exv10w7
Exhibit
10.7
RESOLUTE ENERGY CORPORATION
2009 PERFORMANCE INCENTIVE PLAN
1. PURPOSE OF PLAN
1.1 The purpose of this 2009 Performance Incentive Plan (this “Plan”) of Resolute Energy
Corporation, a Delaware corporation (the “Corporation”), is to promote the success of the
Corporation and to increase stockholder value by providing an additional means through the grant of
awards to attract, motivate, retain and reward selected employees and other eligible persons.
2. ELIGIBILITY
2.1 The Administrator (as such term is defined in Section 3.1) may grant awards under this
Plan only to those persons that the Administrator determines to be Eligible Persons. An “Eligible
Person” is any person who is either: (a) an officer (whether or not a director) or employee of the
Corporation or one of its Subsidiaries; (b) a director of the Corporation or one of its
Subsidiaries; or (c) an individual consultant or advisor who renders or has rendered bona fide
services to the Corporation or one of its Subsidiaries and who is selected to participate in this
Plan by the Administrator; provided, however, that a person who is otherwise an Eligible Person
under clause (c) above may participate in this Plan only if such participation would not adversely
affect either the Corporation’s eligibility to use Form S-8 to register under the Securities Act of
1933, as amended (the “Securities Act”), the offering and sale of shares issuable under this Plan
by the Corporation or the Corporation’s compliance with any other applicable laws. An Eligible
Person who has been granted an award (a “participant”) may, if otherwise eligible, be granted
additional awards if the Administrator shall so determine. As used herein, “Subsidiary” means any
corporation or other entity a majority of whose outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Corporation; and “Board” means the Board of
Directors of the Corporation.
3. PLAN ADMINISTRATION
3.1 The Administrator. This Plan shall be administered by and all awards under this Plan
shall be authorized by the Administrator. The “Administrator” means the Board or one or more
committees appointed by the Board or another committee (within its delegated authority) to
administer all or certain aspects of this Plan. Any such committee shall be comprised solely of one
or more directors or such number of directors as may be required under applicable law. A committee
may delegate some or all of its authority to another committee so constituted. The Board or a
committee comprised solely of directors may also delegate, to the extent permitted by Section
157(c) of the Delaware General Corporation Law and any other applicable law, to one or more
officers of the Corporation, its powers under this Plan (a) to designate the officers and employees
of the Corporation and its Subsidiaries who will receive grants of awards under this Plan, and (b)
to determine the number of shares subject to, and the other terms and conditions of, such awards.
The Board may delegate different levels of authority to different committees with administrative
and grant authority under this Plan. Unless otherwise provided in the Bylaws of the Corporation or
the applicable charter of any Administrator: (a) a majority of the members of the acting
Administrator shall constitute a quorum, and (b) the vote of a majority of the members
present
assuming the presence of a quorum or the unanimous written consent of the members of the Administrator
shall constitute action by the acting Administrator.
With respect to awards intended to satisfy the requirements for performance-based compensation
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), this Plan shall
be administered by a committee consisting solely of two or more outside directors (as this
requirement is applied under Section 162(m) of the Code); provided, however, that the failure to
satisfy such requirement shall not affect the validity of the action of any committee otherwise
duly authorized and acting in the matter. Award grants, and transactions in or involving awards,
intended to be exempt under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), must be duly and timely authorized by the Board or a committee consisting solely
of two or more non-employee directors (as this requirement is applied under Rule 16b-3 promulgated
under the Exchange Act). To the extent required by any applicable listing agency, this Plan shall
be administered by a committee composed entirely of independent directors (within the meaning of
the applicable listing agency). Awards granted to non-employee directors shall not be subject to
the discretion of any officer or employee of the Corporation and shall be administered exclusively
by a committee consisting solely of independent directors.
3.2 Powers of the Administrator. Subject to the express provisions of this Plan, the
Administrator is authorized and empowered to do all things necessary or desirable in connection
with the authorization of awards and the administration of this Plan (in the case of a committee or
delegation to one or more officers, within the authority delegated to that committee or person(s)),
including, without limitation, the authority to:
(a) determine eligibility and, from among those persons determined to be eligible, the
particular Eligible Persons who will receive an award under this Plan;
(b) grant awards to Eligible Persons, determine the price at which securities will be
offered or awarded and the number of securities to be offered or awarded to any of such
persons, determine the other specific terms and conditions of such awards consistent with
the express limits of this Plan, establish the installments (if any) in which such awards
shall become exercisable or shall vest (which may include, without limitation, performance
and/or time-based schedules), or determine that no delayed exercisability or vesting is
required, establish any applicable performance targets, and establish the events of
termination or reversion of such awards;
(c) approve the forms of award agreements (which need not be identical either as to
type of award or among participants);
(d) construe and interpret this Plan and any agreements defining the rights and
obligations of the Corporation, its Subsidiaries, and participants under this Plan, further
define the terms used in this Plan, and prescribe, amend and rescind rules and regulations
relating to the administration of this Plan or the awards granted under this Plan;
(e) cancel, modify, or waive the Corporation’s rights with respect to, or modify,
discontinue, suspend, or terminate any or all outstanding awards, subject to any required
consent under Section 8.6.5;
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(f) accelerate or extend the vesting or exercisability or extend the term of any or all
such outstanding awards (in the case of options or stock appreciation rights, within the
maximum ten-year term of such awards) in such circumstances as the Administrator may deem
appropriate (including, without limitation, in connection with a termination of employment
or services or other events of a personal nature) subject to any required consent under
Section 8.6.5;
(g) adjust the number of shares of Common Stock subject to any award, adjust the price
of any or all outstanding awards or otherwise change previously imposed terms and
conditions, in such circumstances as the Administrator may deem appropriate, in each case
subject to Sections 4 and 8.6 and the applicable requirements of Code Section 162(m) and
Treasury Regulations thereunder with respect to awards that are intended to satisfy the
requirements for performance-based compensation under Section 162(m), and provided that in
no case (except due to an adjustment contemplated by Section 7 or any repricing that may be
approved by stockholders) shall such an adjustment constitute a repricing (by amendment,
cancellation and regrant, exchange or other means) of the per share exercise or base price
of any option or stock appreciation right, and further provided that any adjustment or
change in terms made pursuant to this Section 3.2(g) shall be made in a manner that, in the
good faith determination of the Administrator will not likely result in the imposition of
additional taxes or interest under Section 409A of the Code;
(h) determine the date of grant of an award, which may be a designated date after but
not before the date of the Administrator’s action (unless otherwise designated by the
Administrator, the date of grant of an award shall be the date upon which the Administrator
took the action granting an award);
(i) determine whether, and the extent to which, adjustments are required pursuant to
Section 7 hereof and authorize the termination, conversion, substitution or succession of
awards upon the occurrence of an event of the type described in Section 7;
(j) acquire or settle (subject to Sections 7 and 8.6) rights under awards in cash,
stock of equivalent value, or other consideration; and
(k) determine the Fair Market Value (as defined in Section 5.6) of the Common Stock or
awards under this Plan from time to time and/or the manner in which such value will be
determined.
3.3 Binding Determinations. Any action taken by, or inaction of, the Corporation, any
Subsidiary, or the Administrator relating or pursuant to this Plan and within its authority
hereunder or under applicable law shall be within the absolute discretion of that entity or body
and shall be conclusive and binding upon all persons. Neither the Board nor any Board committee,
nor any member thereof or person acting at the direction thereof, shall be liable for any act,
omission, interpretation, construction or determination made in good faith in connection with this
Plan (or any award made under this Plan), and all such persons shall be entitled to indemnification
and reimbursement by the Corporation in respect of any claim, loss, damage or expense (including,
without limitation, attorneys’ fees) arising or resulting therefrom to the fullest extent permitted
by
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law and/or under any directors and officers liability insurance coverage that may be in effect
from time to time.
3.4 Reliance on Experts. In making any determination or in taking or not taking any action
under this Plan, the Board or a committee, as the case may be, may obtain and may rely upon the
advice of experts, including employees and professional advisors to the Corporation. No director,
officer or agent of the Corporation or any of its Subsidiaries shall be liable for any such action
or determination taken or made or omitted in good faith.
3.5 Delegation. The Administrator may delegate ministerial, non-discretionary functions to
individuals who are officers or employees of the Corporation or any of its Subsidiaries or to third
parties.
4. SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMITS
4.1 Shares Available. Subject to the provisions of Section 7.1, the capital stock that may be
delivered under this Plan shall be shares of the Corporation’s authorized but unissued Common Stock
and any shares of its Common Stock held as treasury shares. For purposes of this Plan, “Common
Stock” shall mean the common stock of the Corporation and such other securities or property as may
become the subject of awards under this Plan, or may become subject to such awards, pursuant to an
adjustment made under Section 7.1.
4.2 Share Limit. The maximum number of shares of Common Stock that may be delivered pursuant
to awards granted to Eligible Persons under this Plan is equal to 5% of the shares of Common Stock
outstanding at closing of the transactions contemplated by the Acquisition Agreement but not to
exceed 2,760,000 shares of Common Stock (the “Share Limit”).
The foregoing numerical limit is subject to adjustment as contemplated by Section 4.3, Section
7.1, and Section 8.10. For purposes of Section 4.2, “Acquisition Agreement” means that certain
Purchase and IPO Reorganization Agreement dated August 2, 2009, by and among the Hicks Acquisition
Company I, Inc., the Company, Resolute Subsidiary Corporation, Resolute Aneth, LLC, Resolute
Holdings, LLC, Resolute Holdings Sub, LLC, and HH-HACI, L.P.
4.3 Awards Settled in Cash, Reissue of Awards and Shares. To the extent that an award is
settled in cash or a form other than shares of Common Stock, the shares that would have been
delivered had there been no such cash or other settlement shall not be counted against the shares
available for issuance under this Plan. Shares that are subject to or underlie awards which expire
or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason
are not paid or delivered under this Plan shall again be available for subsequent awards under this
Plan. The foregoing adjustments to the share limit of this Plan are subject to any applicable
limitations under Section 162(m) of the Code with respect to awards intended as performance-based
compensation thereunder.
4.4 Reservation of Shares; No Fractional Shares. The Corporation shall at all times reserve a
number of shares of Common Stock sufficient to cover the Corporation’s obligations and contingent
obligations to deliver shares with respect to awards then outstanding under this Plan (exclusive of
any dividend equivalent obligations to the extent the Corporation has the right to settle such
rights in cash). No fractional shares shall be delivered under this Plan. The
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Administrator may pay cash in lieu of any fractional shares in settlements of awards under
this Plan.
5. AWARDS
5.1 Type and Form of Awards. The Administrator shall determine the type or types of award(s)
to be made to each selected Eligible Person. Awards may be granted singly, in combination or in
tandem. Awards also may be made in combination or in tandem with, in replacement of, as
alternatives to, or as the payment form for grants or rights under any other employee or
compensation plan of the Corporation or one of its Subsidiaries. The types of awards that may be
granted under this Plan are:
5.1.1 Stock Options. A stock option is the grant of a right to purchase a specified
number of shares of Common Stock during a specified period as determined by the
Administrator. An option may be intended as an incentive stock option within the meaning of
Section 422 of the Code (an “ISO”) or a nonqualified stock option (an option not intended to
be an ISO). The award agreement for an option will indicate if the option is intended as an
ISO; otherwise it will be deemed to be a nonqualified stock option. The maximum term of each
option (ISO or nonqualified) shall be ten (10) years. The per share exercise price for each
option shall be not less than 100% of the Fair Market Value of a share of Common Stock on
the date of grant of the option. When an option is exercised, the exercise price for the
shares to be purchased shall be paid in full in cash or such other method permitted by the
Administrator consistent with Section 5.5.
5.1.2 Additional Rules Applicable to ISOs. To the extent that the aggregate Fair
Market Value (determined at the time of grant of the applicable option) of stock with
respect to which ISOs first become exercisable by a participant in any calendar year exceeds
$100,000, taking into account both Common Stock subject to ISOs under this Plan and stock
subject to ISOs under all other plans of the Corporation or one of its Subsidiaries (or any
parent or predecessor corporation to the extent required by and within the meaning of
Section 422 of the Code and the regulations promulgated thereunder), such options shall be
treated as nonqualified stock options. In reducing the number of options treated as ISOs to
meet the $100,000 limit, the most recently granted options shall be reduced first. To the
extent a reduction of simultaneously granted options is necessary to meet the $100,000
limit, the Administrator may, in the manner and to the extent permitted by law, designate
which shares of Common Stock are to be treated as shares acquired pursuant to the exercise
of an ISO. ISOs may only be granted to employees of the Corporation or one of its
subsidiaries (for this purpose, the term “subsidiary” is used as defined in Section 424(f)
of the Code, which generally requires an unbroken chain of ownership of at least 50% of the
total combined voting power of all classes of stock of each subsidiary in the chain
beginning with the Corporation and ending with the subsidiary in question). There shall be
imposed in any award agreement relating to ISOs such other terms and conditions as from time
to time are required in order that the option be an “incentive stock option” as that term is
defined in Section 422 of the Code. No ISO may be granted to any person who, at the time the
option is granted, owns (or is deemed to own under Section 424(d) of the Code) shares of
outstanding Common Stock possessing more than 10% of the total combined voting power of all
classes of stock of the Corporation, unless the exercise price of such
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option is at least 110% of the Fair Market Value of the stock subject to the option and
such option by its terms is not exercisable after the expiration of five years from the date
such option is granted.
5.1.3 Stock Appreciation Rights. A stock appreciation right or “SAR” is a right to
receive a payment, in cash and/or Common Stock, equal to the excess of the Fair Market Value
of a specified number of shares of Common Stock on the date the SAR is exercised over the
Fair Market Value of a share of Common Stock on the date the SAR was granted (the “base
price”) as set forth in the applicable award agreement. The maximum term of a SAR shall be
ten (10) years.
5.1.4 Restricted Stock.
(a) Restrictions. Restricted stock is Common Stock subject to such restrictions
on transferability, risk of forfeiture and other restrictions, if any, as the
Administrator may impose, which 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 Administrator may determine at the date of grant or thereafter.
Except to the extent restricted under the terms of this Plan and the applicable
award agreement relating to the restricted stock, a participant granted restricted
stock shall have all of the rights of a stockholder, 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 Administrator).
(b) Certificates for Stock. Restricted stock granted under this Plan may be
evidenced in such manner as the Administrator shall determine. If certificates
representing restricted stock are registered in the name of the participant, the
Administrator may require that such certificates bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such restricted
stock, that the Corporation retain physical possession of the certificates, and that
the participant deliver a stock power to the Corporation, endorsed in blank,
relating to the restricted stock.
(c) Dividends and Splits. As a condition to the grant of an award of restricted
stock, the 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 this Plan. Unless otherwise determined by the Administrator, stock
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 stock or other
property has been distributed.
5.1.5 Restricted Stock Units.
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(a) Grant of Restricted Stock Units. A restricted stock unit, or “RSU”,
represents the right to receive from the Corporation on the respective scheduled
vesting or payment date for such RSU, one share of Common Stock. An award of RSUs
may be subject to the attainment of specified performance goals or targets,
forfeitability provisions and such other terms and conditions as the Administrator
may determine, subject to the provisions of this Plan. At the time an award of RSUs
is made, the Administrator shall establish a period of time during which the
restricted stock units shall vest.
(b) Dividend Equivalent Accounts. If (and only if) required by the applicable
award agreement, prior to the expiration of the applicable vesting period of an RSU,
the Corporation shall pay dividend equivalent rights with respect to RSUs, in which
case the Corporation shall establish an account for the participant and reflect in
that account any securities, cash or other property comprising any dividend or
property distribution with respect to the share of Common Stock underlying each RSU.
Each amount or other property credited to any such account shall be subject to the
same vesting conditions as the RSU to which it relates. The participant shall have
be paid the amounts or other property credited to such account upon vesting of the
RSU.
(c) Rights as a Stockholder. Subject to the restrictions imposed under the
terms and conditions of this Plan and the applicable award agreement, each
participant receiving RSUs shall have no rights as a stockholder with respect to
such RSUs until such time as shares of Common Stock are issued to the participant.
Except as otherwise provided in the applicable award agreement, Common Stock
issuable under an RSU shall be treated as issued on the first date that the holder
of the RSU is no longer subject to a substantial risk of forfeiture as determined
for purposes of Section 409A of the Code, and the holder shall be the owner of such
Common Stock on such date. An award agreement may provide that issuance of Common
Stock under an RSU may be deferred beyond the first date that the RSU is no longer
subject to a substantial risk of forfeiture, provided that such deferral is
structured in a manner that is intended to comply with the requirements of Section
409A of the Code.
5.1.6 Cash Awards. The Administrator may, from time to time, subject to the provisions
of the Plan and such other terms and conditions as it may determine, grant cash bonuses
(including without limitation, discretionary awards, awards based on objective or subjective
performance criteria, awards subject to other vesting criteria or awards granted consistent
with Section 5.2 below). Cash awards shall be awarded in such amount and at such times
during the term of the Plan as the Administrator shall determine.
5.1.7 Other Awards. The other types of awards that may be granted under this Plan
include: (a) stock bonuses, performance stock, phantom stock, dividend equivalents, or
similar rights to purchase or acquire shares, whether at a fixed or variable price or ratio
related to the Common Stock (subject to the requirements of Section 5.1.1), upon the
passage of time, the occurrence of one or more events, or the satisfaction of performance
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criteria or other conditions, or any combination thereof; or (b) any similar securities with
a value derived from the value of or related to the Common Stock and/or returns thereon.
5.2 Section 162(m) Performance-Based Awards. Without limiting the generality of the
foregoing, any of the types of awards listed in Sections 5.1.4 through 5.1.7 above may be, and
options and SARs granted with an exercise or base price not less than the Fair Market Value of a
share of Common Stock at the date of grant (“Qualifying Options” and “Qualifying SARs,”
respectively) typically will be, granted as awards intended to satisfy the requirements for
“performance-based compensation” within the meaning of Section 162(m) of the Code
(“Performance-Based Awards”). The grant, vesting, exercisability or payment of Performance-Based
Awards may depend (or, in the case of Qualifying Options or Qualifying SARs, may also depend) on
the degree of achievement of one or more performance goals relative to a pre-established targeted
level or levels using the Business Criteria provided for below for the Corporation on a
consolidated basis or for one or more of the Corporation’s subsidiaries, segments, divisions or
business units, or any combination of the foregoing. Such criteria may be evaluated on an absolute
basis or relative to prior periods, industry peers, or stock market indices. Any Qualifying Option
or Qualifying SAR shall be subject to the requirements of Section 5.2.1 and 5.2.3 in order for such
award to satisfy the requirements for “performance-based compensation” under Section 162(m) of the
Code. Any other Performance-Based Award shall be subject to all of the following provisions of this
Section 5.2.
5.2.1 Class; Administrator. The eligible class of persons for Performance-Based Awards
under this Section 5.2 shall be officers and employees of the Corporation or one of its
Subsidiaries. The Administrator approving Performance-Based Awards or making any
certification required pursuant to Section 5.2.4 must be constituted as provided in Section
3.1 for awards that are intended as performance-based compensation under Section 162(m) of
the Code.
5.2.2 Performance Goals. The specific performance goals for Performance-Based Awards
(other than Qualifying Options and Qualifying SARs) shall be, on an absolute or relative
basis, established based on such business criteria as selected by the Administrator in its
sole discretion (“Business Criteria”), including the following: earnings per share, cash
flow (which means cash and cash equivalents derived from either net cash flow from
operations or net cash flow from operations, financing and investing activities), total
stockholder return, gross revenue, revenue growth, operating income (before or after taxes),
net earnings (before or after interest, taxes, depreciation and/or amortization), return on
equity, capital employed, or on assets or on net investment, cost containment or reduction,
operating margin, debt reduction, finding and development costs, production growth or
production growth per share, reserve replacement or reserves per share growth or any
combination thereof. These terms are used as applied under generally accepted accounting
principles or in the financial reporting of the Corporation or of its Subsidiaries. To
qualify awards as performance-based under Section 162(m), the applicable Business Criterion
(or Business Criteria, as the case may be) and specific performance goal or goals
(“targets”) must be established and approved by the Administrator during the first 90 days
of the performance period (and, in the case of performance periods of less than one year, in
no event after 25% or more of the performance period has elapsed) and while performance
relating to such target(s) remains substantially uncertain within the meaning of
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Section 162(m) of the Code. Performance targets shall be adjusted to mitigate the unbudgeted impact
of material, unusual or nonrecurring gains and losses, accounting changes or other
extraordinary events not foreseen at the time the targets were set unless the Administrator
provides otherwise at the time of establishing the targets; provided that the Administrator
may not make any adjustment to the extent it would adversely affect the qualification of any
compensation payable under such performance targets as “performance-based compensation”
under Section 162(m). The applicable performance measurement period may not be less than 3
months nor more than 10 years.
5.2.3 Form of Payment; Maximum Performance-Based Award. Grants or awards under this
Section 5.2 may be paid in cash or shares of Common Stock or any combination thereof.
5.2.4 Certification of Payment. Before any Performance-Based Award under this Section
5.2 (other than Qualifying Options and Qualifying SARs) is paid and to the extent required
to qualify the award as performance-based compensation within the meaning of Section 162(m)
of the Code, the Administrator must certify in writing that the performance target(s) and
any other material terms of the Performance-Based Award were in fact timely satisfied.
5.2.5 Reservation of Discretion. The Administrator will have the discretion to
determine the restrictions or other limitations of the individual awards granted under this
Section 5.2 including the authority to reduce awards, payouts or vesting or to pay no
awards, in its sole discretion, if the Administrator preserves such authority at the time of
grant by language to this effect in its authorizing resolutions or otherwise.
5.2.6 Expiration of Grant Authority. As required pursuant to Section 162(m) of the
Code and the regulations promulgated thereunder, the Administrator’s authority to grant new
awards that are intended to qualify as performance-based compensation within the meaning of
Section 162(m) of the Code (other than Qualifying Options and Qualifying SARs) shall
terminate upon the first meeting of the Corporation’s stockholders that occurs in the fifth
year following the year in which the Corporation’s stockholders first approve this Plan.
5.3 Award Agreements. Each award shall be evidenced by a written or electronic award
agreement in the form approved by the Administrator and, if required by the Administrator, executed
by the recipient of the award. The Administrator may authorize any officer of the Corporation
(other than the particular award recipient) to execute any or all award agreements on behalf of the
Corporation (electronically or otherwise). The award agreement shall set forth the material terms
and conditions of the award as established by the Administrator consistent with the express
limitations of this Plan.
5.4 Deferrals and Settlements. Payment of awards may be in the form of cash, Common Stock,
other awards or combinations thereof as the Administrator shall determine, and with such
restrictions as it may impose. The Administrator may also require or permit participants
to elect to defer the issuance of shares or the settlement of awards in cash under such rules
and procedures as it may establish under this Plan. The Administrator may also provide that deferred
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settlements include the payment or crediting of interest or other earnings on the deferral
amounts, or the payment or crediting of dividend equivalents where the deferred amounts are
denominated in shares.
5.5 Consideration for Common Stock or Awards. The purchase price for any award granted under
this Plan or the Common Stock to be delivered pursuant to an award, as applicable, may be paid by
means of any lawful consideration as determined by the Administrator, including, without
limitation, one or a combination of the following methods:
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services rendered by the recipient of such award, if authorized by the
Administrator; |
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cash, check payable to the order of the Corporation, or electronic funds
transfer; |
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notice and third party payment in such manner as may be authorized by the
Administrator; |
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the delivery of previously owned shares of Common Stock; |
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by a reduction in the number of shares otherwise deliverable pursuant to the
award; or |
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subject to such procedures as the Administrator may adopt, pursuant to a
“cashless exercise” with a third party who provides financing for the purposes of (or
who otherwise facilitates) the purchase or exercise of awards. |
In the event that the Administrator allows a participant to exercise an award by delivering
shares of Common Stock previously owned by such participant and unless otherwise expressly provided
by the Administrator, any shares delivered which were initially acquired by the participant from
the Corporation (upon exercise of a stock option or otherwise) must have been owned by the
participant at least six months as of the date of delivery. Shares of Common Stock used to satisfy
the exercise price of an option shall be valued at their Fair Market Value on the date of exercise.
The Corporation will not be obligated to deliver any shares unless and until it receives full
payment of the exercise or purchase price therefor and any related withholding obligations under
Section 8.5 and any other conditions to exercise or purchase, as established from time to time by
the Administrator, have been satisfied. Unless otherwise expressly provided in the applicable award
agreement, the Administrator may at any time eliminate or limit a participant’s ability to pay the
purchase or exercise price of any award or shares by any method other than cash payment to the
Corporation.
5.6 Definition of Fair Market Value. For purposes of this Plan “Fair Market Value” shall
mean, unless otherwise determined or provided by the Administrator in the circumstances, the last
sale price for a share of Common Stock as furnished by the New York Stock Exchange (“NYSE”) or
other principal stock exchange on which the Common Stock is then listed for the date in question
or, if no sales of Common Stock were reported by the NYSE or other such exchange on that date, the
last price for a share of Common Stock as furnished by the NYSE or other such exchange for the next
preceding day on which sales of Common Stock were reported by the NYSE. If the Common Stock is no
longer listed or is no longer actively traded on the NYSE or listed on a
principal stock exchange as of the applicable date, the Fair Market Value of the Common Stock
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shall be the value as reasonably determined by the Administrator for purposes of the award in
the circumstances.
5.7 Transfer Restrictions.
5.7.1 Limitations on Exercise and Transfer. Unless otherwise expressly
provided in (or pursuant to) this Section 5.7, by applicable law and by the award
agreement, as the same may be amended, (a) all awards are non-transferable and shall
not be subject in any manner to sale, transfer, anticipation, alienation,
assignment, pledge, encumbrance or charge; (b) awards shall be exercised only by the
participant; and (c) amounts payable or shares issuable pursuant to any award shall
be delivered only to (or for the account of) the participant.
5.7.2 Exceptions. The Administrator may permit awards to be exercised by and
paid to, or otherwise transferred to, other persons or entities pursuant to such
conditions and procedures, including limitations on subsequent transfers, as the
Administrator may, in its sole discretion, establish in writing (provided that any
such transfers of ISOs shall be limited to the extent permitted under the federal
tax laws governing ISOs). Any permitted transfer shall be subject to compliance with
applicable federal and state securities laws.
5.7.3 Further Exceptions to Limits on Transfer. The exercise and transfer
restrictions in Section 5.7.1 shall not apply to:
(a) transfers to the Corporation,
(b) the designation of a beneficiary to receive benefits in the event of the
participant’s death or, if the participant has died, transfers to or exercise by the
participant’s beneficiary, or, in the absence of a validly designated beneficiary,
transfers by will or the laws of descent and distribution,
(c) subject to any applicable limitations on ISOs, transfers to a family member
(or former family member) pursuant to a domestic relations order if approved or
ratified by the Administrator,
(d) subject to any applicable limitations on ISOs, if the participant has
suffered a disability, permitted transfers or exercises on behalf of the participant
by his or her legal representative, or
(e) the authorization by the Administrator of “cashless exercise” procedures
with third parties who provide financing for the purpose of (or who otherwise
facilitate) the exercise of awards consistent with applicable laws and the express
authorization of the Administrator.
5.8 International Awards. One or more awards may be granted to Eligible Persons who provide
services to the Corporation or one of its Subsidiaries outside of the United States. Any awards
granted to such persons may be granted pursuant to the terms and conditions of any applicable
sub-plans, if any, appended to this Plan and approved by the Administrator.
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6. EFFECT OF TERMINATION OF SERVICE ON AWARDS
6.1 Termination of Employment.
6.1.1 The Administrator shall establish the effect of a termination of employment or
service on the rights and benefits under each award under this Plan and in so doing may make
distinctions based upon, inter alia, the cause of termination and type of award. If the
participant is not an employee of the Corporation or one of its Subsidiaries and provides
other services to the Corporation or one of its Subsidiaries, the Administrator shall be the
sole judge for purposes of this Plan (unless a contract or the award agreement otherwise
provides) of whether the participant continues to render services to the Corporation or one
of its Subsidiaries and the date, if any, upon which such services shall be deemed to have
terminated.
6.1.2 For awards of stock options, unless the award agreement provides otherwise, the
exercise period of such options shall expire: (1) 3 months after the last day that the
participant is employed by or provides services to the Corporation or a Subsidiary; (2) in
the case of a participant whose termination of employment is due to death or disability (as
defined in the applicable award agreement), 12 months after the last day that the
participant is employed by or provides services to the Corporation or a Subsidiary; and (3)
immediately upon the last day the participant is employed by or provides services to the
Corporation or a Subsidiary for any participant whose employment or services are terminated
for “cause” (as defined in the applicable award agreement). The Administrator will, in its
absolute discretion, determine the effect of all matters and questions relating to a
termination of employment, including, but not by way of limitation, the question of whether
a leave of absence constitutes a termination of employment and whether a participant’s
termination is for “cause.”
6.1.3 For awards of restricted stock, unless the award agreement provides otherwise,
restricted stock that is subject to restrictions at the time that a participant whose
employment or service is terminated shall be forfeited and reacquired by the Corporation;
provided that the 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 Administrator may in other cases waive
in whole or in part the forfeiture of restricted stock.
6.2 Events Not Deemed Terminations of Service. Unless the express policy of the Corporation
or one of its Subsidiaries, or the Administrator, otherwise provides, the employment relationship
shall not be considered terminated in the case of (a) sick leave, (b) military leave, or (c) any
other leave of absence authorized by the Corporation or one of its Subsidiaries, or the
Administrator; provided that unless reemployment upon the expiration of such leave is guaranteed by
contract or law, such leave is for a period of not more than 3 months. In the case of any employee
of the Corporation or one of its Subsidiaries on an approved leave of absence, continued vesting of
the award while on leave from the employ of the Corporation or one of its Subsidiaries may be
suspended until the employee returns to service, unless the Administrator otherwise
12
provides or applicable law otherwise requires. In no event shall an award be exercised after
the expiration of the term set forth in the award agreement.
6.3 Effect of Change of Subsidiary Status. For purposes of this Plan and any award, if an
entity ceases to be a Subsidiary of the Corporation, a termination of employment or service shall
be deemed to have occurred with respect to each Eligible Person in respect of such Subsidiary who
does not continue as an Eligible Person in respect of another entity within the Corporation or
another Subsidiary that continues as such after giving effect to the transaction or other event
giving rise to the change in status.
7. ADJUSTMENTS; ACCELERATION
7.1 Adjustments. Except where the Administrator determines that the provisions of Section 7.3
shall govern in lieu of this Section 7.1, upon any of the events described in this Section 7.1, or
in contemplation of: any reclassification, recapitalization, stock split (including a stock split
in the form of a stock dividend) or reverse stock split (“stock split”); any merger, combination,
consolidation, or other reorganization; any spin-off, split-up, or similar extraordinary dividend
distribution in respect of the Common Stock (whether in the form of securities or property); any
exchange of Common Stock or other securities of the Corporation, or any similar, unusual or
extraordinary corporate transaction in respect of the Common Stock; or a sale of all or
substantially all the business or assets of the Corporation as an entirety; then the Administrator
shall in such manner, to such extent (if any) and at such time as it deems appropriate and
equitable in the circumstances:
(a) proportionately adjust any or all of (1) the number and type of shares of Common
Stock (or other securities) that thereafter may be made the subject of awards (including the
number of shares provided for in this Plan), (2) the number, amount and type of shares of
Common Stock (or other securities or property) subject to any or all outstanding awards, (3)
the grant, purchase, or exercise price (which term includes the base price of any SAR or
similar right) of any or all outstanding awards, (4) the securities, cash or other property
deliverable upon exercise or payment of any outstanding awards, or (5) (subject to Sections
7.7 and 8.8.3(a)) the performance standards applicable to any outstanding awards (provided
that no adjustment shall be allowed to the extent inconsistent with the requirements of Code
section 162(m)), or
(b) make provision for a cash payment or for the assumption, substitution or exchange
of any or all outstanding share-based awards or the cash, securities or property deliverable
to the holder of any or all outstanding share-based awards, based upon the distribution or
consideration payable to holders of the Common Stock upon or in respect of such event.
The Administrator may adopt such valuation methodologies for outstanding awards as it deems
reasonable in the event of a cash or property settlement and, in the case of options, SARs or
similar rights, but without limitation on other methodologies, may base such settlement solely upon
the excess if any of the per share amount payable upon or in respect of such event over the
exercise or base price of the award. With respect to any award of an ISO, the Administrator may
make such
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an adjustment that causes the option to cease to qualify as an ISO without the consent of the
affected participant.
In any of such events, the Administrator may take such action prior to such event to the
extent that the Administrator deems the action necessary to permit the participant to realize the
benefits intended to be conveyed with respect to the underlying shares in the same manner as is or
will be available to stockholders generally. In the case of any stock split, if no action is taken
by the Administrator, the proportionate adjustments contemplated by clause (a) above shall
nevertheless be made.
Any adjustment, substitution or exchange made pursuant to this Section 7.1 shall be made in a
manner that, in the good faith determination of the Administrator, will not likely result in the
imposition of additional taxes or interest under Section 409A of the Code.
7.2 Automatic Acceleration of Awards. Except as otherwise provided in Section 7.3, upon a
dissolution of the Corporation or other event described in Section 7.1 that the Corporation does
not survive (or does not survive as a public company in respect of its Common Stock), then each
then-outstanding option and SAR shall become fully vested, all shares of restricted stock then
outstanding shall fully vest free of restrictions, and each other award granted under this Plan
that is then outstanding shall become payable to the holder of such award; provided that such
acceleration provision shall not apply, unless otherwise expressly provided by the Administrator,
with respect to any award to the extent that the Administrator has made a provision for the
substitution, assumption, exchange or other continuation or settlement of the award, or the award
would otherwise continue in accordance with its terms, in the circumstances; provided, further,
that no such acceleration of amounts payable shall apply to compensation that has been deferred for
purposes of Section 409A unless the Administrator determines that the acceleration will not result
in the imposition of additional taxes or interest under Section 409A.
7.3 Possible Acceleration of Awards. In the applicable award agreement or by other action,
the Administrator, in its discretion, may provide that any outstanding option or SAR shall become
fully vested, any share of restricted stock then outstanding shall fully vest free of restrictions,
and any other award granted under this Plan that is then outstanding shall vest, or be payable to
the holder of such award, as applicable, upon the occurrence of a Change in Control Event.
For purposes of this Plan, “Change in Control Event” means any of the following:
(a) The acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% or more of either
(1) the then-outstanding shares of common stock of the Corporation (the “Outstanding Company
Common Stock”) or (2) the combined voting power of the then-outstanding voting securities of
the Corporation entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that, for purposes of this definition, the
following acquisitions shall not constitute a Change in Control Event; (A) any acquisition
directly from the Corporation, (B) any acquisition by the Corporation, (C) any acquisition
by any employee benefit plan (or related trust) sponsored
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or maintained by the Corporation or any affiliate of the Corporation or a successor, or
(D) any acquisition by any entity pursuant to a transaction that complies with Sections
(c)(1), (2) and (3) below;
(b) Individuals who, as of the Effective Date, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the Effective Date whose
election, or nomination for election by the Corporation’s stockholders, was approved by a
vote of at least two-thirds of the directors then comprising the Incumbent Board (including
for these purposes, the new members whose election or nomination was so approved, without
counting the member and his predecessor twice) shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of 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;
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation
or similar corporate transaction involving the Corporation or any of its Subsidiaries, a
sale or other disposition of all or substantially all of the assets of the Corporation, or
the acquisition of assets or stock of another entity by the Corporation or any of its
Subsidiaries (each, a “Business Combination”), in each case unless, following such Business
Combination, (1) all or substantially all of the individuals and entities that were the
beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting
Securities immediately prior to 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 voting securities entitled to vote generally in the
election of directors, as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that, as a result of such transaction,
owns the Corporation or all or substantially all of the Corporation’s assets directly or
through one or more subsidiaries (a “Parent”)) in substantially the same proportions as
their ownership immediately prior to such Business Combination of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may be, (2) no
Person (excluding any entity resulting from such Business Combination or a Parent or any
employee benefit plan (or related trust) of the Corporation or such entity resulting from
such Business Combination or Parent) beneficially owns, directly or indirectly, more than
50% of, respectively, the then-outstanding shares of common stock of the entity resulting
from such Business Combination or the combined voting power of the then-outstanding voting
securities of such entity, except to the extent that the ownership in excess of more than
50% existed prior to the Business Combination, and (3) at least a majority of the members of
the board of directors or trustees of the entity resulting from such Business Combination or
a Parent were members of the Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board providing for such Business Combination; or
15
(d) Approval by the stockholders of the Corporation of a complete liquidation or
dissolution of the Corporation other than in the context of a transaction that does not
constitute a Change in Control Event under clause (c) above.
Notwithstanding the foregoing, (1) the Administrator may waive the requirement described in
paragraph (a) above that a Person must acquire more than 50% of the Outstanding Company Stock or
Outstanding Company Voting Securities for a Change in Control Event to have occurred if the
Administrator determines that the percentage acquired by a Person is significant (as determined by
the Administrator in its discretion) and that waiving such condition is appropriate in light of all
facts and circumstances, and (2) no compensation that has been deferred for purposes of Section
409A of the Code shall be payable as a result of a Change in Control Event unless the Change in
Control qualifies as a change in ownership or effective control of the Corporation within the
meaning of Section 409A of the Code.
7.4 Early Termination of Awards. Any award that has been accelerated as required or
contemplated by Section 7.2 or 7.3 (or would have been so accelerated but for Section 7.5, 7.6 or
7.7) shall terminate upon the related event referred to in Section 7.2 or 7.3, as applicable,
subject to any provision that has been expressly made by the Administrator, through a plan of
reorganization or otherwise, for the survival, substitution, assumption, exchange or other
continuation or settlement of such award and provided that, in the case of options and SARs that
will not survive, be substituted for, assumed, exchanged, or otherwise continued or settled in the
transaction, the holder of such award shall be given reasonable advance notice of the impending
termination and a reasonable opportunity to exercise his or her outstanding options and SARs in
accordance with their terms before the termination of such awards (except that in no case shall
more than ten days’ notice of accelerated vesting and the impending termination be required and any
acceleration may be made contingent upon the actual occurrence of the event).
7.5 Other Acceleration Rules. Any acceleration of awards pursuant to this Section 7 shall
comply with applicable legal requirements and, if necessary to accomplish the purposes of the
acceleration or if the circumstances require, may be deemed by the Administrator to occur a limited
period of time not greater than 30 days before the event. Without limiting the generality of the
foregoing, the Administrator may deem an acceleration to occur immediately prior to the applicable
event and/or reinstate the original terms of an award if an event giving rise to an acceleration
does not occur. Notwithstanding any other provision of the Plan to the contrary, the Administrator
may override the provisions of Section 7.2, 7.3, 7.4 and/or 7.6 by express provision in the award
agreement or otherwise. In addition, the Administrator may accord any Eligible Person a right to
refuse any acceleration, whether pursuant to the award agreement or otherwise, in such
circumstances as the Administrator may approve. The portion of any ISO accelerated pursuant to
Section 7.3 or any other action permitted hereunder shall remain exercisable as an ISO only to the
extent the applicable $100,000 limitation on ISOs is not exceeded. To the extent exceeded, the
accelerated portion of the option shall be exercisable as a nonqualified stock option under the
Code.
7.6 Possible Rescission of Acceleration. If the vesting of an award has been accelerated
expressly in anticipation of an event or upon stockholder approval of an event and the
Administrator later determines that the event will not occur, the Administrator may rescind the
effect of the acceleration as to any then outstanding and unexercised or otherwise unvested awards;
provided that, in the case of any compensation that has been deferred for purposes of Section 409A
16
of the Code, the Administrator determines that such rescission will not likely result in the
imposition of additional tax or interest under Code Section 409A.
7.7 Golden Parachute Limitation. Notwithstanding anything else contained in this Section 7 to
the contrary, in no event shall an award be accelerated under this Plan to an extent or in a manner
which would not be fully deductible by the Corporation or one of its Subsidiaries for federal
income tax purposes because of Section 280G of the Code, nor shall any payment hereunder be
accelerated to the extent any portion of such accelerated payment would not be deductible by the
Corporation or one of its Subsidiaries because of Section 280G of the Code. If a participant would
be entitled to benefits or payments hereunder and under any other plan or program that would
constitute “parachute payments” as defined in Section 280G of the Code, then the participant may by
written notice to the Corporation designate the order in which such parachute payments will be
reduced or modified so that the Corporation or one of its Subsidiaries is not denied federal income
tax deductions for any “parachute payments” because of Section 280G of the Code. Notwithstanding
the foregoing, if a participant is a party to an employment or other agreement with the Corporation
or one of its Subsidiaries, or is a participant in a severance program sponsored by the Corporation
or one of its Subsidiaries, that contains express provisions regarding Section 280G and/or Section
4999 of the Code (or any similar successor provision), the Section 280G and/or Section 4999
provisions of such employment or other agreement or plan, as applicable, shall control as to any
awards held by that participant (for example, and without limitation, a participant may be a party
to an employment agreement with the Corporation or one of its Subsidiaries that provides for a
“gross-up” as opposed to a “cut-back” in the event that the Section 280G thresholds are reached or
exceeded in connection with a change in control and, in such event, the Section 280G and/or Section
4999 provisions of such employment agreement shall control as to any awards held by that
participant).
8. OTHER PROVISIONS
8.1 Compliance with Laws. This Plan, the granting and vesting of awards under this Plan, the
offer, issuance and delivery of shares of Common Stock, the acceptance of promissory notes and/or
the payment of money under this Plan or under awards are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to state and federal
securities law, federal margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Corporation, be necessary or
advisable in connection therewith. The person acquiring any securities under this Plan will, if
requested by the Corporation or one of its Subsidiaries, provide such assurances and
representations to the Corporation or one of its Subsidiaries as the Administrator may deem
necessary or desirable to assure compliance with all applicable legal and accounting requirements.
8.2 Future Awards/Other Rights. No person shall have any claim or rights to be granted an
award (or additional awards, as the case may be) under this Plan, subject to any express
contractual rights (set forth in a document other than this Plan) to the contrary.
8.3 No Employment/Service Contract. Nothing contained in this Plan (or in any other documents
under this Plan or in any award) shall confer upon any Eligible Person or other participant any
right to continue in the employ or other service of the Corporation or one of its Subsidiaries,
constitute any contract or agreement of employment or other service or affect an
17
employee’s status as an employee at will, nor shall interfere in any way with the right of the
Corporation or one of its Subsidiaries to change a person’s compensation or other benefits, or to
terminate his or her employment or other service, with or without cause. Nothing in this Section
8.3, however, is intended to adversely affect any express independent right of such person under a
separate employment or service contract other than an award agreement.
8.4 Plan Not Funded. Awards payable under this Plan shall be payable in shares or from the
general assets of the Corporation, and no special or separate reserve, fund or deposit shall be
made to assure payment of such awards. No participant, beneficiary or other person shall have any
right, title or interest in any fund or in any specific asset (including shares of Common Stock,
except as expressly otherwise provided) of the Corporation or one of its Subsidiaries by reason of
any award hereunder. Neither the provisions of this Plan (or of any related documents), nor the
creation or adoption of this Plan, nor any action taken pursuant to the provisions of this Plan
shall create, or be construed to create, a trust of any kind or a fiduciary relationship between
the Corporation or one of its Subsidiaries and any participant, beneficiary or other person. To the
extent that a participant, beneficiary or other person acquires a right to receive payment pursuant
to any award hereunder, such right shall be no greater than the right of any unsecured general
creditor of the Corporation.
8.5 Tax Withholding. Upon any exercise, vesting, or payment of any award or upon the
disposition of shares of Common Stock acquired pursuant to the exercise of an ISO prior to
satisfaction of the holding period requirements of Section 422 of the Code, the Corporation or one
of its Subsidiaries shall have the right at its option to:
(a) require the participant (or the participant’s personal representative or
beneficiary, as the case may be) to pay or provide for payment of at least the minimum
amount of any taxes which the Corporation or one of its Subsidiaries may be required to
withhold with respect to such award event or payment; or
(b) deduct from any amount otherwise payable in cash to the participant (or the
participant’s personal representative or beneficiary, as the case may be) the minimum amount
of any taxes which the Corporation or one of its Subsidiaries may be required to withhold
with respect to such cash payment.
In any case where a tax is required to be withheld in connection with the delivery of shares
of Common Stock under this Plan, the Administrator may in its sole discretion (subject to Section
8.1) grant (either at the time of the award or thereafter) to the participant the right to elect,
pursuant to such rules and subject to such conditions as the Administrator may establish, to have
the Corporation reduce the number of shares to be delivered by (or otherwise reacquire) the
appropriate number of shares, valued in a consistent manner at their Fair Market Value or at the
sales price in accordance with authorized procedures for cashless exercises, necessary to satisfy
the minimum applicable withholding obligation on exercise, vesting or payment. In no event shall
the shares withheld exceed the minimum whole number of shares required for tax withholding under
applicable law. The Corporation may, with the Administrator’s approval, accept one or more
promissory notes from any Eligible Person in connection with taxes required to be withheld upon the
exercise, vesting or payment of any award under this Plan; provided that any such note shall be
18
subject to terms and conditions established by the Administrator and the requirements of
applicable law.
8.6 Effective Date, Termination and Suspension, Amendments.
8.6.1 Effective Date and Termination. This Plan is effective as of July 31,
2009, the date of its approval by the Board and sole stockholder (the “Effective
Date”). Unless earlier terminated by the Board, this Plan shall terminate at the
close of business on the day before the tenth anniversary of the Effective Date.
After the termination of this Plan either upon such stated expiration date or its
earlier termination by the Board, no additional awards may be granted under this
Plan, but previously granted awards (and the authority of the Administrator with
respect thereto, including the authority to amend such awards) shall remain
outstanding in accordance with their applicable terms and conditions and the terms
and conditions of this Plan.
8.6.2 Board Authorization. The Board may, at any time, terminate or, from time
to time, amend, modify or suspend this Plan, in whole or in part. No awards may be
granted during any period that the Board suspends this Plan.
8.6.3 Stockholder Approval. To the extent then required by applicable law or
any applicable listing agency or required under Sections 162, 422 or 424 of the Code
to preserve the intended tax consequences of this Plan, or deemed necessary or
advisable by the Board, any amendment to this Plan shall be subject to stockholder
approval.
8.6.4 Amendments to Awards. Without limiting any other express authority of
the Administrator under (but subject to) the express limits of this Plan, the
Administrator by agreement or resolution may waive conditions of or limitations on
awards to participants that the Administrator in the prior exercise of its
discretion has imposed, without the consent of a participant, and (subject to the
requirements of Sections 3.2 and 8.6.5) may make other changes to the terms and
conditions of awards. Any amendment or other action that would constitute a
repricing of an award is subject to the limitations set forth in Section 3.2(g).
8.6.5 Limitations on Amendments to Plan and Awards. No amendment, suspension
or termination of this Plan or change of or affecting any outstanding award shall,
without written consent of the participant, affect in any manner materially adverse
to the participant any rights or benefits of the participant or obligations of the
Corporation under any award granted under this Plan prior to the effective date of
such change. Changes, settlements and other actions contemplated by Section 7 shall
not be deemed to constitute changes or amendments for purposes of this Section 8.6.
8.7 Privileges of Stock Ownership. Except as otherwise expressly authorized by the
Administrator or this Plan, a participant shall not be entitled to any privilege of stock ownership
as to any shares of Common Stock not actually delivered to and held of record by the participant.
No
19
adjustment will be made for dividends or other rights as a stockholder for which a record date
is prior to such date of delivery.
8.8 Governing Law; Construction; Severability.
8.8.1 Choice of Law. This Plan, the awards, all documents evidencing awards
and all other related documents shall be governed by, and construed in accordance
with the laws of the State of Delaware.
8.8.2 Severability. If a court of competent jurisdiction holds any provision
invalid and unenforceable, the remaining provisions of this Plan shall continue in
effect.
8.8.3 Plan Construction.
(a) Rule 16b-3. It is the intent of the Corporation that the awards
and transactions permitted by awards be interpreted in a manner that, in the
case of participants who are or may be subject to Section 16 of the Exchange
Act, qualify, to the maximum extent compatible with the express terms of the
award, for exemption from matching liability under Rule 16b-3 promulgated
under the Exchange Act. Notwithstanding the foregoing, the Corporation shall
have no liability to any participant for Section 16 consequences of awards or
events under awards if an award or event does not so qualify.
(b) Section 162(m). Awards under Sections 5.1.4 through 5.1.7 to
persons described in Section 5.2 that are either granted or become vested,
exercisable or payable based on attainment of one or more performance goals
related to the Business Criteria, as well as Qualifying Options and
Qualifying SARs granted to persons described in Section 5.2, that are
approved by a committee composed solely of two or more outside directors (as
this requirement is applied under Section 162(m) of the Code) shall be deemed
to be intended as performance-based compensation within the meaning of
Section 162(m) of the Code unless such committee provides otherwise at the
time of grant of the award. It is the further intent of the Corporation that
(to the extent the Corporation or one of its Subsidiaries or awards under
this Plan may be or become subject to limitations on deductibility under
Section 162(m) of the Code) any such awards and any other Performance-Based
Awards under Section 5.2 that are granted to or held by a person subject to
Section 162(m) will qualify as performance-based compensation or otherwise be
exempt from deductibility limitations under Section 162(m).
(c) Code Section 409A Compliance. The Board intends that, except as
may be otherwise determined by the Administrator, any awards under the Plan
are either exempt from or satisfy the requirements of Section 409A of the
Code and related regulations and Treasury pronouncements (“Section 409A”) to
avoid the imposition of any taxes, including additional
20
income or penalty taxes, thereunder. If the Administrator determines that an award,
award agreement, acceleration, adjustment to the terms of an award, payment,
distribution, deferral election, transaction or any other action or
arrangement contemplated by the provisions of the Plan would, if undertaken,
cause a participant’s award to become subject to Section 409A, unless the
Administrator expressly determines otherwise, such award, award agreement,
payment, acceleration, adjustment, distribution, deferral election,
transaction or other action or arrangement shall not be undertaken and the
related provisions of the Plan and/or award agreement will be deemed modified
or, if necessary, rescinded in order to comply with the requirements of
Section 409A to the extent determined by the Administrator without the
content or notice to the participant.
(d) No Guarantee of Favorable Tax Treatment. Although the Company
intends that awards under the Plan will be exempt from, or will comply with,
the requirements of Section 409A of the Code, the Company does not warrant
that any award under the Plan will qualify for favorable tax treatment under
Section 409A of the Code or any other provision of federal, state, local or
foreign law. The Company shall not be liable to any participant for any tax,
interest or penalties the participant might owe as a result of the grant,
holding, vesting, exercise or payment of any award under the Plan
8.9 Captions. Captions and headings are given to the sections and subsections of this Plan
solely as a convenience to facilitate reference. Such headings shall not be deemed in any way
material or relevant to the construction or interpretation of this Plan or any provision thereof.
8.10 Stock-Based Awards in Substitution for Stock Options or Awards Granted by Other
Corporation. Awards may be granted to Eligible Persons in substitution for or in connection with
an assumption of employee stock options, SARs, restricted stock or other stock-based awards granted
by other entities to persons who are or who will become Eligible Persons in respect of the
Corporation or one of its Subsidiaries, in connection with a distribution, merger or other
reorganization by or with the granting entity or an affiliated entity, or the acquisition by the
Corporation or one of its Subsidiaries, directly or indirectly, of all or a substantial part of the
stock or assets of the employing entity. The awards so granted need not comply with other specific
terms of this Plan, provided the awards reflect only adjustments giving effect to the assumption or
substitution consistent with the conversion applicable to the Common Stock in the transaction and
any change in the issuer of the security. Any shares that are delivered and any awards that are
granted by, or become obligations of, the Corporation, as a result of the assumption by the
Corporation of, or in substitution for, outstanding awards previously granted by an acquired
company (or previously granted by a predecessor employer (or direct or indirect parent thereof) in
the case of persons that become employed by the Corporation or one of its Subsidiaries in
connection with a business or asset acquisition or similar transaction) shall not be counted
against the Share Limit or other limits on the number of shares available for issuance under this
Plan.
8.11 Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to limit the
authority of the Board or the Administrator to grant awards or authorize any other compensation,
with or without reference to the Common Stock, under any other plan or authority.
21
8.12 No Corporate Action Restriction. The existence of this Plan, the award agreements and
the awards granted hereunder shall not limit, affect or restrict in any way the right or power of
the Board or the stockholders of the Corporation to make or authorize: (a) any adjustment,
recapitalization, reorganization or other change in the capital structure or business of the
Corporation or any Subsidiary, (b) any merger, amalgamation, consolidation or change in the
ownership of the Corporation or any Subsidiary, (c) any issue of bonds, debentures, capital,
preferred or prior preference stock ahead of or affecting the capital stock (or the rights thereof)
of the Corporation or any Subsidiary, (d) any dissolution or liquidation of the Corporation or any
Subsidiary, (e) any sale or transfer of all or any part of the assets or business of the
Corporation or any Subsidiary, or (f) any other corporate act or proceeding by the Corporation or
any Subsidiary. No participant, beneficiary or any other person shall have any claim under any
award or award agreement against any member of the Board or the Administrator, or the Corporation
or any employees, officers or agents of the Corporation or any Subsidiary, as a result of any such
action.
8.13 Other Company Benefit and Compensation Programs. Payments and other benefits received by
a participant under an award made pursuant to this Plan shall not be deemed a part of a
participant’s compensation for purposes of the determination of benefits under any other employee
welfare or benefit plans or arrangements, if any, provided by the Corporation or any Subsidiary,
except where the Administrator expressly otherwise provides or authorizes in writing. Awards under
this Plan may be made in addition to, in combination with, as alternatives to or in payment of
grants, awards or commitments under any other plans or arrangements of the Corporation or its
Subsidiaries.
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