EXHIBIT 10.1
TRIPLE CROWN MEDIA, INC.
2005 LONG TERM INCENTIVE PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE.
Triple Crown Media, Inc., a Delaware corporation (the "Company"), hereby
establishes this long term incentive plan to be named the Triple Crown Media,
Inc. 2005 Long Term Incentive Plan for certain employees of the Group (as
defined below) and non-employee directors of the Company. The purpose of the
Plan is to encourage certain employees of the Group and non-employee directors
of the Company to acquire Stock of the Company or to receive monetary payments
based on the value of such stock or based upon achieving certain goals on a
basis mutually advantageous to such employees and non-employee directors and the
Company and thus provide an incentive for continuation of the efforts of
employees and non-employee directors for the success of the Company and for
continuity of service.
SECTION 2. DEFINITIONS.
Whenever used herein, the following terms shall have the respective
meanings set forth below:
(a) ACT means the Securities Exchange Act of 1934, as amended from time
to time.
(b) AWARD means any Option, Stock Appreciation Right, Restricted Stock
or Performance Award granted under the Plan.
(c) BASE PRICE means, in the case of an Option or a Stock Appreciation
Right, 100% of the Fair Market Value of a share of Stock on the date
of grant of such option or right.
(d) BOARD means the Board of Directors of the Company.
(e) CAUSE means with respect to a Participant's Termination of
Employment, the following: (a) in the case where there is no
employment agreement, consulting agreement, change in control
agreement or similar agreement in effect between the Group and the
Participant at the time of the grant of the Award (or where there is
such an agreement but it does not define "cause" (or words of like
import)), termination due to a Participant's insubordination,
dishonesty, fraud, incompetence, moral turpitude, willful
misconduct, refusal to perform his or her duties or responsibilities
for any reason other than illness or incapacity or materially
unsatisfactory performance of his or her duties for the Group, as
determined by the Committee in its sole discretion; or (b) in the
case where there is an employment agreement, consulting agreement,
change in control agreement or similar agreement in effect between
the Group and the Participant at the time of the grant of the Award
that defines "cause" (or words of like import), "cause" as defined
under such agreement; provided, however, that with regard to any
agreement under which the definition of "cause" only applies on
occurrence of a change in control, such definition of "cause" shall
not apply until a change in control actually takes place and then
only with regard to a termination thereafter.
With respect to a Participant's Termination of Directorship, "cause"
means an act or failure to act that constitutes cause for removal of
a director under applicable Delaware law.
(f) CHANGE OF CONTROL is defined in Section 14.
(g) CODE means the Internal Revenue Code of 1986, as amended and in
effect from time to time.
(h) COMMITTEE means a committee or subcommittee of the Board that shall
administer the Plan, which committee or subcommittee shall consist
of no fewer than two members, each of whom shall be a "nonemployee
director" within the meaning of Rule 16b-3 (or any successor rule or
regulation) promulgated under the Act, an "outside director" within
the meaning of Section 162(m)(4)(C)(i) of the Code and to the extent
required by applicable stock exchange rules, "independent" as
defined under applicable stock exchange rules. With respect to the
application of the Plan to Non-Employee Directors, the Committee
shall refer to the Board. Notwithstanding the foregoing, if, and to
the extent that no Committee exists that has the authority to
administer the Plan, the functions of the Committee shall be
exercised by the Board and all references herein to the Committee
shall be deemed to be references to the Board.
(i) COVERED EMPLOYEE means a Participant who, as of the date of vesting
and/or payout of an Award, as applicable, is one of the group of
"covered employees," as defined in the regulations promulgated under
Section 162(m) of the Code, or any successor statute.
(j) DISABILITY means permanent and total disability as defined in
Section 22(e)(3) of the Code, as determined by the Committee in good
faith, upon receipt of and in reliance on sufficient competent
medical advice. Notwithstanding the foregoing, for Awards that are
subject to Section 409A of the Code, Disability shall mean that a
Participant is disabled under Section 409A(a)(2)(C)(i) of the Code.
(k) EMPLOYEE means a salaried employee (including officers and directors
who are also employees) of any member of the Group.
(l) FAIR MARKET VALUE means, for any particular date, (i) for any period
during which the Stock shall not be listed for trading on a national
securities exchange, but when prices for the Stock shall be reported
on an automated quotation system sponsored by the National
Association of Securities Dealers, Inc., the last transaction price
per share as quoted by such system, (ii) for any period during which
the Stock shall be listed for trading on a national securities
exchange, the closing price per share of Stock on such exchange as
of the close of such trading day; or (iii) if the Common Stock is
not readily tradable on an established securities market as
determined under Section 409A of the Code or any regulations or
other guidance promulgated thereunder, a value determined by the
reasonable application of a reasonable valuation method in
accordance with
2
Section 409A of the Code or any regulations or other guidance
promulgated thereunder. If the Fair Market Value is to be determined
as of a day when the securities markets are not open, the Fair
Market Value on that day shall be the Fair Market Value on the
preceding day when the markets were open.
(m) GROUP means the Company, its Parent and every Subsidiary of the
Company.
(n) NON-EMPLOYEE DIRECTOR means a director of the Company who is not an
active employee of the Group.
(o) OPTION means the right to purchase Stock at the Base Price for a
specified period of time. For purposes of the Plan, an Option may be
an "Incentive Stock Option" within the meaning of Section 422 of the
Code, or a "Nonqualified Stock Option."
(p) PARENT means any parent corporation of the Company within the
meaning of Section 424(e) of the Code.
(q) PARTICIPANT means any Employee or Non-Employee Director designated
by the Committee to participate in the Plan.
(r) PERFORMANCE AWARD means a right to receive awards of Stock and such
other awards (including awards of cash) that are valued in whole or
in part by reference to, or are payable in or otherwise based on,
Stock or performance during a Performance Period.
(s) PERFORMANCE-BASED EXCEPTION means the performance-based exception
from the tax deductibility limitations of Section 162(m) of the
Code.
(t) PERFORMANCE PERIOD means a period of not more than ten years
established by the Committee during which certain performance goals
set by the Committee are to be met.
(u) PERIOD OF RESTRICTION means the period during which a grant of
Restricted Stock is restricted pursuant to Section 11 of the Plan.
(v) REPORTING PERSON means a person subject to Section 16 of the Act.
(w) RESTRICTED STOCK means Stock granted pursuant to Section 11 of the
Plan, but a share of such Stock shall cease to be Restricted Stock
when the conditions to and limitations on transferability under
Section 11 have been satisfied or have expired, respectively.
(x) RETIREMENT means a Termination of Employment without Cause at or
after age 65 or such earlier date after age 50 as may be approved by
the Committee with regard to such Participant. With respect to a
Participant's Termination of Directorship, Retirement means the
failure to stand for reelection (other than a Termination for Cause)
on or after a Participant has attained age 65 or such earlier
3
date after age 50 as may be approved by the Board with regard to
such Participant.
(y) STOCK means the authorized and unissued shares of the Company's
common stock, par value $.001 per share.
(z) STOCK APPRECIATION RIGHT or SAR means the right to receive a number
of shares of Stock representing the Fair Market Value of a share of
Stock at the date of exercise over the Base Price. In the case of a
Stock Appreciation Right which is granted in conjunction with an
Option, the Base Price shall be the Option exercise price.
(aa) SUBSIDIARY means a subsidiary corporation as defined in Section
424(f) of the Code.
(bb) TEN PERCENT STOCKHOLDER means a person owning stock possessing more
than 10% of the total combined voting power of all classes of stock
of the Company, its Subsidiaries or its Parent.
(cc) TERMINATION OF DIRECTORSHIP means that the Non-Employee Director has
ceased to be a director of the Company. In the event that a
Non-Employee Director becomes an Employee or a consultant upon the
termination of his or her directorship, unless otherwise determined
by the Committee, in its sole discretion, no Termination of
Directorship shall be deemed to occur until such time as such
Non-Employee Director is no longer an Employee, consultant or
Non-Employee Director.
(dd) TERMINATION OF EMPLOYMENT means a termination of employment (for
reasons other than a military or personal leave of absence granted
by the Company) of a Participant from the Group. In the event that
an Employee becomes a consultant or a Non-Employee Director upon the
termination of his or her employment, unless otherwise determined by
the Committee, in its sole discretion, no Termination of Employment
shall be deemed to occur until such time as such Employee is no
longer an Employee, a consultant or a Non-Employee Director.
Notwithstanding the foregoing, the Committee may otherwise define
Termination of Employment in the Award agreement or, if no rights of
a Participant are reduced, may otherwise define Termination of
Employment thereafter.
(ee) WINDOW PERIOD means the third to the twelfth business day following
the release for publication of the Company's quarterly or annual
earnings report.
SECTION 3. ADMINISTRATION.
The Plan will be administered by the Committee. The determinations of the
Committee shall be made in accordance with their judgment as to the best
interests of the Company and its stockholders and in accordance with the purpose
of the Plan. A majority of members of the Committee shall constitute a quorum,
and all determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be made
4
without notice or meeting of the Committee, by a writing signed by a majority of
the Committee members. Determinations, interpretations, or other actions made or
taken by the Committee pursuant to the provisions of the Plan shall be final and
binding and conclusive for all purposes and upon all persons whomsoever.
The Committee may offer to buy out an Award previously granted, based on
such terms and conditions as the Committee shall establish and communicate to
the Participant at the time such offer is made.
The Committee may designate employees of the Group and professional
advisors to assist the Committee in the administration of the Plan and, to the
extent permitted by applicable law and applicable exchange rules, may grant
authority to officers to grant Awards and/or execute agreements or other
documents on behalf of the Committee.
SECTION 4. SHARES RESERVED UNDER THE PLAN.
There is hereby reserved for issuance under the Plan an aggregate of
1,000,000 shares of Stock (subject to any increase or decrease pursuant to
Section 13); provided, however, that notwithstanding the foregoing, no more than
200,000 shares of Stock (subject to any increase or decrease pursuant to Section
13) whether subject to Options, Stock Appreciation Rights, Awards of Restricted
Stock or Performance Awards denominated in shares of Stock may be granted in any
one fiscal year to any one single Participant and the maximum aggregate payout
(determined as of the end of the applicable performance period) with respect to
Awards of Performance Shares granted in any one fiscal year to any one single
Participant shall not exceed $500,000.
Stock underlying outstanding Options, Stock Appreciation Rights or
Performance Awards will be counted against the Plan maximum while such Options
or Performance Awards are outstanding. Shares underlying expired, canceled or
forfeited Awards (except Restricted Stock) may be added back to the Plan
maximum, subject to the provisions of Section 10. When the exercise price of an
Option is paid by delivery of shares of Stock, the number of shares available
for issuance under the Plan shall continue to be reduced by the gross (rather
than the net) number of shares issued pursuant to such exercise, regardless of
the number of shares surrendered in payment. Restricted Stock issued pursuant to
the Plan will be counted against the Plan maximum while outstanding even while
subject to restrictions.
If any Award is cancelled (or is amended in a way that is treated as a
cancellation), the shares related to the cancelled Award shall count against the
above maximum limitations for the applicable fiscal year.
SECTION 5. PARTICIPANTS.
Participants will consist of such Employees of the Group as the Committee
in its sole discretion determines have a major impact on the success and future
growth and profitability of the Company and Non-Employee Directors. Designation
of a Participant in any year shall not require the Committee to designate such
person to receive an Award in any other year or to receive the same type or
amount of Award as granted to the Participant in any other year or as granted to
any other Participant in any year. The Committee shall consider such factors as
it
5
deems pertinent in selecting Participants and in determining the type and amount
of their respective Awards. Only Employees of the Group may be granted Incentive
Stock Options under the Plan.
SECTION 6. TYPES OF AWARDS.
The following Awards may be granted under the Plan: (a) Incentive Stock
Options; (b) Nonqualified Stock Options; (c) Stock Appreciation Rights; (d)
Restricted Stock; and (e) Performance Awards; all as described below. Except as
specifically limited herein, the Committee shall have complete discretion in
determining the type and number of Awards to be granted to any Participant, and
the terms and conditions which attach to each Award, which terms and conditions
need not be uniform as between different participants. All Awards shall be
evidenced in writing and shall be subject to the terms and conditions of the
Plan.
SECTION 7. DATE OF GRANTING AWARDS.
All Awards granted under the Plan shall be granted as of an Award date, as
determined by the Committee. Promptly after each Award date, the Company shall
notify the Participant of the grant of the Award, and shall deliver to the
Participant an Award agreement, duly executed by and on behalf of the Company,
with the request that the Participant execute and return the Award agreement
within thirty days (or such other period determined by the Committee) after the
date of delivery by the Company of the Award agreement to the Participant. If
the Participant shall fail to execute and return the written Award agreement
within such period, his or her Award shall be automatically terminated, except
that if the Participant dies within such period such Award agreement shall be
effective notwithstanding the fact that it has not been signed prior to death.
SECTION 8. INCENTIVE STOCK OPTIONS.
Incentive Stock Options shall consist of options to purchase shares of
Stock at purchase prices not less than 100% (or, in the case of an Incentive
Stock Option granted to a Ten Percent Stockholder, 110%) of the Fair Market
Value of a share of Stock on the date of grant of the Incentive Stock Option.
The purchase price may be paid by check or, in the discretion of the Committee,
by the delivery of shares of Stock then owned by the Participant or such other
method acceptable to the Committee. Unless otherwise provided in the Award
agreement, Incentive Stock Options will be exercisable not earlier than six
months and not later than ten years (or, five years in the case of an Incentive
Stock Option granted to a Ten Percent Stockholder) after the date they are
granted and, except as provided below, will terminate three months after
Termination of Employment for any reason other than death or Disability. Unless
otherwise provided in the Award agreement, in the event Termination of
Employment occurs as a result of death or Disability, the vested portion of the
Option will be exercisable for 12 months after such termination. Unless
otherwise provided in the Award agreement, if the Participant dies within 12
months after Termination of Employment by reason of Disability, then the period
of exercise following death with respect to then vested Options shall be the
remainder of the 12-month period, or three months, whichever is longer. Unless
otherwise provided in the Award agreement, if the Participant dies within three
months after Termination of Employment for any other reason, then the period of
exercise following death with respect to then vested Options
6
shall be three months. Notwithstanding anything herein to the contrary, in no
event shall any Incentive Stock Option be exercised more than ten years after
its grant (or, five years in the case of an Incentive Stock Option granted to a
Ten Percent Stockholder). The aggregate Fair Market Value (determined as of the
time an Option is granted) of the Stock with respect to which an Incentive Stock
Option is exercisable for the first time during any calendar year (under all
option plans of the Group) shall not exceed $100,000 per Participant. Unless
provided otherwise in the Award agreement, Incentive Stock Options that are not
exercisable at the time of Termination of Employment for any reason shall
immediately terminate. Unless provided otherwise in the Award agreement, upon a
Participant's Termination of Employment for Cause all outstanding Incentive
Stock Options (whether vested or unvested) shall immediately terminate.
SECTION 9. NONQUALIFIED STOCK OPTIONS.
Nonqualified Stock Options shall consist of nonqualified options to
purchase shares of Stock at purchase prices not less than 100% of the Fair
Market Value of a share of Stock on the date of grant of the Nonqualified Stock
Option. The purchase price may be paid by check or, in the discretion of the
Committee, by the delivery of shares of Stock then owned by the Participant or
such other method acceptable to the Committee. Notwithstanding anything herein
to the contrary, Nonqualified Stock Options will be exercisable as provided in
the Award agreement except that such options will not be exercisable later than
ten years after the date they are granted. Unless provided otherwise in the
Award agreement, Nonqualified Stock Options that are not exercisable at the time
of Termination of Employment or Termination of Directorship for any reason shall
immediately terminate. Unless provided otherwise in the Award agreement, upon a
Participant's Termination of Employment or Termination of Directorship for Cause
all outstanding Nonqualified Stock Options (whether vested or unvested) shall
immediately terminate. Unless provided otherwise in the Award agreement,
Nonqualified Stock Options that are exercisable at the time of Termination of
Employment or Termination of Directorship shall terminate three months after
Termination of Employment or Termination of Directorship for any reason other
than death, Retirement or Disability. In the event Termination of Employment or
Termination of Directorship occurs as a result of death, Retirement or
Disability, the vested portion of the Nonqualified Stock Options will remain
exercisable for 12 months after such termination unless provided otherwise in
the Award agreement. If the Participant dies during any post-termination
exercise period, then the period of exercise following death shall be the
remainder of the applicable post-termination exercise period, or three months,
whichever is longer unless provided otherwise in the Award agreement. The
Committee shall have the right to determine at the time the Option is granted
whether shares issued upon exercise of a Nonqualified Stock Option shall be
subject to restrictions, and if so, the nature of the restrictions.
SECTION 10. STOCK APPRECIATION RIGHTS.
Stock Appreciation Rights may be granted which, at the discretion of the
Committee, may be exercised (1) in lieu of exercise of an Option, (2) in
conjunction with the exercise of an Option, (3) upon lapse of an Option, (4)
independent of an Option, or (5) each of the above in connection with a
previously awarded Option under the Plan. SARs issued to Reporting Persons shall
be held for at least six months prior to exercise. If the Option referred to in
(1), (2) or (3) above qualified as an Incentive Stock Option pursuant to Section
422 of the Code, the related SAR shall comply with the applicable provisions of
the Code and the regulations issued
7
thereunder. At the time of grant, the Committee may impose such conditions on
exercise of an SAR (including, without limitation, the right of the Committee to
limit the time of exercise to specified periods) as may be required to satisfy
the requirements of Rule 16b-3 (or any successor rule), under the Act.
Settlement for SARs shall be made in Stock. Unless otherwise provided in the
Award agreement, the following will apply upon exercise of an SAR:
(a) Exercise of SARs in Lieu of Exercise of Options. SARs exercisable in
lieu of Options may be exercised for all or part of the shares of
Stock subject to the related Option upon the exercise of the right
to exercise an equivalent number of Options. A SAR may be exercised
only with respect to the shares of Stock for which its related
Option is then exercisable. Upon exercise of a SAR in lieu of
exercise of an Option, shares of Stock equal to the number of SARs
exercised shall no longer be available for Awards under the Plan.
(b) Exercise of SARs in Conjunction with Exercise of Options. SARs
exercisable in conjunction with the exercise of Options shall be
deemed to be exercised upon the exercise of the related Options, and
shares of Stock equal to the sum of the number of shares acquired by
exercise of the Option plus the number of SARs exercised shall no
longer be available for Awards under the Plan.
(c) Exercise of SARs Upon Lapse of Options. SARs exercisable upon lapse
of Options shall be deemed to have been exercised upon the lapse of
the related Options as to the number of shares of Stock subject to
the Options. Shares of Stock equal to the number of SARs deemed to
have been exercised shall not be available again for Awards under
the Plan.
(d) Exercise of SARs Independent of Options. SARs exercisable
independent of Options may be exercised upon whatever terms and
conditions the Committee, in its sole discretion, imposes upon the
SARs, and shares of Stock equal to the number of SARs exercised
shall no longer be available for Awards under the Plan. The exercise
price of such a SAR shall be equal to the Fair Market Value of the
Stock on the date of grant.
SECTION 11. RESTRICTED STOCK.
Restricted Stock shall consist of Stock issued or transferred under the
Plan (other than upon exercise of Options or as Performance Awards) or as a
bonus. Unless otherwise provided in the Award agreement, in the case of any
Restricted Stock:
(a) The purchase price, if any, will be determined by the Committee. The
purchase price for shares of Restricted Stock may be zero to the
extent permitted by applicable law, and, to the extent not so
permitted, such purchase price may not be less than par value.
(b) Restricted Stock may be subject to (i) restrictions on the sale or
other disposition thereof, provided, however, that Restricted Stock
granted to a Reporting Person shall, in addition to any other
restrictions thereon, not be sold or disposed of for
8
not less than six (6) months following the date of grant; (ii)
rights of the Company to reacquire such Restricted Stock at the
purchase price, if any, originally paid therefor upon a Termination
of Employment or Termination of Directorship within specified
periods, (iii) representation by the Employee or Non-Employee
Director that he or she intends to acquire Restricted Stock for
investment and not for resale, and (iv) such other restrictions,
conditions and terms as the Committee deems appropriate.
(c) The Participant shall have all of the rights of a holder of Stock
during the Period of Restriction, including, without limitation, the
right to vote the Stock, the right to receive any dividends, and,
subject to and conditioned upon the full vesting of shares of
Restricted Stock, the right to tender such shares. Notwithstanding
the foregoing, the payment of dividends shall be deferred until, and
conditioned upon, the expiration of the applicable Period of
Restriction, unless the Committee, in its sole discretion, specifies
otherwise at the time of the Award.
(d) The Committee shall determine whether Restricted Stock is to be
delivered to the Participant with an appropriate legend imprinted on
the certificate or if the shares are to be deposited in escrow
pending removal of the restrictions. If and when the Period of
Restriction expires without a prior forfeiture of the Restricted
Stock subject to such Period of Restriction, the certificates for
such shares shall be delivered to the Participant. All legends shall
be removed from said certificates at the time of delivery to the
Participant except as otherwise required by applicable law.
(e) The Committee may require that any stock certificates evidencing
Restricted Stock be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of
any Award of Restricted Stock, the Participant shall have delivered
a duly signed stock power, endorsed in blank, relating to the Stock
covered by such Award.
(f) The Committee may condition the grant or vesting of Restricted Stock
upon the attainment of specified performance goals (including the
goals set forth on Exhibit A) as the Committee may determine in its
sole discretion, including to comply with the requirements of
Section 162(m) of the Code. Unless and until the Committee
determines that Restricted Stock granted to a Covered Employee shall
not be designed to comply with the Performance-Based Exception, one
or more of the performance goals set forth on Exhibit A shall apply.
(g) The Participant shall not be permitted to transfer shares of
Restricted Stock awarded under the Plan during a period set by the
Committee (the "Period of Restriction") commencing with the date of
such Award, as set forth in the Award agreement or grant letter, and
such agreement or grant letter shall set forth a vesting schedule
and any events that would accelerate vesting of the shares of
Restricted Stock. Within these limits, based on service, attainment
of performance goals and/or such other factors or criteria as the
Committee may determine in its sole discretion, the Committee may
provide for the lapse of such
9
restrictions in installments in whole or in part, or may accelerate
the vesting of all or any part of any Award of Restricted Stock
and/or waive the deferral limitations for all or any part of any
Award of Restricted Stock.
(h) Unless and until the Committee determines that Restricted Stock
granted to a Covered Employee shall not be designed to comply with
the Performance-Based Exception, any performance goal and the
vesting percentage must be established in writing by the Committee
prior to the beginning of the applicable fiscal year or at such
later date as otherwise determined by the Committee and while the
outcome of the performance goals is substantially uncertain (but in
no event later than after 25% of the period of service to which the
performance goal relates has elapsed). Such performance goals may
incorporate provisions for disregarding (or adjusting for) changes
in accounting methods, corporate transactions (including, without
limitation, dispositions and acquisitions) and other similar type
events or circumstances.
(i) Upon a Participant's Termination of Employment or Termination of
Directorship for any reason during the relevant Period of
Restriction, all Restricted Stock still subject to restriction will
vest or be forfeited in accordance with the terms and conditions
established by the Committee at grant or thereafter.
SECTION 12. PERFORMANCE AWARDS.
The Committee is authorized to grant to Participants Performance Awards that are
payable in, valued in whole or in part by reference to, or otherwise based on or
related to shares of Stock, including but not limited to, Stock awarded purely
as a bonus and not subject to any restrictions or conditions, shares of Stock in
payment of the amounts due under an incentive or performance plan sponsored or
maintained by the Company, stock equivalent units, restricted stock units,
deferred stock units, and Awards valued by reference to book value of Stock. The
Committee may, in its sole discretion, permit Participants to defer all or a
portion of their cash compensation in the form of Performance Awards granted
under the Plan, subject to the terms and conditions of any deferred compensation
arrangement established by the Company.
Stock issued on a bonus basis under this Section may be issued for no cash
consideration; Stock purchased pursuant to a purchase right awarded under this
Section shall be priced, as determined by the Committee in its sole discretion.
For a Performance Award that the Committee determines shall not be designed to
comply with the Performance Based Exception, the performance goals shall be
established by the Committee. Unless and until the Committee determines that a
Performance Award to a Covered Employee shall not be designed to comply with the
Performance-Based Exception, any performance goal related to a Performance Award
must be established in writing by the Committee prior to the beginning of the
applicable fiscal year or at such later date as otherwise determined by the
Committee and while the outcome of the performance goals is substantially
uncertain (but in no event later than after 25% of the period of service to
which the performance goal relates has elapsed).
10
Any Performance Award and any Stock covered by any such Award shall vest or be
forfeited to the extent so provided in the Award agreement, as determined by the
Committee, in its sole discretion.
Unless otherwise provided in the Award agreement, in the event the minimum
corporate goal is not achieved at the conclusion of the Performance Period, no
payment shall be made to the Participant. Actual payment of the Performance
Award earned shall be in cash or in Stock or in a combination of both, in a
single sum or in periodic installments, all as the Committee in its sole
discretion determines. If Stock is used, the Participant shall not have the
right to vote and receive dividends until the goals are achieved and the actual
shares are issued. In the event a Reporting Person received a Performance Award
which includes Stock, such stock shall not be sold or disposed of for six (6)
months following the date of issuance pursuant to such award. In the event a
Performance Award is paid in cash instead of Stock, the number of shares
reserved for issuance hereunder and the number of shares which may be granted in
the form of Restricted Stock or Performance Awards shall be reduced as if shares
had been issued The Committee shall certify in writing that any performance
goals and any other material terms of a Performance Award have been achieved
prior to the actual payment of the Performance Award. Unless otherwise provided
in the Award agreement, amounts equal to any dividends declared during the
Performance Period with respect to the number of shares of Stock covered by a
Performance Share will not be paid to the Participant.
Subject to the applicable provisions of the Award agreement and the Plan, upon a
Participant's Termination of Employment or Termination of Directorship for any
reason during the Performance Period, the Performance Awards in question will
vest or be forfeited in accordance with the terms and conditions established by
the Committee at grant.
Based on service, performance and/or such other factors or criteria, if any, as
the Committee may determine, the Committee may, at or after grant, accelerate
the vesting of all or any part of any Performance Award and/or waive the
deferral limitations for all or any part of such Award.
SECTION 13. ADJUSTMENT PROVISIONS.
(a) If the Company shall at any time change the number of issued shares
of Stock without new consideration to the Company (such as by stock
dividends or stock splits), the total number of shares reserved for
issuance under the Plan, the maximum number of shares available to a
particular Participant, and the number of shares covered by each
outstanding Award (and the exercise or purchase price thereof), may
be adjusted by the Committee to prevent substantial dilution or
enlargement of the rights granted to, or available for, Participants
under the Plan. Awards may also contain provisions for their
continuation or for other equitable adjustments after changes in the
Stock resulting from reorganization, sale, merger, consolidation,
issuance of stock rights or warrants, or similar occurrence.
(b) Notwithstanding any other provision of the Plan, and without
affecting the number of shares reserved or available hereunder, the
Board may authorize the equitable adjustment of benefits in
connection with any merger, consolidation,
11
acquisition of property or stock, or reorganization upon such terms
and conditions as it may deem appropriate.
SECTION 14. CHANGE OF CONTROL.
If the terms of an agreement under which the Committee has granted an
Award under the Plan shall so provide, upon a Change of Control outstanding
Awards shall become immediately and fully exercisable or payable according to
the following terms:
(a) Any outstanding and unexercised Option shall become immediately and
fully exercisable, and shall remain exercisable until it would
otherwise expire by reason of lapse of time.
(b) During the six month and seven day period from and after a Change of
Control (the "Exercise Period"), unless the Committee shall
determine otherwise at the time of grant, a Participant shall have
the right, in lieu of the payment of the Base Price of the shares of
Stock being purchased under an Option and by giving notice to the
Committee, to elect (within the Exercise Period and, in the case of
Reporting Persons, only within a Window Period within such Exercise
Period) in lieu of exercise thereof, provided that if such Option is
held by a Reporting Person more than six (6) months have elapsed
from the grant thereof to surrender all or part of the Option to the
Company and to receive in cash within 30 days of such notice, an
amount equal to the amount by which the Change in Control Price per
share of Stock on the date of such elections shall exceed the Base
Price per share of Stock under the Option multiplied by the number
of shares of Stock granted under the Option as to which the right
granted under this subsection 14(b) shall have been exercised.
Change in Control Price shall mean the higher of (i) (A) for any
period during which the Stock shall not be listed for trading on a
national securities exchange, but when prices for the Stock shall be
reported on an automated quotation system sponsored by the National
Association of Securities Dealers, Inc., the highest price per share
as quoted by such system, (B) or any period during which the Stock
shall be listed for trading on a national securities exchange, the
highest closing price per share of Stock on such exchange as of the
close of such trading day or (C) the highest market price per share
of Stock as determined by a nationally recognized investment banking
firm selected by the Board in the event neither (A) or (B) above
shall be applicable, in each case during the 60 day period prior to
and ending on the date of the Change of Control, or (ii) if the
Change of Control is the result of a transaction or series of
transactions described in subsections 14(g)(i) or (iii) hereof, the
highest price per share of the Stock paid in such transaction or
series of transaction (which in the case of paragraph (i) shall be
the highest price per share of the Stock as reflected in a Schedule
13D by the person having made the acquisition); provided, however,
that with respect to any Incentive Stock Option, the Change of
Control Price shall not exceed the market price of a share of Stock
(to the extent required pursuant to Section 422 of the Code) on the
date of surrender thereof.
12
(c) Any outstanding and unexercised Stock Appreciation Rights (other
than such rights which arise pursuant to subsection 14(b) hereof)
shall become exercisable as follows:
(i) Any SAR described in subsections 10(a) or (b) shall continue
to be treated as provided in those subsections.
(ii) Any SAR described in subsection 10(c) shall be deemed to have
been exercised if and when the Participant advises the
Committee in writing that he or she elects to have Options
with respect to which the SAR was granted treated as having
lapsed.
(iii) Any SAR described in Subsection 10(d) shall be exercisable
immediately, without regard to limitations imposed; upon such
exercise which are related to the passage of time.
(d) Any Restricted Stock granted pursuant to Section 11 shall become
immediately and fully vested and transferable, and the Committee
shall be deemed to have exercised its discretion to waive any
automatic forfeitures provided with respect to such Restricted
Stock. Any shares held in escrow shall be delivered to the
Participant, and the share certificates shall not contain the legend
specified by subsection 11(d). Reporting Persons shall not dispose
of any Restricted Stock until six (6) months following the date of
grant of such Restricted Stock.
(e) Any Performance Award granted pursuant to Section 12 which has not
expired or been forfeited shall be deemed to have been earned on the
assumption that all performance goals have been achieved to the
fullest extent scheduled in the Award. All payment shall be made
promptly in a lump sum, notwithstanding any other provision for
installment or deferred payment prescribed in the Award.
(f) If an Award agreement does not provide for accelerated vested upon a
Change of Control, the Award, whether or not then vested, shall be
continued, assumed, have new rights substituted therefor, as
determined by the Committee, and restrictions to which any
Restricted Stock or any other Award granted prior to the Change of
Control are subject shall not lapse upon a Change of Control and the
Restricted Stock or other Award shall, where appropriate in the sole
discretion of the Committee, receive the same distribution as other
Stock on such terms as determined by the Committee; provided that,
the Committee may decide to award additional Restricted Stock or
other Awards in lieu of any cash distribution. Notwithstanding
anything to the contrary herein, for purposes of Incentive Stock
Options, any assumed or substituted Option shall comply with the
requirements of Treasury Regulation Section 1.424-1 (and any
amendments thereto).
(g) For purposes of the Plan, a "Change of Control" shall occur if (i)
any Person (other than the Company, any trustee or other fiduciary
holding securities under any employee benefit plan of the Company,
or any company owned, directly or indirectly, by the stockholders of
the Company in substantially the same
13
proportions as their ownership of Stock) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company which represent
forty five percent (45%) or more of the combined voting power of the
Company's then outstanding securities; (ii) during any period of two
(2) consecutive years individuals who at the beginning of such
period constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election, or the nomination for
election, by the Company's stockholders, of each new director is
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who were directors at the beginning of the
period but excluding any individual whose initial assumption of
office occurs as a result of either an actual or threatened election
contest (as such term is used in Rule 14a-11 of Regulation 14A
promulgated under the Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a person
other than the Board; (iii) there is consummated any consolidation
or merger of the Company in which the Company is not the continuing
or surviving corporation or pursuant to which shares of the
Company's Stock are converted into cash, securities, or other
property, other than: (1) a merger of the Company in which the
holders of the Company's Stock immediately prior to the merger have
the same proportionate ownership of common stock of the surviving
corporation immediately after the merger; or (2) a merger which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity) more than 50% of the combined voting power
of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; (iv)
there is consummated any consolidation or merger of the Company in
which the Company is the continuing or surviving corporation in
which the holders of the Company's Stock immediately prior to the
merger do not own more than 50% of the combined voting power of the
voting securities of the surviving corporation immediately after the
merger; (v) there is consummated any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Company other than
(1) the sale or disposition of all or substantially all of the
assets of the Company to a person or persons who beneficially own,
directly or indirectly, more than 50% of the combined voting power
of the outstanding voting securities of the Company at the time of
the sale or (2) pursuant to a spinoff type transaction, directly or
indirectly, of such assets to the stockholders of the Company, or
(vi) the stockholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company.
(h) In the event of a merger or consolidation in which the Company is
not the surviving entity or in the event of any transaction that
results in the acquisition of substantially all of the Company's
outstanding Stock by a single person or entity or by a group of
persons and/or entities acting in concert, or in the event of the
sale or transfer of all or substantially all of the Company's assets
(all of the foregoing being referred to as an "Acquisition Event"),
then the Committee may, in its sole discretion, terminate all
outstanding and unexercised Options or SARs
14
effective as of the date of the Acquisition Event, by delivering
notice of termination to each Participant at least 20 days prior to
the date of consummation of the Acquisition Event, in which case
during the period from the date on which such notice of termination
is delivered to the consummation of the Acquisition Event, each such
Participant shall have the right to exercise in full all of his or
her Options or SARs that are then outstanding (without regard to any
limitations on exercisability otherwise contained in the Award
agreements), but any such exercise shall be contingent on the
occurrence of the Acquisition Event, and, provided that, if the
Acquisition Event does not take place within a specified period
after giving such notice for any reason whatsoever, the notice and
exercise pursuant thereto shall be null and void.
SECTION 15. NONTRANSFERABILITY.
Unless otherwise provided in an Award agreement, Awards granted under the
Plan to a Participant shall not be transferable otherwise than by will or the
laws of descent and distribution or pursuant to a Qualified Domestic Relations
Order (as defined in Section 206(d)(3) of the Employee Retirement Income
Security Act of 1974, as amended, and the rules promulgated thereunder), and
shall be exercisable, during the Participant's lifetime, only by the
Participant. In the event of the death of a Participant, exercise of payment
shall be made only:
(a) By or to the executor or administrator of the estate of the deceased
Participant or the person or persons to whom the deceased
Participant's rights under the Award shall pass by will or the laws
of descent and distribution; and
(b) To the extent that the deceased Participant was entitled thereto at
the date of his death, provided, however, that any otherwise
applicable six-month holding period shall not be required for
exercise by or payment to an executor or administrator of the estate
of a deceased Reporting Person.
SECTION 16. TAXES.
The Company shall be entitled to withhold the amount of any tax
attributable to any amounts payable or shares deliverable under the Plan after
giving the person entitled to receive such payment or delivery notice as far in
advance as practicable, and the Company may defer making payment or delivery as
to any Award if any such tax is payable until indemnified to its satisfaction.
The person entitled to any such delivery may, by notice to the Company at the
time the requirement for such delivery is first established, elect to have such
withholding satisfied by a reduction of the number of shares otherwise so
deliverable (a "Stock Withholding Election"), such reduction to be calculated
based on a closing market price on the date of such notice. Reporting Persons
may make a Stock Withholding Election either (i) during a Window Period, as to
an Option or SAR exercise during such Window Period, or (ii) six months in
advance of an Option or SAR exercise, which exercise need not occur during a
Window Period, and which election may not be suspended or revoked except by
another such election which shall not become effective until six months after it
is made.
15
SECTION 17. NO RIGHT TO EMPLOYMENT
A Participant's right, if any, to continue to serve the Company and its
subsidiaries as a director, officer, employee, or otherwise, shall not be
enlarged or otherwise affected by his or her designation as a Participant under
the Plan.
No Award shall be granted more than ten years after the effective date of
the Plan, but Awards granted prior to such date may extend beyond that date;
provided, however, that the terms and conditions applicable to any Award granted
within such period may thereafter be amended or modified by mutual agreement
between the Company and the Participant or such other person as may then have an
interest therein. Also, by mutual agreement between the Company and a
Participant hereunder, Options or other Awards may be granted to such
Participant in substitution and exchange for, and in cancellation of, any Awards
previously granted such Participant under the Plan. To the extent that any
Options or other Awards which may be granted within the terms of the Plan would
qualify under present or future laws for tax treatment that is beneficial to a
recipient, then any such beneficial treatment shall be considered within the
intent, purpose and operational purview of the Plan and the discretion of the
Committee and to the extent that any such Options or other Awards would so
qualify within the terms of the Plan, the Committee shall have full and complete
authority to grant Options or other Awards that so qualify (including the
authority to grant, simultaneously or otherwise, Options or other Awards which
do not so qualify) and to prescribe the terms and conditions (which need not be
identical as among recipients) in respect to the grant or exercise of any such
Option or other Awards under the Plan. The Board may amend the Plan from time to
time or terminate the Plan at any time. However, no action authorized by this
paragraph shall adversely impair the rights of a Participant regarding any
existing Award. No amendment of the Plan, shall, without approval of the
stockholders of the Company (a) increase the total number of shares which may be
issued under the Plan (except pursuant to Section 13); (b) change the minimum
purchase price, if any (except pursuant to Section 13 hereof), of shares of
Stock which may be made subject to Awards under the Plan; or (c) modify the
requirements as to eligibility for Awards under the Plan. No amendment shall be
effective without stockholder approval if such approval is required in order for
the Plan to continue to comply with the applicable rules of any exchange or
system on which the Company's securities are listed or traded, the applicable
provisions of Section 162(m) of the Code or, to the extent applicable to
Incentive Stock Options, Section 422 of the Code.
SECTION 18. SHAREHOLDER APPROVAL.
The Plan shall be effective on November 30, 2005, subject to the approval
of the Plan by the stockholders of the Company within 12 months before or after
adoption of the Plan by the Board in accordance with the laws of the State of
Delaware.
SECTION 19. GOVERNING LAW.
Except to the extent preempted by any applicable federal law, the Plan
will be construed and administered in accordance with the laws of the State of
Delaware, without reference to the principles of conflicts of law.
16
SECTION 20. GENERAL PROVISIONS
(a) The Committee may require each person receiving shares of Stock
pursuant to an Option or other Award under the Plan to represent to
and agree with the Company in writing that the Participant is
acquiring the shares without a view to distribution thereof. In
addition to any legend required by the Plan, the certificates for
such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer. All
certificates for shares of Stock delivered under the Plan shall 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 Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed or any national
securities exchange system upon whose system the Stock is then
quoted, any applicable Federal or state securities law, and any
applicable corporate law, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate
reference to such restrictions.
(b) Unless otherwise determined by the Committee, as long as the Stock
is listed on a national securities exchange or quoted on a system
sponsored by a national securities association, the issue of any
shares of Stock pursuant to an Award shall be conditioned upon such
shares being listed on such exchange or quoted on such system. The
Company shall have no obligation to issue such shares unless and
until such shares are so listed or quoted, and the right to exercise
any Option or other Award with respect to such shares shall be
suspended until such listing or quotation has been effected.
If at any time counsel to the Company shall be of the opinion that
any sale or delivery of shares of Stock pursuant to an Option or
other Award is or may in the circumstances be unlawful or result in
the imposition of excise taxes on the Company under the statutes,
rules or regulations of any applicable jurisdiction, the Company
shall have no obligation to make such sale or delivery, or to make
any application or to effect or to maintain any qualification or
registration under the Securities Act of 1933, as amended, or
otherwise, with respect to shares of Stock or Awards, and the right
to exercise any Option or other Award shall be suspended until, in
the opinion of said counsel, such sale or delivery shall be lawful
or will not result in the imposition of excise taxes on the Company.
Upon termination of any period of suspension under this Section, any
Award affected by such suspension which shall not then have expired
or terminated shall be reinstated as to all shares of Stock
available before such suspension and as to shares of Stock which
would otherwise have become available during the period of such
suspension, but no such suspension shall extend the term of any
Award.
A Participant shall be required to supply the Company with any
certificates, representations and information that the Company
requests and otherwise cooperate with the Company in obtaining any
listing, registration, qualification, exemption, consent or approval
the Company deems necessary or appropriate.
17
(c) All elections and transactions under the Plan by persons subject to
Section 16 of the Exchange Act involving shares of Stock are
intended to comply with any applicable exemptive condition under
Rule 16b-3. The Committee may establish and adopt written
administrative guidelines, designed to facilitate compliance with
Section 16(b) of the Exchange Act, as it may deem necessary or
proper for the administration and operation of the Plan and the
transaction of business thereunder.
(d) The Plan is intended to comply with the applicable requirements of
Section 409A of the Code and shall be limited, construed and
interpreted in accordance with such intent. To the extent that any
Award is subject to Section 409A of the Code, it shall be paid in a
manner that will comply with Section 409A of the Code, including
proposed, temporary or final regulations or any other guidance
issued by the Secretary of the Treasury and the Internal Revenue
Service with respect thereto. Notwithstanding anything herein to the
contrary, any provision in the Plan that is inconsistent with
Section 409A of the Code shall be deemed to be amended to comply
with Section 409A of the Code and to the extent such provision
cannot be amended to comply therewith, such provision shall be null
and void.
18
EXHIBIT A
PERFORMANCE GOALS
Performance goals established for purposes of the grant or vesting of
Restricted Stock and Performance Awards that are granted to Covered Employees
and that are intended to comply with the Performance-Based Exception shall be
based on the attainment of certain target levels of, or a specified increase or
decrease (as applicable) in one or more of the following performance goals: (i)
enterprise value or value creation targets; (ii) after-tax or pre-tax profits,
including without limitation as attributable to continuing and/or other
operations of the Company; (iii) operational cash flow or economic value added;
(iv) specified objectives with regard to limiting the level of increase in all
or a portion of, the Company's bank debt or other long-term or short-term public
or private debt or other similar financial obligations of the Company, which may
be calculated net of cash balances and/or other offsets and adjustments as may
be established by the Committee; (v) earnings per share or earnings per share
from continuing operations; (vi) net sales, revenues, net income or earnings
before income tax or other exclusions; (vii) return on capital employed or
return on invested capital; (viii) after-tax or pre-tax return on stockholder
equity; (ix) the fair market value of the shares of the Company's Stock; (x) the
growth in the value of an investment in the Company's Stock assuming the
reinvestment of dividends; (xi) a transaction that results in the sale of stock
or assets of the Company; (xii) earnings before interest, taxes plus
amortization and depreciation; or (xiii) reduction in expenses. The Committee
may also exclude the impact of an event or occurrence which the Committee
determines should be appropriately excluded, including: (a) restructurings,
discontinued operations, extraordinary items or events, and other unusual or
non-recurring charges, (b) an event either not directly related to the
operations of the Company or not within the reasonable control of the Company's
management, or (c) a change in tax law or accounting standards required by
generally accepted accounting principles.
In addition, performance goals may be based upon the attainment of specified
levels of Company (or subsidiary, division or other operational unit or business
segment of the Company) performance under one or more of the measures described
above relative to the performance of other corporations. The Committee may: (i)
designate additional business criteria on which the performance goals may be
based or (ii) adjust, modify or amend the aforementioned business criteria.
19