Exhibit 10.11
FRONTIER COMMUNICATIONS CORPORATION
1996 EQUITY INCENTIVE PLAN
(As Amended and Restated December 29, 2008)
SECTION 1. PURPOSE
The Frontier Communications Corporation 1996 Equity Incentive Plan (the
"Plan") has been superseded by the Frontier Communications Corporation Amended
and Restated 2000 Equity Incentive Plan; the Plan is being amended and restated
to comply with the requirements of Section 409A. The purpose of the Plan is to
provide compensation incentives for high levels of performance and productivity
by employees of the Company. The Plan is intended to strengthen the Company's
existing operations and its ability to attract and retain outstanding employees
upon whose judgment, initiative and efforts the continued success, growth and
development of the Company is dependent, as well as encourage such employees to
have a greater personal financial investment in the Company through ownership of
its common stock.
SECTION 2. DEFINITIONS
When used herein, the following terms have the following meanings:
(a) "AFFILIATE" means any company controlled by the Company, controlling
the Company or under common control with the Company.
(b) "AWARD" means an award granted to any Eligible Employee in accordance
with the provisions of the Plan.
(c) "AWARD AGREEMENT" means the written agreement or certificate evidencing
the terms of the Award granted to an Eligible Employee under the Plan.
(d) "BENEFICIARY" means the beneficiary or beneficiaries designated
pursuant to Section 11 to receive the amount, if any, payable under the Plan
upon the death of an Eligible Employee.
(e) "BOARD" means the Board of Directors of the Company.
(f) A "CHANGE IN CONTROL" shall mean the occurrence of any of the following
events with respect to the Company:
(i) (A) a third "person" (other than an employee benefit plan of the
Company), including a "group", as those terms are used in Section
13(d) of the Exchange Act, is or becomes the beneficial owner (as
that term is used in said Section 13(d)) of stock having twenty
percent (20%) or more of the total number of votes that may be
cast for the election of members of the Board or twenty percent
(20%) or more of the fair market value of the Company's issued
and outstanding stock, or (B) the receipt by the Company of any
report, schedule, application or other document filed with a
state or federal governmental agency or commission disclosing
such ownership or proposed ownership.
(ii) approval by the stockholders of the Company of any (1)
consolidation or merger or sale of assets of the Company in which
the Company is not the continuing or surviving corporation or
pursuant to which shares of stock the Company would be converted
into cash, securities or other property, other than a
consolidation or merger of the Company in which holders of its
common stock immediately prior to the consolidation or merger
have substantially the same proportionate ownership of common
stock of the surviving corporation immediately after the
consolidation or merger as they held immediately before, or (2)
sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all the
assets or businesses of the Company.
(iii) as a result of, or in connection with, any cash tender offer,
exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing
transactions (a "Transaction"), the persons who are members of
the Board before the Transaction shall cease to constitute a
majority of the Board or any successor to the Company.
Notwithstanding anything in this Plan or any Award Agreement to the contrary, to
the extent any provision of this Plan or an Award Agreement would cause a
payment of deferred compensation that is subject to Section 409A to be made upon
the occurrence of a Change in Control, then such payment shall not be made
unless such Change in Control also constitutes a "change in ownership", "change
in effective control" or "change in ownership of a substantial portion of the
Company's assets" within the meaning of Section 409A. Any payment that would
have been made except for the application of the preceding sentence shall be
made in accordance with the payment schedule that would have applied in the
absence of a Change in Control.
(g) "CODE" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. (All citations to Sections of the Code are to such Sections
as they are currently designated and reference to such Sections shall include
the provisions thereof as they may from time to time be amended or renumbered as
well as any successor provisions and any applicable regulations.)
(h) "COMPANY" means Citizens Utilities Company, and its successors and
assigns.
(i) "COMMITTEE" means the Compensation Committee of the Board of Directors
of the Company.
(j) "EFFECTIVE DATE" means with respect to this amendment and restatement
of the Plan, January 1, 2005, which is the Section 409A compliance date.
(k) "ELIGIBLE EMPLOYEE" means an employee of any Participating Company
whose responsibilities and decisions in the judgment of the Committee foster the
management, growth, performance or profitability of any Participating Company.
Where required by the context, "Eligible Employee" includes an individual who
has been granted an Award but is no longer an employee of any Participating
Company.
2
(l) "FAIR MARKET VALUE" means, unless another reasonable method for
determining fair market value is specified by the Committee, which method shall
be one that is deemed to constitute fair market value for purposes of Section
409A to the extent it is used with respect to an Option or SAR, the average of
the high and low sales prices of a share of the appropriate Series of Stock as
reported by the New York Stock Exchange (or if such shares are listed on another
national stock exchange or national quotation system, as reported or quoted by
such exchange or system) on the date in question or, if no such sales were
reported for such date, for the most recent date on which sales prices were
quoted.
(m) "FAMILY MEMBER" AND "FAMILY TRUST" shall have the same meanings as are
employed from time to time by the SEC for the purpose of the exception to the
rules promulgated by the SEC which limit transferability of stock options and
stock awards for purposes of Section 16 of the Exchange Act and/or the use of
Form S-8 under the Securities Act. For the purposes of the Plan, the phrases
"Family Member" and "Family Trust" shall be further limited, if necessary, so
that neither the transfer to a Family Member or Family Trust nor the ability of
a Participant to make such a transfer shall have adverse consequences to the
Company or a Participant by reason of Section 162(m) of the Code.
(n) "FRONTIER PENSION PLANS" means any of the Company's non-contributory
defined-benefit qualified retirement plans in effect and applicable on the date
in question.
(o) "OPTION" means an option to purchase Stock, including Restricted Stock
or Deferred Stock, if the Committee so determines, subject to the applicable
provisions of Section 5 and awarded in accordance with the terms of the Plan and
which may be an incentive stock option qualified under Section 422 of the Code
or a nonqualified stock option.
(p) "PARTICIPATING COMPANY" means the Company or any subsidiary or other
affiliate of the Company; provided, however, for incentive stock options only,
"Participating Company" means the Company, any corporation or other entity which
at the time such option is granted under the Plan qualifies as a subsidiary of
the Company under the definition of "subsidiary corporation" contained in
Section 425(f) of the Code; and further provided that, for Awards covered by
Section 409A only, "Participating Company" means the Company and any corporation
or other entity which at the time such option is granted under the Plan would,
together with the Company, be considered a single person under section 414(b) or
(c) of the Code.
(q) "PARTICIPANT" means an Eligible Employee who has been or is being
granted an Award. When required by the context, the definition of Participant
shall include an individual who has been granted an Award but is no longer an
employee of any Participating Company.
(r) "PERFORMANCE SHARE" means a performance share subject to the
requirements of Section 6 and awarded in accordance with the terms of the Plan.
3
(s) "PLAN" means the Frontier Communications Corporation 1996 Equity
Incentive Plan, as the same may be amended, administered or interpreted from
time to time.
(t) "RESTRICTED STOCK" means Stock delivered under the Plan subject to the
requirements of Section 7 and such other terms and restrictions as the Committee
deems appropriate or desirable.
(u) "SAR" means a stock appreciation right subject to the appropriate
requirements under Section 5 and awarded in accordance with the terms of the
Plan.
(v) "SEC" means the Securities and Exchange Commission. "Exchange Act"
means the Securities Exchange Act of 1934. "Rule 16b-3" shall mean such rule
promulgated by the SEC under the Exchange Act and, unless the circumstances
require otherwise, shall include any other rule or regulation adopted under
Sections 16(a) or 16(b) of the Exchange Act relating to compliance with, or an
exemption from, Section 16(b). "Securities Act" means the Securities Act of
1933. Reference to any section of the Securities Act, Exchange Act or any rule
promulgated thereunder shall include any successor section or rule.
(w) "SECTION 409A" means Section 409A of the Code.
(x) "STOCK" means the Series A or Series B Common Stock of the Company and
any successor Common Stock.
(y) "TERMINATION WITHOUT CAUSE" means termination of employment with a
Participating Company by the employer for any reason other than death, Total
Disability or termination for deliberate, willful or gross misconduct, and also
means voluntary termination of employment by employee.
(z) "TOTAL DISABILITY" means the complete and permanent inability of an
Eligible Employee to perform all of his or her duties under the terms of his or
her employment with any Participating Company, as determined by the Committee
upon the basis of such evidence, including independent medical reports and data,
as the Company deems appropriate or necessary; provided, however, that to the
extent any provision of this Plan or any Award Agreement under this Plan would
cause a payment of deferred compensation to be made upon the occurrence of a
Participant's Total Disability, then such payment shall not be made unless such
Total Disability also constitutes a "disability" within the meaning of Section
409A. Any payment that would have been made except for the application of the
preceding sentence shall be made in accordance with the time of payment schedule
that would have applied in the absence of a Total Disability.
SECTION 3. SHARES SUBJECT TO THE PLAN
(a) Subject to adjustment as provided in Section 14 hereof, 11,300,000
shares of Stock are hereby reserved for issuance pursuant to Awards under the
Plan. Shares reserved for issuance under the Plan shall be made available either
from authorized and unissued shares, shares held by the Company in its treasury
or reacquired shares. The term "issued" shall include all deliveries to a
Participant of shares of Stock pursuant to Awards under the Plan. The Committee
may, in its discretion, decide to award other shares issued by the Company that
are convertible into Stock or make such shares subject to purchase by an option,
in which event the maximum number of shares of Stock into which such shares may
be converted shall be used in applying the aggregate share limit under this
Section 3 and all provisions of the Plan relating to Stock shall apply with full
force and effect with respect to such convertible shares.
4
(b) If, for any reason, any shares of Stock awarded or subject to purchase
or issuance under the Plan are not delivered or are reacquired by the Company
for reasons including, but not limited to, a forfeiture of Restricted Stock or
termination, expiration or a cancellation of an Option, SAR or a Performance
Share, such shares of Stock shall be deemed not to have been issued pursuant to
Awards under the Plan, or to have been subject to the Plan; provided, however,
that the counting of shares of Stock subject to Awards granted under the Plan
against the number of shares available for further Awards shall in all cases
conform to the requirements of Rule 16b-3 under the Exchange Act. With respect
to any Award constituting an Option or SAR granted to any Eligible Employee who
is a "covered employee" as defined in Section 162(m) of the Code that is
canceled, the number of shares of Stock originally subject to such Award shall
continue to count in accordance with Section 162(m) of the Code. Unless the
Committee otherwise determines, shares of Stock received by the Company in
connection with the exercise of Options by delivery of shares or in connection
with the payment of withholding taxes shall reduce the number of shares deemed
to have been issued pursuant to Awards under the Plan for the limit set forth in
Section 3(a) hereof.
SECTION 4. GRANT OF AWARDS AND AWARD AGREEMENTS
(a) Subject to and in furtherance of the provisions of the Plan, the
Committee shall (i) determine and designate from time to time those Eligible
Employees or groups of Eligible Employees to whom Awards are to be granted; (ii)
grant Awards to Eligible Employee; (iii) determine the form or forms of Award to
be granted to any Eligible Employee; (iv) determine the amount or number of
shares of Stock, including Restricted Stock or Deferred Stock if the Committee
so determines, subject to each Award; (v) determine the terms and conditions
(which need not be identical) of each Award; (vi) determine the rights of each
Participant after employment has terminated and the periods during which such
rights may be exercised; (vii) establish and modify performance objectives;
(viii) determine whether and to what extent Eligible Employees shall be allowed
or required to defer receipt of any Awards or other amounts payable under the
Plan to the occurrence of a specified date or event; (ix) determine the price at
which shares of Stock may be offered under each Award which price may, except in
the case of Options, be zero; (x) permit cashless exercise of Options and other
Awards of a sale, loan or other nature covering exercise prices and/or income
taxes; (xi) interpret, construe and administer the Plan and any related Award
Agreement and define the terms employed therein; and (xii) make all of the
determinations necessary or advisable with respect to the Plan or any Award
granted thereunder. Awards granted to different Eligible Employees or
Participants need not be identical and, in addition, may be modified in
different respects by the Committee.
(b) Each Award granted under the Plan shall be evidenced by a written Award
Agreement, in a form approved by the Committee. Such agreement shall be subject
to and incorporate the express terms and conditions, if any, required under the
Plan or as required by the Committee for the form of Award granted and such
other terms and conditions as the Committee may specify.
5
(c) The Committee may modify or amend any Awards (by cancellation and
regrant or substitution of Awards or otherwise and with terms and conditions
more or less favorable to Eligible Employees) or waive any restrictions or
conditions applicable to any Awards or the exercise or realization thereof
(except that the Committee may not undertake any such modifications, amendments
or waivers if the effect thereof, taken as a whole, adversely and materially
affects the rights of any recipient of previously granted Awards without his or
her consent, unless such modification, amendment or waiver is necessary or
desirable for the continued validity of the Plan or its compliance with Rule
16b-3 or any other applicable law, rule or regulation or pronouncement or to
avoid any adverse consequences under Section 162(m) of the Code or any
requirement of a securities exchange or association or regulatory or
self-regulatory body). Notwithstanding the foregoing, no such amendment,
modification or waiver may alter the terms of any Option to reduce the Option
price per share (or alter any SAR to reduce the exercise price of the SAR).
Further, the Committee may not, without the approval of shareholders, cancel any
outstanding Option and replace it with a new Option with a lower Option price
(or cancel any SAR and replace it with a new SAR with a lower exercise price)
where the economic effect would be the same as reducing the Option price of the
cancelled Option (or reducing the exercise price of the cancelled SAR).
(d) The Committee may permit the voluntary surrender of all or a portion of
any Award granted under the Plan to be conditioned upon the granting of a new
Award or may require such voluntary surrender as a condition to a grant of a new
Award. Any such new Award shall be subject to such terms and conditions as are
specified by the Committee at the time the new Award is granted, determined in
accordance with the provisions of the Plan without regard to the terms of the
surrendered Award.
(e) In any calendar year, no Eligible Employee may receive Awards covering
more than 500,000 shares of the Company's Stock. Such number of shares shall be
adjusted in accordance with Section 14 hereof.
(f) Notwithstanding anything in this Section 4 to the contrary, Options or
SARs awarded after December 31, 2004 may only be granted only to individuals who
provide direct services on the date of grant of the Option or SAR to the Company
or another entity in a chain of entities in which the Company or another such
entity has a controlling interest within the meaning of Treasury Regulation ss.
1.409A-1(b)(5)(iii)(E) in each entity in the chain.
SECTION 5. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
(a) With respect to Options and SARs, the Committee shall (i) authorize the
granting of incentive stock options, nonqualified stock options, SARs or a
combination of incentive stock options, nonqualified stock options and SARs;
(ii) determine the number of shares of Stock subject to each Option or the
number of shares of Stock that shall be used to determine the value of a SAR;
(iii) determine whether such Stock shall be Restricted Stock; (iv) determine the
time or times when and the manner in which each Option shall be exercisable and
the duration of the exercise period; and (v) determine whether or not all or
part of each Option may be canceled by the exercise of a SAR; provided, however,
that the aggregate Fair Market Value (determined as of the date of Option is
granted) of the Stock (disregarding any restrictions in the case of Restricted
Stock) for which incentive stock options granted to any Eligible Employee under
this Plan may first become exercisable in any calendar year shall not exceed
$100,000. Notwithstanding the foregoing, to the extent that Options intended to
be incentive stock options granted to an Eligible Employee under this Plan for
any reason exceed such limit on exercisability, such excess Options shall be
treated as nonqualified stock options as provided under Section 422(d) of the
Code, but shall in all other respects remain outstanding and exercisable in
accordance with their terms.
6
(b) The exercise period for a nonqualified stock option or SAR shall be 10
years from the date of grant or such shorter period as may be specified by the
Committee at the time of grant. The exercise period for an incentive stock
option and any related SAR, including any extension which the Committee may from
time to time decide to grant, shall not exceed 10 years from the date of grant;
provided, however, that, in the case of an incentive stock option granted to an
Eligible Employee who, at the time of grant, owns stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (a
"10% Stockholder"), such period, including extensions, shall not exceed five
years from the date of grant.
(c) The Option price per share or exercise price of a SAR shall be
determined by the Committee at the time any Option or SAR is granted and shall
be not less than the Fair Market Value, or, in the case of an incentive stock
option granted to a 10% Stockholder and any related tandem SARs, 110 percent of
the Fair Market Value, disregarding any restrictions in the case of Restricted
Stock, on the date the Option is granted, as determined by the Committee;
provided, however, that such price shall be at least equal to the par value of
one share of Stock; provided further, however, that in the discretion of the
Committee and if it does not cause the Option to be subject to Section 409A, in
the case of a nonstatutory stock option or SAR, the Option price per share or
the exercise price of a SAR may be less than the Fair Market Value in the case
of an Option or SAR granted in order to induce an individual to become an
employee of a Participating Company or in the case of an Option or SAR granted
to a new or prospective employee in order to replace stock options, SARs or
other long-term incentives under a program maintained by a prior employer which
are forfeited or cease to be available to the new employee by reason of his
termination of employment with his prior employer. In the case of an Option or
SAR granted through the assumption of, or in substitution for, outstanding
awards previously granted to individuals who became employees of the Company as
a result of merger, consolidation, acquisition or other corporate transaction
involving the Company, provided it does not cause the Option or SAR to be
subject to Section 409A, an Option price (or SAR exercise price) per share may
be used that reasonably preserves the value of the previously granted award
(d) No part of any Option or SAR may be exercised (i) until the Participant
who has been granted the Award shall have remained in the employ of a
Participating Company for such period after the date on which the Option or SAR
is granted as the Committee may specify and (ii) until achievement of such
performance or other criteria, if any, by the Participant, as the Committee may
specify. A SAR and a related Option shall commence to be exercisable no earlier
than six months following the date the Option and SAR are granted. The Committee
may further require that an Option or SAR become exercisable in installments.
7
(e) Except as otherwise provided in the Plan, the purchase price of the
shares as to which an Option shall be exercised shall be paid to the Company at
the time of exercise either in cash or in such other consideration as the
Committee deems appropriate, including, Stock, or with respect to nonqualified
options or Restricted Stock, already owned by the optionee (subject to any
minimum holding period specified by the Committee), having a total Fair Market
Value, as determined by the Committee, equal to the purchase price, or a
combination of cash and such other consideration having a total Fair Market
Value, as so determined, equal to the purchase price; provided, however, that if
payment of the exercise price is made in whole or in part in the form of
Restricted Stock, the Stock received upon the exercise of the Option shall be
Restricted Stock, at least with respect to the same number of shares and subject
to the same restrictions or other limitations as the Restricted Stock paid on
the exercise of the Option. The Committee may provide that a Participant who
delivers shares of Stock to the Company, or sells shares of Stock and applies
all of the proceeds, (a) to pay, or reimburse the payment of the exercise price
of shares of Stock acquired under an employee stock option or SAR or to purchase
shares of Stock under an employee award or grant, an employee purchase plan or
program or any other stock-based employee benefit or incentive plan, (whether or
not such award or grant is under this Plan) and/or (b) to pay federal or state
income taxes resulting from the exercise of such Options or SARs or the purchase
of shares of Stock pursuant to any such grant, award, plan or program, shall
receive a replacement Option under this Plan to purchase a number of shares of
Stock equal to the number of shares of Stock delivered to the Company, or sold,
the proceeds of the sale of which are applied as aforesaid in this sentence. The
replacement Option shall have an exercise price equal to Fair Market Value on
the date of such payment and shall include such other terms and conditions as
the Committee may specify.
(f) (i) Upon the Termination Without Cause of a Participant holding Options
or SARs, his or her Options and SARs may be exercised to the extent exercisable
on the date of Termination Without Cause, at any time and from time to time
within 90 days of the date of such Termination. The Committee, however, in its
discretion, may provide that any Option or SAR of such a Participant which is
not exercisable by its terms on the date of Termination Without Cause will
become exercisable in accordance with a schedule (which may extend the time
limit referred to above, but not later than the final expiration date specified
in the Option or SAR Award Agreement) to be determined by the Committee at any
time during the period that any other Options or SARs held by the Participant
are exercisable.
(ii) Upon the death, retirement or Total Disability (during a
Participant's employment or within three months after termination
of employment for any reason other than termination for cause) of
a Participant holding an Option or SAR, his or her Options and
SARs may be exercised only to the extent exercisable at the time
of death, retirement or Total Disability (or such earlier
termination of employment), at any time and from time to time 90
days after such death, retirement or Total Disability. The
Committee, however, in its discretion, may provide that any
Options or SARs outstanding but not exercisable at the date of
the first to occur of death, retirement or Total Disability will
become exercisable in accordance with a schedule (which may
extend the limits referred to above, but not to a date later than
the final expiration date specified in such Option or SAR Award
Agreement) to be determined by the Committee at any time during
the period while any other Option or SARs held by the Participant
are exercisable.
8
(iii) Upon death, Total Disability, retirement or Termination Without
Cause of a Participant holding an Option(s) or SAR(s) who is
immediately eligible to receive benefits under the terms of the
Frontier Pension Plans, his or her Options or SARs that were
awarded prior to December 1, 2004 may be exercised in full as to
all shares or SAR rights covered by Options and SAR Award
Agreements (whether or not then exercisable) at any time, or from
time to time, but no later than the expiration date specified in
such Option or SAR Award Agreement as specified in Section 5(b)
above or, in the case of incentive Options, within one year
following such death, Total Disability or Termination Without
Cause. This paragraph (iii) does not apply to any Option or SAR
that was awarded on or after December 1, 2004.
(iv) If the employment of a Participant holding an Option or SAR is
terminated for deliberate, willful or gross misconduct, as
determined by the Company, all rights of such Participant and any
Family Member or Family Trust or other transferee to which such
Participant has transferred his or her Option or SAR shall expire
upon receipt by the Participant of the notice of such
termination.
(v) In the event of the death of a Participant, his or her Options
and SARs may be exercised by the person or persons to whom the
Participant's rights under the Option or SAR pass by will, or if
no such person has such right, by his or her executors or
administrators or Beneficiary. The death of a Participant after
Total Disability or Termination Without Cause will not adversely
effect the rights of a Participant or anyone entitled to the
benefits of such Option or SAR.
(g) Except as otherwise determined by the Committee, no Option or SAR
granted under the Plan shall be transferable other than by will or by the laws
of descent and distribution, unless the Committee determines that an Option or
SAR may be transferred by a Participant to a Family Member or Family Trust or
other transferee. Such transfer shall be evidenced by a writing from a grantee
to the Committee or Committee's designee on a form established by the Committee.
Absent an authorized transfer during the lifetime of the Participant, an Option
shall be exercisable only by him or her by his or her guardian or legal
representative.
(h) With respect to an incentive stock option, the Committee shall specify
such terms and provisions as the Committee may determine to be necessary or
desirable in order to qualify such Option as an incentive stock option within
the meaning of Section 422 of the Code.
9
(i) Upon exercise of a SAR, the Participant shall be entitled, subject to
such terms and conditions as the Committee may specify at any time, to receive
upon exercise thereof the excess of (i) the Fair Market Value of a specified
number of shares of Stock at the time of exercise, as determined by the
Committee, over (ii) a specified amount which shall not, subject to Section
5(j), be less than the Fair Market Value of such specified number of shares of
Stock at the time the SAR is granted. Upon exercise of a SAR, payment of such
excess shall be made as the Committee shall specify (A) in cash, (B) through the
issuance or transfer to the Participant of whole shares of Stock, including
Restricted Stock, with a Fair Market Value, disregarding any restrictions in the
case of Restricted Stock, at such time equal to any such excess, or (C) a
combination of cash and shares of Stock with a combined Fair Market Value at
such time equal to such excess, all as determined by the Committee; provided,
however, a fractional share of Stock shall be paid in cash equal to the Fair
Market Value of the fractional share of Stock, disregarding any restrictions in
the case of Restricted Stock, at such time.
(j) If the Award granted to a Participant allows the Participant to elect
to cancel all or any portion of an unexercised Option by exercising a related
SAR, then the Option price per share of Stock shall be used as the specified
price in Section 5(i), to determine the value of the SAR upon such exercise;
and, in the event of the exercise of such SAR, the Company's obligation in
respect of such Option or such portion thereof will be discharged by payment of
the SAR so exercised.
(k) If authorized by the Committee in its sole discretion, the Company may
accept the surrender of the right to exercise any Option granted under the Plan
(whether or not granted with a related SAR) as to all or any of the shares of
Stock as to which the Option is then exercisable, in exchange for payment to the
optionee (in cash or shares of Stock valued at the then Fair Market Value) of an
amount equal to the difference between the option price and the then Fair Market
Value of the shares as to which such right to exercise is surrendered.
SECTION 6. PERFORMANCE SHARES
(a) The Committee may award Performance Shares to Participant under the
Plan, which may be denominated in Stock or in dollars. The Committee shall
determine the performance periods (the "Performance Periods") and the
performance objectives relating to each Performance Share Award. Performance
objectives may vary from Participant to Participant and between groups of
Participants and shall only be based upon any one or more of the following
performance criteria, any combination and/or specifics of which shall be
determined by the Committee as it may deem appropriate: (i) stock price; (ii)
market share; (iii) sales; (iv) earnings per share; (v) operating cash flow;
(vi) free cash flow; (vii) net income or loss; (viii) net income or loss
adjusted to exclude specified items such as gain or losses from extraordinary or
non-recurring items and non-cash expense and income, and before specified
expense items such as interest, depreciation, amortization and income taxes;
(ix) EBITDA; (x) revenue; (xi) return on equity or assets or (xii) cost control.
Performance objectives may be in respect to the performance of the Company and
its subsidiaries or a particular subsidiary or division and may be expressed in
absolute terms or in relation to another company or companies or a division
thereof. Performance Periods may overlap and Participants may participate
simultaneously with respect to Performance Shares for which different
performance periods are prescribed.
(b) At the beginning of a Performance Period (but in no event prior to the
earlier of the elapsing of 90 days or 25% of such Performance Period) the
Committee shall determine and set forth in writing for each Participant or group
of Participants the number of Performance Shares or the dollar value of the
Performance Share Awards made and the applicable performance objectives, each of
which may be fixed or may be expressed in terms of a progression within a
specified range. At the end of each Performance Period, the Committee shall
certify in writing the extent to which the prescribed performance objectives
have been satisfied. An Eligible Employee shall be eligible to be awarded, in
any calendar year, Performance Share Awards up to the maximum number of shares
contemplated in Section 4(e) and shall also be eligible to be awarded
Performance Share Awards denominated in dollars subject to a maximum limitation
of $500,000 for all such dollar-denominated Awards granted to any Eligible
Employee in any calendar year.
10
(c) If during the course of a Performance Period there shall occur
significant events as determined by the Committee, including, but not limited
to, a reorganization of the Company, which the Committee expects to have a
substantial effect on a performance objective during such period, the Committee
may revise such objective.
(d) If a Participant terminates service with all Participating Companies
during a Performance Period because of death, Total Disability, or a significant
event, as determined by the Committee, that Participant shall be entitled to
payment in settlement of each Performance Share for which the Performance Period
was prescribed (i) based upon the performance objectives satisfied at the end of
such period and (ii) prorated for the portion of the Performance Period during
which the Participant was employed by any Participating Company; provided,
however, the Committee may provide for an earlier payment in settlement of such
Performance Share in such amount and under such terms and conditions as the
Committee deems appropriate or desirable with the consent of the Participant. If
a Participant terminates service with all Participating Companies during a
Performance Period for any other reason, then such Participant shall not be
entitled to any payment with respect to that Performance Period unless the
Committee shall otherwise determine.
(e) Each Performance Share may be paid in whole shares of Stock, including
Restricted Stock or Deferred Stock (together with any cash representing
fractional shares of Stock), or cash, or a combination of Stock and cash either
as a lump sum payment or in annual installments, all as the Committee shall
determine, at the time of grant of the Performance Share or otherwise,
commencing as soon as practicable after the end of the relevant Performance
Period. Any dividends or distributions payable on Performance Shares (or the
equivalent as specified in the grant), other than cash dividends representing
the periodic distribution of profits which shall be retained by the Company,
shall be paid over to the Participant when and if payment is made of the
underlying Performance Shares, unless the grant provides otherwise. Except as
otherwise provided in this Section 6, no Performance Shares awarded to
Participants shall be sold, exchanged, transferred, pledged, hypothecated or
otherwise disposed of during the Performance Period unless the Committee
determines that an Award may be transferred to a Family Member or Family Trust
or other transferee.
SECTION 7. RESTRICTED STOCK
(a) Restricted Stock may be received by a Participant either as an Award or
as the result of an exercise of an Option or SAR or as payment for a Performance
Share. Restricted Stock shall be subject to a restriction period (after which
restrictions shall lapse) which shall mean a period commencing on the date the
Award is granted and ending on such date or upon the achievement of such
performance or other criteria as the Committee shall determine (the "Restriction
Period"). The Committee may provide for the lapse of restrictions in
installments where deemed appropriate.
11
(b) Except as otherwise provided in this Section 7, no shares of Restricted
Stock received by a Participant shall be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of during the Restriction Period unless the
Committee determines that an Award may be transferred by a Participant to a
Family Member or Family Trust or other transferee; provided, however, that for
Awards of Restricted Shares that were made prior to December 1, 2004, that
Restriction Period for any Participant shall expire and all restrictions on
shares of Restricted Stock shall lapse upon the Participant's (i) death, (ii)
Total Disability or (iii) Termination Without Cause where the Participant is
immediately eligible to receive benefits under the terms of Frontier Pension
Plans, or with the consent of the Company, or upon some significant event, as
determined by the Committee, including, but not limited to, a reorganization of
the Company.
(c) Except for those circumstances specifically identified in the preceding
subsection (b) that apply to Awards of Restricted Shares that were made prior to
December 1, 2004, if a Participant's employment with all Participating Companies
for any reason or in the event of the Participant's death, in each case before
the expiration of the Restriction Period, all shares of Restricted Stock still
subject to restriction shall, unless the Committee otherwise determines within
90 days after such termination, be forfeited by the Participant and shall be
reacquired by the Company, and, in the case of Restricted Stock purchased
through the exercise of an Option, the Company shall refund the purchase price
paid on the exercise of the Option.
(d) The Committee may require under such terms and conditions as it deems
appropriate or desirable that the certificates for Restricted Stock delivered
under the Plan may be held in custody until the Restriction Period expires or
until restrictions thereon otherwise lapse, and may require as a condition of
any receipt of Restricted Stock that the Participant shall have delivered a
stock power endorsed in blank relating to the Restricted Stock.
(e) Nothing in this Section 7 shall preclude a Participant from exchanging
any shares of Restricted Stock subject to the restrictions contained herein for
any other shares of Stock that are similarly restricted.
(f) Unless the Award Agreement provides otherwise, amounts equal to any
cash dividends representing the periodic distributions of profits declared and
payable during the Restriction Period with respect to the number of shares of
Restricted Stock credited to a Participant shall be paid to the Participant
within 30 days after each dividend becomes payable, unless, at the time of the
Award, the Committee determines that the dividends should be reinvested in
additional shares of Restricted Stock, in which case additional shares of
Restricted Stock shall be credited to the Participant based on the Stock's Fair
Market Value at the time of each such dividend, or unless the Committee
specifies otherwise. All dividends or distributions payable on shares (other
than cash dividends representing periodic distributions of profits) of
Restricted Stock (or the equivalent as specified in the grant) shall be paid
over to the Participant when and if as restrictions lapse on the underlying
shares of Restricted Stock, unless the grant provides otherwise.
12
SECTION 8. DEFERRED STOCK
[RESERVED]
SECTION 9. OTHER STOCK-BASED AWARDS
The Committee may grant other Awards under the Plan which are denominated
in stock units or pursuant to which shares of Stock may be acquired, including
Awards valued using measures other than market value or Fair Market Value, if
deemed by the Committee in its discretion to be consistent with the purposes of
the Plan. Subject to the terms of the Plan, the Committee shall determine the
form of such Awards, the number of shares of Stock to be granted or covered
pursuant to such Awards and all other terms and conditions of such Awards. To
the extent an Award described in this section is a 409A Award (as defined in
Section 17) and is subject to a substantial risk of forfeiture within the
meaning of Section 409A (or will be granted upon the satisfaction of a condition
that constitutes such a substantial risk of forfeiture), any compensation due
under the Award (or pursuant to a commitment to grant an Award) shall be
provided in full not later than the 60th day following the date there is no
longer such a substantial risk of forfeiture with respect to the Award, unless
the Committee shall clearly and expressly provide otherwise with respect to the
Award.
SECTION 10. CERTIFICATES FOR AWARDS OF STOCK
(a) Subject to Section 7(d), each Participant entitled to receive shares of
Stock under the Plan shall be issued a certificate for such shares or have their
shares registered for their account in book entry form by the Company's transfer
agent. In the instance of a certificate, such certificate shall be registered in
the name of the Participant, and shall bear an appropriate legend reciting the
terms, conditions and restrictions, if any, applicable to such shares and shall
be subject to appropriate stop-transfer orders.
(b) The Company shall not be required to issue or deliver any shares or
certificates for shares of Stock prior to (i) the listing of such shares on any
stock exchange or quotation system on which the Stock may then be listed or
quoted, and (ii) the completion of any registration, qualification, approval or
authorization of such shares under any federal or state law, or any ruling or
regulation or approval or authorization of such shares under any governmental
body which the Company shall, in its sole discretion, determine to be necessary
or advisable.
(c) All shares and certificates for shares of Stock delivered under the
Plan shall also be subject to such stop-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and other
requirements of the SEC, any stock exchange upon which the Stock is then listed
and any applicable federal or state securities or regulatory laws, and the
Committee may cause a legend or legends to be placed on any such certificates to
make appropriate reference to such restrictions. The foregoing provisions of
this Section 10(c) shall not be effective if and to the extent that the shares
of Stock delivered under the Plan are covered by an effective and current
registration statement under the Securities Act, or if the Committee determines
that application of such provisions is no longer required or desirable. In
making such determination, the Committee may rely upon an opinion of counsel for
the Company.
13
(d) Except for the restrictions on Restricted Stock under Section 7, each
Participant who receives an award of Stock shall have all of the rights of a
stockholder with respect to such shares, including the right to vote the shares
and receive dividends and other distributions. No Participant awarded an Option,
a SAR, or Performance Share or Deferred Stock shall have any right as a
stockholder with respect to any shares subject to such Award prior to the date
of issuance to him or her of certificate or certificates for such shares.
SECTION 11. BENEFICIARY
(a) Each Eligible Employee shall file with the Committee a written
designation of one or more persons as the Beneficiary who shall be entitled to
receive the Award, if any, payable under the Plan upon his or her death. An
Eligible Employee may from time to time revoke or change his or her Beneficiary
designation without the consent of any prior Beneficiary by filing a new
designation with the Committee. The last such designation received by the
Committee shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Committee prior to the Eligible Employee's death, and in no event shall it be
effective as of a date prior to such receipt.
(b) If no such Beneficiary designation is in effect at the time of an
Employee's death, or if no designated Beneficiary survives the Eligible Employee
or if such designation conflicts with law, the Eligible Employee's estate shall
be entitled to receive the Award, if any, payable under the Plan upon his or her
death. If the Committee is in doubt as to the right of any person to receive
such Award, the Company may retain such Award, without liability for any
interest thereon, until the Committee determines the right thereto, or the
Company may pay such Award into any court of appropriate jurisdiction and such
payment shall be a complete discharge of the liability of the Company therefor.
SECTION 12. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Committee, as appointed by the
Board and serving at the Board's pleasure. Each member of the Committee shall be
both a member of the Board and shall satisfy the "disinterested administration"
or similar requirements, if any, of Rule 16b-3 under the Exchange Act and the
"outside director" or similar successor requirements, if any, of Section 162(m)
of the Code and the regulations promulgated thereunder.
(b) All decisions, determinations or actions of the Committee made or taken
pursuant to grants of authority under the Plan shall be made or taken in the
sole and absolute discretion of the Committee and shall be final, conclusive and
binding on all persons for all purposes.
(c) The Committee shall have full power, discretion and authority to
interpret, construe and administer the Plan and any part thereof and any related
Award Agreement and define the terms employed in the Plan or any agreement, and
its interpretations and constructions thereof and actions taken thereunder shall
be final, conclusive and binding on all persons for all purposes.
14
(d) The Committee shall have full power, discretion and authority to
prescribe and rescind rules, regulations and policies for the administration of
the Plan.
(e) The Committee's decisions and determinations under the Plan and with
respect to any Award granted thereunder need not be uniform and may be made
selectively among Awards, Participants or Eligible Employees, whether or not
such Awards are similar or such Participants or Eligible Employees are similarly
situated.
(f) The Committee shall keep minutes of its actions under the Plan. The act
of a majority of the members present at a meeting duly called and held shall be
the act of the Committee. Any decision or determination reduced to writing and
signed by all members of the Committee shall be fully as effective as if made by
unanimous vote at a meeting duly called and held.
(g) The Committee may employ such legal counsel, including without
limitation independent legal counsel and counsel regularly employed by the
Company, consultants and agents as the Committee may deem appropriate for the
administration of the Plan and may rely upon any opinion received from any such
counsel or consultant and any computations received from any such consultant or
agent. All expenses incurred by the Committee in interpreting and administering
the Plan, including without limitation, meeting fees and expenses and
professional fees, shall be paid by the Company.
(h) No member or former member of the Committee or the Board shall be
liable for any action or determination made in good faith with respect to the
Plan or any Award granted under it. Each member or former member of the
Committee or the Board shall be indemnified and held harmless by the Company
against all cost or expense (including counsel fees and expenses) or liability
(including any sum paid in settlement of a claim with the approval of the Board)
arising out of any act or omission to act in connection with the Plan unless
arising out of such member's or former member's own fraud or bad faith. Such
indemnification shall be in addition to any rights to indemnification or
insurance the members or former member may have as directors or under the
by-laws of the Company or otherwise.
(i) The Committee's determination that an Option, SAR, Performance Share,
Restricted Stock, Deferred Stock or other Stock-based Awards may be transferred
by a Participant to a Family Member or Family Trust or other transferee may be
set forth in: determinations pursuant to Section 12(c), rules and regulations of
general application adopted pursuant to Section 12(d), in the written Award
Agreement, or by a writing delivered to the Participant made any time after the
relevant Award or Awards have been granted, on a case-by-case basis, or
otherwise. In any event, the transferee or Family Member or Family Trust shall
agree in writing to be bound by all the provisions of the Plan and the Award
Agreement, and in no event shall any such transferee have greater rights under
such Award than the Participant effecting such transfer.
(j) With respect to credits, shares, cash or other property credited to a
Participant by reason of dividends or distributions, if the Committee shall so
determine, all such credits, shares, cash or other property to a Participant
shall be paid to the Participant periodically at the end of the applicable
period, whether or not the performance, employment or other standards (or lapse
of time) upon which such Award is conditioned have been satisfied.
15
SECTION 13. AMENDMENT OR DISCONTINUANCE
The Board may, at any time, amend or terminate the Plan. The Plan may also
be amended by the Committee, provided that all such amendments shall be reported
to the Board. No amendments shall become effective unless approved by
affirmative vote of the Company's stockholders if such approval is necessary or
desirable for the continued validity of the Plan or if the failure to obtain
such approval would adversely affect the compliance of the Plan with Rule 16b-3
or any successor rule under the Exchange Act or Section 162(m) of the Code or
any other rule or regulation. No amendment or termination shall, when taken as a
whole, adversely and materially affect the rights of any Participant who has
received a previously granted Award without his or her consent unless the
amendment or termination is necessary or desirable (i) for the continued
validity of the Plan or its compliance with Rule 16b-3 or any other applicable
law, rule or regulation or pronouncement or (ii) to avoid any adverse
consequences under Section 162(m) of the Code, Section 409A or any requirement
of a securities exchange or association or regulatory or self-regulatory body.
SECTION 14. ADJUSTMENTS IN EVENT OF CHANGE IN COMMON STOCK
In the event of a change in corporate capitalization, stock split or stock
dividend, the number of shares purchasable upon exercise of an Option or SAR
shall be increased to the new number of shares which result from the shares
covered by the Option or SAR immediately before the change, split or dividend.
The purchase price per share shall be reduced proportionately and the total
purchase price will remain the same.
In the event of any other change in corporate capitalization, or a
corporate transaction, such as any merger of a corporation into another
corporation, any consolidation of two or more corporations into another
corporation, any separation of a corporation (including a spinoff or other
distribution of stock or property by a corporation), any reorganization of a
corporation (whether or not such reorganization comes within the definition of
such term in Section 368 of the Code), or any partial or complete liquidation by
a corporation or other similar event which could distort the implementation of
the Plan or the realization of its objectives, the Committee shall make an
appropriate adjustment in the number of shares of Stock (i) which are covered by
the Plan, (ii) which may be granted to any one Eligible Employee and which are
subject to any Award, and the purchase price therefor, and in terms, conditions
or restrictions on securities as the Committee deems equitable, with the
objective that the securities covered under the Plan or an Award shall be those
securities which a Participant would have received if he or she had exercised
his or her Option or SAR prior to the event or been entitled to his or her
Restricted or Deferred Stock or Performance Shares.
All such events occurring between the effective date of the Option and its
exercise shall result in an adjustment to the Option terms.
16
SECTION 15. CHANGE IN CONTROL
Awards may include, or may incorporate from any relevant guidelines adopted
by the Committee, terms which provide that any or all of the following actions
or consequences, with any modifications adopted by the Committee, may occur as a
result of, or in anticipation of, any Change in Control to assure fair and
equitable treatment of Participants:
(a) Any Options outstanding at least six months as of the date of Change in
Control shall, if held by a current employee of the Company, become immediately
exercisable in full. In addition, all Participants may, regardless of whether
still an employee of the Company, elect to cancel all or any portion of any
Option or Award no later than 90 days after the Change in Control, in which
event the Company shall pay to such electing Participant, an amount in cash
equal to the excess, if any, of the Current Market Value (as defined below) of
the shares of Stock, including Performance Shares or Restricted Stock, subject
to the Option or of the portion thereof so canceled over the option price for
such shares; provided, however, that no Participant shall have the right to
elect cancellation unless and until at least 6 months have elapsed after the
date of grant of the Option.
(b) Any Performance Periods shall end and the Company shall pay each
Participant an amount in cash equal to the value of such Participant's
performance shares, if any, based upon the Stock's Current Market Value in full
settlement of such performance shares.
(c) Any Restriction Periods shall end and the Company shall pay each
Participant an amount in cash equal to the Current Market Value of the
Restricted Stock held by, or on behalf of, each Participant in exchange for such
Restricted Stock.
(d) The Company shall pay to each Participant all amounts due, if any,
deferred by or payable under Awards granted to such Participant under the Plan
which are not Performance Shares or Restricted Stock, in accordance with the
terms provided by the Committee at the time of deferral or grant.
(e) For purpose of this Section 15, "Current Market Value" means the
highest Fair Market Value during the period commencing 30 days prior to the
Change in Control and ending 30 days after the Change in Control (the "reference
period"); provided that, if the Change in Control occurs as a result of a tender
offer or exchange offer, or a merger, purchase of assets or stock, or another
transaction approved by shareholders of the Company, Current Market Value means
the higher of (i) the highest Fair Market Value during the reference period, or
(ii) the highest price paid per share of Stock pursuant to such tender offer,
exchange offer or transaction. Notwithstanding the preceding provisions of this
subsection, in the case of any Option that is granted or becomes exercisable
after December 31, 2004 (or that is "materially modified" within the meaning of
Section 409A after October 3, 2004) Current Market Value shall not be greater
than the largest amount that will not cause the Option to become subject to
Section 409A.
17
SECTION 16. MISCELLANEOUS
(a) Nothing in this Plan or any Award granted hereunder shall confer upon
any employee any right to continue in the employ of any Participating Company or
interfere in any way with the right of any Participating Company to terminate
his or her employment at any time.
(b) No Award payable under the Plan shall be deemed salary or compensation
for the purpose of computing benefits under any employee benefit plan or other
arrangement of any Participating Company for the benefit of its employees unless
the Company shall determine otherwise.
(c) No Eligible Employee or Participant shall have any claim to an Award
until it is actually granted under the Plan. To the extent that any person
acquires a right to receive payments from the Company under this Plan, such
right shall be no greater than the right of an unsecured general creditor of the
Company. All payments of Awards provided for under the Plan shall be paid by the
Company either by issuing shares of Stock or by delivering cash from the general
funds of the Company or other property of the Company; provided, however, that
such payments shall be reduced by the amount of any payments made to the
Participant or his or her dependents, beneficiaries or estate from any trust or
special or separate fund established in connection with this Plan. The Company
shall not be required to establish a special or separate fund or other
segregation of assets to assure such payments, and, if the Company shall make
any investments to aid it in meeting its obligations hereunder, the Participant
shall have no right, title, or interest whatever in or to any such investments
except as may otherwise be expressly provided in a separate written instrument
relating to such investments.
(d) Absence on leave approved by a duly constituted officer of the Company
(a "Company approved leave") shall not be considered interruption or termination
of employment for any purposes of the Plan; provided, however, that no Award may
be granted to an employee while he or she is absent on leave. Notwithstanding
the preceding sentence, if an Award that is covered by Section 409A is to be
distributed upon "separation from service" within the meaning of Section 409A, a
Company approved leave shall be considered to result in a separation from
service to the extent necessary for compliance with Section 409A.
(e) If the Committee shall find that any person to whom any Award, or
portion thereof, is payable under the Plan is unable to care for his or her
affairs because of illness or accident, or is a minor, then any payment due him
or her (unless a prior claim therefor has been made by a duly appointed legal
representative) may, if the Committee so directs the Company, be paid to his or
her spouse, a child, a relative, an institution maintaining or having custody of
such person, or any other person deemed by the Committee to be a proper
recipient on behalf of such person otherwise entitled to payment. Any such
payment shall be a complete discharge of the liability of the Company therefor.
(f) The right of any Participant or other person to any Award payable under
the Plan may not be assigned, transferred, pledged or encumbered, either
voluntarily or by operation of law, except as provided in Section 11 with
respect to the designation of a Beneficiary or as may otherwise be required by
law or pursuant to a qualified domestic relations order as defined by the Code
or Title I of the Employee Retirement Income Security Act, or the rules
thereunder or unless the Committee determines that an Award may be transferred
to a Family Member or Family Trust or other transferee. If, by reason of any
attempted assignment, transfer, pledge, or encumbrance or any bankruptcy or
other event happening at any time, any amount payable under the Plan would be
made subject to the debts or liabilities of the Participant or his or her
Beneficiary or would otherwise devolve upon anyone else and not be enjoyed by
the Participant or his or her Beneficiary or transferee, Family Trust or Family
Member, then the Committee may terminate such person's interest in any such
payment and direct that the same be held and applied to or for the benefit of
the Participant, his or her Beneficiary, taking into account the expressed
wishes of the Participant (or, in the event of his or her death, those of his or
her Beneficiary) in such manner as the Committee may deem proper.
18
(g) Copies of the Plan and all amendments, administrative rules and
procedures and interpretations shall be made available for review to all
Eligible Employees at all reasonable times at the Company's administrative
offices.
(h) The Committee may cause to be made, as a condition precedent to the
payment of any Award, or otherwise, appropriate arrangements with the
Participant or his or her Beneficiary, for the withholding of any federal,
state, local or foreign taxes. The Committee may in its discretion permit the
payment of such withholding taxes by authorizing the Company to withhold shares
of Stock to be issued, or the Participant to deliver to the Company shares of
Stock owned by the Participant or Beneficiary, in either case having a Fair
Market Value equal to the amount of such taxes, or otherwise permit a cashless
exercise.
(i) All elections, designations, requests, notices, instructions and other
communications from an Eligible Employee, Participant, Beneficiary or other
person to the Committee, required or permitted under the Plan, shall be in such
form as is prescribed from time to time by the Committee and shall be mailed by
first class mail or transmitted by facsimile copy or delivered to such location
as shall be specified by the Committee.
(j) The terms of the Plan shall be binding upon the Company and its
successors and assigns.
(k) Captions preceding the sections hereof are inserted solely as a matter
of convenience and in no way define or limit the scope or intent of any
provision hereof.
(l) The Plan and the grant, exercise and carrying out of Awards shall be
subject to all applicable federal and state laws, rules, and regulations and to
all required or otherwise appropriate approvals and authorizations by any
governmental or regulatory agency or commission. The Company shall have no
obligation of any nature hereunder to any Eligible Employee, Participant or any
other person in the absence of all necessary or desirable approvals or
authorizations and shall have no obligation to seek or obtain the same.
(m) Whenever possible, each provision of this Plan and any Award Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any such provision is held to be ineffective, invalid, illegal or
unenforceable in any respect under the applicable laws or regulations of the
United States or any state, such ineffectiveness, invalidity, illegality or
unenforceability will not affect any other provision but this Plan and any such
agreement will be reformed, construed and enforced so as to carry out the intent
hereof or thereof and as if any invalid or illegal provision had never been
contained herein.
19
(n) At all times, this Plan shall be interpreted and operated (i) with
respect to 409A Awards (as defined in Section 17 below), in accordance with the
requirements of Section 409A, unless an exemption from Section 409A is available
and applicable, (ii) to maintain the exemptions from Section 409A of Options,
SARs and Restricted Stock and any Awards designed to meet the short-deferral
exception under Section 409A, and (iii) to preserve the status of deferrals of
compensation that were earned and vested prior to January 1, 2005 as exempt from
Section 409A, i.e., to preserve the grandfathered status of such deferrals. To
the extent there is a conflict between the provisions of the Plan relating to
compliance with Section 409A and the provisions of any award agreement issued
under the Plan, the provisions of the Plan control. Moreover, any discretionary
authority that the Committee may have pursuant to the Plan shall not be
applicable to an Award that is subject to Section 409A to the extent such
discretionary authority would conflict with Section 409A. In addition, to the
extent required to avoid a violation of the applicable rules under Section 409A
by reason of Section 409A(a)(2)(B)(i), any payment under an Award shall be
delayed until the earliest date of payment that will result in compliance with
the rules of Section 409A(a)(2)(B)(i) (regarding the required six-month delay
for distributions to specified employees that are related to a separation from
service). In the event that any Award shall be deemed not to comply with Section
409A, then neither the Company, the Board of Directors, the Committee nor its or
their designees or agents, nor any of their affiliates, assigns or successors
(each a "protected party") shall be liable to any Award recipient or other
person for actions, inactions, decisions, indecisions or any other role in
relation to the Plan by a protected party if made or undertaken in good faith or
in reliance on the advice of counsel (who may be counsel for the Company), or
made or undertaken by someone other than a protected party.
(o) The Committee, in its discretion, may defer the payment of an Award, if
such payment would cause the annual remuneration of a Participant, who is a
covered employee under Section 162(m) of the Code, to be nondeductible because
it exceeds $1,000,000. Any such deferral shall be clearly and expressly provided
for by the Committee and, in the case of 409A Awards (as defined in Section 17
below) shall be subject to the limitations set forth in the next sentence. Any
such deferral (i) shall be until the earlier of (A) the Participant's separation
from service (within the meaning of Section 409A and subject to the last
sentence of subsection (o) above in the case of a specified employee), or (B)
the next succeeding year (or years) in which the deduction of the payment will
not be barred by application of Section 162(m) of the Code, (ii) is conditioned
on all payments to similarly situated Award recipients being treated in a
reasonably consistent manner, (iii) is conditioned on all payments to the Award
recipient that could also be deferred on the basis of nondeductibility under
Section 162(m) of the Code being similarly delayed, and (iv) shall not be
applied to payments under Options or SARs.
(p) The Plan shall be construed and governed under the laws of the State of
Delaware.
20
SECTION 17. EFFECTIVE DATE AND STOCKHOLDER APPROVAL
The Plan was originally adopted effective May 23, 1996, subject to approval
by the holders of a majority of the Company's common stock at the 1996 Annual
Meeting. Any Awards granted prior to May 23, 1996 will be subject to the receipt
of such approval. No Awards will be granted under the Plan after the expiration
of ten years from the original effective date. Sections 5(i)-(iii) and 7(b) and
(c) were amended in 2005 to add certain provisions related to exercise and
disposition of awards. Section 6(a) and (b) were amended in 1997 to clarify
certain provisions related to Performance Shares. This amendment and restatement
of the Plan was adopted in December 2008 to be generally effective as of January
1, 2005, in order to ensure compliance with Section 409A in the case of "409A
Awards," i.e., all Plan Awards that were not both earned and vested as of
December 31, 2004, and all other Plan Awards that were materially modified after
October 3, 2004, determined in each case within the meaning of Section 409A.
21