all respects with
the provisions of Section 422 of the Code, or any successor provision, and
any regulations promulgated thereunder. Incentive stock options
may be granted only to employees of the Company, while it is a
“corporation” described in Section 7701(a)(3) of the Code and Treas. Reg.
Section 1.421-1(i)(l), and its parent corporation and subsidiary
corporations, within the meaning of Section 424 of the Code. To
the extent the aggregate Fair Market Value of the Shares (determined as of
the date of grant) of an Option to the extent exercisable for the first
time during any calendar year (under all plans of the Company and its
parent and subsidiary corporations) exceeds $100,000, such Option Shares
in excess of $100,000 shall not be incentive stock options. No
Option that is an incentive stock option shall be issued under the Plan
after the date that occurs one (1) day before the tenth (10th) anniversary
of the date the Prior Plan was adopted by the Board or approved by the
stockholders of the Company, whichever was earlier. No Option
that is an incentive stock option shall be exercisable more than ten (10)
years measured from the date of grant (five (5) years in the case of an
Employee described in Section 6(a)(i) hereof) or three (3) months after
the Participant ceases to be an Employee for any reason other than death
or disability, or more than one (1) year after the Participant ceases to
be an Employee due to death or
disability.
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(b)
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Restricted
Stock. Subject to the provisions of the Plan, the
Committee shall have the authority to determine the Participants to whom
Restricted Stock shall be granted, the number of Shares of Restricted
Stock to be granted to each such Participant, the duration of the
Restricted Period during which, and the conditions, including Performance
Objectives, if any, under which if not achieved, the Restricted Stock may
be forfeited to the Company, and the other terms and conditions of such
Awards.
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(i)
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Dividends. Dividends
paid on Restricted Stock may be paid directly
to
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the
Participant or may be subject to risk of forfeiture and/or transfer
restrictions during any period established by the Committee in its
discretion.
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(ii)
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Registration. Any
Restricted Stock may be evidenced in such manner as the Committee shall
deem appropriate, including, without limitation, book-entry registration
or issuance of a stock certificate or certificates. In the
event any stock certificate is issued in respect of Restricted Stock
granted under the Plan, such certificate shall be registered in the name
of the Participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Restricted
Stock.
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(iii)
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Forfeiture and
Restrictions Lapse. Except as otherwise determined by
the Committee or the terms of the Award that granted the Restricted Stock,
upon termination of a Participant’s employment (as determined under
criteria established by the Committee) for any reason during the
applicable Restricted Period, all Restricted Stock shall be forfeited by
the Participant and reacquired by the Company. Unrestricted
Shares, evidenced in such manner as the Committee shall deem appropriate,
shall be issued to the holder of Restricted Stock promptly after the
applicable restrictions have lapsed or otherwise been
satisfied.
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(iv)
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Transfer
Restrictions. During the Restricted Period, Restricted
Stock will be subject to the limitations on transfer as provided in
Section 6(f)(iii).
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(c)
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Performance
Awards. The Committee shall have the authority to
determine the Participants who shall receive a Performance Award, which
shall confer on the Participant the right to receive payment of such
Award, in whole or in part, upon the achievement of such Performance
Objectives during such performance periods as the Committee shall
establish with respect to the
Award.
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(i)
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Terms and
Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the Performance
Objectives to be achieved during any performance period, the length of any
performance period, the amount of any Performance Award and the amount of
any payment or transfer to be made pursuant to any Performance
Award.
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(ii)
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General. In
the case of any Award granted to a Covered Employee, Performance
Objectives shall be designed to be objective and shall otherwise meet the
requirements of Section 162(m) of the Code and regulations thereunder
(including Treasury Regulations sec. 1.162-27 and successor regulations
thereto), including the requirement that the level or levels of
performance targeted by the Committee are such that the achievement of
performance goals is “substantially uncertain” at the time of
grant. The Committee may determine that such Performance Awards
shall be granted and/or settled upon achievement of any one (1)
performance goal or that two (2) or more of the performance goals must be
achieved as a condition to the grant and/or settlement of such Performance
Awards. Performance Objectives may differ among Performance
Awards granted to any one (1) Participant or for Performance Awards
granted to different Participants.
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(iii)
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Performance Period;
Timing for Establishing Performance Goals. Achievement
of Performance Objectives in respect of Performance Awards that are
granted to a Covered Employee and intended to meet the requirements of
Section 162(m) of the Code shall be measured over a performance period of
not less than six (6) months and not more than ten (10) years, as
specified by the Committee. Performance Objectives in the case
of any Award granted to a Participant shall be established not later than
ninety (90) days after the beginning of any performance period applicable
to such Performance Awards, or at such other date as may be
required or permitted for “performance-based compensation” under Section
162(m) of the Code.
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(iv)
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Settlement of
Performance Awards; Other Terms. After the end of each
performance period, the Committee shall determine the amount, if any, of
Performance Awards payable to each Participant based upon achievement of
business criteria over a performance period. Except as may
otherwise be required under Section 409A of the Code, payment
described in the immediately preceding sentence shall be made by the later
of (i) the date that is 2½ months after the end of the
Participant’s first taxable year in which the Performance Award is earned
and payable under the Plan and (ii) the date that is 2½ months
after the end of the Company’s first taxable year in which the Performance
Award is earned and payable under the Plan, and such payment shall not be
subject to any election by the Participant to defer the payment to a later
period. The Committee may not exercise discretion to increase
any such amount payable in respect of a Performance Award which is
intended to comply with Section 162(m) of the Code. The
Committee shall specify the circumstances in which such Performance Awards
shall be paid or forfeited in the event of termination of employment by
the Participant prior to the end of a performance period or settlement of
Performance Awards.
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(v)
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Written
Determinations. All determinations by the Committee as
to the establishment of Performance Objectives, the amount of any
Performance Award, and the achievement of Performance Objectives relating
to Performance Awards shall be made in a written agreement or other
document covering the Performance Award. The Committee may not
delegate any responsibility relating to such Performance Awards that are
granted to a Covered Employee and intended to meet the requirements of
Section 162(m) of the Code.
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(vi)
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Status of Performance
Awards under Section 162(m) of the Code. It is the
intent of the Company that Performance Awards granted to persons who are
designated by the Committee as likely to be Covered Employees within the
meaning of Section 162(m) of the Code and regulations thereunder
(including Treasury Regulations sec. 1.162-27 and successor regulations
thereto) shall constitute “performance-based compensation” within the
meaning of Section 162(m) of the Code and regulations
thereunder. Accordingly, the terms of this Section shall be
interpreted in a manner consistent with Section 162(m) of the Code and
regulations thereunder. Notwithstanding the foregoing, because
the Committee cannot determine with certainty whether a given Participant
will be a Covered Employee with respect to a fiscal year that has not yet
been completed, the term Covered Employee as used herein shall mean any
person designated by the Committee, at the time of grant of a Performance
Award, as likely to be a Covered Employee with respect to that fiscal
year. If any provision of the Plan as in effect on the date of
adoption or any agreements relating to Performance Awards that are
intended to comply with Section 162(m) of the Code does not comply or is
inconsistent with the requirements of Section 162(m) of the Code or
regulations thereunder, such provision shall be construed or deemed
amended to the extent necessary to conform to such
requirements.
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(d)
|
Bonus
Shares. The Committee shall have the authority, in its
discretion, to grant Bonus Shares to Participants. Each Bonus
Share shall constitute a transfer of an unrestricted Share to the
Participant, without other payment therefor, as additional compensation
for the Participant’s services to the
Company.
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(e)
|
Other Stock-Based
Awards. The Committee may also grant to Participants an
Other Stock-Based Award, which shall consist of a right which is an Award
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, Shares as is deemed by the Committee to
be consistent with the purposes of the Plan. Subject to the
terms of the Plan, including the Performance Objectives, if any,
applicable to such Award, the Committee shall determine the terms and
conditions of any such Other Stock-Based Award. Notwithstanding
any other provision of the Plan to the contrary, any Other Stock-Based
Award shall contain terms that (i) are designed to avoid application of
Section 409A of the Code or (ii) are designed to avoid adverse tax
consequences under Section 409A should that Code section apply to such
Award.
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(f)
|
General Provisions
Applicable to all Awards.
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(i)
|
Awards May Be Granted
Separately or Together. Awards may, in the discretion of
the Committee, be granted either alone or in addition to, in tandem with,
or in substitution for any other Award granted under the Plan or any award
granted under any other plan of the Company or any
Affiliate. No Award shall be issued in tandem with another
Award if the tandem Awards would result in adverse tax consequences under
Section 409A of the Code. Awards granted in addition to or in
tandem with other Awards or awards granted under any other plan of the
Company or any Affiliate may be granted either at the same time as or at a
different time from the grant of such other Awards or
awards.
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(ii)
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Forms of Payment by
Company Under Awards. Subject to the terms of the Plan
and of any applicable Award Agreement, payments or transfers to be made by
the Company or an Affiliate upon the grant, exercise or payment of an
Award may be made in such form or forms as the Committee shall determine,
including, without limitation, cash, Shares, other securities, other
Awards or other property, or any combination thereof, and may be made in a
single payment or transfer, in installments, or on a deferred basis, in
each case in accordance with rules and procedures established by the
Committee. Such rules and procedures may include, without
limitation, provisions for the payment or crediting of reasonable interest
on installment or deferred
payments.
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(iii)
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Limits on Transfer of
Awards.
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A.
|
Except
as provided in (C) below, each Award, and each right under any Award,
shall be exercisable only by the Participant during the Participant’s
lifetime, or by the person to whom the Participant’s rights shall pass by
will or the laws of descent and distribution. Notwithstanding
anything in the Plan to the contrary, a nonqualified stock option shall be
transferable pursuant to a domestic relations
order.
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B.
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Except
as provided in (C) below, no Award and no right under any such Award may
be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant and any such
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any
Affiliate.
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C.
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Notwithstanding
anything in the Plan to the contrary, to the extent specifically provided
by the Committee with respect to a grant, a nonqualified stock option may
be transferred to immediate family members or related family trusts, or
similar entities on such terms and conditions as the Committee may
establish. In addition, Awards may be transferred by will or
the laws of descent and
distribution.
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(iv)
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Term of
Awards. The term of each Award shall be for such period
as may be determined by the Committee; provided, that in no event shall
the term of any Award exceed a period of ten (10) years from the date of
its grant (or such shorter term as may be required in respect of an Option
that is an incentive stock option under Section 422 of the
Code).
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(v)
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Share
Certificates. All certificates for Shares or other
securities of the Company or any Affiliate delivered under the Plan
pursuant to any Award or the exercise thereof shall be subject to such
stop transfer orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations, and other requirements
of the SEC, any stock exchange upon which such Shares or other securities
are then listed, and any applicable federal or state laws, and the
Committee may cause a legend or legends to be put on any such certificates
to make appropriate reference to such
restrictions.
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(vi)
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Delivery of Shares or
other Securities and Payment by Participant of
Consideration. No Shares or other securities shall be
delivered pursuant to any Award until payment in full of any amount
required to be paid pursuant to the Plan or the applicable Award Agreement
(including, without limitation, any exercise price, tax payment or tax
withholding) is received by the Company. Such payment may be
made by such method or methods and in such form or forms as the Committee
shall determine, including, without limitation, cash, Shares, other
securities, other Awards or other property, withholding of Shares,
cashless exercise with simultaneous sale, or any combination thereof;
provided that the combined value, as determined by the Committee, of all
cash and cash equivalents and the Fair Market Value of any such Shares or
other property so tendered to the Company, as of the date of such tender,
is at least equal to the full amount required to be paid pursuant to the
Plan or the applicable Award Agreement to the
Company.
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(vii)
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Code Section
409A. Notwithstanding any other provision of the Plan to
the contrary, any Award granted after December 31, 2004 shall contain
terms that (i) are designed to avoid application of Section 409A of the
Code to the Award or (ii) are designed to avoid adverse tax consequences
under Section 409A of the Code should that Code Section apply to the
Award.
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(viii)
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Section 409A Limits on
Payments to Specified Employees. Notwith-standing any
other provision of the Plan or an Award to the contrary, if a Participant
is a “key employee,” as defined in Section 416(i) of the Code (without
regard to paragraph 5 thereof), except to the extent permitted under
Section 409A of the Code, no benefit or payment that is subject to Section
409A of the Code (after taking into account all applicable exceptions to
Section 409A of the Code, including but not limited to the exceptions for
short-term deferrals and for “separation pay only upon an involuntary
separation from service”) shall be made under this Plan or the affected
Award granted thereunder on account of the Participant’s “separation from
service,” as defined in Section 409A of the Code, with the Company and its
Affiliates until the later of the date prescribed for payment in this Plan
or the affected Award granted thereunder and the first (1st)
day of the seventh (7th)
calendar month that begins after the date of the Participant’s separation
from service (or, if earlier, the date of death of the
Participant). Unless otherwise provided in the Award, any
amount that is otherwise payable within the delay period described in the
immediately preceding sentence will be aggregated and paid in a lump sum
without interest.
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SECTION 7. Amendment and
Termination.
Except to the extent prohibited by
applicable law and unless otherwise expressly provided in an Award Agreement or
in the Plan:
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(a)
|
Amendments to the
Plan. The Board or the Committee may amend, alter,
suspend, discontinue, or terminate the Plan without the consent of any
stockholder, Participant, other holder or beneficiary of an Award, or
other Person; provided, however, no such amendment may be made without
stockholder approval to the extent that such approval is required by (i)
applicable legal requirements or (ii) the requirements of any securities
exchange or market on which the Shares are
listed. Notwithstanding the foregoing, the Board or the
Committee may amend the Plan in such manner as it deems necessary in order
to permit Awards to meet the requirements of the Code or other applicable
laws, or to prevent adverse tax
consequences.
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(b)
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Amendments to
Awards. The Committee may waive any conditions or rights
under, amend any terms of, or alter any Award theretofore granted,
provided no change, other than pursuant to Section 7(c), in any Award
shall materially reduce the benefit to Participant without the consent of
such Participant.
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(c)
|
Adjustment of Awards
Upon the Occurrence of Certain Unusual or Nonrecurring
Events. The Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or nonrecurring events (including,
without limitation, the events described in Section 4(c) of the Plan)
affecting the Company, any Affiliate, or the financial statements of the
Company or any Affiliate, or of changes in applicable laws, regulations,
or accounting principles, whenever the Committee determines that such
adjustments are appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the
Plan.
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SECTION 8. Adjustments Upon Changes in
Stock/Change in Control.
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(a)
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Adjustments Upon
Changes in Stock. If any change is made in the Shares
subject to the Plan, or subject to any Award, without the receipt of
consideration by the Company through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend,
dividend in property other than cash, stock split, liquidating dividend,
combination of shares, exchange of shares, change in corporate structure
or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and
maximum number of shares subject to the Plan pursuant to Section 4(c) and
the outstanding Awards will be appropriately adjusted in the class(es) and
number of shares and exercise price per share of stock subject to such
outstanding Awards. Such
adjustments shall be made by the Board or the Committee, the determination
of which shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall not be
treated as a “transaction not involving the receipt of consideration by
the Company”.)
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(b)
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Change in
Control. Unless otherwise provided in the Award, in the
event of a Change in Control described in clauses (b), (c) or (d) of the
definition of Change in Control under Section 2 of the Plan, (i) if the
Company does not survive as an independent corporation (excluding as a
subsidiary), the surviving corporation or an affiliate of such surviving
corporation shall assume the Awards outstanding under the Plan or
substitute similar awards (including an award to acquire the same
consideration paid to the stockholders of the Company in the transaction
effecting the Change in Control) for those outstanding under the Plan, or
(ii) if the Company continues as an independent corporation (excluding as
a subsidiary), such Awards shall continue in full force and
effect. In the event of a Change in Control in which the
Company does not survive as an independent corporation (excluding as a
subsidiary), if any surviving corporation and its affiliates refuse to
assume or continue the Awards, or to substitute similar awards for those
outstanding under the Plan, then unless otherwise provided in the
Award:
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-15-
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(i)
|
All
Options then outstanding shall become immediately vested and fully
exercisable immediately prior to the Change in Control, notwithstanding
any provision therein for exercise in
installments;
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(ii)
|
All
restrictions and conditions of all Restricted Stock then outstanding shall
be deemed satisfied, and the Restricted Period or other limitations on
payment in full with respect thereto shall be deemed to have expired
immediately prior to the date of the Change in Control;
and
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(iii)
|
All
outstanding Performance Awards and any Other Stock or Performance-Based
Awards shall become fully vested, deemed earned in full immediately prior
to the date of the Change in Control and promptly paid to the Participants
as of the date of the Change of Control, without regard to payment
schedules and notwithstanding that the applicable performance cycle,
retention cycle or other restrictions and conditions shall not have been
completed or satisfied.
|
Notwithstanding
the foregoing, the preceding provisions shall not apply to any Award to the
extent that such provisions would result in any impermissible acceleration or
substitution under Section 409A of the Code or any other violation of Section
409A of the Code that would result in adverse tax consequences to the
Participant under Section 409A of the Code
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(c)
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Right of
Cash-Out. If approved by the Board prior to or within
thirty (30) days after such time as a Change in Control shall be deemed to
have occurred, the Board shall have the right for a forty-five (45) day
period immediately following the date that the Change in Control is deemed
to have occurred to require all, but not less than all, Participants to
transfer and deliver to the Company all Awards previously granted to the
Participants in exchange for an amount equal to the “cash value” (defined
below) of the Awards. Such right shall be exercised by written
notice to all Participants. For purposes of this Section, the
cash value of an Award shall equal the sum of (i) all cash to which the
Participant would be entitled upon settlement or exercise of any Award
which is not an Option and (ii) in the case of any Award that is an
Option, the excess of the “market value” (defined below) per share over
the option price, if any, multiplied by the number of shares subject to
such Award. For purposes of the preceding sentence, “market
value” per share shall mean the higher of (i) the average of the Fair
Market Value per share of Common Stock on each of the five (5) trading
days immediately following the date a Change in Control is deemed to have
occurred or (ii) the highest price, if any, offered in connection with the
Change in Control. The amount payable to each Participant by
the Company pursuant to this Section shall be in cash or by certified
check and shall be reduced by any taxes required to be
withheld. Notwithstanding the foregoing, neither the Board, the
Company nor the Committee shall have the right to cash-out any Award, if
the existence or exercise of such right would result in any impermissible
acceleration or substitution under Section 409A of the Code or any other
violation of Section 409A of the Code that would result in adverse tax
consequences to the Participant pursuant to Section 409A of the
Code.
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-16-
SECTION 9. General
Provisions.
|
(a)
|
No Rights to
Awards. No Director, Employee, Consultant or other
Person shall have any claim to be granted any Award, and there is no
obligation for uniformity of treatment of Employees, Consultants, or
holders or beneficiaries of Awards. The terms and conditions of
Awards need not be the same with respect to each
recipient.
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(b)
|
Withholding. The
Company or any Affiliate is authorized to withhold at the minimum
statutory rate from any Award, from any payment due or transfer made under
any Award or under the Plan or from any compensation or other amount owing
to a Participant the amount (in cash, Shares, other securities, Shares
that would otherwise be issued pursuant to such Award, other Awards or
other property) of any applicable taxes payable in respect of an Award,
its exercise, the lapse of restrictions thereon, or any payment or
transfer under an Award or under the Plan and to take such other action as
may be necessary in the opinion of the Company to satisfy all obligations
for the payment of such taxes. In addition, the
Committee may provide, in an Award Agreement, that the Participant may
direct the Company to satisfy such Participant’s tax obligation through
the “constructive” tender of already-owned Shares or the withholding of
Shares otherwise to be acquired upon the exercise or payment of such
Award.
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(c)
|
No Right to
Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the
Company or any Affiliate. Further, the Company or an Affiliate
may at any time dismiss a Participant from employment, free from any
liability or any claim under the Plan, unless otherwise expressly provided
in the Plan or in any Award
Agreement.
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(d)
|
Governing
Law. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Delaware and applicable federal
law.
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(e)
|
Severability. If
any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person
or Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to the applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, Person or Award and the remainder of the
Plan and any such Award shall remain in full force and
effect.
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(f)
|
Other
Laws. The Committee may refuse to issue or transfer any
Shares or other consideration under an Award if, acting in its sole
discretion, it determines that the issuance of transfer or such Shares or
such other consideration might violate any applicable law or regulation or
entitle the Company to recover the same under Section 16(b) of the
Exchange Act, and any payment tendered to the Company by a Participant,
other holder or beneficiary in connection with the exercise of such Award
shall be promptly refunded to the relevant Participant, holder or
beneficiary.
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-17-
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(g)
|
No Trust or Fund
Created. Neither the Plan nor the Award shall create or
be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any
other Person. To the extent that any Person acquires a right to
receive payments from the Company or any Affiliate pursuant to an Award,
such right shall be no greater than the right of any general unsecured
creditor of the Company or any
Affiliate.
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(h)
|
No Fractional
Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities, or other property shall be paid
or transferred in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated, or otherwise
eliminated.
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(i)
|
Securities Laws
Compliance. Unless the Shares have been registered under
the Securities Act of 1933 (and, in the case of any Participant who may be
deemed an affiliate of the Company for securities law purposes, such
Shares have been registered under such Act for resale by such
Participant), or the Company has determined that an exemption from
registration is available, the Company may require prior to and as a
condition of the exercise or payment of any Award that (i) the Participant
desiring to exercise or receive payment such Award give the Company
written notice thereof and that such notice may not be given by the
Participant until forty-five (45) days thereafter (which time period may
be waived by the Committee in its sole discretion) in order to allow the
Company the opportunity to provide to such Participant any disclosure
materials, or to make such filings, as may be required under federal and
state securities laws and (ii) the Participant desiring to exercise or be
paid such Award furnish the Company with a written representation in a
form prescribed by the Committee to the effect that such person is
acquiring said Shares solely with a view to investment for his or her own
account and not with a view to the resale or distribution of all or any
part thereof, and that such person will not dispose of any of such Shares
otherwise than in accordance with the provisions of Rule 144 under the Act
unless and until either the Shares are registered under the Act or the
Company is satisfied that an exemption from such registration is
available.
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(j)
|
Headings. Headings
are given to the Sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision
thereof.
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-18-
|
(k)
|
Code Section
409A. Notwithstanding anything in this Plan to the
contrary, if any Plan provision or Award under the Plan would result in
the imposition of an applicable tax under Code Section 409A and related
regulations and Treasury pronouncements (“Section 409A”), that Plan
provision or Award may be reformed to avoid imposition of the applicable
tax and no action taken to comply with Section 409A shall be deemed to
adversely affect the Participant’s rights to an
Award.
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(l)
|
No Guarantee of Tax
Consequences. None of the Board, the Company nor the
Committee makes any commitment or guarantee that any federal, state or
local tax treatment will apply or be available to any person participating
or eligible to participate
hereunder.
|
SECTION 10. Term of the
Plan.
No Award
shall be granted under the Plan after the tenth (10th)
anniversary of the date the Prior Plan was initially adopted by the Board, as
the Plan shall expire on that date unless earlier terminated pursuant to Section
7. However, unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted prior to such expiration or
termination, and the authority of the Board or the Committee to amend, alter,
adjust, suspend, discontinue, or terminate any such Award or to waive any
conditions or rights under such Award, shall extend beyond such expiration or
termination date.
-19-