Attached files
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EX-31.2 - EX-31.2 - ADVANCED ENERGY INDUSTRIES INC | d79941exv31w2.htm |
EX-32.1 - EX-32.1 - ADVANCED ENERGY INDUSTRIES INC | d79941exv32w1.htm |
10-K - FORM 10-K - ADVANCED ENERGY INDUSTRIES INC | d79941e10vk.htm |
EX-31.1 - EX-31.1 - ADVANCED ENERGY INDUSTRIES INC | d79941exv31w1.htm |
EX-21.1 - EX-21.1 - ADVANCED ENERGY INDUSTRIES INC | d79941exv21w1.htm |
EX-23.1 - EX-23.1 - ADVANCED ENERGY INDUSTRIES INC | d79941exv23w1.htm |
EX-32.2 - EX-32.2 - ADVANCED ENERGY INDUSTRIES INC | d79941exv32w2.htm |
ADVANCED ENERGY INDUSTRIES, INC.
2008 OMNIBUS INCENTIVE PLAN
Adopted February 15, 2008
2008 OMNIBUS INCENTIVE PLAN
Adopted February 15, 2008
As
Amended May 4, 2010
SUBJECT
TO STOCKHOLDER APPROVAL
Advanced Energy Industries, Inc., a Delaware corporation (the
Company), sets forth herein the terms of its 2008
Omnibus Incentive Plan (the Plan), as follows:
1. | PURPOSE |
The Plan is intended to enhance the Companys and its
Affiliates (as defined herein) ability to attract and
retain highly qualified officers, directors, key employees, and
other persons, and to motivate such persons to serve the Company
and its Affiliates and to expend maximum effort to improve the
business results and earnings of the Company, by providing to
such persons an opportunity to acquire or increase a direct
proprietary interest in the operations and future success of the
Company. To this end, the Plan provides for the grant of stock
options, stock appreciation rights, restricted stock, stock
units (including deferred stock units), unrestricted stock, and
dividend equivalent rights. Any of these awards may, but need
not, be made as performance incentives to reward attainment of
annual or long-term performance goals in accordance with the
terms hereof. Stock options granted under the Plan may be
non-qualified stock options or incentive stock options, as
provided herein, except that stock options granted to outside
directors and any consultants or advisers providing services to
the Company or an Affiliate shall in all cases be non-qualified
stock options.
2. | DEFINITIONS |
For purposes of interpreting the Plan and related documents
(including Award Agreements), the following definitions shall
apply:
2.1 Affiliate means, with respect
to the Company, any company or other trade or business that
controls, is controlled by or is under common control with the
Company within the meaning of Rule 405 of Regulation C
under the Securities Act, including, without limitation, any
Subsidiary. For purposes of granting stock options or stock
appreciation rights, an entity may not be considered an
Affiliate unless the Company holds a controlling
interest in such entity, where the term controlling
interest has the same meaning as provided in Treasury
Regulation 1.414(c)-2(b)(2)(i),
provided that the language at least 50 percent
is used instead of at least 80 percent and,
provided further, that where granting of stock options or stock
appreciation rights is based upon a legitimate business
criteria, the language at least 20 percent is
used instead of at least 80 percent each place
it appears in Treasury
Regulation 1.414(c)-2(b)(2)(i).
2.2 Annual Incentive Award means
an Award made subject to attainment of performance goals (as
described in Section 14) generally over a one-year
performance period (the Companys fiscal year, unless
otherwise specified by the Committee).
2.3 Award means a grant of an
Option, Stock Appreciation Right, Restricted Stock, Unrestricted
Stock, Stock Unit, Dividend Equivalent Right, Performance Share,
or Performance Unit under the Plan.
2.4 Award Agreement means the
agreement between the Company and a Grantee that evidences and
sets out the terms and conditions of an Award.
2.5 Benefit Arrangement shall
have the meaning set forth in Section 15 hereof.
2.6 Board means the Board of
Directors of the Company.
2.7 Cause means, as determined by
the Board and unless otherwise provided in an applicable
agreement with the Company or an Affiliate, (i) gross
negligence or willful misconduct in connection with the
performance of duties; (ii) conviction of a criminal
offense (other than minor traffic offenses); or
(iii) material breach of any term of
1
any employment, consulting or other services, confidentiality,
intellectual property or non-competition agreements, if any,
between the Service Provider and the Company or an Affiliate.
2.8 Code means the Internal
Revenue Code of 1986, as now in effect or as hereafter amended.
2.9 Committee means a committee
of, and designated from time to time by resolution of, the
Board, which shall be constituted as provided in
Section 3.2.
2.10 Company means Advanced
Energy Industries, Inc.
2.11 Corporate Transaction means
(i) the dissolution or liquidation of the Company or a
merger, consolidation, or reorganization of the Company with one
or more other entities in which the Company is not the surviving
entity, (ii) a sale of substantially all of the assets of
the Company to another person or entity, or (iii) any
transaction (including without limitation a merger or
reorganization in which the Company is the surviving entity)
which results in any person or entity (other than persons who
are stockholders or affiliates immediately prior to the
transaction) owning 50% or more of the combined voting power of
all classes of stock of the Company.
2.12 Covered Employee means a
Grantee who is a covered employee within the meaning of
Section 162(m)(3) of the Code.
2.13 Disability means the Grantee
is unable to perform each of the essential duties of such
Grantees position by reason of a medically determinable
physical or mental impairment which is potentially permanent in
character or which can be expected to last for a continuous
period of not less than 12 months; provided, however, that,
with respect to rules regarding expiration of an Incentive Stock
Option following termination of the Grantees Service,
Disability shall mean the Grantee is unable to engage in any
substantial gainful activity by reason of a medically
determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months.
2.14 Dividend Equivalent Right
means a right, granted to a Grantee under
Section 13 hereof, to receive cash, Stock, other
Awards or other property equal in value to dividends paid with
respect to a specified number of shares of Stock, or other
periodic payments.
2.15 Effective Date means
May 7, 2008, the date the Plan was approved by the
stockholders.
2.16 Exchange Act means the
Securities Exchange Act of 1934, as now in effect or as
hereafter amended.
2.17 Fair Market Value means the
value of a share of Stock, determined as follows: if on the
Grant Date or other determination date the Stock is listed on an
established national or regional stock exchange, or is publicly
traded on an established securities market, the Fair Market
Value of a share of Stock shall be the closing price of the
Stock on such exchange or in such market (if there is more than
one such exchange or market the Board shall determine the
appropriate exchange or market) on the Grant Date or such other
determination date (or if there is no such reported closing
price, the Fair Market Value shall be the mean between the
highest bid and lowest asked prices or between the high and low
sale prices on such trading day) or, if no sale of Stock is
reported for such trading day, on the next preceding day on
which any sale shall have been reported. If the Stock is not
listed on such an exchange or traded on such a market, Fair
Market Value shall be the value of the Stock as determined by
the Board by the reasonable application of a reasonable
valuation method, in a manner consistent with Code
Section 409A.
2.18 Family Member means a person
who is a spouse, former spouse, child, stepchild, grandchild,
parent, stepparent, grandparent, niece, nephew,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother, sister,
brother-in-law,
or
sister-in-law,
including adoptive relationships, of the Grantee, any person
sharing the Grantees household (other than a tenant or
employee), a trust in which any one or more of these persons
have more than fifty percent of the beneficial interest, a
foundation in which any one or more of these persons (or the
Grantee) control the management of assets, and any other entity
in which one or more of these persons (or the Grantee) own more
than fifty percent of the voting interests.
2.19 Grant Date means, as
determined by the Board, the latest to occur of (i) the
date as of which the Board approves an Award, (ii) the date
on which the recipient of an Award first becomes eligible to
receive an Award under Section 6 hereof, or (iii) such
other date as may be specified by the Board.
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2.20 Grantee means a person who
receives or holds an Award under the Plan.
2.21 Incentive Stock Option means
an incentive stock option within the meaning of
Section 422 of the Code, or the corresponding provision of
any subsequently enacted tax statute, as amended from time to
time.
2.22 Non-qualified Stock Option
means an Option that is not an Incentive Stock Option.
2.23 Option means an option to
purchase one or more shares of Stock pursuant to the Plan.
2.24 Option Price means the
exercise price for each share of Stock subject to an Option.
2.25 Other Agreement shall have
the meaning set forth in Section 15 hereof.
2.26 Outside Director means a
member of the Board who is not an officer or employee of the
Company.
2.27 Performance Award means an
Award made subject to the attainment of performance goals (as
described in Section 14) over a performance period
of up to ten (10) years.
2.28 Performance-Based Compensation
means compensation under an Award that is intended to
satisfy the requirements of Code Section 162(m) for certain
performance-based compensation paid to Covered Employees.
Notwithstanding the foregoing, nothing in this Plan shall be
construed to mean that an Award which does not satisfy the
requirements for performance-based compensation under Code
Section 162(m) does not constitute performance-based
compensation for other purposes, including Code
Section 409A.
2.29 Performance Measures means
measures as described in Section 14 on which the
performance goals are based and which are approved by the
Companys shareholders pursuant to this Plan in order to
qualify Awards as Performance-Based Compensation.
2.30 Performance Period means the
period of time during which the performance goals must be met in
order to determine the degree of payout
and/or
vesting with respect to an Award.
2.31 Performance Share means an
Award under Section 14 herein and subject to the
terms of this Plan, denominated in Shares, the value of which at
the time it is payable is determined as a function of the extent
to which corresponding performance criteria have been achieved.
2.32 Performance Unit means an
Award under Section 14 herein and subject to the
terms of this Plan, denominated in units, the value of which at
the time it is payable is determined as a function of the extent
to which corresponding performance criteria have been achieved.
2.33 Plan means this Advanced
Energy Industries, Inc. 2008 Omnibus Incentive Plan.
2.34 Prior Plans means the
Advanced Energy Industries, Inc. 2003 Stock Option Plan and the
Advanced Energy Industries, Inc. Amended and Restated 2003
Non-Employee Directors Stock Option Plan, amended and
restated February 15, 2006.
2.35 Purchase Price means the
purchase price for each share of Stock pursuant to a grant of
Restricted Stock or Unrestricted Stock.
2.36 Reporting Person means a
person who is required to file reports under Section 16(a)
of the Exchange Act.
2.37 Restricted Stock means
shares of Stock, awarded to a Grantee pursuant to
Section 10 hereof.
2.38 SAR Exercise Price means the
per share exercise price of a SAR granted to a Grantee under
Section 9 hereof.
2.39 Securities Act means the
Securities Act of 1933, as now in effect or as hereafter amended.
2.40 Service means service as a
Service Provider to the Company or an Affiliate. Unless
otherwise stated in the applicable Award Agreement, a
Grantees change in position or duties shall not result in
interrupted or terminated Service, so long as such Grantee
continues to be a Service Provider to the Company or an
Affiliate. Subject to the preceding sentence, whether a
termination of Service shall have occurred for purposes of the
Plan shall be determined by the Board, which determination shall
be final, binding and conclusive.
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2.41 Service Provider means an
employee, officer or director of the Company or an Affiliate, or
a consultant or adviser (who is a natural person) currently
providing services to the Company or an Affiliate.
2.42 Stock means the common
stock, par value $0.001 per share, of the Company.
2.43 Stock Appreciation Right or
SAR means a right granted to a Grantee under
Section 9 hereof.
2.44 Stock Unit means a
bookkeeping entry representing the equivalent of one share of
Stock awarded to a Grantee pursuant to Section 10
hereof.
2.45 Subsidiary means any
subsidiary corporation of the Company within the
meaning of Section 424(f) of the Code.
2.46 Substitute Awards means
Awards granted upon assumption of, or in substitution for,
outstanding awards previously granted by a company or other
entity acquired by the Company or any Affiliate or with which
the Company or any Affiliate combines.
2.47 Ten Percent Stockholder
means an individual who owns more than ten percent (10%) of
the total combined voting power of all classes of outstanding
stock of the Company, its parent or any of its Subsidiaries. In
determining stock ownership, the attribution rules of
Section 424(d) of the Code shall be applied.
2.48 Unrestricted Stock means an
Award pursuant to Section 11 hereof.
3. | ADMINISTRATION OF THE PLAN |
3.1
Board
The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the
Companys certificate of incorporation and by-laws and
applicable law. The Board shall have full power and authority to
take all actions and to make all determinations required or
provided for under the Plan, any Award or any Award Agreement,
and shall have full power and authority to take all such other
actions and make all such other determinations not inconsistent
with the specific terms and provisions of the Plan that the
Board deems to be necessary or appropriate to the administration
of the Plan, any Award or any Award Agreement. All such actions
and determinations shall be by the affirmative vote of a
majority of the members of the Board present at a meeting or by
unanimous consent of the Board executed in writing in accordance
with the Companys certificate of incorporation and by-laws
and applicable law. The interpretation and construction by the
Board of any provision of the Plan, any Award or any Award
Agreement shall be final, binding and conclusive.
3.2
Committee.
The Board from time to time may delegate to the Committee such
powers and authorities related to the administration and
implementation of the Plan, as set forth in Section 3.1
above and other applicable provisions, as the Board shall
determine, consistent with the certificate of incorporation and
by-laws of the Company and applicable law.
(i) Except as provided in Subsection (ii) and except
as the Board may otherwise determine, the Committee, if any,
appointed by the Board to administer the Plan shall consist of
two or more Outside Directors of the Company who:
(a) qualify as outside directors within the
meaning of Section 162(m) of the Code and who (b) meet
such other requirements as may be established from time to time
by the Securities and Exchange Commission for plans intended to
qualify for exemption under
Rule 16b-3
(or its successor) under the Exchange Act and who
(c) comply with the independence requirements of the stock
exchange on which the Common Stock is listed.
(ii) The Board may also appoint one or more separate
committees of the Board, each composed of one or more directors
of the Company who need not be Outside Directors, who may
administer the Plan with respect to employees or other Service
Providers who are not officers or directors of the Company, may
grant Awards under the Plan to such employees or other Service
Providers, and may determine all terms of such Awards.
In the event that the Plan, any Award or any Award Agreement
entered into hereunder provides for any action to be taken by or
determination to be made by the Board, such action may be taken
or such determination may be
4
made by the Committee if the power and authority to do so has
been delegated to the Committee by the Board as provided for in
this Section. Unless otherwise expressly determined by the
Board, any such action or determination by the Committee shall
be final, binding and conclusive. To the extent permitted by
law, the Committee may delegate its authority under the Plan to
a member of the Board.
3.3
Terms of Awards.
Subject to the other terms and conditions of the Plan, the Board
shall have full and final authority to:
(i) designate Grantees,
(ii) determine the type or types of Awards to be made to a
Grantee,
(iii) determine the number of shares of Stock to be subject
to an Award,
(iv) establish the terms and conditions of each Award
(including, but not limited to, the exercise price of any
Option, the nature and duration of any restriction or condition
(or provision for lapse thereof) relating to the vesting,
exercise, transfer, or forfeiture of an Award or the shares of
Stock subject thereto, the treatment of an Award in the event of
a change of control, and any terms or conditions that may be
necessary to qualify Options as Incentive Stock Options),
(v) prescribe the form of each Award Agreement evidencing
an Award, and
(vi) amend, modify, or supplement the terms of any
outstanding Award. Such authority specifically includes the
authority, in order to effectuate the purposes of the Plan but
without amending the Plan, to make or modify Awards to eligible
individuals who are foreign nationals or are individuals who are
employed outside the United States to recognize differences in
local law, tax policy, or custom. Notwithstanding the foregoing,
no amendment, modification or supplement of any Award shall,
without the consent of the Grantee, impair the Grantees
rights under such Award.
The Company may retain the right in an Award Agreement to cause
a forfeiture of the gain realized by a Grantee on account of
actions taken by the Grantee in violation or breach of or in
conflict with any employment agreement, non-competition
agreement, any agreement prohibiting solicitation of employees
or clients of the Company or any Affiliate thereof or any
confidentiality obligation with respect to the Company or any
Affiliate thereof or otherwise in competition with the Company
or any Affiliate thereof, to the extent specified in such Award
Agreement applicable to the Grantee. In addition, the Company
may annul an Award if the Grantee is an employee of the Company
or an Affiliate thereof and is terminated for Cause as defined
in the applicable Award Agreement or the Plan, as applicable.
Furthermore, if the Company is required to prepare an accounting
restatement due to the material noncompliance of the Company, as
a result of misconduct, with any financial reporting requirement
under the securities laws, the individuals subject to automatic
forfeiture under Section 304 of the Sarbanes-Oxley Act of
2002 and any Grantee who knowingly engaged in the misconduct,
was grossly negligent in engaging in the misconduct, knowingly
failed to prevent the misconduct or was grossly negligent in
failing to prevent the misconduct, shall reimburse the Company
the amount of any payment in settlement of an Award earned or
accrued during the twelve-(12)month period following the first
public issuance or filing with the United States Securities and
Exchange Commission (whichever first occurred) of the financial
document that contained such material noncompliance.
3.4
No Repricing.
Notwithstanding anything in this Plan to the contrary, no
amendment or modification may be made to an outstanding Option
or SAR, including, without limitation, by replacement of Options
or SARs with cash or other award type, that would be treated as
a repricing under the rules of the stock exchange on which the
Stock is listed, in each case, without the approval of the
stockholders of the Company, provided, that, appropriate
adjustments may be made to outstanding Options and SARs pursuant
to Section 17 or Section 5.3 and may be
made to make changes to achieve compliance with applicable law,
including Code Section 409A.
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3.5
Deferral Arrangement.
The Board may permit or require the deferral of any award
payment into a deferred compensation arrangement, subject to
such rules and procedures as it may establish, which may include
provisions for the payment or crediting of interest or dividend
equivalents, including converting such credits into deferred
Stock equivalents. Any such deferrals shall be made in a manner
that complies with Code Section 409A.
3.6
No Liability.
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 or Award Agreement.
3.7
Share Issuance/Book-Entry
Notwithstanding any provision of this Plan to the contrary, the
issuance of the Stock under the Plan may be evidenced in such a
manner as the Board, in its discretion, deems appropriate,
including, without limitation, book-entry registration or
issuance of one or more Stock certificates.
4. | STOCK SUBJECT TO THE PLAN |
4.1
Number of Shares Available for Awards
Subject to adjustment as provided in Section 17
hereof, the number of shares of Stock available for issuance
under the Plan shall be the number of shares available for
issuance under the Prior Plans. In no event shall the number of
shares of Stock available for issuance under the Plan exceed
seven million five hundred thousand (7,500,000), subject to
adjustment as provided for in Section 17. Stock
issued or to be issued under the Plan shall be authorized but
unissued shares; or, to the extent permitted by applicable law,
issued shares that have been reacquired by the Company.
4.2
Adjustments in Authorized Shares
The Board shall have the right to substitute or assume Awards in
connection with mergers, reorganizations, separations, or other
transactions to which Section 424(a) of the Code applies.
The number of shares of Stock reserved pursuant to
Section 4 shall be increased by the corresponding
number of Awards assumed and, in the case of a substitution, by
the net increase in the number of shares of Stock subject to
Awards before and after the substitution.
4.3
Share Usage
Shares covered by an Award shall be counted as used as of the
Grant Date. If any shares covered by an Award granted under the
Plan or a Prior Plan are not purchased or are forfeited or
expire, or if an Award otherwise terminates without delivery of
any Stock subject thereto or is settled in cash in lieu of
shares, then the number of shares of Stock counted against the
aggregate number of shares available under the Plan with respect
to such Award shall, to the extent of any such forfeiture,
termination or expiration, again be available for making Awards
under the Plan in the same amount as such shares were counted
against the limit set forth in Section 4.1, provided
that any shares covered by an Award granted under a Prior Plan
will again be available for making Awards under the Plan in the
same amount as such shares were counted against the limits set
forth in the applicable Prior Plan. The number of shares of
Stock available for issuance under the Plan shall not be
increased by (i) any shares of Stock tendered or withheld
or Award surrendered in connection with the purchase of shares
of Stock upon exercise of an Option as described in
Section 12.2, or (ii) any shares of Stock
deducted or delivered from an Award payment in connection with
the Companys tax withholding obligations as described in
Section 18.3.
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5. | EFFECTIVE DATE, DURATION AND AMENDMENTS |
5.1
Effective Date.
The Plan shall be effective as of the Effective
Date. Following the Effective Date no awards will
be made under the Prior Plans.
5.2
Term.
The Plan shall terminate automatically ten (10) years after
the Effective Date and may be terminated on any earlier date as
provided in Section 5.3.
5.3
Amendment and Termination of the Plan
The Board may, at any time and from time to time, amend,
suspend, or terminate the Plan as to any shares of Stock as to
which Awards have not been made. An amendment shall be
contingent on approval of the Companys stockholders to the
extent stated by the Board, required by applicable law or
required by applicable stock exchange listing requirements. In
addition, an amendment will be contingent on approval of the
Companys stockholders if the amendment would:
(i) materially increase the benefits accruing to
participants under the Plan, (ii) materially increase the
aggregate number of shares of Stock that may be issued under the
Plan, or (iii) materially modify the requirements as to
eligibility for participation in the Plan. No Awards shall be
made after termination of the Plan. No amendment, suspension, or
termination of the Plan shall, without the consent of the
Grantee, impair rights or obligations under any Award
theretofore awarded under the Plan.
6. | AWARD ELIGIBILITY AND LIMITATIONS |
6.1
Service Providers and Other Persons
Subject to this Section 6, Awards may be made under
the Plan to: (i) any Service Provider to the Company or of
any Affiliate, including any Service Provider who is an officer
or director of the Company, or of any Affiliate, as the Board
shall determine and designate from time to time and
(ii) any other individual whose participation in the Plan
is determined to be in the best interests of the Company by the
Board.
6.2
Successive Awards and Substitute Awards.
An eligible person may receive more than one Award, subject to
such restrictions as are provided herein. Notwithstanding
Sections 8.1 and 9.1, the Option Price of an
Option or the grant price of a SAR that is a Substitute Award
may be less than 100% of the Fair Market Value of a share of
Common Stock on the original date of grant; provided, that, the
Option Price or grant price is determined in accordance with the
principles of Code Section 424 and the regulations
thereunder; as modified by Code Section 409A and the
regulations thereunder as Options that are non-qualified stock
options and SARs.
6.3
Limitation on Shares of Stock Subject to
Awards.
During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act:
(i) the maximum number of shares of Stock subject to
Options or SARs that can be awarded under the Plan to any person
eligible for an Award under Section 6 hereof is five
hundred twenty five thousand five hundred (525,000) per
12 month period; and
(ii) the maximum number of shares that can be granted under
the Plan, other than pursuant to an Option or SARs, to any
person eligible for an Award under Section 6 hereof
is five hundred twenty five thousand five hundred (525,000) per
12 month period.
The preceding limitations in this Section 6.3 are
subject to adjustment as provided in Section 17
hereof.
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7. | AWARD AGREEMENT |
Each Award granted pursuant to the Plan shall be evidenced by an
Award Agreement, in such form or forms as the Board shall from
time to time determine. Award Agreements granted from time to
time or at the same time need not contain similar provisions but
shall be consistent with the terms of the Plan. Each Award
Agreement evidencing an Award of Options shall specify whether
such Options are intended to be Non-qualified Stock Options or
Incentive Stock Options, and in the absence of such
specification such options shall be deemed Non-qualified Stock
Options.
8. | TERMS AND CONDITIONS OF OPTIONS |
8.1
Option Price
The Option Price of each Option shall be fixed by the Board and
stated in the Award Agreement evidencing such Option. Except in
the case of Substitute Awards, the Option Price of each Option
shall be at least the Fair Market Value on the Grant Date of a
share of Stock; provided, however, that in the
event that a Grantee is a Ten Percent Stockholder, the Option
Price of an Option granted to such Grantee that is intended to
be an Incentive Stock Option shall be not less than
110 percent of the Fair Market Value of a share of Stock on
the Grant Date. In no case shall the Option Price of any Option
be less than the par value of a share of Stock.
8.2
Vesting.
Subject to Sections 8.3 and 17.3 hereof, each Option
granted under the Plan shall become exercisable at such times
and under such conditions as shall be determined by the Board
and stated in the Award Agreement. For purposes of this
Section 8.2, fractional numbers of shares of Stock
subject to an Option shall be rounded down to the next nearest
whole number.
8.3
Term.
Each Option granted under the Plan shall terminate, and all
rights to purchase shares of Stock thereunder shall cease, upon
the expiration of ten years from the date such Option is
granted, or under such circumstances and on such date prior
thereto as is set forth in the Plan or as may be fixed by the
Board and stated in the Award Agreement relating to such Option;
provided, however, that in the event that the
Grantee is a Ten Percent Stockholder, an Option granted to such
Grantee that is intended to be an Incentive Stock Option shall
not be exercisable after the expiration of five years from its
Grant Date.
8.4
Termination of Service.
Each Award Agreement shall set forth the extent to which the
Grantee shall have the right to exercise the Option following
termination of the Grantees Service. Such provisions shall
be determined in the sole discretion of the Board, need not be
uniform among all Options issued pursuant to the Plan, and may
reflect distinctions based on the reasons for termination of
Service.
8.5
Limitations on Exercise of Option.
Notwithstanding any other provision of the Plan, in no event may
any Option be exercised, in whole or in part, prior to the date
the Plan is approved by the stockholders of the Company as
provided herein or after the occurrence of an event referred to
in Section 17 hereof which results in termination of
the Option.
8.6
Method of Exercise.
Subject to the terms of Article 12 and
Section 18.3, an Option that is exercisable may be
exercised by the Grantees delivery to the Company of
notice of exercise on any business day, at the Companys
principal office, on the form specified by the Company. Such
notice shall specify the number of shares of Stock with respect
to which the Option is being exercised and shall be accompanied
by payment in full of the Option Price of the shares for which
the Option is being exercised plus the amount (if any) of
federal
and/or other
taxes which the Company may, in its judgment, be required to
withhold with respect to an Award.
8
8.7
Rights of Holders of Options
Unless otherwise stated in the applicable Award Agreement, an
individual holding or exercising an Option shall have none of
the rights of a stockholder (for example, the right to receive
cash or dividend payments or distributions attributable to the
subject shares of Stock or to direct the voting of the subject
shares of Stock) until the shares of Stock covered thereby are
fully paid and issued to him. Except as provided in
Section 17 hereof, no adjustment shall be made for
dividends, distributions or other rights for which the record
date is prior to the date of such issuance.
8.8
Delivery of Stock Certificates.
Promptly after the exercise of an Option by a Grantee and the
payment in full of the Option Price, such Grantee shall be
entitled to the issuance of a stock certificate or certificates
evidencing his or her ownership of the shares of Stock subject
to the Option.
8.9
Transferability of Options
Except as provided in Section 8.10, during the
lifetime of a Grantee, only the Grantee (or, in the event of
legal incapacity or incompetency, the Grantees guardian or
legal representative) may exercise an Option. Except as provided
in Section 8.10, no Option shall be assignable or
transferable by the Grantee to whom it is granted, other than by
will or the laws of descent and distribution.
8.10
Family Transfers.
If authorized in the applicable Award Agreement, a Grantee may
transfer, not for value, all or part of an Option which is not
an Incentive Stock Option to any Family Member. For the purpose
of this Section 8.10, a not for value
transfer is a transfer which is (i) a gift, (ii) a
transfer under a domestic relations order in settlement of
marital property rights; or (iii) a transfer to an entity
in which more than fifty percent of the voting interests are
owned by Family Members (or the Grantee) in exchange for an
interest in that entity. Following a transfer under this
Section 8.10, any such Option shall continue to be
subject to the same terms and conditions as were applicable
immediately prior to transfer. Subsequent transfers of
transferred Options are prohibited except to Family Members of
the original Grantee in accordance with this
Section 8.10 or by will or the laws of descent and
distribution. The events of termination of Service of
Section 8.4 hereof shall continue to be applied with
respect to the original Grantee, following which the Option
shall be exercisable by the transferee only to the extent, and
for the periods specified, in Section 8.4.
8.11
Limitations on Incentive Stock Options.
An Option shall constitute an Incentive Stock Option only
(i) if the Grantee of such Option is an employee of the
Company or any Subsidiary of the Company; (ii) to the
extent specifically provided in the related Award Agreement; and
(iii) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of
Stock with respect to which all Incentive Stock Options held by
such Grantee become exercisable for the first time during any
calendar year (under the Plan and all other plans of the
Grantees employer and its Affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options
into account in the order in which they were granted.
8.12
Notice of Disqualifying Disposition
If any Grantee shall make any disposition of shares of Stock
issued pursuant to the exercise of an Incentive Stock Option
under the circumstances described in Code Section 421(b)
(relating to certain disqualifying dispositions), such Grantee
shall notify the Company of such disposition within ten
(10) days thereof.
9
9. | TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS |
9.1
Right to Payment and Grant Price.
A SAR shall confer on the Grantee to whom it is granted a right
to receive, upon exercise thereof, the excess of (A) the
Fair Market Value of one share of Stock on the date of exercise
over (B) the grant price of the SAR as determined by the
Board. The Award Agreement for a SAR shall specify the grant
price of the SAR, which shall be at least the Fair Market Value
of a share of Stock on the date of grant. SARs may be granted in
conjunction with all or part of an Option granted under the Plan
or at any subsequent time during the term of such Option, in
conjunction with all or part of any other Award or without
regard to any Option or other Award; provided that a SAR that is
granted subsequent to the Grant Date of a related Option must
have a SAR Price that is no less than the Fair Market Value of
one share of Stock on the SAR Grant Date.
9.2
Other Terms.
The Board shall determine at the date of grant or thereafter,
the time or times at which and the circumstances under which a
SAR may be exercised in whole or in part (including based on
achievement of performance goals
and/or
future service requirements), the time or times at which SARs
shall cease to be or become exercisable following termination of
Service or upon other conditions, the method of exercise, method
of settlement, form of consideration payable in settlement,
method by or forms in which Stock will be delivered or deemed to
be delivered to Grantees, whether or not a SAR shall be in
tandem or in combination with any other Award, and any other
terms and conditions of any SAR.
9.3
Term.
Each SAR granted under the Plan shall terminate, and all rights
thereunder shall cease, upon the expiration of ten years from
the date such SAR is granted, or under such circumstances and on
such date prior thereto as is set forth in the Plan or as may be
fixed by the Board and stated in the Award Agreement relating to
such SAR.
9.4
Transferability of SARS
Except as provided in Section 9.5, during the
lifetime of a Grantee, only the Grantee (or, in the event of
legal incapacity or incompetency, the Grantees guardian or
legal representative) may exercise a SAR. Except as provided in
Section 9.5, no SAR shall be assignable or
transferable by the Grantee to whom it is granted, other than by
will or the laws of descent and distribution.
9.5
Family Transfers.
If authorized in the applicable Award Agreement, a Grantee may
transfer, not for value, all or part of a SAR to any Family
Member. For the purpose of this Section 9.5, a
not for value transfer is a transfer which is
(i) a gift, (ii) a transfer under a domestic relations
order in settlement of marital property rights; or (iii) a
transfer to an entity in which more than fifty percent of the
voting interests are owned by Family Members (or the Grantee) in
exchange for an interest in that entity. Following a transfer
under this Section 9.5, any such SAR shall continue
to be subject to the same terms and conditions as were
applicable immediately prior to transfer. Subsequent transfers
of transferred SARs are prohibited except to Family Members of
the original Grantee in accordance with this Section 9.5
or by will or the laws of descent and distribution.
10. | TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS |
10.1
Grant of Restricted Stock or Stock Units.
Awards of Restricted Stock or Stock Units may be made for no
consideration (other than par value of the shares which is
deemed paid by Services already rendered).
10
10.2
Restrictions.
At the time a grant of Restricted Stock or Stock Units is made,
the Board may, in its sole discretion, establish a period of
time (a restricted period) applicable to such
Restricted Stock or Stock Units. Each Award of Restricted Stock
or Stock Units may be subject to a different restricted period.
The Board may in its sole discretion, at the time a grant of
Restricted Stock or Stock Units is made, prescribe restrictions
in addition to or other than the expiration of the restricted
period, including the satisfaction of corporate or individual
performance objectives, which may be applicable to all or any
portion of the Restricted Stock or Stock Units as described in
Article 14. Neither Restricted Stock nor Stock Units
may be sold, transferred, assigned, pledged or otherwise
encumbered or disposed of during the restricted period or prior
to the satisfaction of any other restrictions prescribed by the
Board with respect to such Restricted Stock or Stock Units.
10.3
Restricted Stock Certificates.
The Company shall issue, in the name of each Grantee to whom
Restricted Stock has been granted, stock certificates
representing the total number of shares of Restricted Stock
granted to the Grantee, as soon as reasonably practicable after
the Grant Date. The Board may provide in an Award Agreement that
either (i) the Secretary of the Company shall hold such
certificates for the Grantees benefit until such time as
the Restricted Stock is forfeited to the Company or the
restrictions lapse, or (ii) such certificates shall be
delivered to the Grantee, provided, however, that
such certificates shall bear a legend or legends that comply
with the applicable securities laws and regulations and makes
appropriate reference to the restrictions imposed under the Plan
and the Award Agreement.
10.4
Rights of Holders of Restricted Stock.
Unless the Board otherwise provides in an Award Agreement,
holders of Restricted Stock shall have the right to vote such
Stock and the right to receive any dividends declared or paid
with respect to such Stock. The Board may provide that any
dividends paid on Restricted Stock must be reinvested in shares
of Stock, which may or may not be subject to the same vesting
conditions and restrictions applicable to such Restricted Stock.
All distributions, if any, received by a Grantee with respect to
Restricted Stock as a result of any stock split, stock dividend,
combination of shares, or other similar transaction shall be
subject to the restrictions applicable to the original Grant.
10.5
Rights of Holders of Stock Units.
10.5.1
Voting and Dividend Rights.
Holders of Stock Units shall have no rights as stockholders of
the Company. The Board may provide in an Award Agreement
evidencing a grant of Stock Units that the holder of such Stock
Units shall be entitled to receive, upon the Companys
payment of a cash dividend on its outstanding Stock, a cash
payment for each Stock Unit held equal to the per-share dividend
paid on the Stock. Such Award Agreement may also provide that
such cash payment will be deemed reinvested in additional Stock
Units at a price per unit equal to the Fair Market Value of a
share of Stock on the date that such dividend is paid.
10.5.2
Creditors Rights.
A holder of Stock Units shall have no rights other than those of
a general creditor of the Company. Stock Units represent an
unfunded and unsecured obligation of the Company, subject to the
terms and conditions of the applicable Award Agreement.
10.6
Termination of Service.
Unless the Board otherwise provides in an Award Agreement or in
writing after the Award Agreement is issued, upon the
termination of a Grantees Service, any Restricted Stock or
Stock Units held by such Grantee that have not vested, or with
respect to which all applicable restrictions and conditions have
not lapsed, shall immediately be deemed forfeited. Upon
forfeiture of Restricted Stock or Stock Units, the Grantee shall
have no further rights with respect to such Award, including but
not limited to any right to vote Restricted Stock or any right
to receive dividends with respect to shares of Restricted Stock
or Stock Units.
11
10.7
Purchase of Restricted Stock and Shares Subject to Stock
Units.
The Grantee shall be required, to the extent required by
applicable law, to purchase the Restricted Stock or Shares
subject to vested Stock Units from the Company at a Purchase
Price equal to the greater of (i) the aggregate par value
of the shares of Stock represented by such Restricted Stock or
Stock Units (ii) the Purchase Price, if any, specified in
the Award Agreement relating to such Restricted Stock or Stock
Units. The Purchase Price shall be payable in a form described
in Section 12 or, in the discretion of the Board, in
consideration for past or future Services rendered to the
Company or an Affiliate.
10.8
Delivery of Stock.
Upon the expiration or termination of any restricted period and
the satisfaction of any other conditions prescribed by the
Board, the restrictions applicable to shares of Restricted Stock
or Stock Units settled in Stock shall lapse, and, unless
otherwise provided in the Award Agreement, a stock certificate
for such shares shall be delivered, free of all such
restrictions, to the Grantee or the Grantees beneficiary
or estate, as the case may be. Neither the Grantee, nor the
Grantees beneficiary or estate, shall have any further
rights with regard to a Stock Unit once the share of Stock
represented by the Stock Unit has been delivered.
11 TERMS
AND CONDITIONS OF UNRESTRICTED STOCK AWARDS
The Board may, in its sole discretion, grant (or sell at par
value or such other higher purchase price determined by the
Board) an Unrestricted Stock Award to any Grantee pursuant to
which such Grantee may receive shares of Stock free of any
restrictions (Unrestricted Stock) under the Plan.
Unrestricted Stock Awards may be granted or sold as described in
the preceding sentence in respect of past services and other
valid consideration, or in lieu of, or in addition to, any cash
compensation due to such Grantee.
12
FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK
12.1
General Rule.
Payment of the Option Price for the shares purchased pursuant to
the exercise of an Option or the Purchase Price for Restricted
Stock shall be made in cash or in cash equivalents acceptable to
the Company.
12.2
Surrender of Stock.
To the extent the Award Agreement so provides, payment of the
Option Price for shares purchased pursuant to the exercise of an
Option or the Purchase Price for Restricted Stock may be made
all or in part through the tender or attestation to the Company
of shares of Stock, which shall be valued, for purposes of
determining the extent to which the Option Price or Purchase
Price has been paid thereby, at their Fair Market Value on the
date of exercise or surrender.
12.3
Cashless Exercise.
With respect to an Option only (and not with respect to
Restricted Stock), to the extent permitted by law and to the
extent the Award Agreement so provides, payment of the Option
Price for shares purchased pursuant to the exercise of an Option
may be made all or in part by delivery (on a form acceptable to
the Board) of an irrevocable direction to a licensed securities
broker acceptable to the Company to sell shares of Stock and to
deliver all or part of the sales proceeds to the Company in
payment of the Option Price and any withholding taxes described
in Section 18.3.
12.4
Other Forms of Payment.
To the extent the Award Agreement so provides, payment of the
Option Price for shares purchased pursuant to exercise of an
Option or the Purchase Price for Restricted Stock may be made in
any other form that is consistent with applicable laws,
regulations and rules, including, without limitation, Service.
12
13 TERMS
AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS
13.1
Dividend Equivalent Rights.
A Dividend Equivalent Right is an Award entitling the recipient
to receive credits based on cash distributions that would have
been paid on the shares of Stock specified in the Dividend
Equivalent Right (or other award to which it relates) if such
shares had been issued to and held by the recipient. A Dividend
Equivalent Right may be granted hereunder to any Grantee. The
terms and conditions of Dividend Equivalent Rights shall be
specified in the grant. Dividend equivalents credited to the
holder of a Dividend Equivalent Right may be paid currently or
may be deemed to be reinvested in additional shares of Stock,
which may thereafter accrue additional equivalents. Any such
reinvestment shall be at Fair Market Value on the date of
reinvestment. Dividend Equivalent Rights may be settled in cash
or Stock or a combination thereof, in a single installment or
installments, all determined in the sole discretion of the
Board. A Dividend Equivalent Right granted as a component of
another Award may provide that such Dividend Equivalent Right
shall be settled upon exercise, settlement, or payment of, or
lapse of restrictions on, such other award, and that such
Dividend Equivalent Right shall expire or be forfeited or
annulled under the same conditions as such other award. A
Dividend Equivalent Right granted as a component of another
Award may also contain terms and conditions different from such
other award.
13.2
Termination of Service.
Except as may otherwise be provided by the Board either in the
Award Agreement or in writing after the Award Agreement is
issued, a Grantees rights in all Dividend Equivalent
Rights or interest equivalents shall automatically terminate
upon the Grantees termination of Service for any reason.
14 TERMS
AND CONDITIONS OF PERFORMANCE SHARES, PERFORMANCE UNITS,
PERFORMANCE AWARDS AND ANNUAL INCENTIVE AWARDS
14.1
Grant of Performance Units/Performance
Shares.
Subject to the terms and provisions of this Plan, the Board, at
any time and from time to time, may grant Performance Units
and/or
Performance Shares to Participants in such amounts and upon such
terms as the Committee shall determine.
14.2
Value of Performance Units/Performance
Shares.
Each Performance Unit shall have an initial value that is
established by the Board at the time of grant. The Board shall
set performance goals in its discretion which, depending on the
extent to which they are met, will determine the value
and/or
number of Performance Units/Performance Shares that will be paid
out to the Participant.
14.3
Earning of Performance Units/Performance
Shares.
Subject to the terms of this Plan, after the applicable
Performance Period has ended, the holder of Performance
Units/Performance Shares shall be entitled to receive payout on
the value and number of Performance Units/Performance Shares
earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the
corresponding performance goals have been achieved.
14.4
Form and Timing of Payment of Performance Units/Performance
Shares.
Payment of earned Performance Units/Performance Shares shall be
as determined by the Board and as evidenced in the Award
Agreement. Subject to the terms of this Plan, the Board, in its
sole discretion, may pay earned Performance Units/Performance
Shares in the form of cash or in shares (or in a combination
thereof) equal to the value of the earned Performance
Units/Performance Shares at the close of the applicable
Performance Period, or as soon as practicable after the end of
the Performance Period. Any Shares may be granted subject to any
restrictions deemed appropriate by the Committee. The
determination of the Committee with respect to the form of
payout of such Awards shall be set forth in the Award Agreement
pertaining to the grant of the Award.
13
14.5
Performance Conditions.
The right of a Grantee to exercise or receive a grant or
settlement of any Award, and the timing thereof, may be subject
to such performance conditions as may be specified by the Board.
The Board may use such business criteria and other measures of
performance as it may deem appropriate in establishing any
performance conditions. If and to the extent required under Code
Section 162(m), any power or authority relating to an Award
intended to qualify under Code Section 162(m), shall be
exercised by the Committee and not the Board.
14.6
Performance Awards or Annual Incentive Awards Granted to
Designated Covered Employees.
If and to the extent that the Board determines that an Award to
be granted to a Grantee who is designated by the Board as likely
to be a Covered Employee should qualify as
performance-based compensation for purposes of Code
Section 162(m), the grant, exercise
and/or
settlement of such Award shall be contingent upon achievement of
pre-established performance goals and other terms set forth in
this Section 14.6.
14.6.1
Performance Goals Generally.
The performance goals for such Awards shall consist of one or
more business criteria and a targeted level or levels of
performance with respect to each of such criteria, as specified
by the Committee consistent with this Section 14.6.
Performance goals shall be objective and shall otherwise meet
the requirements of Code Section 162(m) and regulations
thereunder including the requirement that the level or levels of
performance targeted by the Committee result in the achievement
of performance goals being substantially uncertain.
The Committee may determine that such Awards shall be granted,
exercised
and/or
settled upon achievement of any one performance goal or that two
or more of the performance goals must be achieved as a condition
to grant, exercise
and/or
settlement of such Awards. Performance goals may differ for
Awards granted to any one Grantee or to different Grantees.
14.6.2
Timing For Establishing Performance Goals.
Performance goals shall be established not later than the
earlier of (i) 90 days after the beginning of any
performance period applicable to such Awards and (ii) the
day on which 25% of any performance period applicable to such
Awards has expired, or at such other date as may be required or
permitted for performance-based compensation under
Code Section 162(m).
14.6.3
Settlement of Awards; Other Terms.
Settlement of such Awards shall be in cash, Stock, other Awards
or other property, in the discretion of the Committee. The
Committee may, in its discretion, reduce the amount of a
settlement otherwise to be made in connection with such Awards.
The Committee shall specify the circumstances in which such
Performance or Annual Incentive Awards shall be paid or
forfeited in the event of termination of Service by the Grantee
prior to the end of a performance period or settlement of Awards.
14.6.4
Performance Measures.
The performance goals upon which the payment or vesting of an
Award to a Covered Employee that is intended to qualify as
Performance-Based Compensation shall be limited to the following
Performance Measures:
(a) net earnings or net income;
(b) operating earnings;
(c) pretax earnings;
(d) earnings per share;
(e) share price, including growth measures and total
stockholder return;
(f) earnings before interest and taxes;
14
(g) earnings before interest, taxes, depreciation
and/or
amortization;
(h) sales or revenue growth, whether in general, by type of
product or service, or by type of customer;
(i) gross or operating margins;
(j) return measures, including return on assets, capital,
investment, equity, sales or revenue;
(k) cash flow, including operating cash flow, free cash
flow, cash flow return on equity and cash flow return on
investment;
(l) productivity ratios;
(m) expense targets;
(n) market share;
(o) financial ratios as provided in credit agreements of
the Company and its subsidiaries;
(p) working capital targets;
(q) completion of acquisitions of business or companies.
(r) completion of divestitures and asset sales; and
(s) any combination of any of the foregoing business
criteria.
Any Performance Measure(s) may be used to measure the
performance of the Company, Subsidiary,
and/or
Affiliate as a whole or any business unit of the Company,
Subsidiary,
and/or
Affiliate or any combination thereof, as the Committee may deem
appropriate, or any of the above Performance Measures as
compared to the performance of a group of comparator companies,
or published or special index that the Committee, in its sole
discretion, deems appropriate, or the Company may select
Performance Measure (f) above as compared to various stock
market indices. The Committee also has the authority to provide
for accelerated vesting of any Award based on the achievement of
performance goals pursuant to the Performance Measures specified
in this Section 14.
14.6.5
Evaluation of Performance.
The Committee may provide in any such Award that any evaluation
of performance may include or exclude any of the following
events that occur during a Performance Period: (a) asset
write-downs; (b) litigation or claim judgments or
settlements; (c) the effect of changes in tax laws,
accounting principles, or other laws or provisions affecting
reported results; (d) any reorganization and restructuring
programs; (e) extraordinary nonrecurring items as described
in Accounting Principles Board Opinion No. 30
and/or in
managements discussion and analysis of financial condition
and results of operations appearing in the Companys annual
report to shareholders for the applicable year;
(f) acquisitions or divestitures; and (g) foreign
exchange gains and losses. To the extent such inclusions or
exclusions affect Awards to Covered Employees, they shall be
prescribed in a form that meets the requirements of Code
Section 162(m) for deductibility.
14.6.6
Adjustment of Performance-Based
Compensation.
Awards that are intended to qualify as Performance-Based
Compensation may not be adjusted upward. The Board shall retain
the discretion to adjust such Awards downward, either on a
formula or discretionary basis, or any combination as the
Committee determines.
14.6.7
Board Discretion.
In the event that applicable tax
and/or
securities laws change to permit Board discretion to alter the
governing Performance Measures without obtaining shareholder
approval of such changes, the Board shall have sole discretion
to make such changes without obtaining shareholder approval
provided the exercise of such discretion does not violate Code
Section 409A. In addition, in the event that the Committee
determines that it is advisable to grant Awards that shall not
qualify as Performance-Based Compensation, the Committee may
make such grants
15
without satisfying the requirements of Code Section 162(m)
and base vesting on Performance Measures other than those set
forth in Section 14.6.4.
14.7
Status of Section Awards Under Code
Section 162(m).
It is the intent of the Company that Awards under
Section 14.6 hereof granted to persons who are
designated by the Committee as likely to be Covered Employees
within the meaning of Code Section 162(m) and regulations
thereunder shall, if so designated by the Committee, constitute
qualified performance-based compensation within the
meaning of Code Section 162(m) and regulations thereunder.
Accordingly, the terms of Section 14.6, including
the definitions of Covered Employee and other terms used
therein, shall be interpreted in a manner consistent with Code
Section 162(m) and regulations thereunder. The foregoing
notwithstanding, because the Committee cannot determine with
certainty whether a given Grantee 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 only a
person designated by the Committee, at the time of grant of an
Award, as likely to be a Covered Employee with respect to that
fiscal year. If any provision of the Plan or any agreement
relating to such Awards does not comply or is inconsistent with
the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended
to the extent necessary to conform to such requirements.
15
PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter
entered into by a Grantee with the Company or any Affiliate,
except an agreement, contract, or understanding that expressly
addresses Section 280G or Section 4999 of the Code (an
Other Agreement), and notwithstanding any formal or
informal plan or other arrangement for the direct or indirect
provision of compensation to the Grantee (including groups or
classes of Grantees or beneficiaries of which the Grantee is a
member), whether or not such compensation is deferred, is in
cash, or is in the form of a benefit to or for the Grantee (a
Benefit Arrangement), if the Grantee is a
disqualified individual, as defined in
Section 280G(c) of the Code, any Option, Restricted Stock,
Stock Unit, Performance Share or Performance Unit held by that
Grantee and any right to receive any payment or other benefit
under this Plan shall not become exercisable or vested
(i) to the extent that such right to exercise, vesting,
payment, or benefit, taking into account all other rights,
payments, or benefits to or for the Grantee under this Plan, all
Other Agreements, and all Benefit Arrangements, would cause any
payment or benefit to the Grantee under this Plan to be
considered a parachute payment within the meaning of
Section 280G(b)(2) of the Code as then in effect (a
Parachute Payment) and (ii) if, as a
result of receiving a Parachute Payment, the aggregate after-tax
amounts received by the Grantee from the Company under this
Plan, all Other Agreements, and all Benefit Arrangements would
be less than the maximum after-tax amount that could be received
by the Grantee without causing any such payment or benefit to be
considered a Parachute Payment. In the event that the receipt of
any such right to exercise, vesting, payment, or benefit under
this Plan, in conjunction with all other rights, payments, or
benefits to or for the Grantee under any Other Agreement or any
Benefit Arrangement would cause the Grantee to be considered to
have received a Parachute Payment under this Plan that would
have the effect of decreasing the after-tax amount received by
the Grantee as described in clause (ii) of the preceding
sentence, then the Grantee shall have the right, in the
Grantees sole discretion, to designate those rights,
payments, or benefits under this Plan, any Other Agreements, and
any Benefit Arrangements that should be reduced or eliminated so
as to avoid having the payment or benefit to the Grantee under
this Plan be deemed to be a Parachute Payment; provided,
however, that in order to comply with Code Section 409A,
the reduction or elimination will be performed in the order in
which each dollar of value subject to an Award reduces the
Parachute Payment to the greatest extent.
16
REQUIREMENTS OF LAW
16.1
General.
The Company shall not be required to sell or issue any shares of
Stock under any Award if the sale or issuance of such shares
would constitute a violation by the Grantee, any other
individual exercising an Option, or the Company of any provision
of any law or regulation of any governmental authority,
including without limitation any federal or state securities
laws or regulations. If at any time the Company shall determine,
in its discretion, that the listing, registration or
qualification of any shares subject to an Award upon any
securities exchange or under any
16
governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the issuance or purchase of
shares hereunder, no shares of Stock may be issued or sold to
the Grantee or any other individual exercising an Option
pursuant to such Award unless such listing, registration,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company,
and any delay caused thereby shall in no way affect the date of
termination of the Award. Without limiting the generality of the
foregoing, in connection with the Securities Act, upon the
exercise of any Option or any SAR that may be settled in shares
of Stock or the delivery of any shares of Stock underlying an
Award, unless a registration statement under such Act is in
effect with respect to the shares of Stock covered by such
Award, the Company shall not be required to sell or issue such
shares unless the Board has received evidence satisfactory to it
that the Grantee or any other individual exercising an Option
may acquire such shares pursuant to an exemption from
registration under the Securities Act. Any determination in this
connection by the Board shall be final, binding, and conclusive.
The Company may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Securities Act.
The Company shall not be obligated to take any affirmative
action in order to cause the exercise of an Option or a SAR or
the issuance of shares of Stock pursuant to the Plan to comply
with any law or regulation of any governmental authority. As to
any jurisdiction that expressly imposes the requirement that an
Option (or SAR that may be settled in shares of Stock) shall not
be exercisable until the shares of Stock covered by such Option
(or SAR) are registered or are exempt from registration, the
exercise of such Option (or SAR) under circumstances in which
the laws of such jurisdiction apply shall be deemed conditioned
upon the effectiveness of such registration or the availability
of such an exemption.
16.2
Rule 16b-3.
During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, it is the
intent of the Company that Awards pursuant to the Plan and the
exercise of Options and SARs granted hereunder will qualify for
the exemption provided by
Rule 16b-3
under the Exchange Act. To the extent that any provision of the
Plan or action by the Board does not comply with the
requirements of
Rule 16b-3,
it shall be deemed inoperative to the extent permitted by law
and deemed advisable by the Board, and shall not affect the
validity of the Plan. In the event that
Rule 16b-3
is revised or replaced, the Board may exercise its discretion to
modify this Plan in any respect necessary to satisfy the
requirements of, or to take advantage of any features of, the
revised exemption or its replacement.
17 EFFECT
OF CHANGES IN CAPITALIZATION
17.1
Changes in Stock.
If the number of outstanding shares of Stock is increased or
decreased or the shares of Stock are changed into or exchanged
for a different number or kind of shares or other securities of
the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution
payable in capital stock, or other increase or decrease in such
shares effected without receipt of consideration by the Company
occurring after the Effective Date, the number and kinds of
shares for which grants of Options and other Awards may be made
under the Plan, including, without limitation, the limits set
forth in Section 6.3, shall be adjusted
proportionately and accordingly by the Company. In addition, the
number and kind of shares for which Awards are outstanding shall
be adjusted proportionately and accordingly so that the
proportionate interest of the Grantee immediately following such
event shall, to the extent practicable, be the same as
immediately before such event. Any such adjustment in
outstanding Options or SARs shall not change the aggregate
Option Price or SAR Exercise Price payable with respect to
shares that are subject to the unexercised portion of an
outstanding Option or SAR, as applicable, but shall include a
corresponding proportionate adjustment in the Option Price or
SAR Exercise Price per share. The conversion of any convertible
securities of the Company shall not be treated as an increase in
shares effected without receipt of consideration.
Notwithstanding the foregoing, in the event of any distribution
to the Companys stockholders of securities of any other
entity or other assets (including an extraordinary dividend but
excluding a non-extraordinary dividend of the Company) without
receipt of consideration by the Company, the Company shall, in
such manner as the Company deems appropriate, adjust
(i) the number and kind of shares subject to outstanding
Awards
and/or
(ii) the exercise price of outstanding Options and Stock
Appreciation Rights to reflect such distribution.
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17.2
Reorganization in Which the Company Is the Surviving Entity
Which does not Constitute a Corporate
Transaction.
Subject to Section 17.3 hereof, if the Company shall
be the surviving entity in any reorganization, merger, or
consolidation of the Company with one or more other entities
which does not constitute a Corporate Transaction, any Option or
SAR theretofore granted pursuant to the Plan shall pertain to
and apply to the securities to which a holder of the number of
shares of Stock subject to such Option or SAR would have been
entitled immediately following such reorganization, merger, or
consolidation, with a corresponding proportionate adjustment of
the Option Price or SAR Exercise Price per share so that the
aggregate Option Price or SAR Exercise Price thereafter shall be
the same as the aggregate Option Price or SAR Exercise Price of
the shares remaining subject to the Option or SAR immediately
prior to such reorganization, merger, or consolidation. Subject
to any contrary language in an Award Agreement evidencing an
Award, any restrictions applicable to such Award shall apply as
well to any replacement shares received by the Grantee as a
result of the reorganization, merger or consolidation. In the
event of a transaction described in this Section 17.2,
Stock Units shall be adjusted so as to apply to the securities
that a holder of the number of shares of Stock subject to the
Stock Units would have been entitled to receive immediately
following such transaction.
17.3
Corporate Transaction in which Awards are not
Assumed.
Upon the occurrence of a Corporate Transaction in which
outstanding Options, SARs, Stock Units and Restricted Stock are
not being assumed or continued:
(i) all outstanding shares of Restricted Stock shall be
deemed to have vested, and all Stock Units shall be deemed to
have vested and the shares of Stock subject thereto shall be
delivered, immediately prior to the occurrence of such Corporate
Transaction, and
(ii) either of the following two actions shall be taken:
(A) fifteen days prior to the scheduled consummation of a
Corporate Transaction, all Options and SARs outstanding
hereunder shall become immediately exercisable and shall remain
exercisable for a period of fifteen days, or
(B) the Board may elect, in its sole discretion, to cancel
any outstanding Awards of Options, Restricted Stock, Stock
Units,
and/or SARs
and pay or deliver, or cause to be paid or delivered, to the
holder thereof an amount in cash or securities having a value
(as determined by the Board acting in good faith), in the case
of Restricted Stock or Stock Units, equal to the formula or
fixed price per share paid to holders of shares of Stock and, in
the case of Options or SARs, equal to the product of the number
of shares of Stock subject to the Option or SAR (the Award
Shares) multiplied by the amount, if any, by which
(I) the formula or fixed price per share paid to holders of
shares of Stock pursuant to such transaction exceeds
(II) the Option Price or SAR Exercise Price applicable to
such Award Shares.
With respect to the Companys establishment of an exercise
window, (i) any exercise of an Option or SAR during such
fifteen-day
period shall be conditioned upon the consummation of the event
and shall be effective only immediately before the consummation
of the event, and (ii) upon consummation of any Corporate
Transaction, the Plan and all outstanding but unexercised
Options and SARs shall terminate. The Board shall send notice of
an event that will result in such a termination to all
individuals who hold Options and SARs not later than the time at
which the Company gives notice thereof to its stockholders.
17.4
Corporation Transaction in which Awards are
Assumed.
The Plan, Options, SARs, Stock Units and Restricted Stock
theretofore granted shall continue in the manner and under the
terms so provided in the event of any Corporate Transaction to
the extent that provision is made in writing in connection with
such Corporate Transaction for the assumption or continuation of
the Options, SARs, Stock Units and Restricted Stock theretofore
granted, or for the substitution for such Options, SARs, Stock
Units and Restricted Stock for new common stock options and
stock appreciation rights and new common stock units and
restricted stock relating to the stock of a successor entity, or
a parent or subsidiary thereof, with appropriate
18
adjustments as to the number of shares (disregarding any
consideration that is not common stock) and option and stock
appreciation right exercise prices.
17.5
Adjustments
Adjustments under this Section 17 related to shares
of Stock or securities of the Company shall be made by the
Board, whose determination in that respect shall be final,
binding and conclusive. No fractional shares or other securities
shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated
in each case by rounding downward to the nearest whole share.
The Board shall determine the effect of a Corporate Transaction
upon Awards other than Options, SARs, Stock Units and Restricted
Stock, and such effect shall be set forth in the appropriate
Award Agreement. The Board may provide in the Award Agreements
at the time of grant, or any time thereafter with the consent of
the Grantee, for different provisions to apply to an Award in
place of those described in Sections 17.1, 17.2,
17.3 and 17.4. This Section 17 does not
limit the Companys ability to provide for alternative
treatment of Awards outstanding under the Plan in the event of
change of control events that are not Corporate Transactions.
17.6
No Limitations on Company.
The making of Awards pursuant to the Plan shall not affect or
limit in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations, or changes of
its capital or business structure or to merge, consolidate,
dissolve, or liquidate, or to sell or transfer all or any part
of its business or assets.
18
GENERAL PROVISIONS
18.1
Disclaimer of Rights.
No provision in the Plan or in any Award or Award Agreement
shall be construed to confer upon any individual the right to
remain in the employ or service of the Company or any Affiliate,
or to interfere in any way with any contractual or other right
or authority of the Company either to increase or decrease the
compensation or other payments to any individual at any time, or
to terminate any employment or other relationship between any
individual and the Company. In addition, notwithstanding
anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement, no Award granted under
the Plan shall be affected by any change of duties or position
of the Grantee, so long as such Grantee continues to be a
director, officer, consultant or employee of the Company or an
Affiliate. The obligation of the Company to pay any benefits
pursuant to this Plan shall be interpreted as a contractual
obligation to pay only those amounts described herein, in the
manner and under the conditions prescribed herein. The Plan
shall in no way be interpreted to require the Company to
transfer any amounts to a third party trustee or otherwise hold
any amounts in trust or escrow for payment to any Grantee or
beneficiary under the terms of the Plan.
18.2
Nonexclusivity of the Plan.
Neither the adoption of the Plan nor the submission of the Plan
to the stockholders of the Company for approval shall be
construed as creating any limitations upon the right and
authority of the Board to adopt such other incentive
compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or
specifically to a particular individual or particular
individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock
options otherwise than under the Plan.
18.3
Withholding Taxes.
The Company or an Affiliate, as the case may be, shall have the
right to deduct from payments of any kind otherwise due to a
Grantee any federal, state, or local taxes of any kind required
by law to be withheld with respect to the vesting of or other
lapse of restrictions applicable to an Award or upon the
issuance of any shares of Stock upon the exercise of an Option
or pursuant to an Award. At the time of such vesting, lapse, or
exercise, the Grantee shall pay to the Company or the Affiliate,
as the case may be, any amount that the Company or the Affiliate
may reasonably determine to be necessary to satisfy such
withholding obligation. Subject to the prior approval of the
Company or the Affiliate, which may be withheld by the Company
or the Affiliate, as the case may be, in its sole
19
discretion, the Grantee may elect to satisfy such obligations,
in whole or in part, (i) by causing the Company or the
Affiliate to withhold shares of Stock otherwise issuable to the
Grantee or (ii) by delivering to the Company or the
Affiliate shares of Stock already owned by the Grantee. The
shares of Stock so delivered or withheld shall have an aggregate
Fair Market Value equal to such withholding obligations. The
Fair Market Value of the shares of Stock used to satisfy such
withholding obligation shall be determined by the Company or the
Affiliate as of the date that the amount of tax to be withheld
is to be determined. A Grantee who has made an election pursuant
to this Section 18.3 may satisfy his or her
withholding obligation only with shares of Stock that are not
subject to any repurchase, forfeiture, unfulfilled vesting, or
other similar requirements. The maximum number of shares of
Stock that may be withheld from any Award to satisfy any
federal, state or local tax withholding requirements upon the
exercise, vesting, lapse of restrictions applicable to such
Award or payment of shares pursuant to such Award, as
applicable, cannot exceed such number of shares having a Fair
Market Value equal to the minimum statutory amount required by
the Company to be withheld and paid to any such federal, state
or local taxing authority with respect to such exercise,
vesting, lapse of restrictions or payment of shares.
18.4
Captions.
The use of captions in this Plan or any Award Agreement is for
the convenience of reference only and shall not affect the
meaning of any provision of the Plan or such Award Agreement.
18.5
Other Provisions.
Each Award granted under the Plan may contain such other terms
and conditions not inconsistent with the Plan as may be
determined by the Board, in its sole discretion.
18.6
Number and Gender.
With respect to words used in this Plan, the singular form shall
include the plural form, the masculine gender shall include the
feminine gender, etc., as the context requires.
18.7
Severability.
If any provision of the Plan or any Award Agreement shall be
determined to be illegal or unenforceable by any court of law in
any jurisdiction, the remaining provisions hereof and thereof
shall be severable and enforceable in accordance with their
terms, and all provisions shall remain enforceable in any other
jurisdiction.
18.8
Governing Law.
The validity and construction of this Plan and the instruments
evidencing the Awards hereunder shall be governed by the laws of
the State of Colorado, other than any conflicts or choice of law
rule or principle that might otherwise refer construction or
interpretation of this Plan and the instruments evidencing the
Awards granted hereunder to the substantive laws of any other
jurisdiction.
18.9
Code Section 409A.
The Board intends to comply with Code Section 409A, or an
exemption to Code Section 409A, with regard to Awards
hereunder that constitute nonqualified deferred compensation
within the meaning of Code Section 409A. To the extent that
the Board determines that a Grantee would be subject to the
additional 20% tax imposed on certain nonqualified deferred
compensation plans pursuant to Code Section 409A as a
result of any provision of any Award granted under this Plan,
such provision shall be deemed amended to the minimum extent
necessary to avoid application of such additional tax. The
nature of any such amendment shall be determined by the Board.
20