Exhibit 10.22
PLY GEM INVESTMENT HOLDINGS, INC.
AMENDED AND RESTATED
PHANTOM STOCK PLAN
Section 1. General
(a) Purpose. The purpose of this Ply Gem Investment Holdings, Inc.
Phantom Stock Plan (the "Plan") is to attract, motivate and retain certain key
employees of Ply Gem Investment Holdings, Inc. (the "Company") and its
Subsidiaries who are primarily responsible for the long-term performance of the
Company and to align their interest with that of the stockholders of the
Company.
(b) Overview. The Plan is generally designed to provide non-qualified
deferred compensation to Participants. Each Participant's interest in the Plan
is recorded in and maintained under a bookkeeping Account and these Accounts are
deemed invested in the Company's stock, but there is no stock actually issued to
the Plan (which is generally why these accounts credits are called "Phantom").
When valuing a Participant's Account for payment purposes, the following rules
generally apply: if the Company becomes publicly traded through an IPO, the
stock market will dictate the value of the Account; if a Realization Event or a
Tag-Along Event occurs, the amount paid to shareholders will dictate the value
of the Account; and in the event that a Participant's employment with the
Company terminates and if neither a Realization Event nor an IPO occurs prior to
the time the Participant is paid the value of his or her Account, certain
formulas described in the Plan dictate the value of the Account (which value
differs depending upon the length of time a Participant has been employed with
the Company and the circumstances surrounding the termination of employment).
Following an IPO, each Participant will generally be paid out five years after
the IPO, subject to further deferral opportunities and the right of the Company
to accelerate such payment, with earlier payment upon a Realization Event or a
termination of employment. The value of each Account is generally paid in cash
or stock, at the discretion of the Company.
Section 2. Definitions.
As used in this Plan, capitalized terms not defined in this Plan shall
have the meaning attributed to such terms in the Stockholders Agreement and the
following terms shall have the meanings set forth below:
(a) Account. An unfunded bookkeeping account established to record a
Participant's interest under this Plan, the terms and conditions of which are
set forth in this Plan and in each Participant's Award Agreement.
(b) Award. A grant of Phantom Incentive Units and/or a grant of
Phantom Additional Units under this Plan.
(c) Award Agreement. The written agreement evidencing an Award, which
shall be executed or otherwise acknowledged in writing by a Participant.
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(d) Board. The Board of Directors of the Company.
(e) Cause. "Cause" means: (i) conviction of, or entry of a pleading of
guilty or no contest by, a Participant with respect to a felony or any lesser
crime of which fraud or dishonesty is a material element; (ii) a Participant's
willful and continued failure to perform substantially his or her duties with
the Company or any of its Subsidiaries, or a failure to follow the lawful
direction of the Board or any chief executive officer of the Company or any of
its Subsidiaries to whom such Participant reports after the Board of Directors
or such chief executive officer delivers a written demand for substantial
performance, specifically identifying the manner in which the Participant has
not substantially performed his material duties and the Participant neglects to
cure such a failure within 30 days; (iii) a Participant's theft, fraud or
embezzlement of any property or assets of the Company or any of its Affiliates
or Subsidiaries, or such Participant's dishonesty against the Company or any of
its Affiliates or Subsidiaries which has resulted in material damage to the
Company or any of its Affiliates or Subsidiaries or (iv) a Participant's breach
of any noncompetition or nonsolicitation requirements set forth in the
Stockholders Agreement or willful breach of any confidentiality requirements set
forth in the Stockholders Agreement, in each case, whether or not such agreement
or requirement is enforceable under applicable law.
(f) Common Stock. Common stock, par value $0.01 per share, of the
Company, and any other stock or units into which such common stock shall
thereafter be changed by reason of a recapitalization, merger, consolidation,
split-up, combination, exchange of stock or units or the like.
(g) Company. Ply Gem Investment Holdings, Inc., a Delaware
corporation.
(h) Disability. With respect to any Participant, any event of
disability under the disability insurance plan of the Company or any of its
Affiliates or Subsidiaries covering such Participant, or if there shall be no
such disability plan, then as set forth in any agreement between such
Participant and the Company or any of its Affiliates or Subsidiaries, or if
there shall be no such agreement, then the inability of the Participant to
perform his or her duties as an employee of the Company or any of its Affiliates
or Subsidiaries for at least one-hundred eighty (180) days during any
consecutive 12-month period.
(i) Effective Date. February 12, 2004.
(j) IPO. The closing of the initial underwritten public offering of
shares of Common Stock pursuant to an effective registration statement filed
under the Securities Act.
(k) Participant. Any current or future employee of the Company or any
of its Subsidiaries who is eligible for, and is selected by the Board for, an
Award under this Plan and who has executed an Award Agreement.
(l) Phantom Additional Unit. A Phantom Additional Unit that is first
credited to a Participant's Account in February, 2004, is a phantom stock unit
representing one share of Common Stock and 0.45914 shares of the Preferred Stock
issued in February, 2004. A Phantom Additional Unit that is first credited to a
Participant's Account in August, 2004, is a phantom stock unit representing one
share of Common Stock and 0.53803 shares of the Preferred Stock issued in
August, 2004. As used herein, a "Common Phantom Additional Unit" shall mean the
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portion of a Phantom Additional Unit representing one share of Common Stock and
a "Preferred Phantom Additional Unit" shall mean the portion of a Phantom
Additional Unit representing 0.45914 shares of the Preferred Stock issued in
February, 2004, for Phantom Additional Units granted in February, 2004 and
0.53803 shares of the Preferred Stock issued in August, 2004, for Phantom
Additional Units granted in August, 2004.
(m) Phantom Incentive Unit. A Phantom Incentive Unit is a phantom
stock unit representing a share of Common Stock that is credited to a
Participant's Account.
(n) Plan. This Ply Gem Investment Holdings, Inc. Amended and Restated
Phantom Stock Plan, as may be amended from time to time.
(o) Preferred Stock. Senior Preferred Stock, par value $0.01 per
share, of the Company, and any other stock or units into which such preferred
stock shall thereafter be changed by reason of a recapitalization, merger,
consolidation, split-up, combination, exchange of stock or units or the like.
(p) Realization Event. Any transaction in which Caxton-Iseman (Ply
Gem), L.P. has the right to exercise "Drag-Along Rights" pursuant to Section 4.7
of the Stockholders Agreement.
(q) Stockholders Agreement. That certain Stockholders Agreement, dated
as of February 12, 2004 and as amended from time to time, by and among the
Company, Caxton-Iseman (Ply Gem), L.P., the other investors executing the
agreement and designated as "Other Investors" therein and the individuals
executing the agreement and designated as "Management Stockholders" therein.
(r) Tag-Along Event. Any occurrence of an event qualifying for "Tag
Along" treatment under Section 4.5 of the Stockholders' Agreement.
Section 3. Administration.
(a) This Plan shall be administered by the Board. Subject to the
provisions of this Plan and applicable law and subject to Participants' rights
under outstanding Award Agreements, the Board shall have the power and sole
discretion, in addition to other express powers and authorizations conferred on
the Board by this Plan, to: (i) designate Participants; (ii) determine the
Awards to a Participant; (iii) determine, in a manner consistent with the terms
of this Plan and any Award Agreements entered into pursuant to this Plan,
payments and how other matters are to be calculated in connection with Awards
and Accounts; (iv) determine the terms and conditions of Awards; (v) determine
whether, to what extent, and under what circumstances Awards and amounts payable
pursuant to an Account shall be deferred at the election of the holder thereof
or of the Board; (vii) interpret, administer, reconcile any inconsistency,
correct any defect and/or supply any omission in this Plan and any instrument or
agreement relating to this Plan, or Awards under this Plan; (viii) establish,
amend, suspend, or waive such rules and regulations and appoint such agents as
it shall deem appropriate for the proper administration of this Plan; and (ix)
make any other determination and take any other action that the Board deems
necessary or desirable for the administration of this Plan. The decisions of the
Board shall be final, conclusive, and binding upon all parties, including,
without limitation, the Company, any Participant, any holder or beneficiary of
any Account and any stockholder of the Company.
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(b) No member of the Board shall be liable for any action or
determination made in good faith with respect to this Plan, any Award or any
Account.
Section 4. Eligibility. Members of senior management and key employees of
the Company and/or its Subsidiaries shall be eligible to be designated as a
Participant in this Plan by the Board and to receive an Award credited to an
Account.
Section 5. Phantom Incentive Unit Awards and Phantom Additional Unit
Awards.
(a) General. The Board shall, in its sole discretion, designate
employees of the Company or its Subsidiaries as Participants in this Plan and,
in connection therewith, the Board shall determine the number of Phantom
Incentive Units and/or Phantom Additional Units to be granted to each
Participant so designated. An Account shall be established in the records of the
Company to which the number of Phantom Incentive Units and/or Phantom Additional
Units so granted shall be credited. As more fully set forth herein, a
Participant shall share in any dividends or distributions paid by the Company to
its stockholders, and a Participant's Account will be fully or partially
distributed to him or her following the occurrence of a Realization Event.
(b) Availability for Award; Dividends; Value.
(i) Awards may be made in respect of up to 10% of the Common Stock
outstanding as constituted as of the Effective Date (prior to dilution by the
Phantom Incentive Units, Phantom Additional Units and any Contingent Rights)
under the Plan.
(ii) To the extent that dividends or distributions are declared
and paid to holders of Common Stock, each Participant will receive the amount
that would have been distributed to the Participant had the Phantom Incentive
Units and/or Common Phantom Additional Units credited to the Participant's
Account been issued and outstanding Common Stock and such dividend or
distribution shall be paid at the same time and in the same manner as dividends
or distributions are paid to holders of Common Stock.
(iii) To the extent that dividends or distributions are declared
and paid to holders of Preferred Stock, each Participant will receive the amount
that would have been distributed to the Participant had the Preferred Phantom
Additional Units credited to the Participant's Account been issued and
outstanding Preferred Stock and such dividend or distribution shall be paid at
the same time and in same manner as dividends and distributions are paid to
holders of Preferred Stock.
(c) Deferral of Payment. Notwithstanding any other provision of this
Plan, the Board may make good faith determinations respecting the time and/or
medium of payment and/or impose conditions on payment of the value of a
Participant's Account in order to reflect the time and medium of payment, or
conditions on payment, applicable to holders of Common Stock and/or Preferred
Stock, as applicable, in connection with a Realization Event, IPO or otherwise,
in order to accomplish the intended purposes of this Plan. By way of example and
without limiting the generality of the foregoing, the Board may impose
appropriate restrictions on the payment of the value of a Participant's Account
if the holders of Common Stock and/or Preferred Stock, as applicable, are
subject to a clawback or are required to escrow payment for their Common Stock
and/or Preferred Stock, as applicable.
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(d) Termination of Account Following Payment. Following the payment of
all or a portion of the Account attributable to the Phantom Incentive Units, any
such Phantom Incentive Units shall thereafter be deemed cancelled. Following the
payment of all or a portion of the Account attributable to Common Phantom
Additional Units, any such Common Phantom Additional Units shall thereafter be
deemed cancelled, although the Preferred Phantom Additional Units may still have
value if such portion of the Account was not theretofore paid. Following the
payment of all or a portion of the Account attributable to Preferred Phantom
Additional Units, any such Preferred Phantom Additional Units shall thereafter
be deemed cancelled, although the Common Phantom Additional Units may still have
value if such portion of the Account was not theretofore paid. The payment of a
dividend or distribution with respect to any Award shall not be considered a
payment of any portion of a Participant's Account for purposes of this Section
5(d).
Section 6. Payment of Accounts.
(a) Realization Event. Except as provided in Section 8 (generally
relating to terminations of employment before a Realization Event), upon the
closure and funding of a Realization Event, each Account shall be credited with
the same value per Phantom Incentive Unit and/or Common Phantom Additional Unit
as the value received in the Realization Event by a holder of Common Stock for
one share of Common Stock, and each Participant (or his or her estate, as
applicable) will be paid the value of his or her Account, subject to the Board's
discretion to defer the payment of the value of a Participant's Account to
appropriately reflect the payment schedule, contingent payment, holdbacks or
contingent obligations applicable to holders of Common Stock following the
Realization Event, as follows:
(i) as soon as practicable following a Realization Event that is a
cash transaction, the value of each Account shall be paid in cash to the
Participants.
(ii) following a Realization Event that is an equity or other
non-cash exchange for Common Stock, (A) the Board shall credit each Account
attributable to any Phantom Incentive Unit and/or Common Phantom Additional Unit
at such time and in such amounts of such medium (including notes, equity
securities, or a combination of the foregoing) as payments are made available to
holders of Common Stock pursuant to the Realization Event or, in the Board's
sole discretion, in cash and (B) the value of the Accounts attributable to the
Phantom Incentive Units and/or Common Phantom Additional Units shall be
distributed as soon as practicable following such credit to the Account;
provided that the Board may elect to continue to defer payment of the Account
until not later than such time as the equity or other medium received in
exchange for Common Stock may be converted into cash or is otherwise
transferable and, in the event of such deferral, the Board shall determine
whether payment shall be made either in cash or in the same medium of payment as
holders of Common Stock received in the Realization Event, including notes,
equity securities, or a combination of the foregoing.
(b) Preferred Stock. Notwithstanding anything herein to the contrary,
the value of the Accounts, if any, attributable to any Preferred Phantom
Additional Unit shall be paid to a Participant upon a Realization Event only
when and to the extent permitted in this Section 6(b). The Accounts attributable
to each Preferred Phantom Additional Unit shall receive a credit at such times
and in such amounts as payments are made to a holder of 0.45914 or 0.53803
shares of Preferred Stock in redemption thereof, as applicable, depending upon
the date on which the Preferred Phantom Additional Unit was granted. The value
of the Accounts attributable to
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the Preferred Phantom Additional Units shall be paid to the Participants as soon
as practicable following such credit to the Account and in the same medium
(cash, equity, or any other medium) received by the holders of Preferred Stock.
The Company has the right to pay the value of the Account in respect of
Preferred Phantom Additional Units following a Participant's termination of
employment for any reason and prior to any other event giving rise to the payout
of Preferred Stock generally as described in Section 8(b)(ii)(D) below.
(c) IPO. From and after the consummation by the Company of an IPO that
occurs prior to a Realization Event, the following shall apply:
(i) If the Company shall be required to pay out the value of any
Account or shall exercise any right it may have to pay out the value of any
Account or if any Participant shall have the right to receive any portion of an
Account, the Company may pay the value of the Account in shares of Common Stock
(in the case of Phantom Incentive Units or Common Phantom Additional Units) or
Preferred Stock (in the case of Preferred Phantom Additional Units) or (in the
case of either Phantom Incentive Units or Phantom Additional Units) in cash
(determined by using, in the case of Phantom Incentive Units or Common Phantom
Additional Units, the market price of the Common Stock, and in the case of
Preferred Phantom Additional Units, the Liquidation Value of the Company's
Preferred Stock and the accrued but unpaid dividends thereon, in each case on
the date immediately prior to the payment) or a combination of the foregoing
("Post-IPO Payout").
(ii) Except as provided in Section 8 (generally relating to
termination of employment prior to a Realization Event) and except upon the
earlier occurrence of a Realization Event, and subject to the Company's right
after the IPO to pay the value of the Account at such earlier time as it shall
determine, on the fifth anniversary of the IPO the Account will be paid to the
Participant, who will receive the Post-IPO Payout unless the Participant (or the
Participant's estate, as applicable) elected in writing no later than the fourth
anniversary of the IPO to defer the Post-IPO Payout for an additional 36 months
from the fifth anniversary of the IPO. Each Participant who remains employed
with the Company and who chooses to defer the payment of his or her Post-IPO
Payout (including, for this purpose, any Participant or Participant's estate who
otherwise deferred payment of his or her Account) no later than the fourth
anniversary of the IPO may continue to defer the payment of the Post-IPO Payout
for additional 36 month intervals, provided that the election to defer is made
no later than one year prior to the date on which the Post-IPO Payout would
otherwise be paid.
(d) Tag-Along Event. In connection with a Tag-Along Event, the Company
shall, in its discretion (A) immediately prior to the Tag-Along Event distribute
to each Participant, a number of shares of such class or classes of the
Company's Capital Stock such that the number of shares so distributed plus the
number of shares which the holder would be entitled to sell under Section 4.5 of
the Stockholders Agreement without regard to the Phantom Incentive Units or
Phantom Additional Units held by such Participant (assuming that the source for
the shares to be sold constituted shares of Capital Stock, and shares
distributed with respect to Phantom Incentive Units and shares distributed with
respect to Phantom Additional Units in proportion to the number of shares or
such units held) equals the total number of shares of Capital Stock the holder
is entitled to sell (the "Pro Rata Portion") or (B) immediately following the
Tag-Along Event, credit each Participant's Account with the value the
Participant would have received from the shares that would be distributed
pursuant to clause (A) had such shares been distributed and sold in the
Tag-Along Event, and either pay such portion of the Account as
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soon as practicable following the Tag-Along Event or continue to defer the
payment of the Account until the Account is otherwise payable in accordance with
this Plan. For purposes of the foregoing clause (B), the credit in respect of
the Account and any payment of the Account shall only be in respect of the
Phantom Incentive Units and/or the Phantom Additional Units, as applicable, to
which the Pro Rata Portion applies. For purposes of this Section 6(d), the Pro
Rata Portion, to the extent it is attributable to Phantom Incentive Units, shall
apply "pro rata" to the total number of Protected and Unprotected Phantom
Incentive Units credited to a Participant's Account.
Section 7. Compliance with Debt Instruments and Legal Requirements.
(a) Legal Requirements. The grant of Phantom Incentive Units and
Phantom Additional Units, payment of the value of a Participant's Account
(including a partial distribution of a Participant's Account, if applicable),
and the other obligations of the Company under this Plan shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any regulatory or governmental agency as may be required.
(b) Debt Instruments. Notwithstanding the requirements of Section 6
hereof regarding the payment of the value of the Accounts, the Company shall not
be obligated to pay the value of any portion of any Account (A) at any time
there exists and is continuing a default or an event of default on the part of
the Company or under any guarantee or other agreement under which the Company or
one of its Subsidiaries has borrowed money or (B) if such payment would
constitute a breach of, or result in a default or an event of default on the
part of the Company or any of its Subsidiaries, under any such guarantee or
agreement. In the event that payment of any portion of any Account is deferred
pursuant to this Section 7(b), the Company shall pay the value of such portion
as soon as possible following the date on which such payment would not result in
any such breach or default, with interest at the federal short-term interest
rate on the first day of the month the Participant (or his or her estate) has
the right to receive payment of the value of his or her Account pursuant to
Section 6, to be recalculated on the first day of each month thereafter until
all such payments due under the Account are made.
(c) Postponement. The Board, in its sole discretion, may postpone the
issuance or delivery of any securities under a Participant's Account as the
Company may consider appropriate and may require a Participant to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of any such securities in compliance
with applicable laws, rules and regulations.
Section 8. Termination of Employment.
(a) Protection of Account Values. Unless otherwise provided in an
Award Agreement, Accounts shall become "Protected" as follows:
(i) subject to continued employment with the Company or one of
its Subsidiaries, Participants shall initially be "Unprotected" but shall become
Protected in the value of the Phantom Incentive Unit portion of their Accounts,
as follows:
20% on the first anniversary of the date of the applicable
Award Agreement, if still employed.
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40% on the second anniversary of the date of the applicable
Award Agreement, if still employed.
60% on the third anniversary of the date of the applicable
Award Agreement, if still employed.
80% on the fourth anniversary of the date of the applicable
Award Agreement, if still employed.
100% on the fifth anniversary of the date of the applicable
Award Agreement, if still employed.
(ii) upon the occurrence of the earlier of a Realization Event or
an IPO, a Participant who is then employed with the Company or one of its
Subsidiaries shall become fully Protected in the Phantom Incentive Unit portion
of his or her Account; and
(iii) the Phantom Additional Unit portion of each Participant's
Account, as applicable, is fully Protected as of the date of grant of such
Phantom Additional Units.
(b) Payment Upon Termination of Employment.
(i) Unless otherwise provided in an Award Agreement and
notwithstanding any of the foregoing to the contrary, if a Participant's
employment with the Company or its Subsidiaries terminates for any reason, and
neither a Realization Event nor an IPO has occurred as of such termination of
employment, the Participant's Account will be credited with the "Cash-Out
Amount," as provided below immediately prior to the payment of the Account, and
such Account shall be paid to such Participant within 90 days following the
termination of such Participant's employment with the Company (or up to one year
following the date of termination as may be determined by the Chief Executive
Officer of the Company), as the Board may, in its discretion, determine;
provided that, in the case of death or Disability, payment of the Account will
be governed by Section 8(b)(ii)(C) and will be paid to the Participant's estate,
as applicable.
(ii) The "Cash-Out Amount" is determined as follows:
(A) Cause Termination. In the event that a Participant's
employment with the Company or its Subsidiaries is terminated by the Company for
Cause and neither a Realization Event nor an IPO has occurred prior to such
termination of employment, then the Cash-Out Amount is equal to, with respect to
each Phantom Incentive Unit, (x) the initial value of the Phantom Incentive Unit
on the date of grant as set forth in the Award Agreement, plus or minus (y) any
change in Adjusted Retained Earnings per share from the date of grant through
the end of the most recent fiscal quarter preceding the date of termination of
employment;
(B) Other Discharges; Quits. In the event that a
Participant's employment with the Company or its Subsidiaries terminates for any
reason other than (i) by the Company for Cause or (ii) due to the Participant's
death or Disability, and neither a Realization
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Event nor an IPO has occurred prior to such termination of employment, then the
Cash-Out Amount is equal to the sum of:
(x) with respect to each Protected
Phantom Incentive Unit and each Common Phantom Additional
Unit, an amount equal to the quotient obtained by dividing
(I) the excess of (i) the product of 6.7 times Consolidated
EBITDA during the Measurement Period over (ii) the
Consolidated Indebtedness as of the date of termination, by
(II) the number of shares of Common Stock then issued and
outstanding and all shares of Common Stock issuable upon the
exercise of any then outstanding Contingent Right, whether
or not such Contingent Right is at the time exercisable on
the date of termination of employment; plus
(y) with respect to each Phantom
Incentive Unit that is Unprotected, an amount equal to (I)
the initial value of the Phantom Incentive Unit on the date
of grant as set forth in the Award Agreement, plus or minus
(II) any change in Adjusted Retained Earnings per share from
the date of grant through the end of the most recent fiscal
quarter preceding the date of termination of employment;
(C) Death or Disability. In the event that a Participant's
employment with the Company or its Subsidiaries terminates due to the
Participant's death or Disability and neither a Realization Event nor an IPO has
occurred prior to such termination of employment, then the Cash-Out Amount is
the amount described in Section 8(b)(ii)(B) (above) with respect to each Phantom
Incentive Unit and the Account will be paid to the Participant (or the
Participant's estate, as applicable) one year following the termination of
Participant's employment or, in the Board's discretion, at any time prior to one
year following the termination of employment; provided that, unless the Board
shall otherwise determine, the Participant or the Participant's estate, as
applicable, may elect within 180 days following such termination of employment
to defer the payment of the Account until such time as payment is otherwise
required or made in accordance with the Plan.
(D) Phantom Additional Units. If a Participant's employment
with the Company or its Subsidiaries terminates for any reason prior to a
Realization Event or an IPO, then (x) with respect to each Common Phantom
Additional Unit, the Cash-Out Amount is the amount described in Section
8(b)(ii)(B)(x) above and (y) with respect to each Preferred Phantom Additional
Unit granted in February, 2004, the Cash-Out Amount is 0.45914 times the sum of
(I) the "Liquidation Value" plus (II) the "Maximum Dividend" (each as defined in
the Company's Certificate of Incorporation) and with respect to each Preferred
Phantom Additional Unit granted in August, 2004, the Cash-Out Amount is 0.53803
times the sum of (I) the Liquidation Value plus (II) the Maximum Dividend.
(iii) Notwithstanding the foregoing, with respect to Phantom
Incentive Units valued at the Cash-Out Amount as described in Section
8(b)(ii)(B) above, (A) if during the Measurement Period the Company or any of
its Subsidiaries shall have purchased or otherwise acquired, without the
approval of the Chief Executive Officer of the Company (in a single transaction
or in a series of transactions), a business which is outside of the building
products
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industry, all calculations required under this Section 8(b) shall be made on a
pro forma basis to eliminate the effect of such acquisition and any financing
undertaking in connection therewith and (B) in the event that a sale of the
Company is consummated within nine months following the payment of a
Participant's Account, and if the per share purchase price (or the amount
available for distribution, in the event of a sale of all or substantially all
of the Company's assets) (such price or amount, the "Actual Amount") is higher
than the Cash-Out Amount used to value such Phantom Incentive Units, whether or
not Protected, then the Participant will receive, at the same time stockholders
of the Company receive payment in connection with such sale, an additional
payment from the Company equal to the excess of (x) the number of Phantom
Incentive Units multiplied by the Actual Amount over (y) the aggregate Cash-Out
Amount for such Phantom Incentive Units.
(iv) If a Participant's employment with the Company or its
Subsidiaries terminates for any reason and at any time following the occurrence
of an IPO, even if such employment terminated prior to a Realization Event, in
lieu of the amounts described in Section 8(b)(i) through (iii), the Participant
will be entitled to the Post-IPO Payout (as described in Section 6(c)(i) above)
in respect of the Phantom Incentive Units and the Phantom Additional Units
credited to such Participant's Account, which Account shall be paid to such
Participant in accordance with Section 6(c).
(v) All calculations under Section 6 and this Section 8 of the
value of shares based upon the number of outstanding shares of Common Stock
and/or Preferred Stock shall be determined assuming that each Phantom Incentive
Unit and each Common Phantom Additional Unit is an outstanding share of Common
Stock, each Preferred Phantom Additional Unit granted in February, 2004, is
0.45914 outstanding shares of Preferred Stock and each Preferred Phantom
Additional Unit granted in August, 2004, is 0.53803 outstanding shares of
Preferred Stock.
Section 9. Dilution Adjustments.
(a) Certain Events. In the event of a reclassification,
recapitalization, stock split, stock dividend, combination of units, or other
similar or extraordinary event, the number and kind of Phantom Incentive Units
and Phantom Additional Units, in the aggregate, reserved for issuance or with
respect to which Awards may be made under this Plan shall be adjusted to reflect
such event in the same manner in which Common Stock and Preferred Stock are
adjusted to reflect such event, and the Board shall make such adjustments as it
deems appropriate and equitable in the number, kind and price of Phantom
Incentive Units and Phantom Additional Units credited to outstanding Accounts,
and in any other matters which relate to Awards or Accounts and which are
affected by the events referred to above.
(b) Other Adjustments. The Board is authorized to make adjustments in
the terms and conditions of, and the criteria included in, Accounts in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 9(a)) affecting the Company, or the financial
statements of the Company or any subsidiary, or of changes in applicable laws,
regulations, or accounting principles, whenever the Board determines that such
adjustments are appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under this Plan.
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Section 10. Amendment and Termination.
(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate this Plan or any portion thereof at any time;
provided, however, that any such amendment, alteration, suspension,
discontinuance, or termination that would materially adversely affect the rights
of any Participant with respect to any outstanding Account held pursuant to this
Plan shall not, to that extent, be effective without the written consent of the
affected Participant.
(b) Amendments to Awards. The Board may waive any conditions or rights
under, amend any terms of, or alter, suspend, discontinue, cancel or terminate,
any Account, prospectively or retroactively; provided, however, that any such
waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination not expressly contemplated by this Plan that would materially
adversely affect the rights of any Participant or other holder of an Account
shall not to that extent be effective without the written consent of the
affected Participant or holder.
Section 11. General Provisions.
(a) Nontransferability. Neither an Account, nor any Phantom Incentive
Unit and/or Phantom Additional Units recorded thereunder, may be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered by a
Participant other than by will or by the laws of descent and distribution, and
any such purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company.
(b) No Rights to Awards. No Person shall have any claim to be granted
any Phantom Incentive Unit or Phantom Additional Unit, and there is no
obligation for uniformity of treatment of Participants, or holders or
beneficiaries of Accounts. The terms and conditions of Phantom Incentive Units
and Phantom Additional Units, Accounts and the Board's determinations and
interpretations with respect thereto need not be the same with respect to each
Participant (whether or not Participants are similarly situated).
(c) Government and Other Regulations. The obligation of the Company to
settle Awards in Common Stock, Preferred Stock or otherwise shall be subject to
all applicable laws, rules, and regulations, and to such approvals by
governmental agencies as may be required. Notwithstanding any terms or
conditions of any Award to the contrary, the Company shall be under no
obligation to offer to sell or to sell and shall be prohibited from offering to
sell or selling any shares of Common Stock or Preferred Stock pursuant to an
Award unless such shares have been properly registered for sale pursuant to the
Securities Act with the Securities and Exchange Commission or unless the Company
has received an opinion of counsel, satisfactory to the Company, that such
shares may be offered or sold without such registration pursuant to an available
exemption therefrom and the terms and conditions of such exemption have been
fully complied with. The Company shall be under no obligation to register for
sale under the Securities Act any of the shares of Common Stock or Preferred
Stock to be offered or sold under the Plan until an IPO. Upon an IPO, the
Company shall undertake to register shares of Common Stock and/or Preferred
Stock pursuant to the Securities Act on a Form S-8 with the Securities and
Exchange Commission for issuance under this Plan, such that in the event the
Company makes a distribution of the Accounts in shares of Common Stock or
Preferred Stock at any time following an IPO, there will be a sufficient number
of shares registered under this Plan.
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(d) Tax Withholding. A Participant may be required to pay to the
Company, at its request, and the Company shall have the right and is hereby
authorized to withhold from any payment due or transfer made under any Account
or otherwise under this Plan or from any compensation or other amount owing to
or in respect of a Participant, the amount (in cash, securities, or other
property) of any applicable withholding taxes in respect of an Account, its
distribution or settlement in cash or in kind, or any payment or transfer under
an Account or under this Plan, and to take such other action as may be necessary
in the opinion of the Company to satisfy all obligations for the payment of such
taxes.
(e) Other Compensation Arrangements.
(i) Nothing contained in this Plan shall prevent the Company or
any Subsidiary or other Affiliate from adopting or continuing in effect other
compensation arrangements, which may, but need not, provide for the grant of
options, securities and other types of awards, and such arrangements may be
either generally applicable or applicable only in specific cases.
(ii) Neither the grant of Phantom Incentive Units or Phantom
Additional Units hereunder nor the payment of any amounts in respect of any
Account shall be taken into account in determining a Participant's right to
receive any additional benefits or compensation under any other plan or
arrangement.
(f) No Right to Service or Employment. The grant of Phantom Incentive
Units or Phantom Additional Units shall not be construed as giving a Participant
the right to be retained in the employ or service of the Company or any
Subsidiary. Further, the Company or its Subsidiaries may at any time terminate a
Participant from any employment or other service relationship or discontinue,
free from any liability or any claim under this Plan, unless otherwise expressly
provided in this Plan or in the Participant's Award Agreement.
(g) Awards as an Unsecured Promise.
(i) The Phantom Incentive Units and Phantom Additional Units
granted under this Plan do not constitute an equity interest in the Company or
its Subsidiaries. A Participant shall not share in the voting rights of the
Company or its Subsidiaries as a result of an Award.
(ii) The Company shall not be required to and shall not segregate
any funds representing awards of Phantom Incentive Units or Phantom Additional
Units granted hereunder, and nothing in this Plan or any Award Agreement shall
be construed as providing for such segregation.
(iii) Nothing in this Plan or any Award Agreement, and no action
taken pursuant to their respective terms, shall create or be construed to create
a trust or escrow account of any kind, or a fiduciary relationship between the
Company or its Subsidiaries, on the one hand, and any Participant, or any other
Person, on the other hand.
(iv) The Participants and their beneficiaries and any other
Persons entitled to payment in respect of an Account shall rely solely on the
unsecured promise of the Company to make the payments required under the terms
of any Account, but shall have the
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right to enforce such a claim in the same manner as any unsecured general
creditor of the Company. The Participants shall not have any preferred claim on,
or any beneficial ownership in, any assets of the Company. Any rights created
under this Plan or any Award Agreement shall be mere unsecured contractual
rights of the Participants against the Company.
(h) Termination with Subsidiaries. For purposes of this Plan, a
Participant's employment will be deemed terminated when he or she is no longer
employed by the Company or any of its Subsidiaries.
(i) Conflicts. In the event of a conflict between the terms of this
Plan and any Award Agreement, the terms of this Plan shall prevail.
(j) Governing Law. Unless otherwise provided in the applicable Award
Agreement, the validity, construction, and effect of this Plan and any rules and
regulations relating to this Plan and any Award Agreement shall be determined in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely within such state without regard to the choice of
law principles thereof.
(k) Headings. 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.