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8-K - FORM 8-K - FLAGSTAR BANCORP INC | k50422e8vk.htm |
Exhibit 10.1
FLAGSTAR BANCORP, INC.
2006 EQUITY INCENTIVE PLAN
AS AMENDED
AS AMENDED
ARTICLE I ESTABLISHMENT AND PURPOSE |
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Section 1.1. | Establishment |
1 | ||||
Section 1.2. | Purpose |
1 | ||||
ARTICLE II DEFINITIONS |
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Section 2.1. | Definitions |
1 | ||||
ARTICLE III ADMINISTRATION |
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Section 3.1. | General |
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Section 3.2. | Committee Meetings |
5 | ||||
Section 3.3. | Powers of the Committee |
5 | ||||
Section 3.4. | Grants to Committee Members |
6 | ||||
Section 3.5. | Committee Decisions and Determinations |
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ARTICLE IV ELIGIBILITY AND PARTICIPATION |
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Section 4.1. | Eligibility |
6 | ||||
Section 4.2. | Participation |
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ARTICLE V SHARES SUBJECT TO PLAN |
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Section 5.1. | Available Shares |
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Section 5.2. | Previously Granted Shares |
7 | ||||
Section 5.3. | Incentive Stock Option Restriction |
7 | ||||
Section 5.4. | Adjustments |
8 | ||||
Section 5.5. | Code Section 409A Limitation |
8 | ||||
ARTICLE VI GRANTS IN GENERAL |
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Section 6.1. | Agreement |
8 | ||||
Section 6.2. | Time of Granting of an Award |
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Section 6.3. | Term and Nontransferability of Grants |
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Section 6.4. | Termination of Service as Applied to Options and SARs |
9 | ||||
Section 6.5. | Termination of Service as Applied to Grants Other Than Options and SARs |
9 | ||||
Section 6.6. | Dividends and Distributions |
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Section 6.7. | Participation |
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Section 6.8. | Section 83(b) Election |
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ARTICLE VII STOCK OPTIONS |
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Section 7.1. | Grants |
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Section 7.2. | Exercise of Options |
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Section 7.3. | Term of Options |
11 |
Section 7.4. | Special Rules For Incentive Stock Options |
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Section 7.5. | Grants to Non-Employee Directors |
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ARTICLE VIII STOCK APPRECIATION RIGHTS |
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Section 8.1. | Grant |
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Section 8.2. | Required Terms and Conditions |
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Section 8.3. | Standard Terms and Conditions |
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ARTICLE IX RESTRICTED STOCK |
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Section 9.1. | General |
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Section 9.2. | Required Terms and Conditions |
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Section 9.3. | Standard Terms and Conditions |
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Section 9.4. | Price |
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ARTICLE X RESTRICTED STOCK UNITS |
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Section 10.1. | General |
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Section 10.2. | Required Terms and Conditions |
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Section 10.3. | Standard Terms and Conditions |
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ARTICLE XI OTHER AWARDS AND PERFORMANCE-BASED GRANTS |
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Section 11.1. | Performance Units |
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Section 11.2. | Performance Shares |
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Section 11.3. | Other Awards |
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Section 11.4. | Incentive Awards |
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Section 11.5. | Provisions Relating to Code Section 162(m) |
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ARTICLE XII MISCELLANEOUS |
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Section 12.1. | Effect of a Change in Control |
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Section 12.2. | Rights as a Shareholder |
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Section 12.3. | Modification, Extension and Renewal of Grants |
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Section 12.4. | Term of Plan |
20 | ||||
Section 12.5. | Securities Law Requirements |
20 | ||||
Section 12.6. | Amendment of the Plan |
21 | ||||
Section 12.7. | Application of Funds |
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Section 12.8. | Tax Withholding |
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Section 12.9. | No Reload Rights and No Repricings |
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Section 12.10. | Notices |
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Section 12.11. | Rights to Employment or Other Service |
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Section 12.12. | Exculpation and Indemnification |
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Section 12.13. | No Fund Created |
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Section 12.14. | Additional Arrangements |
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Section 12.15. | Code Section 409A Savings Clause |
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Section 12.16. | Captions |
23 | ||||
Section 12.17. | Governing Law |
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Section 12.18. | Execution |
24 |
FLAGSTAR BANCORP, INC.
2006 EQUITY INCENTIVE PLAN
AS AMENDED
AS AMENDED
ARTICLE I
ESTABLISHMENT AND PURPOSE
Section 1.1. Establishment. Prior to the adoption of this Flagstar Bancorp, Inc. 2006 Equity
Incentive Plan, as amended by the 2011 Amendments, as defined below (the Plan), the Company
maintained the 1997 Incentive Plan, the 1997 Employees and Directors Stock Option Plan and the 2000
Stock Incentive Plan, all as amended from time to time (collectively, the Prior Plans). This
Plan consolidates, amends and restates the Prior Plans into this single plan document so that as of
the Effective Date: (i) the Prior Plans will be merged into this Plan; and (ii) no additional
grants will be made under any Prior Plan. Outstanding awards under any Prior Plan will continue to
be governed by such Prior Plan according to the terms of that Prior Plan as of the Effective Date.
Section 1.2. Purpose. The Plan is intended to provide incentive to key employees, officers,
directors and others expected to provide significant services to the Company and its Affiliates to
foster and promote the long-term financial success of the Company and Affiliates and materially
increase shareholder value. The Plan is also intended to encourage proprietary interest in the
Company, to encourage such key employees to remain in the employ of the Company and its Affiliates,
to attract new employees with outstanding qualifications, and to afford additional incentives to
others to increase their efforts in providing significant services to the Company and its
Affiliates. In furtherance thereof, the Plan permits awards of equity-based and cash incentives to
key employees, officers and directors of, and certain other providers of services to, the Company
and its Affiliates.
ARTICLE II
DEFINITIONS
Section 2.1. Definitions. The following terms shall have the following meanings when used
herein, unless the context clearly indicates otherwise.
(a) 2011 Amendments means the amendments to the Plan approved by the stockholders of the
Company at the Annual Meeting of Stockholders held May 17, 2011.
(b) Act means the Securities Act of 1933, as amended.
(c) Affiliate means any parent corporation or subsidiary corporation of the Company as
those terms are defined in Code Sections 424(e) and (f), respectively.
(d) Agreement means a written agreement entered into between the Company and the recipient
of a Grant which sets forth the terms and conditions of the Grant.
(e) Board means the Board of Directors of the Company.
(f) Cause means, unless otherwise provided in a Participants Agreement, (i) engaging in (A)
willful or gross misconduct or (B) willful or gross neglect, (ii) repeatedly failing to adhere to
the directions of superiors or the Board or the written policies and practices of the Company,
(iii) the commission of a felony, a crime of moral turpitude or any crime involving the Company,
(iv) fraud, misappropriation, dishonesty or embezzlement, (v) incompetence or a material breach of
the Participants employment agreement (if any) with the Company (other than a termination of
employment by the Participant), or (vi) any unlawful act detrimental to the Company, all as
determined in the sole discretion of the Committee.
(g) Change in Control means any one of the following events: (i) a complete dissolution or
liquidation of the Company, (ii) a sale of substantially all of the assets of the Company, (iii) a
merger or combination involving the Company after which the owners of Common Stock of the Company
immediately prior to the merger or combination own less than 50% of the outstanding shares of
common stock of the surviving corporation, or (iv) the acquisition of more than 25% of the
outstanding shares of Common Stock of the Company, whether by tender offer or otherwise, by any
person (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934)
other than a trustee or other fiduciary holding securities under an employee benefit plan of the
Company. The decision of the Committee as to whether a Change in Control has occurred shall be
conclusive and binding.
(h) Code means the Internal Revenue Code of 1986, as amended, and any related rules,
regulations and interpretations.
(i) Committee means the Compensation Committee of the Board; provided that the Committee
shall at all times consist solely of at least two persons who each qualify as a Non-Employee
Director under Rule 16b-3(b)(3)(i) promulgated under the Exchange Act and, to the extent that
relief from the limitation of Section 162(m) of the Code is sought, as an Outside Director under
Section 1.162-27(e)(3)(i) of the Treasury Regulations.
(j) Common Stock means the Companys Common Stock, par value $0.01, either currently
existing or authorized hereafter and any other stock or security resulting from adjustment thereof
as described herein, or the Common Stock of any successor to the Company which is designated for
the purpose of the Plan.
(k) Company means Flagstar Bancorp, Inc., a Michigan corporation, and any successor or
assignee corporation(s) into which the Company may be merged, changed or consolidated; any
corporation for whose Securities the Securities of the Company shall be exchanged; and any assignee
of or successor to substantially all of the assets of the Company.
(l) Disability means a physical or mental condition, which in the sole and absolute
discretion of the Committee is reasonably expected to be of indefinite duration and substantially
prevents a Participant from fulfilling his or her duties or responsibilities to the Company or an
Affiliate.
(m) Effective Date means the date this Plan is approved by the Companys shareholders.
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(n) Eligible Persons means officers, directors and Employees of the Company and its
Affiliates and other persons expected to provide significant services (of a type expressly approved
by the Committee as covered services for these purposes) to the Company or its Affiliates. The
Committee will determine the eligibility of Employees, officers, directors and others expected to
provide significant services to the Company and its Affiliates based on, among other factors, the
position and responsibilities of such individuals and the nature and value to the Company or its
Affiliates of such individuals accomplishments and potential contribution to the success of the
Company or its Affiliates.
(o) Employee means an individual, including an officer or director of the Company or an
Affiliate, who is employed as a common-law employee of the Company or an Affiliate. An Employee
shall not include any person classified by the Company as an independent contractor even if the
individual is subsequently reclassified as a common-law employee by a court, administrative agency
or other adjudicatory body. The payment of directors fees by the Company is not sufficient to
constitute employment of the director by the Company.
(p) Exchange Act means the Securities Exchange Act of 1934, as amended, and the regulations
promulgated thereunder.
(q) Exercise Price means the price per share of Common Stock, determined by the Board or the
Committee, at which an Option or SAR may be exercised.
(r) Fair Market Value means the value of one share of Common Stock, determined as follows:
(i) If the Common Stock is listed on a national stock exchange, the average of the highest
and lowest selling prices on the exchange for the date of determination, but if no sales were
reported for the date of determination, the average of the highest and lowest selling prices on
the exchange for the last preceding date on which there was a sale of Common Stock on such
exchange, as determined by the Committee, or such other reasonable basis determined by the
Committee using actual transactions in the Common Stock as reported by such market and
consistently applied by the Committee.
(ii) If the Common Stock is not then listed on a national stock exchange but is traded on an
over-the-counter market, the average of the closing bid and asked prices for the Common Stock in
such over-the-counter market for the last preceding date on which there was a sale of Common
Stock in such market, as determined by the Committee.
(iii) If neither (i) nor (ii) applies, such value as the Committee in its discretion may in
good faith determine. Notwithstanding the foregoing, where the Common Stock is listed or traded,
the Committee may make discretionary determinations in good faith where the Common Stock has not
been traded for 10 trading days.
(s) Grant means an award of an Incentive Stock Option, Non-qualified Stock Option, SAR,
Restricted Stock, Restricted Stock Unit, Performance Unit, Performance Share, Incentive Award,
Other Award or any combination thereof to an Eligible Person.
(t) Incentive Award means a right granted a Participant under Section 11.4.
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(u) Incentive Stock Option means an Option of the type described in Section 422(b) of the
Code awarded to an Employee.
(v) Non-qualified Stock Option means an Option not described in Section 422(b) of the Code
awarded to an Eligible Person, the taxation of which is pursuant to Section 83 of the Code.
(w) Option means any option, whether an Incentive Stock Option or a Non-qualified Stock
Option, to purchase shares of Common Stock at a price and for the term fixed by the Committee in
accordance with Article VII of the Plan and subject to such other limitations and restrictions in
the Plan and the applicable Agreement.
(x) Other Award means a right granted a Participant under Section 11.3.
(y) Participant means any Eligible Person to whom a Grant is made, or the Successors of the
Participant, as the context so requires.
(z) Performance Period means the period established by the Committee during which any
performance goals specified by the Committee with respect to a Grant are to be measured.
(aa) Performance Share means a right granted a Participant under Section 11.2.
(bb) Performance Unit means a right granted a Participant under Section 11.1.
(cc) Plan means the Companys 2006 Equity Incentive Plan, as set forth herein, and as the
same may from time to time be amended.
(dd) Purchase Price means the Exercise Price times the number of shares of Common Stock with
respect to which an Option is exercised.
(ee) Restricted Stock means Common Stock granted to a Participant subject to the terms and
conditions established by the Committee pursuant to Article IX.
(ff) Restricted Stock Unit means a right granted to a Participant under Article X.
(gg) Restriction Period means the period of time during which restrictions established by
the Committee shall apply to a Grant.
(hh) Retirement means, unless otherwise provided by the Committee in the Participants
Agreement, the Termination of Service (other than for Cause) of a Participant:
(i) on or after the Participants attainment of age 65; or
(ii) on or after the Participants attainment of age 55, provided the Participants age plus
years of service with the Company or an Affiliate, including service in the employer-employee
relationship, directorship or both, equals or exceeds 75 years.
(ii) Stock Appreciation Right or SAR means a right granted to a Participant under Article
VIII.
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(jj) Successor of the Participant means the legal representative of the estate of a deceased
Participant or the person or persons who acquire the right to exercise an Option or SAR by bequest
or inheritance or by reason of the death of the Participant.
(kk) Termination of Service means the time when the employee-employer relationship or
directorship or other service relationship (sufficient to constitute service as an Eligible Person)
between the Participant and the Company or an Affiliate is terminated for any reason, with or
without Cause, including, but not limited to, any termination by resignation, discharge,
Disability, death or Retirement; provided, however, Termination of Service shall not include: (i) a
termination where there is a simultaneous reemployment of the Participant by the Company or an
Affiliate or other continuation of service (sufficient to constitute service as an Eligible Person)
for the Company or an Affiliate or (ii) an employee who is on military leave, sick leave or other
bona fide leave of absence (to be determined in the discretion of the Committee). The Committee,
in its absolute discretion, shall determine the effects of all matters and questions relating to
Termination of Service, including but not limited to the question of whether any Termination of
Service was for Cause and all questions of whether particular leaves of absence constitute
Terminations of Employment.
ARTICLE III
ADMINISTRATION
Section 3.1. General. The Plan shall be administered by the Committee.
Section 3.2. Committee Meetings. The Committee shall meet from time to time as determined by
its chairman or by the Chairman or Chief Executive Officer of the Company. A majority of the
members of the Committee shall constitute a quorum and the acts of a majority of the members
present at any meeting of the Committee at which a quorum is present, or acts approved in writing
by a majority of the entire Committee, shall be the acts of the Committee for purposes of the Plan.
To the extent applicable, no member of the Committee may act as to matters under the Plan
specifically relating to such member.
Section 3.3. Powers of the Committee. Subject to the terms and conditions of the Plan and
consistent with the Companys intention for the Committee to exercise the greatest permissible
flexibility under Rule 16b-3 of the Exchange Act in awarding Grants, the Committee shall have the
power:
(a) to determine from time to time the Eligible Persons who are to be awarded Grants and the
nature and amount of Grants, and to generally determine the terms, provisions and conditions (which
need not be identical) of Grants awarded under the Plan, not inconsistent with the terms of the
Plan;
(b) to construe and interpret the Plan and Grants thereunder and to establish, amend and
revoke rules and regulations for administration of the Plan. In this connection, the Committee may
correct any defect, supply any omission or reconcile any inconsistency in the Plan, in any
Agreement or in any related agreements in the manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective;
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(c) to amend any outstanding Grant, subject to Sections 8.2(f), 12.3, 12.5 and 12.9, and to
accelerate or extend the vesting or exercisability of any Grant, subject to Section 12.3, and to
waive conditions or restrictions on any Grants, subject to Section 8.2(f), all to the extent it
shall deem appropriate;
(d) to cancel, with the consent of a Participant or as otherwise permitted by the Plan,
outstanding Grants;
(e) to determine whether, and to what extent and under what circumstances, Grants may be
settled in cash, Common Stock, other property or a combination of the foregoing, subject to Section
8.2(f);
(f) to appoint agents as the Committee deems necessary or desirable to administer the Plan;
(g) to provide for the forms of Agreements to be utilized in connection with the Plan, which
need not be identical for each Participant;
(h) to establish any blackout period the Committee in its sole discretion deems necessary or
advisable; and
(i) generally to exercise such powers and to perform such acts as are deemed necessary or
expedient to carry out the terms of the Plan and to promote the best interests of the Company and
its Affiliates with respect to the Plan.
Section 3.4. Grants to Committee Members. Notwithstanding Section 3.3, any Grant awarded
under the Plan to an Eligible Person who is a member of the Committee shall be made by a majority
of the directors of the Company who are not on the Committee; provided that any Grant to such
person must satisfy the requirements for exemption under Rule 16b-3 of the Exchange Act and does
not cause any member of the Committee to be disqualified as a Non-Employee Director under such
Rule.
Section 3.5. Committee Decisions and Determinations. Any determination made by the Committee
pursuant to the provisions of the Plan or an Agreement shall be made in its sole discretion in the
best interest of the Company and its Affiliates, not as a fiduciary. All decisions made by the
Committee pursuant to the provisions of the Plan or an Agreement shall be final and binding on all
persons, including the Company, its Affiliates, Participants and Successors of the Participants.
Any determination by the Committee shall not be subject to de novo review if challenged in any
court or legal forum.
ARTICLE IV
ELIGIBILITY AND PARTICIPATION
Section 4.1. Eligibility. Any Eligible Person may receive Grants under the Plan.
Section 4.2. Participation. Whether an Eligible Person receives a Grant under the Plan will
be determined by the Committee, in its sole discretion, as provided in Section 3.3. Except for
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Incentive Awards, to receive a Grant an Eligible Person must enter into an Agreement
evidencing the Grant.
ARTICLE V
SHARES SUBJECT TO PLAN
Section 5.1. Available Shares. Shares hereunder may consist, in whole or in part, of
authorized and unissued shares or treasury shares, including shares purchased by the Company on the
open market for purposes of the Plan. The certificates for Common Stock issued hereunder may
include any legend which the Committee deems appropriate to reflect any restrictions on transfer
hereunder or under the Agreement or as the Committee may otherwise deem appropriate.
(a) Grants. Subject to adjustment pursuant to Section 5.4 and except as provided in
subsection (b), the maximum number of shares of Common Stock that may be issued under the Plan as a
result of any Grants is: (i) 226,828 shares, which is the total shares attributable to any
authorized shares not issued or not subject to outstanding awards under the Companys 1997
Employees and Directors Stock Option Plan and 2000 Stock Incentive Plan, both as amended, as of the
Effective Date, plus (ii) any shares subject to outstanding awards under the Companys 1997
Employees and Directors Stock Option Plan and 2000 Stock Incentive Plan, both as amended, as of the
Effective Date that on or after the Effective Date cease for any reason to be subject to such
awards (other than by reason of exercise or settlement of the awards to the extent they are
exercised for or settled in vested and nonforfeitable shares), plus (iii) 7,500,000 shares, plus
(iv) 15,000,000 shares effective on the date of adoption of the 2011 Amendments.
(b) Cash-Settled SARs. Grants of SARs under which the Grant Agreement provides they will be
settled only in cash shall not be considered in the limit under subsection (a); provided, however,
once made, a Grant of a SAR which will be settled in only cash may not later be amended, modified
or otherwise changed to be settled in Common Stock or a combination of Common Stock and cash, as
provided in Section 8.2(f).
Section 5.2. Previously Granted Shares. Subject to Sections 5.1 and 5.3, the Committee has
full authority to determine the number of shares of Common Stock available for Grants. In its
discretion, the Committee may include as available for distribution all of the following:
(a) Common Stock subject to a Grant that has been forfeited;
(b) Common Stock under a Grant that otherwise terminates, fails to vest, expires or lapses
without issuance of Common Stock being made to a Participant; and
(c) Common Stock subject to any Grant that settles in cash or a form other than Common Stock.
Section 5.3. Incentive Stock Option Restriction. Solely for purposes of determining whether
shares are available for the issuance of Incentive Stock Options, and notwithstanding any provision
of this Article V to the contrary, the maximum aggregate number of shares that may be issued
through Incentive Stock Options under the Plan is 1,500,000. The terms of Section 5.2
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apply in determining the number of shares available under this Section for issuance through
Incentive Stock Options.
Section 5.4. Adjustments. In the event that the outstanding shares of Common Stock hereafter
are changed into or exchanged for a different number or kind of shares or other securities of the
Company or of another corporation by reason of merger, consolidation, reorganization,
recapitalization, reclassification, combination of shares, stock split-up, or stock dividend, or in
the event that there should be any other stock splits, stock dividends or other relevant changes in
capitalization occurring after the effective date of this Plan:
(a) The aggregate number and kind of shares that may be issued under this Plan may be adjusted
appropriately; and
(b) Rights under outstanding Grants made to Eligible Persons hereunder, both as to the number
of subject shares and the Exercise Price, may be adjusted appropriately.
Notwithstanding anything herein to the contrary, without affecting the number of shares of
Common Stock reserved or available hereunder, the Committee may authorize the issuance or
assumption of benefits under this Plan in connection with any merger, consolidation, acquisition of
property or stock, or reorganization upon such terms and conditions as it may deem appropriate
(including but not limited to a conversion of equity awards in Grants under this Plan in a manner
consistent with paragraph 53 of FASB Interpretation No. 44), subject to compliance with the rules
under Code Sections 422 and 424, as applicable.
The foregoing adjustments and the manner of application of the foregoing provisions to Grants
shall be determined solely by the Committee on a case-by-case basis, applied to similarly situated
groups or in any other manner as it deems in its sole discretion. Any adjustment hereunder may
provide for the elimination of fractional share interests.
Section 5.5. Code Section 409A Limitation. Any adjustment made pursuant to Section 5.4 to any
Grant that is considered deferred compensation within the meaning of Section 409A of the Code
shall be made in compliance with the requirements of Code Section 409A. Any adjustments made
pursuant to Section 5.4 to any Grant that is not considered deferred compensation shall be made
in a manner to ensure that after such adjustment, the Grant either continues not to be subject to
Code Section 409A or complies with the requirements of Code Section 409A.
ARTICLE VI
GRANTS IN GENERAL
Section 6.1. Agreement. Except for Incentive Awards, each Grant hereunder shall be evidenced
by a written Agreement as of the date of the Grant and executed by the Company and the Eligible
Person. Each Agreement shall set forth the terms and conditions as may be determined by the
Committee consistent with the Plan. The Agreement shall state the number of shares of Common Stock
to which the Grant pertains and may provide for adjustment in accordance with Section 5.4. As
applicable, each Agreement must state the Exercise Price or other consideration to be paid for any
Grant.
8
Section 6.2. Time of Granting of an Award. The award date of a Grant shall, for all purposes,
be the date on which the Committee makes the determination awarding such Grant, or such other date
as is determined by the Board. Notice of the determination of a Grant shall be given to each
Eligible Person to whom a Grant is awarded within a reasonable period of time after the date of
such Grant.
Section 6.3. Term and Nontransferability of Grants. No Grant is exercisable except by the
Participant or a Successor of the Participant permitted by the Plan. No Grant is assignable or
transferable, except by will or the laws of descent and distribution of the state wherein the
Participant was domiciled at the time of his or her death; provided, however, that the Committee
may permit other transfers where the Committee concludes that such transferability (i) does not
result in accelerated taxation, (ii) does not cause any Option intended to be an Incentive Stock
Option to fail to be described in Code Section 422(b), (iii) is in no event a transfer for value,
and (iv) is otherwise appropriate and desirable.
Section 6.4. Termination of Service as Applied to Options and SARs. Unless otherwise provided
in the applicable Agreement or as otherwise determined by the Committee, Options and SARs shall be
governed by the following provisions in the event of a Participants Termination of Service:
(a) Termination of Service, Except by Death, Retirement or Disability. Upon any Termination
of Service for any reason other than a Participants death, Retirement or Disability, the
Participant has the right, subject to the restrictions of Section 7.4, to exercise his or her
Options or SARs at any time within three months after Termination of Service, but only to the
extent that, at the date of Termination of Service, the Participants right to exercise such
Options or SARs had accrued pursuant to the terms of the Agreement and had not previously been
exercised; provided, however, that, unless otherwise provided in the Agreement, if there occurs a
Termination of Service for Cause, any Option or SAR not exercised in full prior to such Termination
of Service shall be canceled.
(b) Death of Participant. If the Participant dies while an Eligible Person or within three
months after any Termination of Service other than for Cause, his or her Options or SARs may be
exercised in full, subject to the restrictions of Section 7.4, at any time within 24 months after
the Participants death, by the Successor of the Participant, but only to the extent that, at the
date of death, the Participants right to exercise such Options or SARs had accrued, had not been
forfeited pursuant to the terms of the Agreement and had not previously been exercised.
(c) Disability or Retirement of Participant. Upon Termination of Service for reason of
Disability or Retirement, a Participant shall have the right, subject to the restrictions of
Section 7.4, to exercise his or her Options or SARs in full at any time within 12 months after
Termination of Service, but only to the extent that, at the date of Termination of Service, the
Participants right to exercise such Options or SARs had accrued pursuant to the terms of the
applicable Agreement and had not previously been exercised.
Section 6.5. Termination of Service as Applied to Grants Other Than Options and SARs. Unless
otherwise provided in the applicable Agreement or as determined by the Committee,
9
Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, Incentive
Awards and Other Awards shall be governed by the following provisions:
(a) Termination of Service, Except by Death, Retirement or Disability. In the event of a
Participants Termination of Service for any reason other than the Participants death, Retirement
or Disability, the Participants Grants of Restricted Stock, Restricted Stock Units, Performance
Units, Performance Shares, Incentive Awards and Other Awards shall be forfeited upon the
Participants Termination of Service.
(b) Death, Retirement or Disability of Participant. Restricted Stock, Restricted Stock Units
and Other Awards shall fully vest on a Participants Termination of Service by reason of the
Participants death, Retirement or Disability. Performance Units, Performance Shares and Incentive
Awards or any award tied to performance may be paid out at a target level and paid or distributed
at the same time payments are made to other Participants who did not incur such a Termination of
Service as determined by the Committee.
Section 6.6. Dividends and Distributions. Participants awarded Grants of Restricted Stock,
Restricted Stock Units, Performance Shares or Performance Units may, if the Committee so
determines, be credited with dividends paid with respect to the underlying shares or dividend
equivalents while the Grants are held in a manner determined by the Committee in its sole
discretion. The Committee may apply any restrictions to the dividends or dividend equivalents that
the Committee deems appropriate. The Committee, in its sole discretion, may determine the form of
payment of dividends or dividend equivalents, including in the form of cash, Common Stock,
Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units.
Section 6.7. Participation. There is no guarantee that any Eligible Person will receive a
Grant under the Plan or, having received a Grant, that the Participant will receive a future Grant
on similar terms or at all. There is no obligation for uniformity of treatment of Eligible Persons
with respect to who receives a Grant or the terms and conditions of Participants Grants.
Section 6.8. Section 83(b) Election. The Committee may prohibit a Participant from making an
election under Section 83(b) of the Code. If the Committee has not prohibited such election, and
if the Participant elects to include in such Participants gross income in the year of transfer the
amounts specified in Section 83(b) of the Code, the Participant shall notify the Company of such
election within ten (10) days of filing notice of the election with the Internal Revenue Service,
and will provide the required withholding pursuant to Section 12.8, in addition to any filing and
notification required pursuant to regulations issued under the authority of Section 83(b) of the
Code.
ARTICLE VII
STOCK OPTIONS
Section 7.1. Grants. The Committee may grant Options in accordance with this Article. The
Exercise Price for any Option shall not be less than Fair Market Value on the date of Grant. Each
Agreement for an Option shall state whether such Option is an Incentive Stock Option or a
Non-qualified Stock Option. Incentive Stock Options may not be granted to an Eligible Person
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who is not an Employee of the Company or an Affiliate. Options may be awarded alone or in
addition to other Grants made under the Plan.
Section 7.2. Exercise of Options.
(a) Options may be exercised in whole or part at any time within the period permitted for the
exercise thereof and shall be exercised by written notice of intent to exercise the Option
delivered to the Secretary of the Company at its principal executive offices.
(b) Except as may otherwise be provided below, the Purchase Price for each Option granted to
an Eligible Person shall be payable in full in United States dollars upon the exercise of the
Option. In the event the Company determines that it is required to withhold taxes as a result of
the exercise of an Option, as a condition to the exercise thereof, an Employee may be required to
make arrangements satisfactory to the Company to enable it to satisfy such withholding requirements
in accordance with Section 12.8 hereof. If the applicable Agreement so provides, and the Committee
otherwise so permits, the Purchase Price may be paid in one or a combination of the following:
(i) by a certified or bank cashiers check;
(ii) by the surrender of shares of Common Stock in good form for transfer, owned by the person
exercising the Option and having a Fair Market Value on the date of exercise equal to the Purchase
Price, or in any combination of cash and shares of Common Stock, as long as the sum of the cash so
paid and the Fair Market Value of the shares of Common Stock so surrendered equals the Purchase
Price;
(iii) by cancellation of indebtedness owed by the Company to the Participant; or
(iv) by any combination of such methods of payment or any other method acceptable to the
Committee in its discretion.
Except in the case of exercised Options paid for by certified or bank cashiers check, the
Committee may impose limitations and prohibitions on the exercise of Options as it deems
appropriate, including, without limitation, any limitation or prohibition designed to avoid
accounting consequences which may result from the use of Common Stock as payment upon exercise of
an Option. Any fractional shares of Common Stock resulting from a Participants election that are
accepted by the Company will be paid in cash or forfeited in the discretion of the Committee.
Section 7.3. Term of Options. The period during which any Option may be exercised shall not
exceed ten (10) years from the Grant Date. No Option shall be exercisable until such time as set
forth in the applicable Agreement (but in no event after the expiration of such Option).
Section 7.4. Special Rules For Incentive Stock Options.
(a) Aggregate Fair Market Value. In the case of Incentive Stock Options granted hereunder,
the aggregate Fair Market Value (determined as of the date of the Grant thereof) of the Common
Stock with respect to which Incentive Stock Options become exercisable by any Participant for
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the first time during any calendar year (under the Plan and all other plans maintained by the
Company or its Affiliates) shall not exceed $100,000.
(b) Rules Applicable to Certain Owners. In the case of an individual described in Section
422(b)(6) of the Code (relating to certain 10% owners), the Exercise Price with respect to an
Incentive Stock Option shall not be less than 110% of the Fair Market Value of a share of Common
Stock on the day the Option is granted and the term of an Incentive Stock Option shall be no more
than five years from the date of grant.
(c) Disqualifying Disposition. If shares of Common Stock acquired upon exercise of an
Incentive Stock Option are disposed of in a disqualifying disposition within the meaning of Section
422 of the Code by a Participant prior to the expiration of either two years from the date of grant
of such Option or one year from the transfer of such shares to the Participant pursuant to the
exercise of such Option, or in any other disqualifying disposition within the meaning of Section
422 of the Code, such Participant shall notify the Company in writing as soon as practicable
thereafter of the date and terms of such disposition and, if the Company thereupon has a
tax-withholding obligation, shall pay to the Company an amount equal to any withholding tax the
Company is required to pay as a result of the disqualifying disposition.
(d) Disability. Solely for purposes of the provisions of the Plan as applied to Incentive
Stock Options and notwithstanding any other provision of the Plan, Disability means a
Participants inability to engage in any substantial gainful activity by reason of any 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.
Section 7.5. Grants to Non-Employee Directors. Notwithstanding any other provision of the
Plan to the contrary, this Section shall govern Grants to directors who are not Employees.
(a) Grants. Each director who is not an Employee on the date he or she takes office as a
director on or after the Effective Date shall receive a Grant of 1,000 Non-qualified Stock Options
as of such date. Each director is entitled to such other Grants (excluding Incentive Stock
Options) as the Board may award at any time and from time to time.
(b) Exercise Price. The Exercise Price of Non-qualified Stock Options granted to a director
equals the Fair Market Value of the Common Stock on such date.
(c) Term. Non-qualified Stock Options granted to directors hereunder shall have a term of
five years; provided that Grants of Non-qualified Stock Options expire one year after the date of
which a director terminates his or her service as a director, but in no event later than the date
on which such Non-qualified Stock Options would otherwise expire. Grants other than Non-qualified
Stock Options shall have such terms as set by the Board in the applicable Agreement.
(d) Exercise and Expiration. Unless provided otherwise by the Board in an Agreement, Options
and SARs granted to a director hereunder are fully (100%) exercisable on the one-year anniversary
of the date of grant. Directors may exercise Non-qualified Stock Options in the manner set forth
in Section 7.2. Grants to directors pursuant to this Section 7.5 shall be governed by the same
provisions for termination in the event of the directors death as contained in
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Sections 6.4(b) and 6.5(b) and in the event of the directors Disability as contained in
Sections 6.4(c) and 6.5(b).
ARTICLE VIII
STOCK APPRECIATION RIGHTS
Section 8.1. Grant. The Committee has authority to grant Stock Appreciation Rights (SARs)
under the Plan at any time or from time to time. A SAR shall entitle the Participant to receive
Common Stock or cash upon exercise of such SAR equal in value to the excess of the Fair Market
Value per share of Common Stock over the exercise price per share of Common Stock specified in the
related Agreement, multiplied by the number of shares in respect of which the SAR is exercised,
less any amount retained to cover tax withholdings, if necessary. The aggregate Fair Market Value
per share of Common Stock shall be determined as of the date of exercise of such SAR. Settlement
of a SAR shall be subject to the Participants satisfaction in full of any conditions, restrictions
or limitations imposed in accordance with the Plan or any Agreement. SARs may be awarded alone or
in addition to other Grants made under the Plan.
Section 8.2. Required Terms and Conditions. SARs shall be subject to the following terms and
conditions and to such additional terms and conditions, not inconsistent with the provisions of the
Plan, as the Committee deems desirable.
(a) Price. The grant price of a SAR may not be less than 100% of the Fair Market Value per
share of Common Stock on the date of grant, and the exercise price of a SAR may not be less than
100% of the Fair Market Value per share of Common Stock on the date of exercise.
(b) Term and Exercisability. The term and exercisability of a SAR shall be no longer than ten
(10) years after the Grant Date. The Committee may provide in a SAR Agreement or thereafter for an
accelerated exercise of all or part of a SAR upon such events or standards that it may determine,
including one or more performance measures.
(c) Method of Exercise. A Participant shall exercise a SAR by giving written notice of
exercise to the Company specifying in whole shares the portion of the SAR to be exercised and if
the Participant has more than one Grant of SARs which could be exercised, designating the
particular Grant to be exercised.
(d) No Deferral Features. To the extent necessary to comply with Code Section 409A, the SAR
Agreement shall not include any features allowing the Participant to defer recognition of income
past the date of exercise.
(e) Modification. Notwithstanding any provision of the Plan to the contrary, the Committee
shall not amend or otherwise modify a Grant of a SAR, which explicitly requires settlement only in
cash, after the date of grant to permit settlement in Common Stock or a combination of Common Stock
and cash.
Section 8.3. Standard Terms and Conditions. Unless the Committee specifies otherwise in the
SAR Agreement, the terms set forth in this Section 8.4 shall apply to all SARs granted under
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the Plan. An SAR Agreement that incorporates the terms of the Plan by reference shall be
deemed to have incorporated the terms set forth in this Section.
(a) Term. The standard term of a SAR shall be seven (7) years beginning on the Grant Date.
(b) Exercisability. The standard rate at which a SAR shall be exercisable shall be 25 percent
of the Grant on each of the first four annual anniversaries of the Grant Date.
(c) Nontransferability of Stock Appreciation Rights. The standard SAR Agreement shall provide
that no SAR shall be sold, assigned, margined, transferred, encumbered, conveyed, gifted,
alienated, hypothecated, pledged or otherwise disposed of, other than by will or the laws of
descent and distribution, and all SARs shall be exercisable during the Participants lifetime only
by the Participant.
ARTICLE IX
RESTRICTED STOCK
Section 9.1. General. The Committee has authority to grant Restricted Stock under the Plan at
any time or from time to time. The Committee shall determine the number of shares of Restricted
Stock to be awarded to any Eligible Person, the Restriction Period within which such Grants may be
subject to forfeiture and any other terms and conditions of the Grants, including without
limitation providing for either grant or vesting upon the achievement of performance goals. To the
extent the Company desires to avoid the deduction limit of Code Section 162(m) as applied to
Restricted Stock, Grants of Restricted Stock must comply with Section 11.5.
Section 9.2. Required Terms and Conditions. Restricted Stock shall be subject to the
following terms and conditions and to such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee deems desirable:
(a) Restrictions. The Committee may condition the grant or vesting of the Restricted Stock on
the performance of services for the Company or the attainment of performance goals, or both.
(b) Delivery. The Company shall issue the shares of Restricted Stock to each recipient who is
awarded a Grant of Restricted Stock either in certificate form or in book entry form, registered in
the name of the recipient, with legends or notations, as applicable, referring to the terms,
conditions and restrictions applicable to any such Grant and record the transfer on the Companys
official shareholder records; provided that the Company may require that any stock certificates
evidencing Restricted Stock granted hereunder be held in the custody of the Company until the
restrictions thereon shall have lapsed, and that as a condition of any Grant of Restricted Stock,
the Participant shall have delivered a stock power, endorsed in blank, relating to the Common Stock
covered by such Grant.
Section 9.3. Standard Terms and Conditions. Unless the Committee specifies otherwise in the
Restricted Stock Agreement, the terms set forth in this Section 9.3 shall apply to all Restricted
Stock granted under the Plan. A Restricted Stock Agreement that incorporates the terms of the Plan
by reference shall be deemed to have incorporated the terms set forth in this Section.
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(a) Restriction Period. Standard Grants of Restricted Stock will vest in 50% increments on
each annual anniversary of the date of grant beginning with the first anniversary.
(b) Restrictions. The standard restrictions applicable to Restricted Stock are continued
service of the Participant for the Company during the Restriction Period.
(c) Rights. The standard terms of a Restricted Stock Agreement shall provide that the
Participant shall have, with respect to the Restricted Stock, all of the rights of a shareholder of
the Company holding the class of Common Stock that is the subject of the Restricted Stock,
including, if applicable, the right to vote the shares and the right to receive any cash dividends,
subject to Section 6.3.
Section 9.4. Price. The Committee may require a Participant to pay a stipulated purchase
price for each share of Restricted Stock.
ARTICLE X
RESTRICTED STOCK UNITS
Section 10.1. General. The Committee has authority to grant Restricted Stock Units under the
Plan at any time or from time to time. A Restricted Stock Unit is a bookkeeping entry of a grant
of Common Stock that will be settled either by delivery of Common Stock or the payment of cash
based upon the Fair Market Value of a specified number of Common Stock. The Committee shall
determine the number of Restricted Stock Units to be awarded to any Participant, the Restriction
Period within which such Grants may be subject to forfeiture and any other terms and conditions of
the Grants, including, without limitation, providing for either grant or vesting upon the
achievement of performance goals. To the extent the Company desires to avoid the deduction limit
of Code Section 162(m) as applied to Restricted Stock Units, Grants of Restricted Stock Units must
comply with Section 11.5. The Grant of a Restricted Stock Unit shall occur as of the grant date
determined by the Committee. Restricted Stock Units may be awarded alone or in addition to other
Grants made under the Plan.
Section 10.2. Required Terms and Conditions. Restricted Stock Units shall be subject to the
following terms and conditions and to such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee deems desirable:
(a) Restrictions. The Committee may condition the grant or vesting of the Restricted Stock
Units on the performance of services for the Company, the attainment of performance goals, or both.
To the extent tied to performance, the Company will comply with Section 11.5 if it desires to
obtain a deduction.
(b) Rights. The Committee shall be entitled to specify in a Restricted Stock Unit Agreement
the extent to which and on what terms and conditions the applicable Participant shall be entitled
to receive payments corresponding to the dividends payable on the Common Stock.
Section 10.3. Standard Terms and Conditions. Unless the Committee specifies otherwise in the
Restricted Stock Unit Agreement, the terms set forth in this Section 10.3 shall apply to all
Restricted Stock Units granted under the Plan. A Restricted Stock Unit Agreement that
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incorporates the terms of the Plan by reference shall be deemed to have incorporated the terms
set forth in this Section:
(a) Restriction Period. The standard Restriction Period shall be one year from the Grant
Date.
(b) Restrictions. The standard restrictions applicable to a Restricted Stock Unit are
continued service of the Participant for the Company during the Restriction Period.
(c) Rights. The standard terms of the Restricted Stock Units shall provide that the
Participant is entitled to receive current payments corresponding to the dividends payable on the
Common Stock.
ARTICLE XI
OTHER AWARDS AND PERFORMANCE-BASED GRANTS
Section 11.1. Performance Units. The Committee has authority to grant Performance Units under
the Plan at any time or from time to time. A Performance Unit consists of the right to receive
cash upon achievement of a performance goal or goals (as the case may be) and satisfaction of such
other terms and conditions as the Committee determines. The Committee shall have complete
discretion to determine the number of Performance Units granted to each Participant and any
applicable conditions. An award of Performance Units shall be earned in accordance with the
Agreement over a specified period of performance, as determined by the Committee. Unless expressly
waived in the Agreement, an award of Performance Units must vest solely on the attainment of one or
more performance goals. Performance Units may be granted alone or in addition to other Awards made
under the Plan. The Committee, in its discretion, may substitute actual shares of Common Stock for
the cash payment otherwise required to be made to a Participant pursuant to a Performance Unit. To
the extent the Company desires to avoid the application of the deduction limit of Code Section
162(m) as applied to Performance Units, Grants of Performance Units will comply with the provisions
of Section 11.5.
Section 11.2. Performance Shares. The Committee has authority to grant Performance Shares
under the Plan at any time or from time to time. A Performance Share consists of the right to
receive shares of Common Stock upon achievement of a performance goal or goals (as the case may be)
and satisfaction of such other terms and conditions as the Committee determines. The Committee
shall have complete discretion to determine the number of Performance Shares granted to each
Participant and any applicable conditions. An award of Performance Shares shall be earned in
accordance with the Agreement over a specified period of performance, as determined by the
Committee. Unless expressly waived in the Agreement, an award of Performance Shares must vest
solely on the attainment of one or more performance goals. Performance Shares may be granted alone
or in addition to other Awards made under the Plan. The Committee, in its discretion, may make a
cash payment equal to the Fair Market Value of the Common Stock otherwise required to be issued to
a Participant pursuant to a Performance Share. To the extent the Company desires to avoid the
application of the deduction
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limit of Code Section 162(m) as applied to Performance Shares, Grants of Performance Shares
will comply with the provisions of Section 11.5.
Section 11.3. Other Awards. The Committee has authority to grant Other Awards under the Plan
at any time and from time to time. An Other Award is a Grant not otherwise specifically provided
for under the terms of the Plan that is valued in whole or in part by reference to, or is otherwise
based upon or settled in, Common Stock. The Grant of an Other Award shall be evidenced by an
Agreement, setting forth the terms and conditions of the Grant as the Committee, in its sole
discretion within the terms of the Plan, deems desirable. Other Awards may be awarded alone or in
addition to other Grants made under the Plan.
Section 11.4. Incentive Awards. The Committee has authority to grant Incentive Awards, which
are annual cash payments to select officers and Employees based on the attainment of one or more
performance goals as the Committee may determine. Incentive Awards must comply with the
requirements of Section 11.5.
Section 11.5. Provisions Relating to Code Section 162(m). Unless expressly waived (either
with respect to an individual Participant or a class of individual Participants) in writing by the
Committee, it is the intent of the Company that Grants made to persons who are (or may become)
Covered Employees (within the meaning of Section 162(m) of the Code) shall constitute qualified
performance-based compensation satisfying the relevant requirements of Code Section 162(m) and the
guidance thereunder. Accordingly, the Plan shall be administered and the provisions of the Plan
shall be interpreted in a manner consistent with Code Section 162(m). If any provision of the Plan
or any Agreement relating to such a Grant does not comply or is inconsistent with the requirements
of Code Section 162(m), unless expressly waived as described above, such provision shall be
construed or deemed amended to the extent necessary to conform to such requirements. In addition,
the following provisions shall apply to the Plan or a Grant to the extent necessary to obtain a tax
deduction for the Company or an Affiliate:
(a) Awards subject to this Section must vest (or may be granted or vest) solely on the
attainment of one or more objective performance goals unrelated to term of employment. Grants will
also be subject to the general vesting provisions provided in the Agreement and this Plan.
(b) Within the first 90 days of the year, but in no event later than completion of 25% of the
Performance Period or such earlier date as required under Section 162(m), the Committee must
establish performance goals (in accordance with subsection (e) below) in writing (including but not
limited to Committee minutes) for Covered Employees who will receive Grants that are intended as
qualified performance-based compensation. The outcome of the goal must be substantially uncertain
at the time the Committee actually establishes the goal.
(c) The performance goal must state, in terms of an objective formula or standard, the method
for computing the Grant payable to the Participant if the goal is attained.
(d) The terms of the objective formula or standard must prevent any discretion being exercised
by the Committee to later increase the amount payable that otherwise would be due upon attainment
of the goal, but may allow discretion to decrease the amount payable.
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(e) The material terms of the performance goal must be disclosed to and subsequently approved
in a separate vote by the stockholders before the payout is executed, unless they conform to one or
any combination of the following goals/targets, each determined in accordance with generally
accepted accounting principles or similar objective standards (and/or each as may appear in the
annual report to stockholders, Form 10K or Form 10Q) as applied to the Companys activities or
performance or relative to comparison companies and as applied to the Company as a whole or
business units or divisions: revenue; revenue growth; earnings (including earnings per share,
earnings before interest, taxes, depreciation and amortization, earnings before interest and taxes,
and earnings before or after taxes); operating income; gross profit; net income; profit margins;
earnings per share; return on assets; return on equity; return on invested capital; economic
value-added; efficiency ratio (other expenses as a percentage of other income plus net interest
income); stock price; gross dollar volume; cost containment or reduction; total shareholder return;
market share; asset growth; deposit growth; book value; expense deposit ratios; management; cash
flow; customer satisfaction; regulatory compliance metrics; CAMELS rating; and loan originations.
The foregoing criteria may relate to the Company or its Affiliates, one or more of their
divisions or units, or any combination of the foregoing, and may be applied on an absolute basis
and/or be relative to one or more peer group companies or indices, or any combination thereof, all
as the Committee shall determine.
(f) A combination of the above performance goals may be used with a particular Agreement
evidencing a Grant.
(g) The Committee in its sole discretion in setting the goals/targets in the time prescribed
above may provide for the making of equitable adjustments (singularly or in combination) to the
goals/targets in recognition of unusual or nonrecurring events for the following qualifying
objective items: asset impairments under Statement of Financial Accounting Standards No. 121, as
amended or superseded; acquisition-related charges; accruals for restructuring and/or
reorganization program charges; merger integration costs; merger transaction costs; any profit or
loss attributable to the business operations of any entity or entities acquired during the period
of service to which the performance goal relates; tax settlements; any extraordinary,
unusual-in-nature, infrequent-in-occurrence or other nonrecurring items (not otherwise listed) as
described in Accounting Principles Board Opinion No. 30; any extraordinary, unusual-in-nature,
infrequent-in-occurrence or other nonrecurring items (not otherwise listed) in managements
discussion and analysis of financial condition results of operations, selected financial data,
financial statements and/or in the footnotes, each as appearing in the annual report to
stockholders; unrealized gains or losses on investments; charges related to derivative transactions
contemplated by Statement of Financial Accounting Standards No. 133, as amended or superseded; and
compensation charges related to FAS 123 (Revised) or its successor provision.
(h) The Committee must certify in writing prior to payout that the performance goals and any
other material terms were in fact satisfied. In the manner required by Section 162(m) of the Code,
the Committee shall, promptly after the date on which the necessary financial and other information
for a particular Performance Period becomes available, certify the extent to which performance
goals have been achieved with respect to any Grant intended to qualify as performance-based
compensation under Section 162(m) of the Code. In addition, the
18
Committee may, in its discretion, reduce or eliminate the amount of any Grant payable to any
Participant, based on such factors as the Committee may deem relevant.
(i) Limitation on Grants.
(i) If a Grant is canceled, the canceled Grant continues to be counted against the maximum
number of shares for which Grants may be awarded to the Participant under the Plan, but not towards
the total number of shares reserved and available under the Plan pursuant to Section 5.1.
(ii) During any fiscal year, the maximum aggregate number of shares of Common Stock for which
Options and Stock Appreciation Rights may be granted to any Covered Employee shall not exceed
5,000,000 shares.
(iii) During any fiscal year, the maximum aggregate numbers of shares of Common Stock for
which Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares and Other
Awards may be granted to any Covered Employee shall not exceed 5,000,000 shares.
(iv) During any fiscal year, the maximum cash payment hereunder for performance-based
compensation purposes under Code Section 162(m) to any Covered Employee shall not exceed
$6,000,000.
(v) In the case of an outstanding Grant intended to qualify for the performance-based
compensation exception under Section 162(m), the Committee shall not, without approval of a
majority of the shareholders of the Company, amend the Plan or the Grant in a manner that would
adversely affect the Grants continued qualification for the performance-based exception.
(vi) Effective for any Performance Period beginning after January 1, 2009, notwithstanding any
provision of the Plan to contrary, a Covered Employee whose employment with the Company terminates
mid-Performance Period, other than a termination because of death or Disability, shall not be
entitled to a payout of a performance-based Grant in any amount greater than the amount payable
based on actual performance during the Performance Period, prorated based on the number of days
during the Performance Period the Covered Employee was in employment with the Company.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Effect of a Change in Control. Notwithstanding any other provision of this Plan
to the contrary, all unvested, unexercisable or restricted Grants shall automatically vest, become
exercisable and become unrestricted without further action by the Board or Committee upon a Change
in Control, unless provisions are made in connection with the transaction resulting in the Change
in Control for the assumption of Grants theretofore awarded, or the substitution for such Grants of
new grants, by the successor entity or parent thereof, with appropriate adjustment as to the number
and kind of shares and the per share exercise prices, as provided in Section 5.4.
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Section 12.2. Rights as a Shareholder. Other than certain voting rights permitted by the Plan
or an Agreement, no person shall have any rights of a shareholder as to Common Stock subject to a
Grant until, after proper transfer of the Common Stock subject to a Grant or other required action,
such shares have been recorded on the Companys official shareholder records as having been issued
and transferred. No adjustment shall be made for cash dividends or other rights for which the
record date is prior to the date such shares are recorded as issued and transferred in the
Companys official shareholder records.
Section 12.3. Modification, Extension and Renewal of Grants.
(a) Ability. Within the limitations of the Plan, including the limits of Sections 8.2(f) and
12.9, the Committee may modify, extend or renew outstanding Grants, accept the cancellation of
outstanding Grants (to the extent not previously exercised) to make new Grants in substitution
therefor, accelerate vesting and waive any restrictions, forfeiture provisions or other terms and
conditions on Grants, unless such action would not satisfy any applicable requirements of Rule
16b-3 of the Exchange Act; provided, however, no such action shall result in an adjustment to the
performance goals of any Grant intended to be exempt under Code Section 162(m) if the action
results in such Grant not being deductible or increases the amount of compensation otherwise
payable to a Participant. The foregoing notwithstanding, no such action shall apply to a Grant
without the consent of the Participant if it would alter or impair any rights or obligations under
any Grant previously made.
(b) Code Section 409A Limitation. Any action taken under subsection (a) hereunder to any
Grant that is considered deferred compensation within the meaning of Section 409A of the Code
shall be made in compliance with the requirements of Code Section 409A. Any action taken under
subsection (a) hereunder to any Grant that is not considered deferred compensation within the
meaning of Code Section 409A shall be made in a manner to ensure that after such action, the Grant
either continues not to be subject to Code Section 409A or complies with the requirements of Code
Section 409A.
Section 12.4. Term of Plan. Grants may be made pursuant to the Plan until the expiration of
ten (10) years from the Effective Date of the Plan, unless the Company sooner terminates the Plan
under Section 12.6.
Section 12.5. Securities Law Requirements.
(a) Legality of Issuance. The issuance of any Common Stock in connection with a Grant shall
be contingent upon the following:
(i) the obligation of the Company to sell Common Stock with respect to Grants shall be subject
to all applicable laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee;
(ii) the Committee may make such changes to the Plan as may be necessary or appropriate to
comply with the rules and regulations of any government authority or to obtain tax benefits; and
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(iii) each Grant is subject to the requirement that if at any time the Committee determines,
in its discretion, that the listing, registration or qualification of Common Stock issuable
pursuant to the Plan is required by any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the Grant or the issuance of Common Stock, no Grants shall be
granted or payment made or Common Stock issued, in whole or in part, unless listing, registration,
qualification, consent or approval has been effected or obtained free of any conditions in a manner
acceptable to the Committee.
(b) Restrictions on Transfer. Regardless of whether the offering and sale of Common Stock
under the Plan has been registered under the Act or has been registered or qualified under the
securities laws of any state, the Company may impose restrictions on the sale, pledge or other
transfer of shares of Common Stock (including the placement of appropriate legends on stock
certificates) if, in the judgment of the Company and its counsel, such restrictions are necessary
or desirable in order to achieve compliance with the provisions of the Act, the securities laws of
any state or any other law. In the event that the sale of Common Stock under the Plan is not
registered under the Act but an exemption is available which requires an investment representation
or other representation, each Participant shall be required to represent that such shares of Common
Stock are being acquired for investment, and not with a view to the sale or distribution thereof,
and to make such other representations as are deemed necessary or appropriate by the Company and
its counsel. Any determination by the Company and its counsel in connection with any of the
matters set forth in this Section shall be conclusive and binding on all persons.
(c) Registration or Qualification of Securities. The Company may, but shall not be obligated
to, register or qualify the issuance of Grants and/or the sale of Common Stock under the Act or any
other applicable law. The Company shall not be obligated to take any affirmative action in order
to cause the issuance of Grants or the sale of Common Stock under the Plan to comply with any law.
(d) Exchange of Certificates. If, in the opinion of the Company and its counsel, any legend
placed on a stock certificate representing Common Stock sold under the Plan is no longer required,
the holder of such certificate shall be entitled to exchange such certificate for a certificate
representing the same number of shares of Common Stock but lacking such legend.
Section 12.6. Amendment of the Plan. The Board may from time to time, with respect to any
Common Stock at the time not subject to Grants, suspend or discontinue the Plan or revise or amend
it in any respect whatsoever. The Board may amend the Plan as it shall deem advisable, except that
no amendment may adversely affect a Participant with respect to Grants previously made without the
written consent of the Participant holding such Grant and unless such amendments are in connection
with compliance with applicable laws (including Code Section 409A), stock exchange rules or
accounting rules; provided that the Board may not make any amendment in the Plan, including the
repricing, replacement or regranting through cancellation of Options or SARs, that would, if such
amendment were not approved by the holders of the Common Stock, cause the Plan to fail to comply
with any requirement or applicable law or regulation, unless and until the approval of the holders
of such Common Stock is obtained.
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Section 12.7. Application of Funds. The proceeds received by the Company from the sale of
Common Stock pursuant to the exercise of an Option will be used for general corporate purposes.
Section 12.8. Tax Withholding. Each recipient of a Grant shall, no later than the date as of
which the value of any Grant first becomes includable in the gross income of the recipient for
federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Company
regarding payment of any federal, state or local taxes of any kind that are required by law to be
withheld with respect to such income. A Participant may elect to have such tax withholding
satisfied, in whole or in part, by (i) authorizing the Company to withhold a number of shares of
Common Stock to be issued pursuant to a Grant equal to the Fair Market Value as of the date
withholding is effected that would satisfy the withholding amount due, (ii) transferring to the
Company shares of Common Stock owned by the Participant with a Fair Market Value equal to the
amount of the required withholding tax, or (iii) in the case of a Participant who is an Employee of
the Company at the time such withholding is effected, by withholding from the Participants cash
compensation. Notwithstanding anything contained in the Plan to the contrary, the Participants
satisfaction of any tax-withholding requirements imposed by the Committee shall be a condition
precedent to the Companys obligation as may otherwise be provided hereunder to provide shares of
Common Stock to the Participant, and the failure of the Participant to satisfy such requirements
with respect to the exercise of an Option shall cause such Option to be forfeited. Any Participant
who surrenders previously owned shares of Common Stock to satisfy withholding obligations incurred
in connection with a Grant must comply with the applicable provisions of Rule 16b-3 of the Exchange
Act, if applicable.
Section 12.9. No Reload Rights and No Repricings. Options and SARs shall not contain any
provisions entitling a Participant to an automatic grant of additional Options or SARs in
connection with any exercise of the original Option or SAR. In no event will the Committee be
permitted to reprice any Grant unless approved pursuant to a vote of the shareholders.
Section 12.10. Notices. All notices under the Plan shall be in writing and if to the Company,
shall be delivered personally to the Secretary of the Company or mailed to its principal office,
addressed to the attention of the Secretary, and if to a Participant or recipient of a Grant, shall
be delivered personally or mailed to the Participant or recipient of a Grant at the address
appearing in the records of the Company. Such addresses may be changed at any time by written
notice to the other party given in accordance with this Section.
Section 12.11. Rights to Employment or Other Service. Nothing in the Plan or in any Option or
Grant granted pursuant to the Plan shall confer on any individual any right to continue in the
employ or other service of the Company (if applicable) or interfere in any way with the right of
the Company and its shareholders to terminate the individuals employment or other service at any
time.
Section 12.12. Exculpation and Indemnification. To the maximum extent permitted by law, the
Company shall indemnify and hold harmless the members of the Board and the members of the Committee
from and against any and all liabilities, costs and expenses incurred by such persons as a result
of any act or omission to act in connection with the performance of such persons duties,
responsibilities and obligations under the Plan, other than such liabilities,
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costs and expenses as may result from the gross negligence, bad faith, willful misconduct or
criminal acts of such persons.
Section 12.13. No Fund Created. Any and all payments hereunder to recipients of Grants
hereunder shall be made from the general funds of the Company (or, if applicable, a Participating
Company), and no special or separate fund shall be established or other segregation of assets made
to assure such payments; provided that bookkeeping reserves may be established in connection with
the satisfaction of payment obligations hereunder. The obligations of the Company under the Plan
are unsecured and constitute a mere promise by the Company to make benefit payments in the future,
and to the extent that any person acquires a right to receive payments under the Plan from the
Company (or, if applicable, a Participating Company), such right shall be no greater than the right
of a general unsecured creditor of the Company (or, if applicable, a Participating Company).
Section 12.14. Additional Arrangements. Nothing contained herein precludes any Participating
Company from adopting other or additional compensation or benefit arrangements.
Section 12.15. Code Section 409A Savings Clause.
(a) It is the intention of the Company that no Grant shall be deferred compensation subject
to Section 409A of the Code, unless and to the extent that the Committee specifically determines
otherwise as provided below, and the Plan and the terms and conditions of all Grants shall be
interpreted accordingly.
(b) The terms and conditions governing any Grants that the Committee determines will be
subject to Section 409A of the Code, including any rules for elective or mandatory deferral of the
delivery of cash or Common Stock pursuant thereto and any rules regarding treatment of such Grants
in the event of a Change in Control, shall be set forth in the applicable Agreement and shall
comply in all respects with Section 409A of the Code.
(c) Following a Change in Control, no action shall be taken under the Plan that will cause any
Grant that the Committee has previously determined is subject to Section 409A of the Code to fail
to comply in any respect with Section 409A of the Code without the written consent of the
Participant.
Section 12.16. Captions. The use of captions in the Plan is for convenience. The captions
are not intended to provide substantive rights and shall not be used in construing the terms of the
Plan.
Section 12.17. Governing Law. The laws of Michigan shall govern the plan, without reference
to principles of conflict of laws.
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Section 12.18. Execution. The Company has caused the Plan to be executed in the name and on
behalf of the Company by an officer of the Company thereunto duly authorized as of this 17th day of
May, 2011.
FLAGSTAR BANCORP, INC., a Michigan corporation |
||||
By: | /s/ Joseph P. Campanelli | |||
Name & Title: Joseph P. Campanelli, | ||||
Chairman, President and Chief Executive Officer | ||||
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