Further, the Director agrees, by accepting the award, that the Company and its Affiliates may deduct from any amounts it may owe the Director from time to time (such as other compensation) to the extent of any amounts the Director is required to reimburse the Company pursuant to such policy or applicable law with respect to the award.
3.Compliance with Laws; No Stockholder Rights Prior to Issuance; Dividend Rights.
3.1 Compliance with Laws. The Company’s obligation to make any payments or issue any shares with respect to the award is subject to full compliance with all then applicable requirements of law, the Securities and Exchange Commission or other regulatory agencies having jurisdiction over the Company and its shares, and of any exchange upon which stock of the Company may be listed.
3.2 Limitations on Rights Associated with Units. The Director shall not have the rights and privileges of a stockholder, including without limitation the right to vote or receive dividends (except as expressly provided in Section 3.3), with respect to any Shares which may be issued in respect of the Stock Units until the date appearing on the certificate(s) for such Shares (or, in the case of Shares entered in book entry form, the date that the Shares are actually recorded in such form for the benefit of the Director), if such Shares become deliverable.
3.3 Dividend Equivalent Rights Distributions. Not later than 60 days following each date that the Company pays an ordinary cash dividend on its Common Stock (if any), the Company shall credit the Director with an additional number of Stock Units equal to (i) the per share cash dividend paid by the Company on its Common Stock on such date, multiplied by (ii) the total number of Stock Units (including any dividend equivalents previously credited hereunder) (with such total number adjusted pursuant to Section 4) subject to the Stock Unit award as of the related dividend payment record date, divided by (iii) the Fair Market Value of a Share of common stock on the date of payment of such dividend. Any Stock Units credited pursuant to the foregoing provisions of this Section 3.3 shall be subject to the same vesting, payment and other terms, conditions and restrictions as the original Stock Units to which they relate. No crediting of Stock Units shall be made pursuant to this Section 3.3 with respect to any Stock Units which, as of such record date, have been paid pursuant to Section 1.
4.Adjustments.
The Stock Units are subject to adjustment upon the occurrence of events such as stock splits, stock dividends and other changes in capitalization in accordance with Section 6(a) of the Plan. In the event of any adjustment, the Company will give the Director written notice thereof which will set forth the nature of the adjustment.
5.Tax Matters.
5.1 Tax Withholding. The Company shall be entitled to require, as a condition of making any payments or
issuing any shares upon payment of the Stock Units, that the Director or other person entitled to such shares or other payment pay any sums required to be withheld by federal, state, local or other applicable tax law with respect to such payment. Alternatively, the Company, in its discretion, may make such provisions for the withholding of taxes (if any such withholding is required) as it deems appropriate (including, without limitation, withholding the taxes due from compensation otherwise payable to the Director or reducing the number of shares otherwise deliverable with respect to the award (valued at their then Fair Market Value) by the amount necessary to satisfy any such withholding obligations at the flat percentage rates applicable to supplemental wages).
5.2 Transfer Taxes. The Company will pay all federal and state transfer taxes, if any, and other fees and expenses in connection with the issuance of shares in connection with the payment of the Stock Units.
5.3 Compliance with Code. The Board shall administer and construe the award, and may amend the Terms of the award, in a manner designed to comply with the Code and to avoid adverse tax consequences under Code Section 409A or otherwise.
5.4 Unfunded Arrangement. The right of the Director to receive payment under the award shall be an unsecured contractual claim against the Company. As such, neither the Director nor any Successor shall have any rights in or against any specific assets of the Company based on the award. Awards shall at all times be considered entirely unfunded for tax purposes.
6.Plan; Amendment.
The Stock Units are governed by, and the Director’s rights are subject to, all of the terms and conditions of the Plan and any other rules adopted by the Board, as the foregoing may be amended from time to time. The Director shall have no rights with respect to any amendment of these Terms or the Plan unless such amendment is in writing and signed by a duly authorized officer of the Company. In the event of a conflict between the provisions of the Stock Plan System and the provisions of these Terms and/or the Plan, the provisions of these Terms and/or the Plan, as applicable, shall govern.
7.Definitions.
Whenever used in these Terms, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized:
“Affiliated Company” means the Company and other entity related to the Company under the rules of Code Section 414.
“Key Employee” means an employee treated as a “specified employee” under Code Section 409A(a)(2)(B)(i) of the Company or an Affiliate Company (i.e., a key employee (as defined in Code Section 416(i) without regard to paragraph (5) thereof))
