Exhibit 99.1
2005 Stock Option and Award Plan
The Yankee Candle Company, Inc.
2005 STOCK OPTION AND AWARD PLAN
1. Purpose
The purpose of this 2005 Stock Option and Award Plan (the "Plan") of The
Yankee Candle Company, Inc., a Massachusetts corporation (the "Company"), is to
advance the interests of the Company's stockholders by enhancing the Company's
ability to attract, retain and motivate persons who are expected to make
important contributions to the Company and by providing such persons with equity
ownership opportunities and performance-based incentives that are intended to
align their interests with those of the Company's stockholders. Except where the
context otherwise requires, the term "Company" shall include any of the
Company's present or future parent or subsidiary corporations as defined in
Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the "Code") and any other business venture
(including, without limitation, joint venture or limited liability company) in
which the Company has a controlling interest, as determined by the Board of
Directors of the Company (the "Board").
2. Eligibility
All (i) employees, officers and directors of the Company, (ii),
consultants and advisors (within the meaning of Form S-8 under the Securities
Act of 1933, as amended) of the Company and (iii) persons to whom the Company
has extended a written offer of employment, are eligible to receive options,
performance share awards, stock appreciation rights, restricted stock and other
stock-based awards (each, an "Award") under the Plan. Each person who receives
an Award under the Plan is deemed a "Participant".
3. Administration and Delegation
(a) Administration by Board of Directors. The Plan will be administered by
the Board. The Board shall have authority to grant Awards and to adopt, amend
and repeal such administrative rules, guidelines and practices relating to the
Plan as it shall deem advisable. The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. All decisions by the Board
shall be made in the Board's sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.
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Exhibit 99.1
2005 Stock Option and Award Plan
(b) Appointment of Committees. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board to the
extent that the Board's powers or authority under the Plan have been delegated
to such Committee.
4. Stock Available for Awards
(a) Number of Shares. Subject to adjustment under Section 10, Awards may
be made under the Plan for up to 1,500,000 shares of common stock, $0.01 par
value per share, of the Company (the "Common Stock"). If any Award expires or is
terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part (including as the result of shares of Common Stock
subject to such Award being repurchased by the Company at the original issuance
price pursuant to a contractual repurchase right) or results in any Common Stock
not being issued, the unused Common Stock covered by such Award shall again be
available for the grant of Awards under the Plan. Further, shares of Common
Stock tendered to the Company by a Participant to exercise an Award shall be
added to the number of shares of Common Stock available for the grant of Awards
under the Plan. However, in the case of Incentive Stock Options (as hereinafter
defined), the foregoing provisions shall be subject to any limitations under the
Code. Shares issued under the Plan may consist in whole or in part of authorized
but unissued shares or treasury shares.
(b) Section 162(m) Per-Participant Limit. The maximum number of shares of
Common Stock with respect to which Awards may be granted to any Participant
under the Plan shall be 500,000 per calendar year. For purposes of the foregoing
limit, the combination of an Option in tandem with an SAR (as each is hereafter
defined) shall be treated as a single Award. The per-Participant limit described
in this Section 4(b)(1) shall be construed and applied consistently with Section
162(m) of the Code or any successor provision thereto, and the regulations
thereunder ("Section 162(m)").
5. Stock Options
(a) General. The Board may grant options to purchase Common Stock (each,
an "Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option that is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of The Yankee Candle Company,
Inc., any of The Yankee Candle Company, Inc.'s present or future parent or
subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and
any other entities the employees of which are eligible to receive Incentive
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Exhibit 99.1
2005 Stock Option and Award Plan
Stock Options under the Code, and shall be subject to and shall be construed
consistently with the requirements of Section 422 of the Code. The Company shall
have no liability to a Participant, or any other party, if an Option (or any
part thereof) that is intended to be an Incentive Stock Option is not an
Incentive Stock Option or for any action taken by the Board pursuant to Section
11(f), including without limitation the conversion of an Incentive Stock Option
to a Nonstatutory Stock Option.
(c) Exercise Price. The Board shall establish the exercise price of each
Option and specify such exercise price in the applicable option agreement;
provided, however, that the exercise price in the case of an Incentive Stock
Option shall be not less than (i) 100% of the fair market value as determined by
(or in a manner approved by) the Board ("Fair Market Value") at the time the
Option is granted and (ii) 110% of Fair Market Value if granted to a Participant
who, at the time an Incentive Stock Option is granted to him or her, owns
(within the meaning of Section 422(b)(6) of the Code) stock possessing more than
ten percent of the total combined voting power of all classes of stock of the
Company (a "Ten-Percent Stockholder").
(d) Duration of Options. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in the
applicable option agreement, provided that (i) no Option will be granted for a
term in excess of 10 years (five years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and (ii) the terms of an Option (other
than an Incentive Stock Option) may provide that, upon the death of the
Participant prior to the expiration of the Option, the Option may be exercised
for up to one (1) year following the date of the Participant's death, even if
such period extends beyond ten (10) years from the date the Option is granted.
(e) Exercise of Option. Options may be exercised by delivery to the
Company (or party designated by the Company) of a written notice of exercise
signed by the proper person or by any other form of notice (including electronic
notice) approved by the Board together with payment in full as specified in
Section 5(f) for the number of shares for which the Option is exercised;
provided, however, that Options may not be exercised by a Participant for twelve
months following a hardship distribution to the Participant, to the extent such
exercise is prohibited under Treasury Regulation Section
1.401(k)-1(d)(2)(iv)(B)(4). Shares of Common Stock subject to the Option will be
delivered by the Company following exercise either as soon as practicable or,
subject to such conditions as the Board shall specify, on a deferred basis (with
the Company's obligation to be evidenced by an instrument providing for future
delivery of the deferred shares at the time or times specified by the Board).
(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may otherwise provide in an option
agreement, by (i) delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver
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Exhibit 99.1
2005 Stock Option and Award Plan
promptly to the Company sufficient funds to pay the exercise price and any
required tax withholding or (ii) delivery by the Participant to the Company of a
copy of irrevocable and unconditional instructions to a creditworthy broker to
deliver promptly to the Company cash or a check sufficient to pay the exercise
price and any required tax withholding;
(3) by delivery of shares of Common Stock owned by the Participant
valued at their Fair Market Value, provided (i) such method of payment is then
permitted under applicable law, (ii) such Common Stock, if acquired directly
from the Company, was owned by the Participant for at least six (6) months (or
such lesser period as may be permitted by the Committee) prior to the exercise
of the Option, (iii) such Common Stock is not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements;
(4) to the extent permitted by applicable law, payment of such other
lawful consideration as the Board may determine;
(5) by any combination of the above permitted forms of payment.
(g) Substitute Options. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in Section 2.
6. Performance Share Awards
The Board may grant Awards providing that the Company will issue, without
payment of any cash purchase price, shares of its Common Stock to the recipient
of the Award, with the number of shares to be issued contingent upon the Company
satisfying specified financial performance metrics (such as earnings per share)
over the time period specified in the Award ("Performance Share Awards"). The
Board shall determine the terms and conditions of a Performance Share Award,
including the applicable performance metrics, the impact of employment
termination upon the Performance Share Award and the impact of a Change in
Control Event upon the Performance Share Award.
7. Stock Appreciation Rights.
(a) General. A Stock Appreciation Right, or SAR, is an Award entitling the
holder, upon exercise, to receive an amount in cash or Common Stock or a
combination thereof (such form to be determined by the Board) determined in
whole or in part by reference to appreciation, from and after the date of grant,
in the fair market value of a share of Common Stock. SARs may be based solely on
appreciation in the fair market value of Common Stock or on a comparison of such
appreciation with some other measure of market growth such as (but not limited
to) appreciation in a recognized market index. The date as of which such
appreciation or
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Exhibit 99.1
2005 Stock Option and Award Plan
other measure is determined shall be the exercise date unless another date is
specified by the Board in the SAR Award.
(b) Grants. Stock Appreciation Rights may be granted in tandem with, or
independently of, Options granted under the Plan.
(c) Exercise. Stock Appreciation Rights may be exercised by delivery to
the Company (or party designated by the Company) of a written notice of exercise
signed by the proper person or by any other form of notice (including electronic
notice) approved by the Board, specifying the number of shares with respect to
which the Stock Appreciation Right is being exercised, together with any other
documents required by the Board.
8. Restricted Stock.
(a) General. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award").
(b) Terms and Conditions. The Board shall determine the terms and
conditions of a Restricted Stock Award, including the conditions for repurchase
(or forfeiture) and the issue price, if any.
(c) Stock Certificates. Any stock certificates issued in respect of a
Restricted Stock Award shall be registered in the name of the Participant and,
unless otherwise determined by the Board, deposited by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). At the
expiration of the applicable restriction periods, the Company (or such designee)
shall deliver the certificates no longer subject to such restrictions to the
Participant or if the Participant has died, to the beneficiary designated, in a
manner determined by the Board, by a Participant to receive amounts due or
exercise rights of the Participant in the event of the Participant's death (the
"Designated Beneficiary"). In the absence of an effective designation by a
Participant, "Designated Beneficiary" shall mean the Participant's estate.
9. Other Stock-Based Awards.
Other Awards of shares of Common Stock, and other Awards that are valued
in whole or in part by reference to, or are otherwise based on, shares of Common
Stock or other property, may be granted hereunder to Participants ("Other Stock
Unit Awards"), including without limitation Awards entitling recipients to
receive shares of Common Stock to be delivered in the future. Such Other Stock
Unit Awards shall also be available as a form of payment in the settlement of
other Awards granted under the Plan or as payment in lieu of compensation to
which a Participant is otherwise entitled. Other Stock Unit Awards may be paid
in shares of
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Exhibit 99.1
2005 Stock Option and Award Plan
Common Stock or cash, as the Board shall determine. Subject to the provisions of
the Plan, the Board shall determine the conditions of each Other Stock Unit
Awards, including any purchase price applicable thereto. At the time any Award
is granted, the Board may provide that, at the time Common Stock would otherwise
be delivered pursuant to the Award, the Participant will instead receive an
instrument evidencing the Participant's right to future delivery of the Common
Stock.
10. Adjustments for Changes in Common Stock and Certain Other Events.
(a) Changes in Capitalization. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than an ordinary
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the sub-limits set forth in Section 4(b), (iii) the number and class of
securities and exercise price per share of each outstanding Option, (iv) the
share- and per-share provisions of each Stock Appreciation Right, (v) the
repurchase price per share subject to each outstanding Restricted Stock Award
and (vi) the share- and per-share-related provisions of each outstanding Other
Stock Unit Award, shall be appropriately adjusted by the Company (or substituted
Awards may be made, if applicable) to the extent determined by the Board.
(b) Reorganization Events.
(1) Definition. A "Reorganization Event" shall mean: (a) any merger
or consolidation of the Company with or into another entity as a result of which
all of the Common Stock of the Company is converted into or exchanged for the
right to receive cash, securities or other property or is cancelled, (b) any
exchange of all of the Common Stock of the Company for cash, securities or other
property pursuant to a share exchange transaction or (c) any liquidation or
dissolution of the Company.
(2) Consequences of a Reorganization Event on Awards Other than
Restricted Stock Awards. In connection with a Reorganization Event, the Board
shall take any one or more of the following actions as to all or any outstanding
Awards on such terms as the Board determines: (i) provide that Awards shall be
assumed, or substantially equivalent Awards shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written
notice to a Participant, provide that the Participant's unexercised Options or
other unexercised Awards shall become exercisable in full and will terminate
immediately prior to the consummation of such Reorganization Event unless
exercised by the Participant within a specified period following the date of
such notice, (iii) provide that outstanding Awards shall become realizable or
deliverable, or restrictions applicable to an Award shall lapse, in whole or in
part prior to or upon such Reorganization Event, (iv) in the event of a
Reorganization Event under the terms of which holders of Common Stock will
receive upon consummation thereof a cash payment for each share surrendered in
the Reorganization Event (the "Acquisition Price"), make or provide for a cash
payment to a Participant equal to (A) the Acquisition Price times the
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Exhibit 99.1
2005 Stock Option and Award Plan
number of shares of Common Stock subject to the Participant's Options or other
Awards (to the extent the exercise price does not exceed the Acquisition Price)
minus (B) the aggregate exercise price of all such outstanding Options or other
Awards, in exchange for the termination of such Options or other Awards, (v)
provide that, in connection with a liquidation or dissolution of the Company,
Awards shall convert into the right to receive liquidation proceeds (if
applicable, net of the exercise price thereof) and (vi) any combination of the
foregoing.
For purposes of clause (i) above, an Option shall be considered
assumed if, following consummation of the Reorganization Event, the Option
confers the right to purchase, for each share of Common Stock subject to the
Option immediately prior to the consummation of the Reorganization Event, the
consideration (whether cash, securities or other property) received as a result
of the Reorganization Event by holders of Common Stock for each share of Common
Stock held immediately prior to the consummation of the Reorganization Event
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if the consideration received as a result
of the Reorganization Event is not solely common stock of the acquiring or
succeeding corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for the
consideration to be received upon the exercise of Options to consist solely of
common stock of the acquiring or succeeding corporation (or an affiliate
thereof) equivalent in fair market value to the per share consideration received
by holders of outstanding shares of Common Stock as a result of the
Reorganization Event.
To the extent all or any portion of an Option becomes exercisable
solely as a result of clause (ii) above, the Board may provide that upon
exercise of such Option the Participant shall receive shares subject to a right
of repurchase by the Company or its successor at the Option exercise price; such
repurchase right (x) shall lapse at the same rate as the Option would have
become exercisable under its terms and (y) shall not apply to any shares subject
to the Option that were exercisable under its terms without regard to clause
(ii) above.
(3) Consequences of a Reorganization Event on Restricted Stock
Awards. Upon the occurrence of a Reorganization Event other than a liquidation
or dissolution of the Company, the repurchase and other rights of the Company
under each outstanding Restricted Stock Award shall inure to the benefit of the
Company's successor and shall apply to the cash, securities or other property
which the Common Stock was converted into or exchanged for pursuant to such
Reorganization Event in the same manner and to the same extent as they applied
to the Common Stock subject to such Restricted Stock Award. Upon the occurrence
of a Reorganization Event involving the liquidation or dissolution of the
Company, except to the extent specifically provided to the contrary in the
instrument evidencing any Restricted Stock Award or any other agreement between
a Participant and the Company, all restrictions and conditions on all Restricted
Stock Awards then outstanding shall automatically be deemed terminated or
satisfied.
(c) Change in Control Events:
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Exhibit 99.1
2005 Stock Option and Award Plan
(1) Definition. A "Change in Control Event" shall mean:
(a) the acquisition by an individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership of
any capital stock of the Company if, after such acquisition, such Person
beneficially owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) more than 50% of either (x) the then-outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (y) the
combined voting power of the then-outstanding securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control Event: (A) any
acquisition directly from the Company (excluding an acquisition pursuant to the
exercise, conversion or exchange of any security exercisable for, convertible
into or exchangeable for common stock or voting securities of the Company,
unless the Person exercising, converting or exchanging such security acquired
such security directly from the Company or an underwriter or agent of the
Company), (B) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company, or (C) any acquisition by any corporation pursuant to a Business
Combination (as defined below) which complies with clauses (x) and (y) of
subsection (c) of this definition; or
(b) such time as the Continuing Directors (as defined below)
do not constitute a majority of the Board (or, if applicable, the Board of
Directors of a successor corporation to the Company), where the term "Continuing
Director" means at any date a member of the Board (x) who was a member of the
Board on the date of the initial adoption of this Plan by the Board or (y) who
was nominated or elected subsequent to such date by at two thirds of the
directors who were Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or endorsed by at least
two thirds of the directors who were Continuing Directors at the time of such
nomination or election; provided, however, that there shall be excluded from
this clause (y) any individual whose initial assumption of office occurred as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents, by or on behalf of a person other than the Board; or
(c) the consummation of a merger, consolidation,
reorganization, recapitalization or share exchange involving the Company or a
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), unless, immediately following such Business
Combination, each of the following two conditions is satisfied: (x) all or
substantially all of the individuals and entities who were the beneficial owners
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, at least 50% of the then-outstanding shares of common
stock and the combined voting power of the then-outstanding securities entitled
to vote generally in the election of directors, respectively, of the
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Exhibit 99.1
2005 Stock Option and Award Plan
resulting or acquiring corporation in such Business Combination (which shall
include, without limitation, a corporation which as a result of such transaction
owns the Company or substantially all of the Company's assets either directly or
through one or more subsidiaries) (such resulting or acquiring corporation is
referred to herein as the "Acquiring Corporation") in substantially the same
proportions as their ownership of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, respectively, immediately prior to such
Business Combination and (y) no Person (excluding any employee benefit plan (or
related trust) maintained or sponsored by the Company or by the Acquiring
Corporation) beneficially owns, directly or indirectly, more than 50% of the
then-outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors (except to the extent
that such ownership existed prior to the Business Combination); or
(d) the liquidation or dissolution of the Company.
(2) The effect on Awards of a Change in Control Event shall be set
forth in the agreement evidencing such Award.
11. General Provisions Applicable to Awards
(a) Transferability of Awards. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution or, other than in the case of an Incentive Stock Option, pursuant
to a qualified domestic relations order, and, during the life of the
Participant, shall be exercisable only by the Participant. References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.
(b) Documentation. Each Award shall be evidenced in such form (written,
electronic or otherwise) as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.
(c) Board Discretion. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.
(d) Termination of Status. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, or the Participant's legal
representative, conservator, guardian or Designated Beneficiary, may exercise
rights under the Award.
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Exhibit 99.1
2005 Stock Option and Award Plan
(e) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Company for payment of, any taxes required by law
to be withheld in connection with an Award to such Participant. Except as the
Board may otherwise provide in an Award, for so long as the Common Stock is
registered under the Exchange Act, Participants may satisfy such tax obligations
in whole or in part by delivery of shares of Common Stock, including shares
retained from the Award creating the tax obligation, valued at their Fair Market
Value; provided, however, except as otherwise provided by the Board, that the
total tax withholding where stock is being used to satisfy such tax obligations
cannot exceed the Company's minimum statutory withholding obligations (based on
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to such supplemental taxable
income). Shares surrendered to satisfy tax withholding requirements cannot be
subject to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements. The Company may, to the extent permitted by law, deduct any such
tax obligations from any payment of any kind otherwise due to a Participant.
(f) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
(g) Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(h) Performance Conditions.
(1) This Section 11(h) shall be administered by a Committee approved
by the Board, all of the members of which are "outside directors" as defined by
Section 162(m) (the "Section 162(m) Committee").
(2) Notwithstanding any other provision of the Plan, if the Section
162(m) Committee determines, at the time Performance Share Award, Restricted
Stock Award or Other Stock Unit Award is granted to a Participant who is then an
officer, that such Participant is, or is likely to be as of the end of the tax
year in which the Company would claim a tax deduction in
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connection with such Award, a Covered Employee (as defined in Section 162(m)),
then the Section 162(m) Committee may provide that this Section 11(h) is
applicable to such Award.
(3) If Performance Share Award, Restricted Stock Award or Other
Stock Unit Award is subject to this Section 11(h), then the lapsing of
restrictions thereon and the distribution of cash or Shares pursuant thereto, as
applicable, shall be subject to the achievement of one or more objective
performance goals established by the Section 162(m) Committee, which shall be
based on the relative or absolute attainment of specified levels of one or any
combination of the following: (a) earnings per share, (b) return on average
equity or average assets with respect to a pre-determined peer group, (c)
earnings, (d) earnings growth, (e) revenues, (f) expenses, (g) stock price, (h)
market share, (i) return on sales, assets, equity or investment, (j) regulatory
compliance, (k) improvement of financial ratings, (l) achievement of balance
sheet or income statement objectives, (m) total shareholder return, (n) net
operating profit after tax, (o) pre-tax or after-tax income, (p) cash flow, or
(q) such other objective goals established by the Board, and may be absolute in
their terms or measured against or in relationship to other companies
comparably, similarly or otherwise situated. Such performance goals may be
adjusted to exclude any one or more of (i) extraordinary items, (ii) gains or
losses on the dispositions of discontinued operations, (iii) the cumulative
effects of changes in accounting principles, (iv) the writedown of any asset,
and (v) charges for restructuring and rationalization programs. Such performance
goals may vary by Participant and may be different for different Awards. Such
performance goals shall be set by the Section 162(m) Committee within the time
period prescribed by, and shall otherwise comply with the requirements of,
Section 162(m).
(4) Notwithstanding any provision of the Plan, with respect to any
Performance Share Award, Restricted Stock Award or Other Stock Unit Award that
is subject to this Section 11(h), the Section 162(m) Committee may adjust
downwards, but not upwards, the cash or number of Shares payable pursuant to
such Award, and the Section 162(m) Committee may not waive the achievement of
the applicable performance goals except in the case of the death or disability
of the Participant.
(5) The Section 162(m) Committee shall have the power to impose such
other restrictions on Awards subject to this Section 11(h) as it may deem
necessary or appropriate to ensure that such Awards satisfy all requirements for
"performance-based compensation" within the meaning of Section 162(m)(4)(C) of
the Code, or any successor provision thereto.
12. Miscellaneous
(a) No Right To Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
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Exhibit 99.1
2005 Stock Option and Award Plan
(b) No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then a Participant who exercises an Option between the record date
and the distribution date for such stock dividend shall be entitled to receive,
on the distribution date, the stock dividend with respect to the shares of
Common Stock acquired upon such Option exercise, notwithstanding the fact that
such shares were not outstanding as of the close of business on the record date
for such stock dividend.
(c) Effective Date and Term of Plan. The Plan shall become effective on
the date on which it is adopted by the Board, but no Award may be granted unless
and until the Plan has been approved by the Company's stockholders. No Awards
shall be granted under the Plan after the completion of 10 years from the
earlier of (i) the date on which the Plan was adopted by the Board or (ii) the
date the Plan was approved by the Company's stockholders, but Awards previously
granted may extend beyond that date.
(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time; provided that, to the extent determined by
the Board, no amendment requiring stockholder approval under any applicable
legal, regulatory or listing requirement shall become effective until such
stockholder approval is obtained. No Award shall be made that is conditioned
upon stockholder approval of any amendment to the Plan.
(e) Provisions for Foreign Participants. The Board may modify Awards or
Options granted to Participants who are foreign nationals or employed outside
the United States or establish subplans or procedures under the Plan to
recognize differences in laws, rules, regulations or customs of such foreign
jurisdictions with respect to tax, securities, currency, employee benefit or
other matters.
(f) Compliance With Code Section 409A. No Award shall provide for deferral
of compensation that does not comply with Section 409A of the Code, unless the
Board, at the time of grant, specifically provides that the Award is not
intended to comply with Section 409A of the Code.
(g) Governing Law. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the Commonwealth of Massachusetts, without regard to any applicable conflicts of
law.
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