Attached files
file | filename |
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10-Q - FORM 10-Q - ARBITRON INC | w79284e10vq.htm |
EX-4.1 - EX-4.1 - ARBITRON INC | w79284exv4w1.htm |
EX-4.2 - EX-4.2 - ARBITRON INC | w79284exv4w2.htm |
EX-32.1 - EX-32.1 - ARBITRON INC | w79284exv32w1.htm |
EX-10.3 - EX-10.3 - ARBITRON INC | w79284exv10w3.htm |
EX-31.1 - EX-31.1 - ARBITRON INC | w79284exv31w1.htm |
EX-10.4 - EX-10.4 - ARBITRON INC | w79284exv10w4.htm |
EX-10.2 - EX-10.2 - ARBITRON INC | w79284exv10w2.htm |
EX-31.2 - EX-31.2 - ARBITRON INC | w79284exv31w2.htm |
Exhibit 10.1
ARBITRON INC.
2008 EQUITY COMPENSATION PLAN
(Amended and Restated Effective as of May 25, 2010 (the Amendment
and Restatement Date))
2008 EQUITY COMPENSATION PLAN
(Amended and Restated Effective as of May 25, 2010 (the Amendment
and Restatement Date))
1. Purpose.
The purpose of this 2008 Equity Compensation Plan (the Plan) of Arbitron Inc., a Delaware
corporation (the Company), is to advance the interests of the Companys stockholders by enhancing
the Companys ability to attract, retain and motivate persons who are expected to make important
contributions to the Company and by providing such persons with equity ownership opportunities and
performance-based incentives that are intended to better align the interests of such persons with
those of the Companys stockholders. Except where the context otherwise requires, the term
Company includes any of the Companys present or future parent or subsidiary corporations as
defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any
regulations issued thereunder (the Code) and any other business venture (including, without
limitation, joint venture or limited liability company) in which the Company has a controlling
interest, as determined by the Board of Directors of the Company (the Board).
2. Eligibility.
All of the Companys employees, officers, and directors are eligible to be granted options,
stock appreciation rights (SARs), restricted stock, restricted stock units (RSUs), deferred
stock units (DSUs), other stock-based awards and cash awards as described in the Section 10(i)
(each, an Award) under the Plan. Each person who receives an Award under the Plan is deemed a
Participant.
3. Administration and Delegation.
(a) Administration by Board of Directors. The Plan will be administered by the Board.
The Board has the authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it considers advisable. The Board may
construe and interpret the terms of the Plan and any Award agreements entered into under the Plan.
The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award in the manner and to the extent it considers expedient to carry the Plan into effect and
will be the sole and final judge of such expediency. All decisions by the Board may be made in the
Boards sole discretion and will be final and binding on all persons having or claiming any
interest in the Plan or in any Award. No director or person acting pursuant to the authority
delegated by the Board shall be liable for any action or determination relating to or under the
Plan made in good faith.
(b) Appointment of Committees. To the extent permitted by applicable law, the Board
may delegate any or all of its powers under the Plan to one or more committees or subcommittees of
the Board (a Committee). All references in the Plan to the Board mean the Board or a Committee
of the Board or the officers referred to in Section 3(c) to the extent that the Boards powers or
authority under the Plan have been delegated to such Committee or officers. Until and to the extent
the Board determines otherwise, the Compensation and Human Resources Committee of the Board shall
constitute the Committee.
(c) Delegation to Officers. To the extent permitted by applicable law, the Board may
delegate to one or more officers of the Company the power to grant Awards (subject to any
limitations under the Plan) to employees or officers of the Company or any of its present or future
subsidiary corporations and to exercise such other powers under the Plan as the Board may
determine, provided that the Board must fix the terms of the Awards to be granted by such officers
(including the exercise price of such Awards, which may include a formula by which the exercise
price will be determined) and the maximum number of shares subject to Awards that the officers may
grant; provided further, however, that no officer will be authorized to grant Awards to any
executive officer of the Company (as defined by Rule 3b-7 under the Securities
Exchange Act of 1934, as amended (the Exchange Act)) or to any officer of the Company (as
defined by Rule 16a-1 under the Exchange Act).
(d) Awards to Non-Employee Directors. Discretionary Awards to non-employee directors
will only be granted and administered by a Committee, all of the members of which are independent
as defined by Section 303A.02 of the New York Stock Exchange Listed Company Manual.
4. Stock Available for Awards.
(a) Number of Shares; Share Counting.
(1) Authorized Number of Shares. Subject to adjustment under Section 9, Awards may
be made under the Plan for up to 4,700,000 shares of common stock, $0.50 par value per share, of
the Company (the Common Stock). Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(2) Share Counting. For purposes of counting the number of shares available for the
grant of Awards under the Plan and under the sublimits contained in Sections 4(b)(2), 4(b)(3),
4(b)(4), and 7(b)(1) with respect to vesting of Restricted Stock Awards, (i) all shares of Common
Stock covered by independent SARs must be counted against the number of shares available for the
grant of Awards; (ii) if any Award (A) expires or is terminated, surrendered or canceled without
having been fully exercised or is forfeited in whole or in part or (B) results in any Common
Stock not being issued, the unused Common Stock covered by such Award will again be available for
the grant of Awards; provided, however, in the case of Incentive Stock Options, the foregoing
will be subject to any limitations under the Code; and provided further, in the case of
independent SARs, that only the number of shares issued in settlement of a stock-settled SAR will
be counted against the shares available under the Plan and against the sublimits listed in the
first clause of this Section and (iii) shares of Common Stock delivered (either by actual
delivery or attestation) to the Company by a Participant to (A) purchase shares of Common Stock
upon the exercise of an Award or (B) satisfy tax withholding obligations (including shares
retained from the Award creating the tax obligation) shall be added back to the number of shares
available for the future grant of Awards.
(b) Sub-limits. Subject to adjustment under Section 9, the following sub-limits on
the number of shares subject to Awards will apply:
(1) Section 162(m) Per-Participant Limits. The maximum number of shares of Common
Stock with respect to which Options and SARs may be granted to any Participant under the Plan
will be 700,000 in the aggregate during any period of three consecutive fiscal years of the
Company. For purposes of the foregoing limit, the combination of an Option in tandem with a SAR
(as each is hereafter defined) will be treated as a single Award. The maximum number of shares of
Common Stock with regard to which Awards other than Options and SARs that are intended to qualify
as performance-based compensation under Code Section 162(m) may be granted to any Participant
under the Plan will be 500,000 during any period of three consecutive fiscal years of the
Company. The per Participant limits described in this Section 4(b)(1) will be construed and
applied consistently with Section 162(m) of the Code or any successor provision thereto, and the
regulations thereunder (Section 162(m)).
(2) Limit on Incentive Stock Options. The maximum number of shares with respect to
which Incentive Stock Options may be granted is 4,700,000.
(c) Substitute Awards. In connection with a merger or consolidation of an entity with
the Company or the acquisition by the Company of property or stock of an entity, the Board may
grant Awards in substitution for any options or other stock or stock-based awards granted by such
entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan.
Substitute Awards whether granted under the Plan or otherwise do not count against the overall
share limit set forth in Section 4(a)(1) or any sublimits contained in the Plan, except as may be
required by reason of Section 422 and related provisions of the Code or by the applicable listing
requirements.
5. Stock Options.
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(a) General. The Board may grant options to purchase Common Stock (each, an Option)
and determine the number of shares of Common Stock to be covered by each Option, the exercise price
of each Option and the conditions and limitations applicable to the exercise of each Option,
including conditions relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option that is not intended to be an Incentive Stock Option (as
hereinafter defined) will be designated a Non-statutory Stock Option.
(b) Incentive Stock Options. An Option that the Board intends to be an incentive
stock option as defined in Section 422 of the Code (an Incentive Stock Option) will only be
granted to employees of Arbitron Inc., any of Arbitron Inc.s present or future parent or
subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities
the employees of which are eligible to receive Incentive Stock Options under the Code, and will be
subject to and will be construed consistently with the requirements of Section 422 of the Code. The
Company shall have no liability to a Participant, or any other party, if an Option (or any part
thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or for
any action taken by the Board, including without limitation the conversion of an Incentive Stock
Option to a Nonstatutory Stock Option.
(c) Exercise Price. The Board will establish the exercise price of each Option and
specify the exercise price in the applicable option agreement. Except for substitute Awards
described in Section 4(c), the exercise price will be not less than 100% of the Fair Market Value
(as defined below) on the date the Option is granted; provided that if the Board approves the grant
of an Option with an exercise price to be determined on a future date, the exercise price will be
not less than 100% of the Fair Market Value on such future date.
Fair Market Value of a share of Common Stock for purposes of the Plan will be determined as
follows:
(1) if the Common Stock trades on a national securities exchange, the closing sale price
(for the primary trading session) on the date of grant; or
(2) if the Common Stock does not trade on any such exchange, the average of the closing bid
and asked prices as reported by an authorized OTCBB market data vendor as listed on the OTCBB
website (otcbb.com) on the date of grant; or
(3) if the Common Stock is not publicly traded, the Board will determine the Fair Market
Value for purposes of the Plan using any measure of value it determines to be appropriate
(including, as it considers appropriate, relying on appraisals) in a manner consistent with the
valuation principles under Code Section 409A, except as the Board or Committee may expressly
determine otherwise.
For any date that is not a trading day, the Fair Market Value of a share of Common Stock for
such date will be determined by using the closing sale price or average of the bid and asked
prices, as appropriate, for the immediately preceding trading day and with the timing in the
clauses above adjusted accordingly. The Board can substitute a particular time of day or other
measure of closing sale price or bid and asked prices if appropriate because of exchange or
market procedures or can, in its sole discretion, use weighted averages either on a daily basis or
such longer period as complies with Code Section 409A.
The Board has sole discretion to determine the Fair Market Value for purposes of this Plan,
and all Awards are conditioned on the participants agreement that the Administrators
determination is conclusive and binding even though others might make a different determination.
(d) Duration of Options. Each Option will be exercisable at such times and subject to
such terms and conditions as the Board may specify in the applicable option agreement; provided,
however, that no Option will be granted with a term in excess of 10 years.
(e) Exercise of Option. Options may be exercised by delivery to the Company of a
written notice of exercise signed by the proper person or by any other form of notice (including
electronic notice) approved
by the Board, together with payment in full as specified in Section 5(f) for the number of
shares for which
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the Option is exercised. Shares of Common Stock subject to the Option will be
delivered by the Company as soon as practicable following exercise.
(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option
granted under the Plan will be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as may otherwise be provided in the applicable option agreement, by (i) delivery
of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to
the Company sufficient funds to pay the exercise price and any required tax withholding or (ii)
delivery by the Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price and any required tax withholding;
(3) to the extent provided for in the applicable option agreement or approved by the Board,
in its sole discretion, by delivery (either by actual delivery or attestation) of shares of
Common Stock owned by the Participant valued at their Fair Market Value, provided (i) such method
of payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly
from the Company, was owned by the Participant for such minimum period of time, if any, as may be
established by the Board in its discretion and (iii) such Common Stock is not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements;
(4) to the extent permitted by applicable law and provided for in the applicable option
agreement or approved by the Board, in its sole discretion, by payment of such other lawful
consideration as the Board may determine; or
(5) by any combination of the above permitted forms of payment.
(g) Limitation on Repricing. Unless such action is approved by the Companys
stockholders: (1) no outstanding Option granted under the Plan may be amended to provide an
exercise price per share that is lower than the then-current exercise price per share of such
outstanding Option (other than adjustments pursuant to Section 9) and (2) the Board may not cancel
any outstanding option (whether or not granted under the Plan) and grant in substitution therefor
either new Awards under the Plan covering the same or a different number of shares of Common Stock
and having an exercise price per share lower than the then-current exercise price per share of the
cancelled option or cash.
(h) No Dividend Equivalents. No option will provide for the payment or accrual of the
right to receive an amount equal to any dividends or other distributions declared and paid on an
equal number of outstanding shares of Common Stock (Dividend Equivalents).
6. Stock Appreciation Rights.
(a) General. The Board may grant Awards consisting of SARs entitling the holder, upon
exercise, to receive an amount of Common Stock determined in whole or in part by reference to
appreciation, from and after the date of grant, in the Fair Market Value of a share of Common Stock
over the measurement price established pursuant to Section 6(c). The date as of which such
appreciation is determined will be the exercise date.
(b) Grants. SARs may be granted in tandem with, or independently of, Options granted
under the Plan.
(c) Measurement Price. The Board will establish the measurement price of each SAR and
specify it in the applicable SAR agreement. Except for substitute Awards described in Section 4(c),
the measurement price must not be less than 100% of the Fair Market Value on the date the SAR is
granted; provided that if
the Board approves the grant of a SAR with an exercise price to be determined on a future
date, the exercise price must be not less than 100% of the Fair Market Value on such future date.
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(d) Duration of SARs. Each SAR will be exercisable at such times and subject to such
terms and conditions as the Board may specify in the applicable SAR agreement; provided, however,
that no SAR will be granted with a term in excess of 10 years.
(e) Exercise of SARs. SARs may be exercised by delivery to the Company of a written
notice of exercise signed by the proper person or by any other form of notice (including electronic
notice) approved by the Board, together with any other documents required by the Board.
(f) Limitation on Repricing. Unless such action is approved by the Companys
stockholders: (1) no outstanding SAR granted under the Plan may be amended to provide an exercise
price per share that is lower than the then-current exercise price per share of such outstanding
SAR (other than adjustments pursuant to Section 9) and (2) the Board may not cancel any outstanding
SAR (whether or not granted under the Plan) and grant in substitution therefor either new Awards
under the Plan covering the same or a different number of shares of Common Stock and having an
exercise price per share lower than the then-current exercise price per share of the cancelled SAR
or cash.
(g) Dividend Equivalents. No SAR will provide for the payment or accrual of Dividend
Equivalents.
7. Restricted Stock; Restricted Stock Units.
(a) General. The Board may grant Awards entitling recipients to acquire shares of
Common Stock (Restricted Stock), subject to the right of the Company to repurchase all or part of
such shares at their issue price or other stated or formula price (or to require forfeiture of such
shares if issued at no cost) from the recipient if conditions specified by the Board in the
applicable Award are not satisfied before the end of the applicable restriction period or periods
established by the Board for such Award. Instead of granting Awards for Restricted Stock, the Board
may grant Awards entitling the recipient to receive shares of Common Stock or cash to be delivered
at the time such Award vests (Restricted Stock Units) or at a future date (Deferred Stock
Units), (Restricted Stock, Restricted Stock Units, and Deferred Stock Units are each referred to
herein as a Restricted Stock Award).
(b) Limitations on Vesting. Restricted Stock Awards that vest solely based on the
passage of time will be zero percent vested before the first anniversary of the date of grant, no
more than one-third vested before the second anniversary of the date of grant, and no more than
two-thirds vested before the third anniversary of the date of grant. Restricted Stock Awards that
do not vest solely based on the passage of time will not vest before the first anniversary of the
date of grant (or, in the case of Awards to non-employee directors, if earlier, the date of the
first annual meeting held after the date of grant). Notwithstanding any other provision of this
Plan (other than Section 10(i), if applicable), the Board may, in its discretion, either at the
time a Restricted Stock Award is made or at any time thereafter, waive its right to repurchase
shares of Common Stock (or waive the forfeiture thereof) or remove or modify any part or all of the
restrictions applicable to the Restricted Stock Award, provided that the Board may only exercise
such rights in the event of death, disability or retirement of the Participant; or a merger,
consolidation, sale, reorganization, recapitalization, or change in control of the Company. The
limitations of this Section 7(b) will not apply to (y) Performance Awards granted pursuant to
Section 10(i) or (z) Restricted Stock Awards granted, in the aggregate, for up to 10% of the
maximum number of authorized shares set forth in Section 4(a)(1).
(c) Terms and Conditions for All Restricted Stock Awards. The Board will determine
the terms and conditions of a Restricted Stock Award, including the conditions for vesting and
repurchase (or forfeiture) and the issue price, if any.
(d) Additional Provisions Relating to Restricted Stock.
(1) Dividends. Participants holding shares of Restricted Stock will be entitled to
all ordinary cash dividends paid with respect to such shares, unless otherwise provided by the
Board. Unless otherwise provided by the Board, if any dividends or distributions are paid in shares, or consist of a
dividend or distribution to holders of Common Stock other than an ordinary cash dividend, the
shares, cash or other
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property will be subject to the same restrictions on transferability and
forfeitability as the shares of Restricted Stock with respect to which they were paid. Each
dividend payment will be made no later than the end of the calendar year in which the dividends
are paid to shareholders of that class of stock or, if later, the 15th day of the third month
following the date the dividends are paid to shareholders of that class of stock. Notwithstanding
the foregoing, dividends payable with respect to shares of Restricted Stock constituting
Performance Awards shall only be delivered when the restrictions on the shares to which the
dividends relate lapse.
(2) Stock Certificates. The Company may require that any stock certificates issued
in respect of shares of Restricted Stock must be deposited in escrow by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). At the expiration of
the applicable restriction periods, the Company (or such designee) will deliver the certificates
no longer subject to such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts
due or exercise rights of the Participant in the event of the Participants death (the
Designated Beneficiary). In the absence of an effective designation by a Participant,
Designated Beneficiary means the Participants estate.
(e) Additional Provisions Relating to Restricted Stock Units and Deferred Stock Units.
(1) Settlement. Upon the vesting of and/or lapsing of any other restrictions (i.e.,
settlement) with respect to each Restricted Stock Unit, the Participant will be entitled to
receive from the Company one share of Common Stock or an amount of cash equal to the Fair Market
Value of one share of Common Stock, as determined by the Board and provided in the applicable
Award agreement. The Board may, in its discretion, provide that settlement of Restricted Stock
Units will be deferred, on a mandatory basis or at the election of the Participant and become a
Deferred Stock Unit.
(2) Voting Rights. A Participant will have no voting rights with respect to any
Restricted Stock Units or Deferred Stock Units.
(3) Dividend Equivalents. To the extent provided by the Board, in its sole
discretion, a grant of Restricted Stock Units or Deferred Stock Units may provide Participants
with Dividend Equivalents. Dividend Equivalents may be paid currently or credited to an account
for the Participants, may be settled in cash and/or shares of Common Stock and may be subject to
the same restrictions on transfer and forfeitability as the Restricted Stock Units or Deferred
Stock Units with respect to which paid, as determined by the Board in its sole discretion,
subject in each case to such terms and conditions as the Board establishes, in each case to be
set forth in the applicable Award agreement. Notwithstanding the foregoing, Dividend Equivalents
(if any) associated with Performance Awards shall be accumulated and paid only as and to the
extent the related shares underlying the Performance Awards are issued.
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8. Other Stock-Based Awards.
(a) General. Other Awards of shares of Common Stock, and other Awards that are valued
in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other
property, may be granted hereunder to Participants (Other Stock-Based Awards), including without
limitation Awards entitling recipients to receive shares of Common Stock to be delivered in the
future. Such Other Stock-Based Awards will also be available as a form of payment in the settlement
of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant
is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as
the Board determines.
(b) Terms and Conditions. Subject to the provisions of the Plan, the Board will
determine the terms and conditions of each Other Stock-Based Award, including any purchase price
applicable thereto; provided however, that Other Stock-Based Awards shall be subject to the
limitations of Section 7(b) and the requirement in Section 7(a)(3) regarding accumulation of
dividend equivalents with respect to Performance Awards.
9. Adjustments for Changes in Common Stock and Certain Other Events.
(a) Changes in Capitalization. In the event of any stock split, reverse stock split,
stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or
other similar change in capitalization or event, or any dividend or distribution to holders of
Common Stock other than an ordinary cash dividend, (i) the number and class of securities available
under this Plan, (ii) the sub-limits and share counting rules set forth in Sections 4(a) and 4(b)
and 7(b)(1) with respect to vesting of Restricted Stock Awards, (iii) the number and class of
securities and exercise price per share of each outstanding Option, (iv) the share- and per-share
provisions and the exercise price of each SAR, (v) the number of shares subject to and the
repurchase price per share subject to each outstanding Restricted Stock Award and (vi) the share-
and per-share-related provisions and the purchase price, if any, of each outstanding Other
Stock-Based Award, must be equitably adjusted by the Company (or substituted Awards may be made, if
applicable) in the manner determined by the Board. Without limiting the generality of the
foregoing, if the Company effects a split of the Common Stock by means of a stock dividend and the
exercise price of and the number of shares subject to an outstanding Option are adjusted as of the
date of the distribution of the dividend (rather than as of the record date for such dividend),
then an optionee who exercises an Option between the record date and the distribution date for such
stock dividend will be entitled to receive, on the distribution date, the stock dividend with
respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact
that such shares were not outstanding as of the close of business on the record date for such stock
dividend.
(b) Reorganization Events.
(1) Definition. A Reorganization Event means: (a) any merger or consolidation of
the Company with or into another entity as a result of which all of the Common Stock of the
Company is converted into or exchanged for the right to receive cash, securities or other
property or is cancelled, (b) any exchange of all of the Common Stock of the Company for cash,
securities or other property pursuant to a share exchange transaction or (c) any liquidation or
dissolution of the Company.
(2) Consequences of a Reorganization Event on Awards Other than Restricted Stock
Awards. In connection with a Reorganization Event, the Board may take any one or more of the
following actions as to all or any (or any portion of) outstanding Awards other than Restricted
Stock Awards on such terms as the Board determines: (i) provide that Awards must be assumed, or
substantially equivalent Awards must be substituted, by the acquiring or succeeding corporation
(or an affiliate thereof), (ii) upon written notice to a Participant, provide that the
Participants unexercised Awards will terminate immediately before the consummation of such
Reorganization Event unless exercised by the Participant within a specified period following the
date of such notice, (iii) provide that outstanding Awards will become exercisable, realizable,
or deliverable, or restrictions applicable to an Award will lapse, in whole or in part before or
upon such Reorganization Event, (iv) in the event of a Reorganization Event under the
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terms of which holders of Common Stock will receive upon consummation thereof a cash payment
for each share surrendered in the Reorganization Event (the Acquisition Price), make or provide
for a cash payment to a Participant equal to the excess, if any, of (A) the Acquisition Price
times the number of shares of Common Stock subject to the Participants Awards (to the extent the
exercise price does not exceed the Acquisition Price) over (B) the aggregate exercise price of
all such outstanding Awards and any applicable tax withholdings, in exchange for the termination
of such Awards, (v) provide that, in connection with a liquidation or dissolution of the Company,
Awards will convert into the right to receive liquidation proceeds (if applicable, net of the
exercise price thereof and any applicable tax withholdings) and (vi) any combination of the
foregoing. In taking any of the actions permitted under this Section 9(b), the Board will not be
obligated by the Plan to treat all Awards, all Awards held by a Participant, or all Awards of the
same type, identically.
For purposes of clause (i) above, an Option will be considered assumed if, following
consummation of the Reorganization Event, the Option confers the right to purchase, for each
share of Common Stock subject to the Option immediately before the consummation of the
Reorganization Event, the consideration (whether cash, securities or other property) received as
a result of the Reorganization Event by holders of Common Stock for each share of Common Stock
held immediately before the consummation of the Reorganization Event (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a majority of the
outstanding shares of Common Stock); provided, however, that if the consideration received as a
result of the Reorganization Event is not solely common stock of the acquiring or succeeding
corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or
succeeding corporation, provide for the consideration to be received upon the exercise of Options
to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate
thereof) equivalent in value (as determined by the Board) to the per share consideration received
by holders of outstanding shares of Common Stock as a result of the Reorganization Event.
(3) Consequences of a Reorganization Event on Restricted Stock Awards. Upon the
occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the
repurchase and other rights of the Company under each outstanding Restricted Stock Award will
inure to the benefit of the Companys successor and will, unless the Board determines otherwise,
apply to the cash, securities or other property which the Common Stock was converted into or
exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as
they applied to the Common Stock subject to such Restricted Stock Award. Upon the occurrence of a
Reorganization Event involving the liquidation or dissolution of the Company, except to the
extent specifically provided to the contrary in the instrument evidencing any Restricted Stock
Award or any other agreement between a Participant and the Company, all restrictions and
conditions on all Restricted Stock Awards then outstanding will automatically be deemed
terminated or satisfied.
(c) Change in Control Events.
(1) Definition. Except to the extent defined differently in an Award, a Change in
Control Event means:
(i) the acquisition by an individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the Exchange Act)) (a Person)
of beneficial ownership of any capital stock of the Company if, after such acquisition, such
Person beneficially owns (within the meaning of Rule 13d 3 promulgated under the Exchange Act)
25% or more of either (x) the then-outstanding shares of common stock of the Company (the
Outstanding Company Common Stock) or (y) the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the election of directors (the
Outstanding Company Voting Securities); provided, however, that for purposes of this
subsection (a), the following acquisitions will not constitute a Change in Control Event: (1)
any acquisition directly from the Company or (2) any acquisition by any corporation pursuant
to a Business Combination (as defined below) which complies with clauses (x) and (y) of
subsection (c) of this definition; or
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(ii) such time as the Continuing Directors (as defined below) do not constitute at least
a majority of the Board (or, if applicable, the Board of Directors of a successor corporation
to the Company), where the term Continuing Director means at any date a member of the Board
(x) who was a member of the Board on the date of the initial adoption of this Plan by the
Board or (y) who was nominated or elected subsequent to such date by at least a majority of
the directors who were Continuing Directors at the time of such nomination or election or
whose election to the Board was recommended or endorsed by at least a majority of the
directors who were Continuing Directors at the time of such nomination or election; provided,
however, that this clause (y) excludes any individual whose initial assumption of office
occurred as a result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or consents, by
or on behalf of a person other than the Board; or
(iii) the consummation of a merger, consolidation, reorganization, recapitalization or
share exchange involving the Company or a sale or other disposition of all or substantially
all of the assets of the Company (a Business Combination), unless, immediately following
such Business Combination, each of the following two conditions is satisfied: (x) all or
substantially all of the individuals and entities who were the beneficial owners of the
Outstanding Company Common Stock and Outstanding Company Voting Securities immediately before
such Business Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors, respectively, of the
resulting or acquiring corporation in such Business Combination (which includes, without
limitation, a corporation which as a result of such transaction owns the Company or
substantially all of the Companys assets either directly or through one or more subsidiaries)
(such resulting or acquiring corporation is referred to herein as the Acquiring Corporation)
in substantially the same proportions as their ownership of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, respectively, immediately before such
Business Combination and (y) no Person (excluding any employee benefit plan (or related trust)
maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns,
directly or indirectly, 25% or more of the then-outstanding shares of common stock of the
Acquiring Corporation, or of the combined voting power of the then-outstanding securities of
such corporation entitled to vote generally in the election of directors (except to the extent
that such ownership existed before the Business Combination); or
(iv) the liquidation or dissolution of the Company.
(2) Effect on Awards. Notwithstanding the provisions of Section 9(b), except as
provided otherwise in an individual agreement governing an Award, in the event of a Change in
Control Event:
(i) for the portion of each Award that continues in effect or is assumed or for which
substantially equivalent awards are substituted (as provided in Section 9(b)(2)), then Award
or the substituted Award shall become fully vested, exercisable and payable and be released
from any repurchase or forfeiture rights (other than repurchase rights exercisable at Fair
Market Value) for all of the shares (or other consideration) at the time represented by such
continuing, assumed or substituted portion of the Award, immediately upon termination of the
Participants employment or other service relationship if such employment or service
relationship is terminated by the successor company or the Company without cause or
voluntarily by the Participant with good reason (in each case as defined in the applicable
agreement governing the Award) within twenty-four (24) months after the Change in Control
Event; and
(ii) for the portion of each Award that does not continue in effect and is neither
assumed nor substituted, such portion of the Award shall automatically become fully vested and
exercisable and be released from any repurchase or forfeiture rights (other than repurchase
rights exercisable at Fair Market Value) for all of the shares (or other consideration) at the
time represented by such portion of the Award, immediately prior to the effective date of the
Change in Control Event, provided that the Participants employment or service relationship
has not terminated prior to such date.
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10. General Provisions Applicable to Awards.
(a) Transferability of Awards. Awards cannot be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation
of law, except by will or the laws of descent and distribution or, other than in the case of an
Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the life of
the Participant, will be exercisable only by the Participant; provided, however, that the Board may
permit or provide in an Award for the gratuitous transfer of the Award by the Participant to or for
the benefit of any immediate family member, family trust or other entity established for the
benefit of the Participant and/or an immediate family member thereof if, with respect to such
proposed transferee, the Company would be eligible to use a Form S-8 for the registration of the
sale of the Common Stock subject to such Award under the Securities Act of 1933, as amended;
provided, further, that the Company will not be required to recognize any such transfer until such
time as the Participant and such permitted transferee must, as a condition to such transfer,
deliver to the Company a written instrument in form and substance satisfactory to the Company
confirming that such transferee will be bound by all of the terms and conditions of the Award.
References to a Participant, to the extent relevant in the context, include references to
authorized transferees.
(b) Documentation. Each Award will be evidenced in such form (written, electronic or
otherwise) as the Board determines. Each Award may contain terms and conditions in addition to
those set forth in the Plan.
(c) Board Discretion. Except as otherwise provided by the Plan, each Award may be
made alone or in addition or in relation to any other Award. The terms of each Award need not be
identical, and the Board need not treat Participants uniformly.
(d) Termination of Status. The Board may determine the effect on an Award of the
disability, death, termination or other cessation of employment, authorized leave of absence or
other change in the employment or other status of a Participant and the extent to which, and the
period during which, the Participant, or the Participants legal representative, conservator,
guardian or Designated Beneficiary, may exercise rights under the Award.
(e) Withholding. The Participant must satisfy all applicable federal, state, and
local or other income and employment tax withholding obligations before the Company will deliver
stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company may
decide to satisfy the withholding obligations through additional withholding on salary or wages. If
the Company elects not to or cannot withhold from other compensation, the Participant must pay the
Company the full amount, if any, required for withholding or have a broker tender to the Company
cash equal to the withholding obligations. Payment of withholding obligations is due before the
Company will issue any shares on exercise or release from forfeiture of an Award or, if the Company
so requires, at the same time as is payment of the exercise price unless the Company determines
otherwise. If provided for in an Award or approved by the Board in its sole discretion, a
Participant may satisfy such tax obligations in whole or in part by delivery (either by actual
delivery or attestation) of shares of Common Stock, including shares retained from the Award
creating the tax obligation, valued at their Fair Market Value; provided, however, except as
otherwise provided by the Board, that the total tax withholding where stock is being used to
satisfy such tax obligations cannot exceed the Companys minimum statutory withholding obligations
(based on minimum statutory withholding rates for federal and state tax purposes, including payroll
taxes, that are applicable to such supplemental taxable income). Shares used to satisfy tax
withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or
other similar requirements.
(f) Amendment of Award. Except as otherwise provided in Section 5(g) with respect to
repricings, Section 7(b)(1) with respect to vesting of Restricted Stock Awards, Section 10(i) with
respect to Performance Awards or Section 11(d) with respect to actions requiring shareholder
approval, the Board may amend, modify or terminate any outstanding Award, including but not limited
to, substituting therefor another Award of the same or a different type, changing the date of
exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option.
The Participants consent to such action will be required unless (i) the Board determines that the
action, taking into account any related action, would not
10
materially and adversely affect the Participants rights under the Plan or (ii) the change is
permitted under Section 9 hereof.
(g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any
shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously
delivered under the Plan until (i) all conditions of the Award have been met or removed to the
satisfaction of the Company, (ii) in the opinion of the Companys counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied, including any
applicable securities laws and any applicable stock exchange or stock market rules and regulations,
and (iii) the Participant has executed and delivered to the Company such representations or
agreements as the Company may consider appropriate to satisfy the requirements of any applicable
laws, rules or regulations.
(h) Acceleration. Except as otherwise provided in Section 10(i) with respect to
Performance Awards or Section 11(d) with respect to actions requiring shareholder approval, and
subject to Section 7(b), the Board may at any time provide that any Award will become immediately
exercisable in full or in part, free of some or all restrictions or conditions, or otherwise
realizable in full or in part, as the case may be.
(i) Performance Awards.
(1) Grants. Restricted Stock Awards, Other Stock-Based Awards and Cash Awards under
the Plan may be made subject to the achievement of performance goals pursuant to this Section
10(i) (Performance Awards), subject to the limit in Section 4(b)(1) on shares covered by such
grants. Subject to Section 10(i)(4), no Performance Awards will vest before the first anniversary
of the date of grant. Performance Awards can also provide for cash payments of up to $5,000,000
per fiscal year per individual.
(2) Committee. Grants of Performance Awards to any Covered Employee intended to
qualify as performance-based compensation under Section 162(m) (Performance-Based
Compensation) must be made only by a Committee (or subcommittee of a Committee) comprised solely
of two or more directors eligible to serve on a committee making Awards qualifying as
performance-based compensation under Section 162(m). In the case of such Awards granted to
Covered Employees, references to the Board or to a Committee will be treated as referring to such
Committee or subcommittee. Covered Employee means any person who is, or whom the Committee, in
its discretion, determines may be, a covered employee under Section 162(m)(3) of the Code.
(3) Performance Measures. For any Award that is intended to qualify as
Performance-Based Compensation, the Committee must specify that the degree of granting, vesting
and/or payout must be subject to the achievement of one or more objective performance measures
established by the Committee, which will be based on the relative or absolute attainment of
specified levels of one or any combination of the following: (i) change in share price; (ii)
operating earnings, operating profit margins, earnings before interest, taxes, depreciation, or
amortization, net earnings, earnings per share (basic or diluted) or other measure of earnings;
(iii) total stockholder return; (iv) operating margin; (v) gross margin; (vi) balance sheet
performance, including debt, long or short term, inventory, accounts payable or receivable,
working capital, or shareholders equity; (vii) return measures, including return on invested
capital, sales, assets, investment or equity; (viii) days sales outstanding; (ix) operating
income; (x) net operating income; (xi) pre-tax profit; (xii) cash flow, including cash flow from
operations, investing, or financing activities, before or after dividends, investments, or
capital expenditures; (xiii) revenue; (xiv) expenses, including cost of goods sold, operating
expenses, marketing and administrative expense, research and development, restructuring or other
special or unusual items, interest, tax expense, or other measures of savings; (xv) earnings
before interest, taxes and depreciation; (xvi) economic value created or added; (xvii) market
share; (xviii) sales or net sales; (xix) sales or net sales of particular products; (xx) gross
profits; (xxi) net income; (xxii) inventory turns; (xxiii) revenue per employee; and (xxiv)
implementation or completion of critical projects involving acquisitions, divestitures, process
improvements, product or production quality, attainment of other strategic objectives relating to
market penetration, geographic expansion, product development, regulatory or quality performance,
innovation or research goals. Such goals may reflect absolute entity or business unit performance
or a relative comparison to the performance of a peer group of entities or other external
11
measure of the selected
performance criteria and may be absolute in their terms or measured against or in
relationship to other companies comparably, similarly or otherwise situated. The Committee may
specify that such performance measures will be adjusted to exclude any one or more of (i)
extraordinary items, (ii) gains or losses on the dispositions of discontinued operations, (iii)
the cumulative effects of changes in accounting principles, (iv) the writedown of any asset, and
(v) charges for restructuring and rationalization programs. Such performance measures: (i) may
vary by Participant and may be different for different Awards; (ii) may be particular to a
Participant or the department, branch, line of business, subsidiary or other unit in which the
Participant works and may cover such period as may be specified by the Committee; and (iii) will
be set by the Committee within the time period prescribed by, and will otherwise comply with the
requirements of, Section 162(m). Awards that are not intended to qualify as Performance-Based
Compensation may be based on these or such other performance measures as the Board may determine.
(4) Adjustments. Notwithstanding any provision of the Plan, with respect to any
Performance Award that is intended to qualify as Performance-Based Compensation, the Committee
may adjust downwards, but not upwards, the cash or number of Shares payable pursuant to such
Award, and the Committee may not waive the achievement of the applicable performance measures
except in the case of the death or disability of the Participant or a change in control of the
Company.
(5) Other. The Committee will have the power to impose such other restrictions on
Performance Awards as it may deem necessary or appropriate to ensure that such Awards satisfy all
requirements for Performance-Based Compensation.
11. Miscellaneous
(a) No Right To Employment or Other Status. No person will have any claim or right to
be granted an Award, and the grant of an Award must not be construed as giving a Participant the
right to continued employment or any other relationship with the Company. The Company expressly
reserves the right at any time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no
Participant or Designated Beneficiary will have any rights as a stockholder with respect to any
shares of Common Stock to be distributed with respect to an Award until becoming the record holder
of such shares.
(c) Effective Date and Term of Plan. The Plan as restated will become effective on
the date the Plan is approved by the Companys stockholders (the Effective Date). No Awards will
be granted under the Plan after the expiration of 10 years from the Amendment and Restatement Date,
but Awards previously granted may extend beyond that date.
(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any
portion thereof at any time provided that (i) to the extent required by Section 162(m), no Award
granted to a Participant that is intended to comply with Section 162(m) after the date of such
amendment will become exercisable, realizable or vested, as applicable to such Award, unless and
until the Companys stockholders approve such amendment if required by Section 162(m) (including
the vote required under Section 162(m)); and (ii) no amendment that would require stockholder
approval under the rules of the New York Stock Exchange (NYSE) may be made effective unless and
until the Companys stockholders approve such amendment. In addition, if at any time the approval
of the Companys stockholders is required as to any other modification or amendment under Section
422 of the Code or any successor provision with respect to Incentive Stock Options, the Board may
not effect such modification or amendment without such approval. Unless otherwise specified in the
amendment, any amendment to the Plan adopted in accordance with this Section 11(d) will apply to,
and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment
is adopted, provided the Board determines that such amendment does not materially and adversely
affect the rights of Participants under the Plan.
(e) Provisions for Foreign Participants. The Board may modify Awards granted to
Participants who are foreign nationals or employed outside the United States or establish subplans
or procedures under the Plan
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to recognize differences in laws, rules, regulations or customs of such foreign
jurisdictions with respect to tax, securities, currency, employee benefit or other matters.
(f) Compliance with Code Section 409A. The Company will have no liability to a
Participant, or any other party, if an Award that is intended to be exempt from, or compliant with,
Section 409A is not so exempt or compliant or for any action taken by the Board.
(g) Governing Law. The provisions of the Plan and all Awards made hereunder will be
governed by and interpreted in accordance with the laws of the State of Delaware, excluding
choice-of-law principles of the law of such state that would require the application of the laws of
a jurisdiction other than such state.
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