Attached files
file | filename |
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S-1/A - FORM S-1/A - Roadrunner Transportation Systems, Inc. | c55423a7sv1za.htm |
EX-5 - EX-5 - Roadrunner Transportation Systems, Inc. | c55423a7exv5.htm |
EX-1 - EX-1 - Roadrunner Transportation Systems, Inc. | c55423a7exv1.htm |
EX-3.1 - EX-3.1 - Roadrunner Transportation Systems, Inc. | c55423a7exv3w1.htm |
EX-3.2 - EX-3.2 - Roadrunner Transportation Systems, Inc. | c55423a7exv3w2.htm |
EX-23.1 - EX-23.1 - Roadrunner Transportation Systems, Inc. | c55423a7exv23w1.htm |
EX-10.17 - EX-10.17 - Roadrunner Transportation Systems, Inc. | c55423a7exv10w17.htm |
EX-10.15 - EX-10.15 - Roadrunner Transportation Systems, Inc. | c55423a7exv10w15.htm |
EX-10.16 - EX-10.16 - Roadrunner Transportation Systems, Inc. | c55423a7exv10w16.htm |
Exhibit 10.14
Roadrunner Transportation Systems, Inc.
2010 Incentive Compensation Plan
Roadrunner Transportation Systems, Inc.
2010 Incentive Compensation Plan
1. Purpose. The purpose of this 2010 Incentive Compensation Plan (the Plan)
is to assist Roadrunner Transportation Systems, Inc., a Delaware corporation (the
Company) and its Related Entities (as hereinafter defined) in attracting, motivating,
retaining and rewarding high-quality executives and other employees, officers, directors,
consultants and other persons who provide services to the Company or its Related Entities by
enabling such persons to acquire or increase a proprietary interest in the Company in order to
strengthen the mutuality of interests between such persons and the Companys shareholders, and
providing such persons with annual and long-term performance incentives to expend their maximum
efforts in the creation of shareholder value. The Plan is intended to qualify certain compensation
awarded under the Plan for tax deductibility under Section 162(m) of the Code (as hereafter
defined) to the extent deemed appropriate by the Plan Administrator (as hereafter defined).
2. Definitions. For purposes of the Plan, the following terms shall be defined as set
forth below, in addition to such terms defined in Section 1 hereof or in the respective Sections of
the Plan.
(a) Applicable Laws means the requirements relating to the administration of equity
compensation plans under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, the rules and regulations of any stock exchange upon which the Common Stock is listed and the
applicable laws of any foreign country or jurisdiction where Awards are granted under the Plan.
(b) Award means any award granted pursuant to the terms of this Plan including, an
Option, Stock Appreciation Right, Restricted Stock, Stock Unit, Stock granted as a bonus or in lieu
of another award, Dividend Equivalent, Other Stock-Based Award or Performance Award, together with
any other right or interest, granted to a Participant under the Plan.
(c) Award Agreement means the written agreement evidencing an Award granted under
the Plan.
(d) Beneficiary means the person, persons, trust or trusts which have been
designated by a Participant in his or her most recent written beneficiary designation filed with
the Plan Administrator to receive the benefits specified under the Plan upon such Participants
death or to which Awards or other rights are transferred if and to the extent permitted under
Section 10(b) hereof. If, upon a Participants death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the person, persons, trust or
trusts entitled by will or the laws of descent and distribution to receive such benefits.
(e) Beneficial Owner, Beneficially Owning and Beneficial
Ownership shall have the meanings ascribed to such terms in Rule 13d-3 under the Exchange Act
and any successor to such Rule.
(f) Board means the Companys Board of Directors.
(g) Cause shall, with respect to any Participant, have the meaning specified in the
Award Agreement. In the absence of any definition in the Award Agreement, Cause shall have the
equivalent meaning or the same meaning as cause or for cause set forth in any employment,
consulting, or other agreement for the performance of services between the Participant and the
Company or a Related Entity or, in the absence of any such definition in
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such agreement, such term shall mean (i) the failure by the Participant to perform his or her
duties as assigned by the Company (or a Related Entity) in a reasonable manner, (ii) any material
violation or material breach by the Participant of his or her employment, consulting or other
similar agreement with the Company (or a Related Entity), if any, (iii) any violation or breach by
the Participant of his or her confidential information and invention assignment, non-competition,
non-solicitation, non-disclosure and/or other similar agreement with the Company or a Related
Entity, if any, (iv) any act by the Participant of dishonesty or bad faith with respect to the
Company (or a Related Entity), (v) any material violation or breach by the Participant of the
Companys or a Related Entitys policy for employee conduct, if any, (vi) use of alcohol, drugs or
other similar substances in a manner that adversely affects the Participants work performance, or
(vii) the commission by the Participant of any act, misdemeanor, or crime reflecting unfavorably
upon the Participant or the Company or any Related Entity. No act shall constitute Cause pursuant
to this paragraph until the Company has provided the Participant with written notice of the
specific act or acts that constitutes Cause and permitted the Participant a reasonable period of
time, not in excess of fifteen (15) days to cure any such act(s) to the extent such act(s) are
curable.
(h) Change in Control means and shall be deemed to have occurred on the earliest of
the following dates:
(i) the date on which any person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Existing Shareholders, obtains beneficial ownership (as defined in
Rule 13d-3 of the Exchange Act) or a pecuniary interest in thirty-five percent (35%) or more of the
combined voting power of the Companys then outstanding securities (Voting Stock);
(ii) the consummation of a merger, consolidation, reorganization or similar transaction other
than a transaction: (1) in which substantially all of the holders of Companys Voting Stock hold or
receive directly or indirectly fifty percent (50%) or more of the voting stock of the resulting
entity or a parent company thereof, in substantially the same proportions as their ownership of the
Company immediately prior to the transaction; or (2) in which the holders of Companys capital
stock immediately before such transaction will, immediately after such transaction, hold as a group
on a fully diluted basis the ability to elect at least a majority of the directors of the surviving
corporation (or a parent company);
(iii) there is consummated a sale, lease, exclusive license or other disposition of all or
substantially all of the consolidated assets of the Company and its Subsidiaries, other than a
sale, lease, license or other disposition of all or substantially all of the consolidated assets of
the Company and its Subsidiaries to an entity, fifty percent (50%) or more of the combined voting
power of the voting securities of which are owned by shareholders of the Company in substantially
the same proportions as their ownership of the Company immediately prior to such sale, lease,
license or other disposition; or
(iv) individuals who, on the date this Plan is adopted by the Board, are Directors (the
Incumbent Board) cease for any reason to constitute at least a majority of the Directors;
provided, however, that if the appointment or election (or nomination for election) of any new
Director was approved or recommended by a majority vote of the members of the Incumbent Board then
still in office, such new member shall, for purposes of this Plan, be considered as a member of the
Incumbent Board.
For purposes of determining whether a Change in Control has occurred, a transaction includes
all transactions in a series of related transactions, and terms used in this definition but not
defined are used as defined in the Plan. The term Change in Control shall not include a sale of
assets, merger or other transaction effected exclusively for the purpose of changing the domicile
of the Company.
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Notwithstanding the foregoing or any other provision of this Plan, the definition of Change in
Control (or any analogous term) in an individual written agreement between the Company and the
Participant shall supersede the foregoing definition with respect to Awards subject to such
agreement (it being understood, however, that if no definition of Change in Control or any
analogous term is set forth in such an individual written agreement, the foregoing definition shall
apply).
(i) Code means the Internal Revenue Code of 1986, as amended from time to time,
including regulations thereunder and successor provisions and regulations thereto.
(j) Committee means a committee designated by the Board to administer the Plan with
respect to at least a group of Employees, Directors or Consultants.
(k) Consultant means any person (other than an Employee or a Director, solely with
respect to rendering services in such persons capacity as a director) who is engaged by the
Company or any Related Entity to render consulting or advisory services to the Company or such
Related Entity.
(l) Continuous Service means uninterrupted provision of services to the Company or
any Related Entity in the capacity as either an officer, Employee, Director or Consultant.
Continuous Service shall not be considered to be interrupted in the case of (i) any approved leave
of absence, (ii) transfers among the Company, any Related Entities, or any successor entities, in
the capacity as either an officer, Employee, Director or Consultant or (iii) any change in status
as long as the individual remains in the service of the Company or a Related Entity in the capacity
as either an officer, Employee, Director, Consultant (except as otherwise provided in the Award
Agreement). An approved leave of absence shall include sick leave, military leave, or any other
authorized personal leave.
(m) Corporate Transaction means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events:
(i) a sale, lease, exclusive license or other disposition of a significant portion of the
consolidated assets of the Company and its Subsidiaries, as determined by the Board in its
discretion;
(ii) a sale or other disposition of more than twenty percent (20%) of the outstanding
securities of the Company; or
(iii) a merger, consolidation, reorganization or similar transaction, whether or not the
Company is the surviving corporation.
(n) Covered Employee means an Eligible Person who is a Covered Employee as specified
in Section 7(d) of the Plan.
(o) Director means a member of the Board or the board of directors of any Related
Entity.
(p) Disability means a permanent and total disability (within the meaning of Section
22(e) of the Code), as determined by a medical doctor satisfactory to the Plan Administrator.
(q) Dividend Equivalent means a right, granted to a Participant under Section 6(g)
hereof, to receive cash, Stock, other Awards or other property equal in value to dividends paid
with respect to a specified number of Shares, or other periodic payments.
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(r) Effective Date means the effective date of this Plan, which shall be the date
this Plan is adopted by the Board, subject to the approval of the shareholders of the Company.
(s) Eligible Person means each officer, Director, Employee or Consultant who
provides services to the Company or any Related Entity. An Employee on leave of absence may be
considered as still in the employ of the Company or a Related Entity for purposes of eligibility
for participation in the Plan.
(t) Employee means any person, including an officer or Director, who is an employee
of the Company or any Related Entity. The payment of a directors fee by the Company or a Related
Entity shall not be sufficient to constitute employment by the Company.
(u) Exchange Act means the Securities Exchange Act of 1934, as amended from time to
time, including rules thereunder and successor provisions and rules thereto.
(v) Existing Shareholders means any shareholder as of the day before the Companys
initial Registration Statement on Form S-1 is effective.
(w) Fair Market Value means the fair market value of Shares, Awards or other
property as determined by the Plan Administrator, or under procedures established by the Plan
Administrator. Unless otherwise determined by the Plan Administrator, the Fair Market Value of a
Share as of any given date, after which the Stock is publicly traded on a stock exchange or market,
shall be the closing sale price per share reported on a consolidated basis for stock listed on the
principal stock exchange or market on which the Stock is traded on such date; provided, however,
that with respect to the determination of the Fair Market Value of a Share on the date that the
Stock is first sold to the public in the initial public offering, the Fair Market Value per Share
shall be the price at which Shares are first sold to the public as specified in the final
prospectus for the initial public offering.
(x) Good Reason shall, with respect to any Participant, have the meaning specified
in the Award Agreement. In the absence of any definition in the Award Agreement, Good Reason
shall have the equivalent meaning (or the same meaning as good reason or for good reason) set
forth in any employment, consulting or other agreement for the performance of services between the
Participant and the Company or a Related Entity or, in the absence of any such definition in such
agreement, such term shall mean (i) the material diminution in the Participants authority, duties
or responsibilities as assigned by the Company or a Related Entity, excluding for this purpose an
isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by the
Company (or a Related Entity) promptly after receipt of notice thereof given by the Participant;
(ii) any material failure by the Company (or a Related Entity) to comply with its obligations to
the Participant as agreed upon, other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company (or a Related Entity) promptly after
receipt of notice thereof given by the Participant; (iii) the Companys (or Related Entitys)
requiring the Participant to be based at any office or location more than fifty (50) miles from the
location of employment as of the date of Award, except for travel reasonably required in the
performance of the Participants responsibilities; (iv) any purported termination by the Company
(or a Related Entity) of the Participants Continuous Service otherwise than for Cause as defined
in Section 2(f), death, or by reason of the Participants Disability as defined in Section 2(o); or
(v) any material reduction in the Participants base salary. An event shall constitute Good Reason
only if the Participant gives notice to the Company of any circumstances which the Participant
believes constitute Good Reason, within 90 days of the first occurrence of such circumstances and
the Company shall have 30 days after receipt of such notice to cure such circumstances, if
possible.
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(y) Option means a right granted to a Participant under Section 6(b) hereof, to
purchase Stock or other property at a specified price during specified time periods. Any Option
granted under the Plan is not intended to be an incentive stock option within the meaning of
Section 422 of the Code or any successor provision thereto.
(z) Option Expiration Date means the date of expiration of the Options maximum term
as set forth in the Award Agreement evidencing such Option.
(aa) Other Stock-Based Awards means Awards granted to a Participant pursuant to
Section 6(i) hereof.
(bb) Parent means any corporation (other than the Company), whether now or hereafter
existing, in an unbroken chain of corporations ending with the Company, if each of the corporations
in the chain (other than the Company) owns stock possessing fifty percent (50%) or more of the
combined voting power of all classes of stock in one of the other corporations in the chain.
(cc) Participant means a person who has been granted an Award under the Plan which
remains outstanding, including a person who is no longer an Eligible Person.
(dd) Performance Award means a right, granted to an Eligible Person under Sections
6(h) and 7 hereof, to receive Awards based upon performance criteria specified by the Plan
Administrator.
(ee) Performance Period means that period established by the Plan Administrator at
the time any Performance Award is granted or at any time thereafter during which any performance
goals specified by the Plan Administrator with respect to such Award are to be measured.
(ff) Person has the meaning ascribed to such term in Section 3(a)(9) of the Exchange
Act and used in Sections 13(d) and 14(d) thereof, and shall include a group as defined in Section
12(d) thereof.
(gg) Plan Administrator means the Board or any Committee delegated by the Board to
administer the Plan. There may be different Plan Administrators with respect to different groups
of Eligible Persons.
(hh) Related Entity means any Subsidiary and any business, corporation, partnership,
limited liability company or other entity designated by the Plan Administrator in which the
Company, a Parent or a Subsidiary, directly or indirectly, holds a substantial ownership interest.
(ii) Restricted Stock means Stock granted to a Participant under Section 6(d)
hereof, that is subject to certain restrictions, including a risk of forfeiture.
(jj) Rule 16b-3 and Rule 16a-1(c)(3) means Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and Participants,
promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.
(kk) Share means a share of the Companys Common Stock, and the share of such other
securities as may be substituted (or resubstituted) for Stock pursuant to Section 10(c) hereof.
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(ll) Stock means the Companys Common Stock, and such other securities as may be
substituted (or resubstituted) for the Companys Common Stock pursuant to Section 10(c) hereof.
(mm) Stock Appreciation Right means a right granted to a Participant pursuant to
Section 6(c) hereof.
(nn) Stock Unit means a right, granted to a Participant pursuant to Section 6(e)
hereof, to receive Shares, cash or a combination thereof at the end of a specified period of time.
(oo) Subsidiary means any corporation (other than the Company), whether now or
hereafter existing, in an unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
3. Administration.
(a) Administration by Board. The Board shall administer the Plan unless and until the Board delegates administration to
a Committee, as provided in Section 3(b).
(b) Delegation to Committee.
(i) General. The Board may delegate administration of the Plan to a Committee or
Committees, and the term Committee shall apply to any person or persons to whom such authority
has been delegated. If administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish
the Committee at any time and revest in the Board the administration of the Plan.
(ii) Section 162(m) and Rule 16b-3 Compliance. In the discretion of the Board, the
Committee may consist solely of two or more Outside Directors, in accordance with Section 162(m)
of the Code, and/or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3.
In addition, the Board or the Committee may delegate to a committee the authority to grant Awards
to eligible persons who are either (a) not then Covered Employees and are not expected to be
Covered Employees at the time of recognition of income resulting from such Award, (b) not persons
with respect to whom the Company wishes to comply with Section 162(m) of the Code, or (c) not then
subject to Section 16 of the Exchange Act.
(c) Powers of the Plan Administrator. The Plan Administrator shall have the power, subject to, and within the limitations of, the
express provisions of the Plan:
(i) To determine from time to time which of the persons eligible under the Plan shall be
granted Awards; when and how each Award shall be granted; what type or combination of types of
Award shall be granted; the provisions of each Award granted (which need not be identical),
including the time or times when a person shall be permitted to receive Shares or cash pursuant to
an Award; and the number of Shares or amount of cash with respect to which an Award shall be
granted to each such person.
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(ii) To construe and interpret the Plan and Awards granted under it, and to establish, amend
and revoke rules and regulations for its administration. The Plan Administrator, in the exercise
of this power, may correct any defect, omission or inconsistency in the Plan or in any Award
Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(iii) To amend the Plan or an Award as provided in Section 10(e).
(iv) To terminate or suspend the Plan as provided in Section 10(e).
(v) To effect, at any time and from time to time, with the consent of any adversely affected
Participant, (1) the reduction of the exercise price of any outstanding Award under the Plan, if
any, (2) the cancellation of any outstanding Award and the grant in substitution therefor of (A) a
new Award under the Plan or another equity plan of the Company covering the same or a different
number of Shares, (B) cash and/or (C) other valuable consideration (as determined by the Plan
Administrator, in its sole discretion), or (3) any other action that is treated as a repricing
under generally accepted accounting principles.
(vi) To adopt such modifications, procedures, and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or Related Entities
may operate to assure the viability of the benefits from Awards granted to Participants performing
services in such countries and to meet the objectives of the Plan.
(vii) To make all determinations required under the Plan or any Award Agreements thereunder,
including, but not limited to, the determination if there has been a Change in Control, a Corporate
Transaction, whether a termination of Continuous Service was for Cause or for Good Reason and
whether a Participant is precluded from selling the Shares subject to an Award by federal or state
securities laws or by agreement.
(viii) Generally, to exercise such powers and to perform such acts as the Plan Administrator
deems necessary or appropriate to promote the best interests of the Company and that are not in
conflict with the provisions of the Plan.
(d) Effect of Plan Administrators Decision. All determinations, interpretations and constructions made by the Plan Administrator in good
faith shall not be subject to review by any person and shall be final, binding and conclusive on
all persons.
(e) Arbitration. Any dispute or claim concerning any Award granted (or not granted) pursuant to the Plan or
any disputes or claims relating to or arising out of the Plan shall be fully, finally and
exclusively resolved by binding and confidential arbitration conducted pursuant to the rules of
JAMS, Inc. (JAMS) in the nearest city in which JAMS conducts business to the city in which the
Participant is employed by the Company. The Company shall pay all arbitration fees. In addition
to any other relief, the arbitrator may award to the prevailing party recovery of its attorneys
fees and costs. By accepting an Award, the Participant and the Company waive their respective
rights to have any such disputes or claims tried by a judge or jury.
(f) Limitation of Liability. The Plan Administrator, and each member thereof, shall be entitled to, in good faith, rely
or act upon any report or other information furnished to him or her by any officer or Employee, the
Companys independent auditors, Consultants or any other agents assisting in the administration of
the Plan. Members of the Plan Administrator, and any officer or Employee acting at the direction
or on behalf of the Plan Administrator, shall not be personally liable for any action or
determination taken or made in good faith with respect to the Plan, and shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect to any such action
or determination.
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4. Shares Issuable Under the Plan.
(a) Limitation on Overall Number of Shares Available for Issuance Under the Plan.
Subject to adjustment as provided in Section 10(c) hereof, the total number of Shares that may be
issued in connection with Awards under the Plan shall not exceed in the aggregate 2,500,000 Shares.
Any Shares issued under the Plan may consist, in whole or in part, of authorized and unissued
Shares or treasury shares.
(b) Availability of Shares Not Issued Pursuant to Awards.
(i) If any Shares subject to an Award are forfeited, expire or otherwise terminate without
issuance of such Shares, or any Award is settled for cash or otherwise does not result in the
issuance of all or a portion of the Shares subject to such Award, the Shares shall, to the extent
of such forfeiture, expiration, termination, cash settlement or non-issuance, again be available
for Awards under the Plan.
(ii) If any Shares issued pursuant to an Award are forfeited back to or repurchased by the
Company, including, but not limited to, any repurchase or forfeiture caused by the failure to meet
a contingency or condition required for the vesting of such shares, then such forfeited or
repurchased Shares shall revert to and again become available for issuance under the Plan.
(iii) In the event that any Option or other Award is exercised by the withholding of Shares
from the Award by the Company, or withholding tax liabilities arising from such Option or other
Award are satisfied by the withholding of Shares from the Award by the Company, then only the net
number of Shares actually issued to the Participant, excluding the Shares withheld, shall be
counted as issued for purposes of determining the maximum number of Shares available for grant
under the Plan.
(c) Application of Limitations. The limitation contained in this Section 4 shall apply not only to Awards that are settled
by the delivery of Shares but also to Awards relating to Shares but settled only in cash (such as
cash-only Stock Appreciation Rights). The Plan Administrator may adopt reasonable counting
procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of
tandem or substitute awards) and may make adjustments if the number of Shares actually delivered
differs from the number of shares previously counted in connection with an Award.
5. Eligibility; Per-Person Award Limitations. Awards may be granted under the Plan only to Eligible Persons. Subject to adjustment as
provided in Section 10(c), for each fiscal year in which awards granted under the Plan are subject
to the requirements of Section 162(m) of the Code, an Eligible Person may not be granted Awards
under which more than 2,500,000 Shares could be received by the Participant.
In addition, the maximum dollar value payable to any one Participant with respect to
Performance Units is $5,000,000 per each twelve (12) month period in a Performance Period
(pro-rated on a straight-line basis for any Performance Period that is greater than or less than
twelve (12) months in length).
6. Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth in this Section 6. In
addition, the Plan Administrator may impose on any Award or the exercise thereof, at the date of
grant or thereafter (subject to Section 10(e)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Plan Administrator shall determine, including
terms requiring forfeiture of Awards in the event of termination of the
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Participants Continuous Service and terms permitting a Participant to make elections relating
to his or her Award. The Plan Administrator shall retain full power and discretion to accelerate,
waive or modify, at any time, any term or condition of an Award that is not mandatory under the
Plan.
(b) Options. The Plan Administrator is authorized to grant Options to any Eligible Person on the
following terms and conditions:
(i) Stock Option Agreement. Each grant of an Option shall be evidenced by an Award
Agreement. Such Award Agreement shall be subject to all applicable terms and conditions of the
Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan
and which the Plan Administrator deems appropriate for inclusion in the Award Agreement. The
provisions of the various Award Agreements entered into under the Plan need not be identical.
(ii) Number of Shares. Each Award Agreement shall specify the number of Shares that
are subject to the Option and shall provide for the adjustment of such number in accordance with
Section 10(c) hereof. The Award Agreement shall also specify that the Option is not intended to be
an incentive stock option as such term is defined under Section 422 of the Code.
(iii) Exercise Price. Each Award Agreement shall state the price at which Shares
subject to the Option may be purchased (the Exercise Price), which shall be, determined
in the sole discretion of the Plan Administrator; provided, however, that the Exercise Price shall
not be less than one hundred percent (100%) of the Fair Market Value of the Stock on the date of
grant. Notwithstanding any other provision of the Plan, all Options shall be structured to avoid
the imposition of any excise tax under Section 409A of the Code, unless otherwise specifically
determined by the Plan Administrator.
(iv) Time and Method of Exercise. The Plan Administrator shall determine the time or
times at which or the circumstances under which an Option 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 Options shall cease to be or become exercisable following termination of
Continuous Service or upon other conditions, the methods by which the exercise price may be paid or
deemed to be paid (including, in the discretion of the Plan Administrator, a cashless exercise
procedure), the form of such payment, including, without limitation, cash, Stock, net exercise,
other Awards or awards granted under other plans of the Company or a Related Entity, other property
(including notes or other contractual obligations of Participants to make payment on a deferred
basis) or any other form of consideration legally permissible, and the methods by or forms in which
Stock will be delivered or deemed to be delivered to Participants.
(v) Termination of Service. Subject to earlier termination of the Option as otherwise
provided in the Plan and unless otherwise specifically provided by the Plan Administrator with
respect to an Option and set forth in the Award Agreement, an Option shall be exercisable after a
Participants termination of Continuous Service only during the applicable time period determined
in accordance with this Section and thereafter shall terminate and no longer be exercisable:
(A) Death or Disability. If the Participants Continuous Service terminates because
of the death or Disability of the Participant, the Option, to the extent unexercised and
exercisable on the date on which the Participants Continuous Service terminated, may be exercised
by the Participant (or the Participants legal representative or estate) at any time prior to the
expiration of twelve (12) months (or such other period of time as determined by the Plan
Administrator, in its discretion) after the date on which the Participants
10
Continuous Service terminated, but in any event only with respect to the vested portion of the
Option and no later than the Option Expiration Date.
(B) Termination for Cause. Notwithstanding any other provision of the Plan to the
contrary, if the Participants Continuous Service is terminated for Cause, the Option shall
terminate and cease to be exercisable immediately upon such termination of Continuous Service.
(C) Other Termination of Service. If the Participants Continuous Service terminates
for any reason, except Disability, death or Cause, the Option, to the extent unexercised and
exercisable by the Participant on the date on which the Participants Continuous Service
terminated, may be exercised by the Participant at any time prior to the expiration of three (3)
months (or such longer period of time as determined by the Plan Administrator, in its discretion)
after the date on which the Participants Continuous Service terminated, but in any event only with
respect to the vested portion of the Option and no later than the Option Expiration Date.
(D) Extension for Securities Law Violations. Notwithstanding the other provisions of
this Section 6(b)(v) above and contingent upon this provision not adversely affecting the exemption
of the Option from the provisions of Section 409A of the Code, if the Participants Continuous
Service terminates for any reason, except Cause, and the Participant is precluded by federal or
state securities laws from selling the Shares, so that the Participant has less than a thirty (30)
day period from the termination of Participants Continuous Service to the expiration date of the
Option in which the Participant would be permitted by federal or state securities laws to sell the
Shares, then the period for exercising the Option following the termination of Participants
Continuous Service shall automatically be extended by an additional period of up to thirty (30)
days measured from the date the Participant is first free to sell Shares; provided, however, that
in no event shall the Option be exercisable after the specified Option Expiration Date. The
determination of whether the Participant is precluded from selling the Shares subject to the Option
by federal or state securities laws shall be made by the Plan Administrator and such determination
shall be final, binding and conclusive.
(c) Stock Appreciation Rights. The Plan Administrator is authorized to grant Stock Appreciation Rights to Participants on
the following terms and conditions:
(i) Agreement. Each grant of a Stock Appreciation Right shall be evidenced by an
Award Agreement. Such Award Agreement shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are not inconsistent with the
Plan and which the Plan Administrator deems appropriate for inclusion in the Award Agreement. The
provisions of the various Award Agreements entered into under the Plan need not be identical.
(ii) Right to Payment. A Stock Appreciation Right shall confer on the Participant 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 Stock
Appreciation Right as determined by the Plan Administrator.
(iii) Other Terms. The Plan Administrator shall determine at the date of grant or
thereafter, the time or times at which and the circumstances under which a Stock Appreciation Right
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 Stock Appreciation Rights shall cease to
be or become exercisable following termination of Continuous Service or upon other conditions, the
form of payment upon exercise of Shares, cash or other property, the method of exercise, method of
settlement, form of consideration payable in settlement (either cash, Shares or other property),
method by or forms in which Stock will be delivered or deemed to be delivered to Participants,
whether or not a Stock Appreciation Right
11
shall be in tandem or in combination with any other Award, and any other terms and conditions
of any Stock Appreciation Right. Stock Appreciation Rights may be either freestanding or in tandem
with other Awards. Notwithstanding any other provision of the Plan, unless otherwise exempt from
Section 409A of the Code or otherwise specifically determined by the Plan Administrator, each Stock
Appreciation Right shall be structured to avoid the imposition of any excise tax under Section 409A
of the Code.
(d) Restricted Stock. The Plan Administrator is authorized to grant Restricted Stock to any Eligible Person on
the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any, as the Plan Administrator may
impose, or as otherwise provided in this Plan. The terms of any Restricted Stock grant under the
Plan shall be set forth in a written Award Agreement which shall contain provisions determined by
the Plan Administrator and not inconsistent with the Plan. The restrictions may lapse separately
or in combination at such times, under such circumstances (including based on achievement of
performance goals and/or future service requirements), in such installments or otherwise, as the
Plan Administrator may determine at the date of grant or thereafter. Except to the extent
restricted under the terms of the Plan and any Award Agreement relating to the Restricted Stock, a
Participant granted Restricted Stock shall have all of the rights of a shareholder, including the
right to vote the Restricted Stock and the right to receive dividends thereon (subject to any
mandatory reinvestment or other requirement imposed by the Plan Administrator). During the
restricted period applicable to the Restricted Stock, subject to Section 10(b) below, the
Restricted Stock may not be sold, transferred, pledged, hypothecated, margined or otherwise
encumbered by the Participant.
(ii) Forfeiture. Except as otherwise determined by the Plan Administrator, upon
termination of a Participants Continuous Service during the applicable restriction period, the
Participants Restricted Stock that is at that time subject to a risk of forfeiture that has not
lapsed or otherwise been satisfied shall be forfeited to or reacquired by the Company; provided
that the Plan Administrator may provide, by rule or regulation or in any Award Agreement, or may
determine in any individual case, that restrictions or forfeiture conditions relating to Restricted
Stock shall be waived in whole or in part in the event of terminations resulting from specified
causes, and the Plan Administrator may in other cases waive in whole or in part the forfeiture of
Restricted Stock.
(iii) Certificates for Shares. Restricted Stock granted under the Plan may be
evidenced in such manner as the Plan Administrator shall determine. If certificates representing
Restricted Stock are registered in the name of the Participant, the Plan Administrator may require
that such certificates bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such Restricted Stock, that the Company retain physical possession of
the certificates, that the certificates be kept with an escrow agent and that the Participant
deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant of an Award of Restricted
Stock, the Plan Administrator may require or permit a Participant to elect that any cash dividends
paid on a share of Restricted Stock be automatically reinvested in additional shares of Restricted
Stock or applied to the purchase of additional Awards under the Plan. Unless otherwise determined
by the Plan Administrator, Shares distributed in connection with a stock split or stock dividend,
and other property distributed as a dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Stock with respect to which such Shares or other
property have been distributed.
12
(e) Stock Units. The Plan Administrator is authorized to grant Stock Units to Participants, which are rights
to receive Shares, cash or other property, or a combination thereof at the end of a specified time
period, subject to the following terms and conditions:
(i) Award and Restrictions. Satisfaction of an Award of Stock Units shall occur upon
expiration of the time period specified for such Stock Units by the Plan Administrator (or, if
permitted by the Plan Administrator, as elected by the Participant). In addition, Stock Units
shall be subject to such restrictions (which may include a risk of forfeiture) as the Plan
Administrator may impose, if any, which restrictions may lapse at the expiration of the time period
or at earlier specified times (including based on achievement of performance goals and/or future
service requirements), separately or in combination, in installments or otherwise, as the Plan
Administrator may determine. The terms of an Award of Stock Units shall be set forth in a written
Award Agreement which shall contain provisions determined by the Plan Administrator and not
inconsistent with the Plan. Stock Units may be satisfied by delivery of Stock, cash equal to the
Fair Market Value of the specified number of Shares covered by the Stock Units, or a combination
thereof, as determined by the Plan Administrator at the date of grant or thereafter. Prior to
satisfaction of an Award of Stock Units, an Award of Stock Units carries no voting or dividend or
other rights associated with share ownership. Notwithstanding any other provision of the Plan,
unless otherwise exempt from Section 409A of the Code or otherwise specifically determined by the
Plan Administrator, each Stock Unit shall be structured to avoid the imposition of any excise tax
under Section 409A of the Code.
(ii) Forfeiture. Except as otherwise determined by the Plan Administrator, upon
termination of a Participants Continuous Service during the applicable time period or portion
thereof to which forfeiture conditions apply (as provided in the Award Agreement evidencing the
Stock Units), the Participants Stock Units (other than those Stock Units subject to deferral at
the election of the Participant) shall be forfeited; provided that the Plan Administrator may
provide, by rule or regulation or in any Award Agreement, or may determine in any individual case,
that restrictions or forfeiture conditions relating to Stock Units shall be waived in whole or in
part in the event of terminations resulting from specified causes, and the Plan Administrator may
in other cases waive in whole or in part the forfeiture of Stock Units.
(iii) Dividend Equivalents. Unless otherwise determined by the Plan Administrator at
date of grant, any Dividend Equivalents that are granted with respect to any Award of Stock Units
shall be either (A) paid with respect to such Stock Units at the dividend payment date in cash or
in Shares of unrestricted Stock having a Fair Market Value equal to the amount of such dividends,
or (B) deferred with respect to such Stock Units and the amount or value thereof automatically
deemed reinvested in additional Stock Units, other Awards or other investment vehicles, as the Plan
Administrator shall determine or permit the Participant to elect.
(f) Bonus Stock and Awards in Lieu of Obligations. The Plan Administrator is authorized to grant Stock as a bonus, or to grant Stock or other
Awards in lieu of Company obligations to pay cash or deliver other property under the Plan or under
other plans or compensatory arrangements, provided that, in the case of Participants subject to
Section 16 of the Exchange Act, the amount of such grants remains within the discretion of the Plan
Administrator to the extent necessary to ensure that acquisitions of Stock or other Awards are
exempt from liability under Section 16(b) of the Exchange Act. Stock or Awards granted hereunder
shall be subject to such other terms as shall be determined by the Plan Administrator.
(g) Dividend Equivalents. The Plan Administrator is authorized to grant Dividend Equivalents to any Eligible Person
entitling the Eligible Person to receive cash, Shares, other Awards, or other property equal in
value to dividends paid with respect to a specified number of Shares, or other periodic payments.
Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award.
The terms of an Award of Dividend Equivalents shall be set forth in a written Award Agreement which
shall contain provisions determined by the Plan Administrator and not inconsistent with the Plan.
The Plan Administrator
13
may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be
deemed to have been reinvested in additional Stock, Awards, or other investment vehicles, and
subject to such restrictions on transferability and risks of forfeiture, as the Plan Administrator
may specify. Notwithstanding any other provision of the Plan, unless otherwise exempt from Section
409A of the Code or otherwise specifically determined by the Plan Administrator, each Dividend
Equivalent shall be structured to avoid the imposition of any excise tax under Section 409A of the
Code.
(h) Performance Awards. The Plan Administrator is authorized to grant Performance Awards to any Eligible Person
payable in cash, Shares, other property, or other Awards, on terms and conditions established by
the Plan Administrator, subject to the provisions of Section 7 if and to the extent that the Plan
Administrator shall, in its sole discretion, determine that an Award shall be subject to those
provisions. The performance criteria to be achieved during any Performance Period and the length
of the Performance Period shall be determined by the Plan Administrator upon the grant of each
Performance Award. Except as provided in this Plan or as may be provided in an Award Agreement,
Performance Awards will be distributed only after the end of the relevant Performance Period. The
performance goals to be achieved for each Performance Period shall be conclusively determined by
the Plan Administrator and may be based upon the criteria set forth in Section 7(b), or in the case
of an Award that the Plan Administrator determines shall not be subject to Section 7 hereof, any
other criteria that the Plan Administrator, in its sole discretion, shall determine should be used
for that purpose. The amount of the Award to be distributed shall be conclusively determined by
the Plan Administrator. Performance Awards may be paid in a lump sum or in installments following
the close of the Performance Period or, in accordance with procedures established by the Plan
Administrator, on a deferred basis.
(i) Other Stock-Based Awards. The Plan Administrator is authorized, subject to limitations under applicable law, to grant
to any Eligible Person such other Awards that may be denominated or payable in, valued in whole or
in part by reference to, or otherwise based on, or related to, Shares, as deemed by the Plan
Administrator to be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or exchangeable into Stock,
purchase rights for Stock, Awards with value and payment contingent upon performance of the Company
or any other factors designated by the Plan Administrator, and Awards valued by reference to the
book value of Stock or the value of securities of or the performance of specified Related Entities
or business units. The Plan Administrator shall determine the terms and conditions of such Awards.
The terms of any Award pursuant to this Section shall be set forth in a written Award Agreement
which shall contain provisions determined by the Plan Administrator and not inconsistent with the
Plan. Stock delivered pursuant to an Award in the nature of a purchase right granted under this
Section 6(i) shall be purchased for such consideration (including without limitation loans from the
Company or a Related Entity), paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Stock, other Awards or other property, as the Plan
Administrator shall determine. Cash awards, as an element of or supplement to any other Award
under the Plan, may also be granted pursuant to this Section 6(i). Notwithstanding any other
provision of the Plan, unless otherwise exempt from Section 409A of the Code or otherwise
specifically determined by the Plan Administrator, each Award shall be structured to avoid the
imposition of any excise tax under Section 409A of the Code.
7. Tax Qualified Performance Awards.
(a) Covered Employees. A Committee, composed in compliance with the requirements of Section 162(m) of the Code, in its
discretion, may determine at the time an Award is granted to an Eligible Person who is, or is
likely to be, as of the end of the tax year in which the Company would claim a tax deduction in
connection with such Award, a Covered Employee, that the provisions of this Section 7 shall be
applicable to such Award.
14
(b) Performance Criteria. If an Award is subject to this Section 7, then the lapsing of restrictions thereon and the
distribution of cash, Shares or other property pursuant thereto, as applicable, shall be contingent
upon achievement of one or more objective performance goals. Performance goals shall be objective
and shall otherwise meet the requirements of Section 162(m) of the Code 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. One or more of the
following business criteria for the Company, on a consolidated basis, and/or for Related Entities,
or for business or geographical units of the Company and/or a Related Entity (except with respect
to the total shareholder return and earnings per share criteria), shall be used by the Committee in
establishing performance goals for such Awards: (1) earnings per share; (2) revenues or margins;
(3) cash flow; (4) operating margin; (5) return on net assets, investment, capital, or equity; (6)
economic value added; (7) direct contribution; (8) net income; pretax earnings; earnings before
interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings after
interest expense and before extraordinary or special items; operating income; income before
interest income or expense, unusual items and income taxes, local, state or federal and excluding
budgeted and actual bonuses which might be paid under any ongoing bonus plans of the Company; (9)
working capital; (10) management of fixed costs or variable costs; (11) identification or
consummation of investment opportunities or completion of specified projects in accordance with
corporate business plans, including strategic mergers, acquisitions or divestitures; (12) total
shareholder return; and (13) debt reduction. Any of the above goals may be determined on an
absolute or relative basis or as compared to the performance of a published or special index deemed
applicable by the Committee including, but not limited to, the Standard & Poors 500 Stock Index or
a group of companies that are comparable to the Company. The Committee shall exclude the impact of
an event or occurrence which the Committee determines should appropriately be excluded, including
without limitation (i) restructurings, discontinued operations, extraordinary items, and other
unusual or non-recurring charges, (ii) an event either not directly related to the operations of
the Company or not within the reasonable control of the Companys management, or (iii) a change in
accounting standards required by generally accepted accounting principles.
(c) Performance Period; Timing For Establishing Performance Goals. Achievement of performance goals in respect of such Performance Awards shall be measured over a
Performance Period no shorter than twelve (12) months and no longer than five (5) years, as
specified by the Committee. Performance goals shall be established not later than ninety (90) days
after the beginning of any Performance Period applicable to such Performance Awards, or at such
other date as may be required or permitted for performance-based compensation under Section
162(m) of the Code.
(d) Adjustments. The Committee may, in its discretion, reduce the amount of a settlement otherwise to be made in
connection with Awards subject to this Section 7, but may not exercise discretion to increase any
such amount payable to a Covered Employee in respect of an Award subject to this Section 7. The
Committee shall specify the circumstances in which such Awards shall be paid or forfeited in the
event of termination of Continuous Service by the Participant prior to the end of a Performance
Period or settlement of Awards.
(e) Committee Certification. No Participant shall receive any payment under the Plan unless the Committee has certified, by
resolution or other appropriate action in writing, that the performance criteria and any other
material terms previously established by the Committee or set forth in the Plan, have been
satisfied to the extent necessary to qualify as performance based compensation under Section
162(m) of the Code.
8. Certain Provisions Applicable to Awards or Sales.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under the Plan may, in the discretion of the Plan Administrator, be granted
either alone or
15
in addition to, in tandem with, or in substitution or exchange for, any other Award or any
award granted under another plan of the Company, any Related Entity, or any business entity to be
acquired by the Company or a Related Entity, or any other right of a Participant to receive payment
from the Company or any Related Entity. Such additional, tandem, and substitute or exchange Awards
may be granted at any time. If an Award is granted in substitution or exchange for another Award
or award, the Plan Administrator shall require the surrender of such other Award or award in
consideration for the grant of the new Award. In addition, Awards may be granted in lieu of cash
compensation, including in lieu of cash amounts payable under other plans of the Company or any
Related Entity.
(b) Form and Timing of Payment Under Awards; Deferrals. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by
the Company or a Related Entity upon the exercise of an Option or other Award or settlement of an
Award may be made in such forms as the Plan Administrator shall determine, including, without
limitation, cash, other Awards or other property, and may be made in a single payment or transfer,
in installments, or on a deferred basis. Except as may be prohibited by Section 409A of the Code,
the settlement of any Award may be accelerated in the discretion of the Plan Administrator or upon
occurrence of one or more specified events (in addition to a Change in Control). Installment or
deferred payments may be required by the Plan Administrator (subject to Section 10(g) of the Plan)
or permitted at the election of the Participant on terms and conditions established by the Plan
Administrator. Payments may include, without limitation, provisions for the payment or crediting
of a reasonable interest rate on installment or deferred payments or the grant or crediting of
Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in
Stock.
(c) Exemptions from Section 16(b) Liability. It is the intent of the Company that this Plan comply in all respects with applicable
provisions of Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that neither the
grant of any Awards to nor other transaction by a Participant who is subject to Section 16 of the
Exchange Act is subject to liability under Section 16(b) thereof (except for transactions
acknowledged in writing to be non-exempt by such Participant). Accordingly, if any provision of
this Plan or any Award Agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such transaction, such provision will be construed or deemed
amended to the extent necessary to conform to the applicable requirements of Rule 16b-3 or Rule
16a-1(c)(3) so that such Participant shall avoid liability under Section 16(b).
(d) Code Section 409A. If and to the extent that the Plan Administrator believes that any Awards may constitute a
nonqualified deferred compensation plan under Section 409A of the Code, (i) any payment that is
to be made on account of a Change in Control shall only be made if the event constitutes a Change
in Control and a change in control event for purposes of Section 409A and (ii) the terms and
conditions set forth in the Award Agreement for that Award shall be drafted in a manner that is
intended to comply with, and shall be interpreted in a manner consistent with, the applicable
requirements of Section 409A of the Code, but nothing herein shall be construed as an entitlement
to or a guarantee of any particular tax treatment to the Participant.
9. Change in Control; Corporate Transaction.
(a) Change in Control.
(i) The Plan Administrator may, in its discretion, accelerate the vesting, exercisability,
lapsing of restrictions, or expiration of deferral of any Award, including upon a Change in
Control. In addition, the Plan Administrator may provide in an Award Agreement that the
performance goals relating to any Award will be deemed to have been met upon the occurrence of any
Change in Control.
16
(ii) In addition to the terms of Sections 9(a)(i) above, the effect of a change in control,
may be provided (1) in an employment, compensation, or severance agreement, if any, between the
Company or any Related Entity and the Participant, relating to the Participants employment,
compensation, or severance with or from the Company or such Related Entity, or (2) in the Award
Agreement.
(b) Corporate Transactions. In the event of a Corporate Transaction, any surviving corporation or acquiring corporation
(together, the Successor Corporation) may either (i) assume any or all Awards outstanding
under the Plan; (ii) continue any or all Awards outstanding under the Plan; or (iii) substitute
similar stock awards for outstanding Awards (it being understood that similar awards include, but
are not limited to, awards to acquire the same consideration paid to the shareholders or the
Company, as the case may be, pursuant to the Corporate Transaction). In the event that any
Successor Corporation does not assume or continue any or all such outstanding Awards or substitute
similar stock awards for such outstanding Awards, then with respect to Awards that have been not
assumed, continued or substituted, then such Awards shall terminate if not exercised (if
applicable) at or prior to such effective time (contingent upon the effectiveness of the Corporate
Transaction).
In the event that the Successor Corporation in a Corporate Transaction refuses to assume,
continue or substitute for an Award, then the Award shall fully vest and be exercisable (if
applicable) as to all of the Shares subject to such Award, including Shares as to which such Award
would not otherwise be vested or, if applicable, exercisable. If an Award becomes fully vested
and, if applicable, exercisable in lieu of assumption, continuation or substitution in the event of
a Corporate Transaction, the Plan Administrator shall notify the Participant in writing or
electronically at least five (5) business days prior to the effective time of the Corporate
Transaction that the Award shall be fully vested and, if applicable, exercisable immediately prior
to and contingent upon the effective time of the Corporate Transaction. For the purposes of this
Section, an Award shall be considered assumed or substituted if, following the Corporate
Transaction, the assumed or substituted award confers the right to purchase or receive, for each
Share subject to the Award immediately prior to the Corporate Transaction, the consideration
(whether stock, cash, or other securities or property) received in the Corporate Transaction by
holders of Stock for each Share held on the effective time of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received in the Corporate
Transaction is not solely common stock of the Successor Corporation, the Plan Administrator may,
with the consent of the Successor Corporation, provide for the consideration to be received from
the Award (or, if applicable, upon the exercise of the Award), for each Share subject to the Award,
to be solely common stock of the Successor Corporation equal in fair market value to the per share
consideration received by holders of Stock in the Corporate Transaction. An Award shall be
considered continued if the Award continues in accordance with its terms and continues to be for
same number of Shares as prior to the Corporate Transaction. The Plan Administrator, in its sole
discretion, shall determine whether each Award has been assumed, continued, substituted or
terminated pursuant to the terms of this Section.
The Plan Administrator, in its discretion and without the consent of any Participant, may (but
is not obligated to) either (i) accelerate the vesting of any Awards (and, if applicable, the time
at which such Awards may be exercised) in full or as to some percentage of the Award to a date
prior to the effective time of such Corporate Transaction as the Plan Administrator shall determine
(contingent upon the effectiveness of the Corporate Transaction) or (ii) provide for a cash payment
in exchange for the termination of an Award or any portion thereof where such cash payment is equal
to the Fair Market Value of the Shares that the Participant would receive if the Award were fully
vested and exercised (if applicable) as of such date (less any applicable exercise price).
Notwithstanding the foregoing, with respect to Restricted Stock and any other Award granted
under the Plan where the Company has any forfeiture, reacquisition or repurchase
17
rights, the forfeiture, reacquisition or repurchase rights for such Awards may be assigned by
the Company to the Successor Corporation (or the Successor Corporations parent company) in
connection with such Corporate Transaction. In the event any such rights are not continued or
assigned to the Successor Corporation, then such rights shall lapse and the Award shall be fully
vested as of the effective time of the Corporate Transaction. In addition, the Plan
Administrator, in its discretion, may (but is not obligated to) provide that any forfeiture,
reacquisition or repurchase rights held by the Company with respect to any such Awards shall lapse
in whole or in part (contingent upon the effectiveness of the Corporate Transaction).
(c) Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company, then all outstanding Awards
shall terminate immediately prior to the completion of such dissolution or liquidation, and Shares
subject to the Companys repurchase option may be repurchased by the Company notwithstanding the
fact that the holder of such stock is still in Continuous Service.
10. General Provisions.
(a) Compliance With Legal and Other Requirements. The Company may, to the extent deemed necessary or advisable by the Plan Administrator,
postpone the issuance or delivery of Stock or payment of other benefits under any Award until
completion of such registration or qualification of such Stock or other required action under any
federal or state law, rule or regulation, listing or other required action with respect to any
stock exchange or automated quotation system upon which the Stock or other Company securities are
listed or quoted, or compliance with any other obligation of the Company, as the Plan
Administrator, may consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject to such other conditions as
it may consider appropriate in connection with the issuance or delivery of Stock or payment of
other benefits in compliance with applicable laws, rules, and regulations, listing requirements, or
other obligations. The foregoing notwithstanding, in connection with a Change in Control, the
Company shall take or cause to be taken no action, and shall undertake or permit to arise no legal
or contractual obligation, that results or would result in any postponement of the issuance or
delivery of Stock or payment of benefits under any Award or the imposition of any other conditions
on such issuance, delivery or payment, to the extent that such postponement or other condition
would represent a greater burden on a Participant than existed on the ninetieth (90th)
day preceding the Change in Control.
(b) Limits on Transferability; Beneficiaries.
(i) General. Except as provided in the Award Agreement, a Participant may not assign,
sell, transfer, or otherwise encumber or subject to any lien any Award or other right or interest
granted under this Plan, in whole or in part, other than by will or by operation of the laws of
descent and distribution, and such Awards or rights that may be exercisable shall be exercised
during the lifetime of the Participant only by the Participant or his or her guardian or legal
representative.
(ii) Permitted Transfer of Option. The Plan Administrator, in its sole discretion,
may permit the transfer of an Option as follows: (A) by gift to a member of the Participants
Immediate Family (as defined below) or (B) by transfer by instrument to a trust providing that the
Option is to be passed to beneficiaries upon death of the Participant. For purposes of this
Section 10(b)(ii), Immediate Family shall mean the Participants spouse (including a
former spouse subject to terms of a domestic relations order); child, stepchild, grandchild,
child-in-law; parent, stepparent, grandparent, parent-in-law; sibling and sibling-in-law, and shall
include adoptive relationships. If a determination is made by counsel for the Company that the
restrictions contained in this Section 10(b)(ii) are not required by applicable federal or state
securities laws under the circumstances, then the Plan Administrator, in its sole discretion, may
permit the transfer of Awards to one or more Beneficiaries or other transferees during the
18
lifetime of the Participant, which may be exercised by such transferees in accordance with the
terms of such Award, but only if and to the extent permitted by the Plan Administrator pursuant to
the express terms of an Award Agreement (subject to any terms and conditions which the Plan
Administrator may impose thereon, and further subject to any prohibitions and restrictions on such
transfers pursuant to Rule 16b-3). A Beneficiary, transferee, or other person claiming any rights
under the Plan from or through any Participant shall be subject to all terms and conditions of the
Plan and any Award Agreement applicable to such Participant, except as otherwise determined by the
Plan Administrator, and to any additional terms and conditions deemed necessary or appropriate by
the Plan Administrator.
(c) Adjustments.
(i) Adjustments to Awards. In the event that any dividend or other distribution
(whether in the form of cash, Stock, or other property), recapitalization, forward or reverse
split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange,
liquidation, dissolution or other similar corporate transaction or event affects the Stock and/or
such other securities of the Company or any other issuer, then the Plan Administrator shall, to
avoid anti-dilution or other enlargement or loss of value to Participant Awards, equitably adjust
(A) the number and kind of Shares reserved for issuance in connection with Awards granted
thereafter, (B) the number and kind of Shares by which annual per-person Award limitations are
measured under Section 5 hereof, (C) the number and kind of Shares subject to or deliverable in
respect of outstanding Awards, (D) the exercise price, grant price or purchase price relating to
any Award and/or make provision for payment of cash or other property in respect of any outstanding
Award, and (E) any other aspect of any Award that the Plan Administrator determines to be
appropriate.
(ii) Other Adjustments. The Plan Administrator (which shall be a Committee to the
extent such authority is required to be exercised by a Committee to comply with Code Section
162(m)) is authorized to make adjustments in the terms and conditions of, and the criteria included
in, Awards (including Awards subject to performance goals) in recognition of unusual or
nonrecurring events (including, without limitation, acquisitions and dispositions of businesses and
assets) affecting the Company, any Related Entity or any business unit, or the financial statements
of the Company or any Related Entity, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in view of the Plan
Administrators assessment of the business strategy of the Company, any Related Entity or business
unit thereof, performance of comparable organizations, economic and business conditions, personal
performance of a Participant, and any other circumstances deemed relevant; provided that no such
adjustment shall be authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, Stock Appreciation Rights or Performance Awards granted to
Participants designated by the Plan Administrator as Covered Employees and intended to qualify as
performance-based compensation under Code Section 162(m) and the regulations thereunder to
otherwise fail to qualify as performance-based compensation under Code Section 162(m) and
regulations thereunder.
(d) Taxes. Consistent with applicable law and after giving due consideration to
various accounting guidance regarding withholding at minimum statutory rates, the Company and any
Related Entity are authorized to withhold from any Award granted, any payment relating to an Award
under the Plan, including from a distribution of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or potentially payable in connection with
any transaction involving an Award, and to take such other action as the Plan Administrator may
deem advisable to enable the Company and Participants to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash payments in respect
thereof in satisfaction of a Participants tax obligations, either on a mandatory or elective basis
in the discretion of the Plan Administrator.
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(e) Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue
or terminate the Plan, or any Committees authority to grant Awards under the Plan, without the
consent of shareholders or Participants. Any amendment or alteration to the Plan shall be subject
to the approval of the Companys shareholders if such shareholder approval is deemed necessary and
advisable by the Board. However, without the consent of an affected Participant, no such amendment,
alteration, suspension, discontinuance or termination of the Plan may materially and adversely
affect the rights of such Participant under any previously granted and outstanding Award. The Plan
Administrator may waive any conditions or rights under, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award Agreement relating thereto, except as
otherwise provided in the Plan; provided that, without the consent of an affected Participant, no
such action may materially and adversely affect the rights of such Participant under such Award.
(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any action taken
hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue
as an Eligible Person or Participant or in the employ of the Company or a Related Entity; (ii)
interfering in any way with the right of the Company or a Related Entity to terminate any Eligible
Persons or Participants Continuous Service at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated uniformly with other
Participants and Employees, or (iv) conferring on a Participant any of the rights of a shareholder
of the Company unless and until the Participant is duly issued or transferred Shares in accordance
with the terms of an Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute an unfunded plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or obligations to deliver
Stock pursuant to an Award, nothing contained in the Plan or any Award shall give any such
Participant any rights that are greater than those of a general creditor of the Company; provided
that the Plan Administrator may authorize the creation of trusts and deposit therein cash, Stock,
other Awards or other property, or make other arrangements to meet the Companys obligations under
the Plan. Such trusts or other arrangements shall be consistent with the unfunded status of the
Plan unless the Plan Administrator otherwise determines with the consent of each affected
Participant. The trustee of such trusts may be authorized to dispose of trust assets and reinvest
the proceeds in alternative investments, subject to such terms and conditions as the Plan
Administrator may specify and in accordance with applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its submission to the shareholders of the
Company for approval shall be construed as creating any limitations on the power of the Board or
the Committee thereof to adopt such other incentive arrangements as it may deem desirable including
incentive arrangements and awards which do not qualify under Code Section 162(m).
(i) Fractional Shares. No fractional Shares shall be issued or delivered pursuant to
the Plan or any Award. The Plan Administrator shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction and effect of the Plan, any rules and
regulations under the Plan, and any Award Agreement shall be determined in accordance with the laws
of the State of Delaware without giving effect to principles of conflicts of laws, and applicable
federal law.
(k) Plan Effective Date and Shareholder Approval; Termination of Plan. The Plan shall
become effective on the Effective Date, subject to subsequent approval within twelve (12) months of
its adoption by the Board by shareholders of the Company eligible to vote in the election of
directors, by a vote sufficient to meet the requirements of Code Sections 162(m)
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(if applicable), Rule 16b-3 under the Exchange Act (if applicable), applicable Nasdaq
requirements, and other laws, regulations, and obligations of the Company applicable to the Plan.
Awards may be granted subject to shareholder approval, but may not be exercised or otherwise
settled in the event shareholder approval is not obtained. The Plan shall terminate no later than
ten (10) years from the date of the later of (x) the Effective Date and (y) the date an increase in
the number of shares reserved for issuance under the Plan is approved by the Board (so long as such
increase is also approved by the shareholders).
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