Exhibit 10.01
CARDINAL HEALTH, INC.
2005 LONG-TERM INCENTIVE PLAN
1. PURPOSE OF THE PLAN.
The purpose of this Plan is to encourage ownership in the Company by key
personnel whose long-term employment is considered essential to the Company's
continued progress and, thereby, encourage such personnel to act in the
shareholders' interest and share in the Company's success. The Plan also is
intended to assist the Company in the recruitment of new employees.
2. DEFINITIONS.
As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board, any Committee or such delegates
as shall be administering the Plan in accordance with Section 4 of the
Plan.
(b) "AFFILIATE" means any Subsidiary or other entity that is
directly or indirectly controlled by the Company or any entity in which
the Company has a significant ownership interest as determined by the
Administrator.
(c) "APPLICABLE LAW" means the requirements relating to the
administration of stock option plans under U.S. federal and state laws,
any stock exchange or quotation system on which the Company has listed or
submitted for quotation the Common Shares to the extent provided under the
terms of the Company's agreement with such exchange or quotation system
and, with respect to Awards subject to the laws of any foreign
jurisdiction where Awards are, or will be, granted under the Plan, the
laws of such jurisdiction.
(d) "AWARD" means a Cash Award, Stock Award, Option, Stock
Appreciation Right or Other Stock-Based Award granted in accordance with
the terms of the Plan.
(e) "AWARDEE" means an Employee who has been granted an Award under
the Plan.
(f) "AWARD AGREEMENT" means a Cash Award Agreement, Stock Award
Agreement, Option Agreement, Stock Appreciation Right Agreement and/or
Other Stock-Based Award Agreement, which may be in written or electronic
format, in such form and with such terms as may be specified by the
Administrator, evidencing the terms and conditions of an individual Award.
Each Award Agreement is subject to the terms and conditions of the Plan.
(g) "BOARD" means the Board of Directors of the Company.
(h) "CASH AWARD" means a bonus opportunity awarded under Section 13
of the Plan pursuant to which a Participant may become entitled to receive
an amount based on the satisfaction of such performance criteria as are
specified in the agreement or, if no agreement is entered into with
respect to the Cash Award, other documents evidencing the Award (the "Cash
Award Agreement").
(i) "CHANGE OF CONTROL" means any of the following:
i. the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty-five percent (25%) or
more of either (x) the then outstanding Common Shares of the Company
(the "Outstanding Company Common Shares"), or (y) the combined
voting power of the then outstanding voting 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 (i), the following acquisitions
shall not constitute a
Change of Control: (A) any acquisition directly from the Company or
any corporation controlled by the Company; (B) any acquisition by
the Company or any corporation controlled by the Company; (C) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled
by the Company; or (D) any acquisition by any corporation that is a
Non-Control Acquisition (as defined in subsection (iii) of this
Section 2(i)); or
ii. individuals who, as of the effective date of this Plan,
constitute the Board of the Company (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board of the
Company; provided, however, that any individual becoming a Director
subsequent to the effective date whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at
least a majority of the Directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs 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
iii. consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the
assets of the Company or the acquisition by the Company of assets or
shares of another corporation (a "Business Combination"), unless,
such Business Combination is a Non-Control Acquisition. A
"Non-Control Acquisition" shall mean a Business Combination where:
(x) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company
Common Shares and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than fifty percent (50%) of, respectively, the then
outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns
the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately
prior to such Business Combination of the Outstanding Company Common
Shares and Outstanding Company Voting Securities, as the case may
be; (y) no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly,
twenty-five percent (25%) or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the
extent that such ownership existed prior to the Business Combination
(including any ownership that existed in the Company or the company
being acquired, if any); and (z) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
iv. approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(j) "CODE" means the United States Internal Revenue Code of 1986, as
amended.
(k) "COMMITTEE" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan or the Human Resources and
Compensation Committee of the Board.
(l) "COMMON SHARES" means the common shares, without par value, of
the Company.
(m) "COMPANY" means Cardinal Health, Inc., an Ohio corporation, or,
except as utilized in the definition of Change of Control, its successor.
(n) "CONVERSION AWARD" has the meaning set forth in Section
4(b)(xii) of the Plan.
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(o) "DIRECTOR" means a member of the Board.
(p) "DISABILITY," unless the Administrator determines otherwise, has
the meaning specified in the Company's long-term disability plan
applicable to the Participant at the time of the disability.
(q) "DISAFFILIATION" means a Subsidiary's or Affiliate's ceasing to
be a Subsidiary or Affiliate for any reason (including, without
limitation, as a result of a public offering, or a spinoff or sale by the
Company, of the stock of the Subsidiary or Affiliate) or a sale of a
division of the Company and its Affiliates.
(r) "EMPLOYEE" means a regular, active employee of the Company or
any Affiliate, including an Officer and/or Director who is also a regular,
active employee of the Company or any Affiliate. The Administrator shall
determine whether the Chairman of the Board qualifies as an "Employee."
For any and all purposes under the Plan, the term "Employee" shall not
include a person hired as an independent contractor, leased employee,
consultant or a person otherwise designated by the Administrator, the
Company or an Affiliate at the time of hire as not eligible to participate
in or receive benefits under the Plan or not on the payroll, even if such
ineligible person is subsequently determined to be a common law employee
of the Company or an Affiliate or otherwise an employee by any
governmental or judicial authority. Unless otherwise determined by the
Administrator in its sole discretion, for purposes of the Plan, an
Employee shall be considered to have terminated employment and to have
ceased to be an Employee if his or her employer ceases to be an Affiliate,
even if he or she continues to be employed by such employer.
(s) "EXCHANGE ACT" means the United States Securities Exchange Act
of 1934, as amended.
(t) "GRANT DATE" means, with respect to each Award, the date upon
which the Award is granted to an Awardee pursuant to this Plan.
(u) "INCENTIVE STOCK OPTION" means an Option that is identified in
the Option Agreement as intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations
promulgated thereunder, and that actually does so qualify.
(v) "FAIR MARKET VALUE" means the fair market value of the Common
Shares as determined by the Administrator from time to time. Unless
otherwise determined by the Administrator, the fair market value shall be
the closing price for the Common Shares reported on a consolidated basis
on the New York Stock Exchange on the relevant date or, if there were no
sales on such date, the closing price on the nearest preceding date on
which sales occurred.
(w) "NONQUALIFIED STOCK OPTION" means an Option that is not an
Incentive Stock Option.
(x) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(y) "OPTION" means a right granted under Section 8 of the Plan to
purchase a number of Shares or Stock Units at such exercise price, at such
times, and on such other terms and conditions as are specified in the
agreement or other documents evidencing the Award (the "Option
Agreement"). Both Incentive Stock Options and Nonqualified Stock Options
may be granted under the Plan.
(z) "OTHER STOCK-BASED AWARD" means an Award granted pursuant to
Section 12 of the Plan on such terms and conditions as are specified in
the agreement or other documents evidencing the Award (the "Other
Stock-Based Award Agreement").
(aa)"PARTICIPANT" means the Awardee or any person (including any
estate) to whom an Award has been assigned or transferred as permitted
hereunder.
(bb)"PLAN" means this 2005 Long-Term Incentive Plan.
(cc)"QUALIFYING PERFORMANCE CRITERIA" shall have the meaning set
forth in Section 14(b) of the Plan.
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(dd)"RETIREMENT" means, unless the Administrator determines
otherwise, voluntary Termination of Employment by a Participant from the
Company and its Affiliates after attaining age fifty-five (55) and having
(i) at least ten (10) years of service with the Company and its
Affiliates, including service with an Affiliate of the Company prior to
the time that such Affiliate became an Affiliate of the Company, and (ii)
at least five years of continuous service with the Company and its
Affiliates, excluding service with an Affiliate of the Company prior to
the time that such Affiliate became an Affiliate of the Company.
(ee)"SECURITIES ACT" means the United States Securities Act of 1933,
as amended.
(ff)"SHARE" means a Common Share, as adjusted in accordance with
Section 16 of the Plan.
(gg)"STOCK APPRECIATION RIGHT" means a right granted under Section
10 of the Plan on such terms and conditions as are specified in the
agreement or other documents evidencing the Award (the "Stock Appreciation
Right Agreement").
(hh)"STOCK AWARD" means an award or issuance of Shares or Stock
Units made under Section 11 of the Plan, the grant, issuance, retention,
vesting and/or transferability of which is subject during specified
periods of time to such conditions (including without limitation continued
employment or performance conditions) and terms as are expressed in the
agreement or other documents evidencing the Award (the "Stock Award
Agreement").
(ii)"STOCK UNIT" means a bookkeeping entry representing an amount
equivalent to the Fair Market Value of one Share, payable in cash,
property or Shares. Stock Units represent an unfunded and unsecured
obligation of the Company, except as otherwise provided for by the
Administrator.
(jj)"SUBSIDIARY" means any company (other than the Company) in an
unbroken chain of companies beginning with the Company, provided each
company in the unbroken chain (other than the Company) owns, at the time
of determination, stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other companies in such
chain.
(kk)"TERMINATION FOR CAUSE" means, unless otherwise provided in an
Award Agreement, Termination of Employment on account of any act of fraud
or intentional misrepresentation or embezzlement, misappropriation or
conversion of assets of the Company or any Affiliate, or the intentional
and repeated violation of the written policies or procedures of the
Company, provided that for an Employee who is party to an individual
severance or employment agreement defining Cause, except as may be
provided in such agreement, "Cause" shall have the meaning set forth in
such agreement. For purposes of this Plan, a Participant's Termination of
Employment shall be deemed to be a Termination for Cause if, after the
Participant's employment has terminated, facts and circumstances are
discovered that would have justified, in the opinion of the Committee, a
Termination for Cause.
(ll)"TERMINATION OF EMPLOYMENT" means ceasing to be an Employee;
provided, however, that, unless otherwise determined by the Administrator,
for purposes of this Plan, a Participant will not be deemed to have had a
Termination of Employment if such Participant continues to be or becomes a
Director or becomes an independent contractor, leased employee or
consultant to the Company. Notwithstanding the foregoing, for Incentive
Stock Option purposes, Termination of Employment will occur when the
Awardee ceases to be an employee (as determined in accordance with Section
3401(c) of the Code and the regulations promulgated thereunder) of the
Company or one of its Subsidiaries.
3. STOCK SUBJECT TO THE PLAN.
(a) Aggregate Limit. Subject to the provisions of Section 16(a) of
the Plan, the maximum aggregate number of Shares which may be subject to
Awards granted under the Plan is 18,000,000 Shares. The aggregate number
of Shares subject to Awards granted under this Plan shall not be reduced
by Shares subject to Awards granted upon the assumption of, or in
substitution for, awards granted by a business or entity that is acquired
by, or whose assets are acquired by, the Company. The Shares issued
pursuant to the
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Plan may be either Shares reacquired by the Company, including Shares
purchased in the open market, or authorized but unissued Shares.
(b) Code Section 162(m) and 422 Limits. Subject to the provisions of
Section 16(a) of the Plan, the aggregate number of Shares subject to
Awards granted under this Plan during any fiscal year to any one Awardee
shall not exceed 1,000,000. Subject to the provisions of Section 16(a) of
the Plan, the aggregate number of Shares that may be subject to all
Incentive Stock Options granted under the Plan is 4,500,000 Shares.
Notwithstanding anything to the contrary in the Plan, the limitations set
forth in this Section 3(b) shall be subject to adjustment under Section
16(a) of the Plan only to the extent that such adjustment will not affect
the status of any Award intended to qualify as "performance-based
compensation" under Section 162(m) of the Code.
(c) Stock Appreciation Rights, Stock Awards and Other Stock-Based
Awards Limit. Subject to the provisions of Section 16(a) of the Plan, the
aggregate number of Shares that may be granted subject to Stock
Appreciation Rights, Stock Awards and Other Stock-Based Awards made under
the Plan is 6,000,000 Shares.
(d) Share Counting Rules.
i. For purposes of this Section 3 of the Plan, the aggregate
number of Shares subject to Awards granted under the Plan at any
time shall not be reduced by Shares subject to Awards that have been
canceled, expired, forfeited or settled in cash.
ii. The following Shares shall not become available for Awards
under this Plan: (A) Shares subject to Awards that have been
retained by the Company in payment or satisfaction of the purchase
price of an Award or the tax withholding obligation of an Awardee;
(B) Shares that have been delivered (either actually or
constructively by attestation) to the Company in payment or
satisfaction of the purchase price of an Award or the tax
withholding obligation of an Awardee; or (C) Shares reserved for
issuance upon a grant of Stock Appreciation Rights which are
exercised and settled in Shares, to the extent the number of
reserved Shares exceeds the number of Shares actually issued upon
the exercise of the Stock Appreciation Rights.
4. ADMINISTRATION OF THE PLAN.
(a) Procedure.
i. Multiple Administrative Bodies. The Plan shall be
administered by the Board, a Committee designated by the Board to so
administer this Plan and/or their respective delegates.
ii. Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Awards granted hereunder as
"performance-based compensation" within the meaning of Section
162(m) of the Code, Awards to "covered employees" within the meaning
of Section 162(m) of the Code or to Employees that the Committee
determines may be "covered employees" in the future shall be made by
a Committee of two or more "outside directors" within the meaning of
Section 162(m) of the Code. Notwithstanding any other provision of
the Plan, the Administrator shall not have any discretion or
authority to make changes to any Award that is intended to qualify
as "performance-based compensation" to the extent that the existence
of such discretion or authority would cause such Award not to so
qualify.
iii. Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3 promulgated under
the Exchange Act ("Rule 16b-3"), Awards to Officers and Directors
shall be made by the entire Board or a Committee of two or more
"non-employee directors" within the meaning of Rule 16b-3.
iv. Other Administration. Except to the extent prohibited by
Applicable Law, the Board or a Committee may delegate to a Committee
of one or more Directors or to authorized officers of the
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Company the power to approve Awards to persons eligible to receive
Awards under the Plan who are not (A) subject to Section 16 of the
Exchange Act or (B) at the time of such approval, "covered
employees" under Section 162(m) of the Code.
v. Delegation of Authority for the Day-to-Day Administration
of the Plan. Except to the extent prohibited by Applicable Law, the
Administrator may delegate to one or more individuals the day-to-day
administration of the Plan and any of the functions assigned to it
in this Plan. Such delegation may be revoked at any time.
(b) Powers of the Administrator. Subject to the provisions of the
Plan and, in the case of a Committee or delegates acting as the
Administrator, subject to the specific duties delegated to such Committee
or delegates, the Administrator shall have the authority, in its
discretion:
i. to select the Employees of the Company or its Affiliates to
whom Awards are to be granted hereunder;
ii. to determine the number of Common Shares to be covered by
each Award granted hereunder;
iii. to determine the type of Award to be granted to the
selected Employees;
iv. to approve forms of Award Agreements;
v. to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise
and/or purchase price, the time or times when an Award may be
exercised (which may or may not be based on performance criteria),
the vesting schedule, any vesting and/or exercisability provisions,
terms regarding acceleration of Awards or waiver of forfeiture
restrictions, the acceptable forms of consideration for payment for
an Award, the term, and any restriction or limitation regarding any
Award or the Shares relating thereto, based in each case on such
factors as the Administrator, in its sole discretion, shall
determine and may be established at the time an Award is granted or
thereafter;
vi. to correct administrative errors;
vii. to construe and interpret the terms of the Plan
(including sub-plans and Plan addenda) and Awards granted pursuant
to the Plan;
viii. to adopt rules and procedures relating to the operation
and administration of the Plan to accommodate the specific
requirements of local laws and procedures. Without limiting the
generality of the foregoing, the Administrator is specifically
authorized (A) to adopt the rules and procedures regarding the
conversion of local currency, the shift of tax liability from
employer to employee (where legally permitted) and withholding
procedures and handling of stock certificates which vary with local
requirements, and (B) to adopt sub-plans and Plan addenda as the
Administrator deems desirable, to accommodate foreign laws,
regulations and practice;
ix. to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to
sub-plans and Plan addenda;
x. to modify or amend each Award, including, but not limited
to, the acceleration of vesting and/or exercisability, provided,
however, that any such modification or amendment (A) is subject to
the minimum vesting provisions set forth in Sections 8(e), 11(a) and
12(a) of the Plan and the plan amendment provisions set forth in
Section 17 of the Plan, and (B) may not impair any outstanding Award
unless agreed to in writing by the Participant, except that such
agreement shall not be required if the Administrator determines in
its sole discretion that such modification or amendment either (Y)
is required or advisable in order for the Company, the Plan or the
Award to satisfy any Applicable Law or to meet the requirements of
any accounting standard, or (Z) is not reasonably likely to
significantly diminish the benefits provided under such Award, or
that adequate compensation has been provided
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for any such diminishment;
xi. to allow Participants to satisfy withholding tax amounts
by electing to have the Company withhold from the Shares to be
issued upon exercise of a Nonqualified Stock Option or vesting of a
Stock Award that number of Shares having a Fair Market Value equal
to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined in such manner and on such
date that the Administrator shall determine or, in the absence of
provision otherwise, on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have
Shares withheld for this purpose shall be made in such form and
under such conditions as the Administrator may provide;
xii. to authorize conversion or substitution under the Plan of
any or all stock options, stock appreciation rights or other stock
awards held by awardees of an entity acquired by the Company (the
"Conversion Awards"). Any conversion or substitution shall be
effective as of the close of the merger or acquisition. The
Conversion Awards may be Nonqualified Stock Options or Incentive
Stock Options, as determined by the Administrator, with respect to
options granted by the acquired entity;
xiii. to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Award
previously granted by the Administrator;
xiv. to impose such restrictions, conditions or limitations as
it determines appropriate as to the timing and manner of any resales
by a Participant or of other subsequent transfers by the Participant
of any Shares issued as a result of or under an Award or upon the
exercise of an Award, including without limitation, (A) restrictions
under an insider trading policy, (B) restrictions as to the use of a
specified brokerage firm for such resales or other transfers, and
(C) institution of "blackout" periods on exercises of Awards;
xv. to provide, either at the time an Award is granted or by
subsequent action, that an Award shall contain as a term thereof, a
right, either in tandem with the other rights under the Award or as
an alternative thereto, of the Participant to receive, without
payment to the Company, a number of Shares, cash or a combination
thereof, the amount of which is determined by reference to the value
of the Award; and
xvi. to make all other determinations deemed necessary or
advisable for administering the Plan and any Award granted
hereunder.
(c) Effect of Administrator's Decision. All questions arising under
the Plan or under any Award shall be decided by the Administrator in its
total and absolute discretion. All decisions, determinations and
interpretations by the Administrator regarding the Plan, any rules and
regulations under the Plan and the terms and conditions of any Award
granted hereunder, shall be final and binding on all Participants. The
Administrator shall consider such factors as it deems relevant, in its
sole and absolute discretion, to making such decisions, determinations and
interpretations including, without limitation, the recommendations or
advice of any officer or other employee of the Company and such attorneys,
consultants and accountants as it may select.
5. ELIGIBILITY.
Awards may be granted only to Employees of the Company or any of its
Affiliates. Awards may not be granted to a Director unless such Director
otherwise qualifies as an Employee of the Company or one of its Affiliates.
6. TERM OF PLAN.
The Plan shall become effective upon its approval by shareholders of the
Company. It shall continue in effect for a term of ten (10) years from the date
the Plan is approved by the shareholders of the Company unless terminated
earlier under Section 17 of the Plan.
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7. TERM OF AWARD.
Subject to the provisions of the Plan, the term of each Award shall be
determined by the Administrator and stated in the Award Agreement. In the case
of an Option, the term shall be ten (10) years from the Grant Date or such
shorter term as may be provided in the Award Agreement.
8. OPTIONS.
The Administrator may grant an Option or provide for the grant of an
Option, either from time to time in the discretion of the Administrator or
automatically upon the occurrence of specified events, including, without
limitation, the achievement of performance goals, the satisfaction of an event
or condition within the control of the Awardee or within the control of others.
(a) Option Agreement. Each Option Agreement shall contain provisions
regarding (i) the number of Shares that may be issued upon exercise of the
Option, (ii) the type of Option, (iii) the exercise price of the Option
and the means of payment of such exercise price, (iv) the term of the
Option, (v) such terms and conditions on the vesting and/or exercisability
of an Option as may be determined from time to time by the Administrator,
(vi) restrictions on the transfer of the Option and forfeiture provisions,
and (vii) such further terms and conditions, in each case not inconsistent
with this Plan, as may be determined from time to time by the
Administrator.
(b) Exercise Price. The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator, except that the per Share exercise price shall be no less
than 100% of the Fair Market Value per Share on the Grant Date.
Notwithstanding the preceding sentence, at the Administrator's discretion,
Conversion Awards may be granted in substitution and/or conversion of
options of an acquired entity, with a per Share exercise price of less
than 100% of the Fair Market Value per Share on the date of such
substitution and/or conversion.
(c) No Option Repricings. Subject to Section 16(a) of the Plan, the
exercise price of an Option may not be reduced without shareholder
approval.
(d) No Reload Grants. Options shall not be granted under the Plan in
consideration for and shall not be conditioned upon the delivery of Shares
to the Company in payment of the exercise price and/or tax withholding
obligation under any other employee stock option.
(e) Vesting Period and Exercise Dates. Options granted under this
Plan shall vest and/or be exercisable at such time and in such
installments during the period prior to the expiration of the Option's
term as determined by the Administrator, except that no Option shall first
become exercisable within one (1) year from its Grant Date, other than (i)
upon a Change of Control as specified in Section 16(b) of the Plan, or
(ii) upon the death, Disability or Retirement of the Awardee, in each case
as specified in the Option Agreement. The Administrator shall have the
right to make the timing of the ability to exercise any Option granted
under this Plan subject to continued active employment, the passage of
time and/or such performance requirements as deemed appropriate by the
Administrator. At any time after the grant of an Option, the Administrator
may reduce or eliminate any restrictions surrounding any Participant's
right to exercise all or part of the Option, subject to restrictions set
forth above.
(f) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the
method of payment, either through the terms of the Option Agreement or at
the time of exercise of an Option. Acceptable forms of consideration may
include:
i. cash;
ii. check or wire transfer (denominated in U.S. Dollars);
iii.subject to any conditions or limitations established by
the Administrator, other Shares which
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(A) in the case of Shares acquired from the Company (whether upon
the exercise of an Option or otherwise), have been owned by the
Participant for more than six (6) months on the date of surrender
(unless this condition is waived by the Administrator), and (B) have
a Fair Market Value on the date of surrender equal to or greater
than the aggregate exercise price of the Shares as to which said
Option shall be exercised (it being agreed that the excess of the
Fair Market Value over the aggregate exercise price shall be
refunded to the Awardee in cash);
iv. subject to any conditions or limitations established by
the Administrator, the Company withholding shares otherwise issuable
upon exercise of an Option;
v. consideration received by the Company under a
broker-assisted sale and remittance program acceptable to the
Administrator;
vi. such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Law; or
vii. any combination of the foregoing methods of payment.
(g) Procedure for Exercise; Rights as a Shareholder.
i. Any Option granted hereunder shall be exercisable according
to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the applicable
Option Agreement.
ii. An Option shall be deemed exercised when the Company
receives (A) written or electronic notice of exercise (in accordance
with the Option Agreement or procedures established by the
Administrator) from the person entitled to exercise the Option, (B)
full payment for the Shares with respect to which the related Option
is exercised, and (C) with respect to Nonqualified Stock Options,
provisions acceptable to the Administrator have been made for
payment of all applicable withholding taxes.
iii.Unless provided otherwise by the Administrator or pursuant
to this Plan, until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a shareholder shall exist
with respect to the Shares subject to an Option, notwithstanding the
exercise of the Option.
iv. The Company shall issue (or cause to be issued) such
Shares as soon as administratively practicable after the Option is
exercised. An Option may not be exercised for a fraction of a Share.
(h) Termination of Employment. The Administrator shall determine as
of the Grant Date (subject to modification subsequent to the Grant Date)
the effect a Termination of Employment due to (i) Disability, (ii)
Retirement, (iii) death, or (iv) otherwise (including Termination for
Cause) shall have on any Option.
9. INCENTIVE STOCK OPTION LIMITATIONS/TERMS.
(a) Eligibility. Only employees (as determined in accordance with
Section 3401(c) of the Code and the regulations promulgated thereunder) of
the Company or any of its Subsidiaries may be granted Incentive Stock
Options. No Incentive Stock Option shall be granted to any such employee
who as of the Grant Date owns stock possessing more than 10% of the total
combined voting power of the Company.
(b) $100,000 Limitation. Notwithstanding the designation "Incentive
Stock Option" in an Option Agreement, if and to the extent that the
aggregate Fair Market Value of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by the Awardee during any
calendar year (under all plans of the Company and any of its Subsidiaries)
exceeds U.S. $100,000, such Options shall be treated as Nonqualified Stock
Options. For purposes of this Section 9(b) of the Plan, Incentive Stock
Options shall
9
be taken into account in the order in which they were granted. The Fair
Market Value of the Shares shall be determined as of the Grant Date.
(c) Transferability. The Option Agreement must provide that an
Incentive Stock Option cannot be transferable by the Awardee otherwise
than by will or the laws of descent and distribution, and, during the
lifetime of such Awardee, must not be exercisable by any other person. If
the terms of an Incentive Stock Option are amended to permit
transferability, the Option will be treated for tax purposes as a
Nonqualified Stock Option.
(d) Exercise Price. The per Share exercise price of an Incentive
Stock Option shall in no event be inconsistent with the requirements for
qualification of the Incentive Stock Option under Section 422 of the Code.
(e) Other Terms. Option Agreements evidencing Incentive Stock
Options shall contain such other terms and conditions as may be necessary
to qualify, to the extent determined desirable by the Administrator, with
the applicable provisions of Section 422 of the Code.
10. STOCK APPRECIATION RIGHTS.
A "Stock Appreciation Right" is a right that entitles the Awardee to
receive, in cash or Shares (as determined by the Administrator), value equal to
or otherwise based on the excess of (i) the Fair Market Value of a specified
number of Shares at the time of exercise over (ii) the aggregate exercise price
of the right, as established by the Administrator on the Grant Date. Stock
Appreciation Rights may be granted to Awardees either alone ("freestanding") or
in addition to or in tandem with other Awards granted under the Plan and may,
but need not, relate to a specific Option granted under Section 8 of the Plan.
Any Stock Appreciation Right granted in tandem with an Option may be granted at
the same time such Option is granted or at any time thereafter before exercise
or expiration of such Option. All Stock Appreciation Rights under the Plan shall
be granted subject to the same terms and conditions applicable to Options as set
forth in Section 8 of the Plan; provided, however, that Stock Appreciation
Rights granted in tandem with a previously granted Option shall have the terms
and conditions of such Option. Subject to the provisions of Section 8 of the
Plan, the Administrator may impose such other conditions or restrictions on any
Stock Appreciation Right as it shall deem appropriate. Stock Appreciation Rights
may be settled in Shares or cash as determined by the Administrator.
11. STOCK AWARDS.
(a) Stock Award Agreement. Each Stock Award Agreement shall contain
provisions regarding (i) the number of Shares subject to such Stock Award
or a formula for determining such number, (ii) the purchase price of the
Shares, if any, and the means of payment for the Shares, (iii) the
performance criteria, if any, and level of achievement versus these
criteria that shall determine the number of Shares granted, issued,
retainable and/or vested, (iv) such terms and conditions on the grant,
issuance, vesting and/or forfeiture of the Shares as may be determined
from time to time by the Administrator, (v) restrictions on the
transferability of the Stock Award, and (vi) such further terms and
conditions in each case not inconsistent with this Plan as may be
determined from time to time by the Administrator. No condition that is
based upon performance criteria and level of achievement versus such
criteria shall be based on performance over a period of less than one (1)
year and no condition that is based upon continued employment or the
passage of time shall provide for vesting in full of a Stock Award in less
than pro rata installments over three (3) years from the date the Stock
Award is made, other than (i) with respect to such Stock Awards that are
issued upon the exercise or settlement of Options or Stock Appreciation
Rights, (ii) upon a Change of Control as specified in Section 16(b) of the
Plan, (iii) upon the death, Disability or Retirement of the Awardee, in
each case as specified in the Stock Award Agreement, or (iv) for up to
600,000 Shares subject to Stock Awards and Other Stock-Based Awards in the
aggregate which shall have no minimum vesting period.
(b) Restrictions and Performance Criteria. The grant, issuance,
retention and/or vesting of each Stock Award may be subject to such
performance criteria and level of achievement versus these criteria as the
Administrator shall determine, which criteria may be based on financial
performance, personal
10
performance evaluations and/or completion of service by the Awardee.
Notwithstanding anything to the contrary herein, the performance criteria
for any Stock Award that is intended to satisfy the requirements for
"performance-based compensation" under Section 162(m) of the Code shall be
established by the Administrator based on one or more Qualifying
Performance Criteria selected by the Administrator and specified in
writing not later than ninety (90) days after the commencement of the
period of service (or, if earlier, the elapse of 25% of such period) to
which the performance goals relate, provided that the outcome is
substantially uncertain at that time.
(c) Termination of Employment. The Administrator shall determine as
of the Grant Date (subject to modification subsequent to the Grant Date)
the effect a Termination of Employment due to (i) Disability, (ii)
Retirement, (iii) death, or (iv) otherwise (including Termination for
Cause) shall have on any Stock Award.
(d) Rights as a Shareholder. Unless otherwise provided for by the
Administrator, the Participant shall have the rights equivalent to those
of a shareholder and shall be a shareholder only after Shares are issued
(as evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company) to the Participant.
12. OTHER STOCK-BASED AWARDS.
(a) Other Stock-Based Awards. An "Other Stock-Based Award" means any
other type of equity-based or equity-related Award not otherwise described
by the terms of this Plan (including the grant or offer for sale of
unrestricted Shares) in such amount and subject to such terms and
conditions as the Administrator shall determine. Such Awards may involve
the transfer of actual Shares to Participants, or payment in cash or
otherwise of amounts based on the value of Shares. Each Other Stock-Based
Award will be evidenced by an Award Agreement containing such terms and
conditions as may be determined by the Administrator. No condition that is
based upon performance criteria and level of achievement versus such
criteria shall be based on performance over a period of less than one (1)
year and no condition that is based upon continued employment or the
passage of time shall provide for vesting in full of an Other Stock-Based
Award in less than pro rata installments over three (3) years from the
date the Other Stock-Based Award is made, other than (i) with respect to
such Other Stock-Based Awards that are issued upon the exercise or
settlement of Options or Stock Appreciation Rights, (ii) upon a Change of
Control as specified in Section 16(b) of the Plan, (iii) upon the death,
Disability or Retirement of the Awardee, in each case as specified in the
Other Stock-Based Award Agreement, or (iv) for up to 600,000 Shares
subject to Stock Awards and Other Stock-Based Awards in the aggregate
which shall have no minimum vesting period.
(b) Value of Other Stock-Based Awards. Each Other Stock-Based Award
shall be expressed in terms of Shares or units based on Shares, as
determined by the Administrator. The Administrator may establish
performance goals in its discretion. If the Administrator exercises its
discretion to establish performance goals, the number and/or value of
Other Stock-Based Awards that will be paid out to the Participant will
depend on the extent to which the performance goals are met.
Notwithstanding anything to the contrary herein, the performance criteria
for any Other Stock-Based Award that is intended to satisfy the
requirements for "performance-based compensation" under Section 162(m) of
the Code shall be established by the Administrator based on one or more
Qualifying Performance Criteria selected by the Administrator and
specified in writing not later than ninety (90) days after the
commencement of the period of service (or, if earlier, the elapse of 25%
of such period) to which the performance goals relate and otherwise within
the time period required by the Code and the applicable Treasury
Regulations, provided that the outcome is substantially uncertain at that
time.
(c) Payment of Other Stock-Based Awards. Payment, if any, with
respect to Other Stock-Based Awards shall be made in accordance with the
terms of the Award, in cash or Shares as the Administrator determines.
(d) Termination of Employment. The Administrator shall determine as
of the Grant Date (subject to modification subsequent to the Grant Date)
the effect a Termination of Employment due to (i) Disability, (ii)
Retirement, (iii) death, or (iv) otherwise (including Termination for
Cause) shall have on any Other Stock-Based Award.
11
13. CASH AWARDS.
Each Cash Award will confer upon the Participant the opportunity to earn a
future payment tied to the level of achievement with respect to one or more
performance criteria established for a performance period.
(a) Cash Award. Each Cash Award may contain provisions regarding (i)
the amounts potentially payable to the Participant as a Cash Award, (ii)
the performance criteria and level of achievement versus these criteria
which shall determine the amount of such payment, (iii) the period as to
which performance shall be measured for establishing the amount of any
payment, (iv) the timing of any payment earned by virtue of performance,
(v) restrictions on the alienation or transfer of the Cash Award prior to
actual payment, (vi) forfeiture provisions, and (vii) such further terms
and conditions, in each case not inconsistent with the Plan, as may be
determined from time to time by the Administrator. The maximum amount
payable as a Cash Award that is settled for cash may be a multiple of the
target amount payable, but the maximum amount payable pursuant to portions
of Cash Awards earned with respect to any fiscal year to any Awardee shall
not exceed U.S. $7,500,000.
(b) Performance Criteria. The Administrator shall establish the
performance criteria and level of achievement versus these criteria which
shall determine the amounts payable under a Cash Award, which criteria may
be based on financial performance and/or personal performance evaluations.
The Administrator may specify the percentage of the target Cash Award that
is intended to satisfy the requirements for "performance-based
compensation" under Section 162(m) of the Code. Notwithstanding anything
to the contrary herein, the performance criteria for any portion of a Cash
Award that is intended to satisfy the requirements for "performance-based
compensation" under Section 162(m) of the Code shall be a measure
established by the Administrator based on one or more Qualifying
Performance Criteria selected by the Administrator and specified in
writing not later than ninety (90) days after the commencement of the
period of service (or, if earlier, the elapse of 25% of such period) to
which the performance goals relates, provided that the outcome is
substantially uncertain at that time.
(c) Timing and Form of Payment. The Administrator shall determine
the timing of payment of any Cash Award. The Administrator may provide for
or, subject to such terms and conditions as the Administrator may specify,
may permit an Awardee to elect for the payment of any Cash Award to be
deferred to a specified date or event. The Administrator may specify the
form of payment of Cash Awards, which may be cash or other property, or
may provide for an Awardee to have the option for his or her Cash Award,
or such portion thereof as the Administrator may specify, to be paid in
whole or in part in cash or other property. To the extent that a Cash
Award is in the form of cash, the Administrator may determine whether a
payment is in U.S. dollars or foreign currency.
(d) Termination of Employment. The Administrator shall determine as
of the Grant Date (subject to modification subsequent to the Grant Date)
the effect a Termination of Employment due to (i) Disability, (ii)
Retirement, (iii) death, or (iv) otherwise (including Termination for
Cause) shall have on any Cash Award.
14. OTHER PROVISIONS APPLICABLE TO AWARDS.
(a) Non-Transferability of Awards. Unless determined otherwise by
the Administrator, an Award may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by
beneficiary designation, will or by the laws of descent or distribution.
The Administrator may make an Award transferable to an Awardee's family
member or any other person or entity. If the Administrator makes an Award
transferable, either as of the Grant Date or thereafter, such Award shall
contain such additional terms and conditions as the Administrator deems
appropriate, and any transferee shall be deemed to be bound by such terms
upon acceptance of such transfer.
(b) Qualifying Performance Criteria. For purposes of this Plan, the
term "Qualifying Performance Criteria" shall mean any one or more of the
following performance criteria, either individually, alternatively or in
any combination, applied to either the Company as a whole or to a business
unit,
12
Affiliate or business segment, either individually, alternatively or in
any combination, and measured either annually or cumulatively over a
period of years, on an absolute basis or relative to a pre-established
target, to previous years' results or to a designated comparison group, in
each case as specified by the Committee in the Award: (i) cash flow; (ii)
earnings (including gross margin, earnings before interest and taxes,
earnings before taxes, and net earnings); (iii) earnings per share; (iv)
growth in earnings or earnings per share; (v) stock price; (vi) return on
equity or average shareholders' equity; (vii) total shareholder return;
(viii) return on capital; (ix) return on assets or net assets; (x) return
on investment; (xi) revenue; (xii) income or net income; (xiii) operating
income or net operating income; (xiv) operating profit or net operating
profit (whether before or after taxes); (xv) operating margin; (xvi)
return on operating revenue; (xvii) market share; (xviii) contract awards
or backlog; (xix) overhead or other expense reduction; (xx) growth in
shareholder value relative to the moving average of the S&P 500 Index or a
peer group index; (xxi) credit rating; (xxii) strategic plan development
and implementation; (xxiii) improvement in workforce diversity; (xxiv)
customer satisfaction; (xxv) employee satisfaction; (xxvi) management
succession plan development and implementation; and (xxvii) employee
retention. With respect to any Award that is intended to satisfy the
requirements for "performance-based compensation" under Section 162(m) of
the Code, the performance criteria must be Qualifying Performance
Criteria, and the Administrator will (within the first quarter of the
performance period, but in no event more than ninety (90) days into that
period) establish the specific performance targets (including thresholds
and whether to exclude certain extraordinary, non-recurring, or similar
items) and award amounts (subject to the right of the administrator to
exercise discretion to reduce payment amounts following the conclusion of
the performance period).
(c) Certification. Prior to the payment of any compensation under an
Award intended to qualify as "performance-based compensation" under
Section 162(m) of the Code, the Committee shall certify in writing the
extent to which any Qualifying Performance Criteria and any other material
terms under such Award have been satisfied (other than in cases where such
criteria relate solely to the increase in the value of the Common Shares).
(d) Discretionary Adjustments Pursuant to Section 162(m).
Notwithstanding satisfaction of any completion of any Qualifying
Performance Criteria, to the extent specified as of the Grant Date, the
number of Shares, Options or other benefits granted, issued, retainable
and/or vested under an Award on account of satisfaction of such Qualifying
Performance Criteria may be reduced by the Committee on the basis of such
further considerations as the Committee in its sole discretion shall
determine.
15. DIVIDENDS AND DIVIDEND EQUIVALENTS.
Any Award may provide the Awardee with the right to receive dividend
payments or dividend equivalent payments on the Shares subject the Award,
whether or not such Award has been exercised or is vested. Such payments may be
made in cash or may be credited as cash or Stock Units to an Awardee's account
and later settled in cash or Shares or a combination thereof, as determined by
the Administrator. Such payments and credits may be subject to such conditions
and contingencies as the Administrator may establish.
16. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ORGANIC CHANGE OR CHANGE
OF CONTROL.
(a) Adjustment Clause. In the event of (i) a stock dividend, stock
split, reverse stock split, share combination, or recapitalization or
similar event affecting the capital structure of the Company (each, a
"Share Change"), or (ii) a merger, consolidation, acquisition of property
or shares, separation, spinoff, reorganization, stock rights offering,
liquidation, Disaffiliation, or similar event affecting the Company or any
of its Subsidiaries (each, a "Organic Change"), the Administrator or the
Board may in its discretion make such substitutions or adjustments as it
deems appropriate and equitable to (i) the Share limitations set forth in
Sections 3, 11(a) and 12(a) of the Plan, (ii) the number and kind of
Shares covered by each outstanding Award, and (iii) the price per Share
subject to each such outstanding Award. In the case of Organic Changes,
such adjustments may include, without limitation, (x) the cancellation of
outstanding Awards in exchange for payments of cash, property or a
combination thereof having an aggregate value equal to the value of such
Awards, as determined by the Administrator or the Board in its sole
discretion (it being understood that in the case of an Organic Change with
respect to which shareholders receive consideration other than publicly
traded equity securities of the ultimate surviving entity, any such
13
determination by the Administrator that the value of an Option or Stock
Appreciation Right shall for this purpose be deemed to equal the excess,
if any, of the value of the consideration being paid for each Share
pursuant to such Organic Change over the exercise price of such Option or
Stock Appreciation Right shall conclusively be deemed valid); (y) the
substitution of other property (including, without limitation, cash or
other securities of the Company and securities of entities other than the
Company) for the Shares subject to outstanding Awards; and (z) in
connection with any Disaffiliation, arranging for the assumption of
Awards, or replacement of Awards with new awards based on other property
or other securities (including, without limitation, other securities of
the Company and securities of entities other than the Company), by the
affected Subsidiary, Affiliate, or division or by the entity that controls
such Subsidiary, Affiliate, or division following such Disaffiliation (as
well as any corresponding adjustments to Awards that remain based upon
Company securities).
(b) Change of Control. In the event of a Change of Control, unless
otherwise determined by the Administrator as of the Grant Date of a
particular Award (or subsequent to the Grant Date), the following
acceleration, exercisability and valuation provisions shall apply:
i. On the date that such Change of Control occurs, any or all
Options and Stock Appreciation Rights awarded under this Plan not
previously exercisable and vested shall become fully exercisable and
vested.
ii. Except as may be provided in an individual severance or
employment agreement (or severance plan) to which an Awardee is a
party, in the event of an Awardee's Termination of Employment within
two (2) years after a Change of Control for any reason other than
because of the Awardee's death, Retirement, Disability or
Termination for Cause, each Option and Stock Appreciation Right held
by the Awardee (or a transferee) that is vested following such
Termination of Employment shall remain exercisable until the earlier
of the third (3rd) anniversary of such Termination of Employment (or
any later date until which it would remain exercisable by its terms)
or the expiration of its original term. In the event of an Awardee's
Termination of Employment more than two (2) years after a Change of
Control, or within two (2) years after a Change of Control because
of the Awardee's death, Retirement, Disability or Termination for
Cause, the provisions of Sections 8(h) and 10 of the Plan shall
govern (as applicable).
iii. On the date that such Change of Control occurs, the
restrictions applicable to any or all Stock Awards, Other
Stock-Based Awards and Cash Awards shall lapse and such Awards shall
be fully vested.
(c) Section 409A. Notwithstanding the foregoing: (i) any adjustments
made pursuant to Section 16(a) of the Plan to Awards that are considered
"deferred compensation" within the meaning of Section 409A of the Code
shall be made in compliance with the requirements of Section 409A of the
Code; (ii) any adjustments made pursuant to Section 16(a) of the Plan to
Awards that are not considered "deferred compensation" subject to Section
409A of the Code shall be made in such a manner as to ensure that after
such adjustment, the Awards either continue not to be subject to Section
409A of the Code or comply with the requirements of Section 409A of the
Code; (iii) the Administrator shall not have the authority to make any
adjustments pursuant to Section 16(a) of the Plan to the extent that the
existence of such authority would cause an Award that is not intended to
be subject to Section 409A of the Code to be subject thereto; and (iv) if
any Award is subject to Section 409A of the Code, Section 16(b) of the
Plan shall be applicable only to the extent specifically provided in the
Award Agreement and permitted pursuant to Section 25 of the Plan.
17. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Amendment and Termination. The Administrator may amend, alter or
discontinue the Plan or any Award Agreement, but any such amendment shall
be subject to approval of the shareholders of the Company in the manner
and to the extent required by Applicable Law. In addition, without
limiting the foregoing, unless approved by the shareholders of the Company
and subject to Section 16(a), no such amendment shall be made that would
reduce the minimum exercise price for Options or Stock Appreciation
14
Rights granted under the Plan or reduce the exercise price of outstanding
Options or Stock Appreciation Rights.
(b) Effect of Amendment or Termination. No amendment, suspension or
termination of the Plan shall impair the rights of any Participant with
respect to an outstanding Award, unless mutually agreed otherwise between
the Participant and the Administrator, which agreement must be in writing
and signed by the Participant and the Company, except that no such
agreement shall be required if the Administrator determines in its sole
discretion that such amendment either (i) is required or advisable in
order for the Company, the Plan or the Award to satisfy any Applicable Law
or to meet the requirements of any accounting standard, or (ii) is not
reasonably likely to significantly diminish the benefits provided under
such Award, or that any such diminishment has been adequately compensated,
except following a Change of Control. Termination of the Plan shall not
affect the Administrator's ability to exercise the powers granted to it
hereunder with respect to Awards granted under the Plan prior to the date
of such termination.
(c) Effect of the Plan on Other Arrangements. Neither the adoption
of the Plan by the Board or a Committee nor the submission of the Plan to
the shareholders of the Company for approval shall be construed as
creating any limitations on the power of the Board or any Committee to
adopt such other incentive arrangements as it or they may deem desirable,
including without limitation, the granting of restricted shares or
restricted share units or stock options otherwise than under the Plan, and
such arrangements may be either generally applicable or applicable only in
specific cases.
18. DESIGNATION OF BENEFICIARY.
(a) An Awardee may file a written designation of a beneficiary who
is to receive the Awardee's rights pursuant to Awardee's Award or the
Awardee may include his or her Awards in an omnibus beneficiary
designation for all benefits under the Plan. To the extent that Awardee
has completed a designation of beneficiary while employed with Company,
such beneficiary designation shall remain in effect with respect to any
Award hereunder until changed by the Awardee to the extent enforceable
under Applicable Law.
(b) Such designation of beneficiary may be changed by the Awardee at
any time by written notice. In the event of the death of an Awardee and in
the absence of a beneficiary validly designated under the Plan who is
living at the time of such Awardee's death, the Company shall allow the
legal representative of the Awardee's estate to exercise the Award.
19. NO RIGHT TO AWARDS OR TO EMPLOYMENT.
No person shall have any claim or right to be granted an Award and the
grant of any Award shall not be construed as giving an Awardee the right to
continue in the employ of the Company or its Affiliates. Further, the Company
and its Affiliates expressly reserve the right, at any time, to dismiss any
Employee or Awardee at any time without liability or any claim under the Plan,
except as provided herein or in any Award Agreement entered into hereunder.
20. LEGAL COMPLIANCE.
Shares shall not be issued pursuant to an Option, Stock Appreciation
Right, Stock Award or Other Stock-Based Award unless the such Option, Stock
Appreciation Right, Stock Award or Other Stock-Based Award and the issuance and
delivery of such Shares shall comply with Applicable Law and shall be further
subject to the approval of counsel for the Company with respect to such
compliance. Unless the Awards and Shares covered by this Plan have been
registered under the Securities Act or the Company has determined that such
registration is unnecessary, each person receiving an Award and/or Shares
pursuant to any Award may be required by the Company to give a representation in
writing that such person is acquiring such Shares for his or her own account for
investment and not with a view to, or for sale in connection with, the
distribution of any part thereof.
15
21. INABILITY TO OBTAIN AUTHORITY.
To the extent the Company is unable to or the Administrator deems it
infeasible to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company's counsel to be advisable or necessary
to the lawful issuance and sale of any Shares hereunder, the Company shall be
relieved of any liability with respect to the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
22. RESERVATION OF SHARES.
The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
23. NOTICE.
Any written notice to the Company required by any provisions of this Plan
shall be addressed to the Secretary of the Company and shall be effective when
received.
24. GOVERNING LAW; INTERPRETATION OF PLAN AND AWARDS.
(a) This Plan and all determinations made and actions taken pursuant
hereto shall be governed by the substantive laws, but not the choice of
law rules, of the state of Ohio, except as to matters governed by U.S.
federal law.
(b) In the event that any provision of the Plan or any Award granted
under the Plan is declared to be illegal, invalid or otherwise
unenforceable by a court of competent jurisdiction, such provision shall
be reformed, if possible, to the extent necessary to render it legal,
valid and enforceable, or otherwise deleted, and the remainder of the
terms of the Plan and/or Award shall not be affected except to the extent
necessary to reform or delete such illegal, invalid or unenforceable
provision.
(c) The headings preceding the text of the sections hereof are
inserted solely for convenience of reference, and shall not constitute a
part of the Plan, nor shall they affect its meaning, construction or
effect.
(d) The terms of the Plan and any Award shall inure to the benefit
of and be binding upon the parties hereto and their respective permitted
heirs, beneficiaries, successors and assigns.
25. SECTION 409A.
It is the intention of the Company that no Award shall be "deferred
compensation" subject to Section 409A of the Code, unless and to the extent that
the Administrator specifically determines otherwise, and the Plan and the terms
and conditions of all Awards shall be interpreted accordingly. The terms and
conditions governing any Awards that the Administrator determines will be
subject to Section 409A of the Code, including any rules for elective or
mandatory deferral of the delivery of cash or Shares pursuant thereto and any
rules regarding treatment of such Awards in the event of a Change of Control,
shall be set forth in the applicable Award Agreement, and shall comply in all
respects with Section 409A of the Code.
26. LIMITATION ON LIABILITY.
The Company and any Affiliate which is in existence or hereafter comes
into existence shall not be liable to a Participant, an Employee, an Awardee or
any other persons as to:
(a) The Non-Issuance of Shares. The non-issuance or sale of Shares
as to which the Company has been unable to obtain from any regulatory body
having jurisdiction the authority deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any shares hereunder; and
16
(b) Tax or Exchange Control Consequences. Any tax consequence
expected, but not realized, or any exchange control obligation owed, by
any Participant, Employee, Awardee or other person due to the receipt,
exercise or settlement of any Option or other Award granted hereunder.
27. UNFUNDED PLAN.
Insofar as it provides for Awards, the Plan shall be unfunded. Although
bookkeeping accounts may be established with respect to Awardees who are granted
Stock Awards under this Plan, any such accounts will be used merely as a
bookkeeping convenience. The Company shall not be required to segregate any
assets which may at any time be represented by Awards, nor shall this Plan be
construed as providing for such segregation, nor shall the Company nor the
Administrator be deemed to be a trustee of stock or cash to be awarded under the
Plan. Any liability of the Company to any Participant with respect to an Award
shall be based solely upon any contractual obligations which may be created by
the Plan; no such obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. Neither the Company
nor the Administrator shall be required to give any security or bond for the
performance of any obligation which may be created by this Plan.
28. FOREIGN EMPLOYEES.
Awards may be granted hereunder to Employees who are foreign nationals,
who are located outside the United States or who are not compensated from a
payroll maintained in the United States, or who are otherwise subject to (or
could cause the Company to be subject to) legal or regulatory provisions of
countries or jurisdictions outside the United States, on such terms and
conditions different from those specified in the Plan as may, in the judgment of
the Administrator, be necessary or desirable to foster and promote achievement
of the purposes of the Plan, and, in furtherance of such purposes, the
Administrator may make such modifications, amendments, procedures, or subplans
as may be necessary or advisable to comply with such legal or regulatory
provisions.
29. TAX WITHHOLDING.
No later than the date as of which an amount first becomes includible in
the gross income of the Participant for federal income tax purposes with respect
to any Award under the Plan, the Participant shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any federal,
state, local or foreign taxes of any kind required by law to be withheld with
respect to such amount. Unless otherwise determined by the Company, withholding
obligations may be settled with Shares, including Shares that is part of the
Award that gives rise to the withholding requirement; provided, however, that
not more than the legally required minimum withholding may be settled with
Shares. The obligations of the Company under the Plan shall be conditional on
such payment or arrangements, and the Company and its Affiliates shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the participant. The Administrator may establish such
procedures as it deems appropriate, including making irrevocable elections, for
the settlement of withholding obligations with Shares.
17