EXHIBIT 10.1
GARMIN LTD.
2005 EQUITY INCENTIVE PLAN
Table of Contents
Page
Article 1. Establishment, Objectives and Duration............................1
1.1. Establishment of the Plan........................................1
1.2. Objectives of the Plan...........................................1
1.3. Duration of the Plan.............................................1
Article 2. Definitions.......................................................1
Article 3. Administration....................................................7
3.1. Board and Committee..............................................7
3.2. Powers of the Board..............................................7
Article 4. Shares Subject to the Plan........................................9
4.1. Number of Shares Available.......................................9
4.2. Adjustments in Authorized Shares................................10
4.3. Newly Issued Shares.............................................10
Article 5. Eligibility and General Conditions of Awards.....................11
5.1. Eligibility.....................................................11
5.2. Grant Date......................................................11
5.3. Maximum Term....................................................11
5.4. Award Agreement.................................................11
5.5. Restrictions on Share Transferability...........................11
5.6. Termination of Affiliation......................................11
5.7. Nontransferability of Awards....................................14
Article 6. Stock Options....................................................15
6.1. Grant of Options................................................15
6.2. Award Agreement.................................................15
6.3. Option Price....................................................15
6.4. Grant of Incentive Stock Options................................15
6.5. Exercise of Options.............................................17
Article 7. Stock Appreciation Rights........................................17
7.1. Grant of SARs...................................................17
7.2. SAR Award Agreement.............................................18
7.3. Exercise of SARs................................................18
7.4. Expiration of SARs..............................................18
7.5. Payment of SAR Amount...........................................18
Article 8. Restricted Shares................................................18
8.1. Grant of Restricted Shares......................................18
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8.2. Award Agreement.................................................19
8.3. Consideration...................................................19
8.4. Effect of Forfeiture............................................19
8.5. Escrow; Legends.................................................19
Article 9. Performance Units and Performance Shares.........................19
9.1. Grant of Performance Units and Performance Shares...............19
9.2. Value/Performance Goals.........................................19
9.3. Payment of Performance Units and Performance Shares.............20
9.4. Form and Timing of Payment of Performance Units and
Performance Shares..............................................20
Article 10. Bonus Shares and Deferred Shares................................20
10.1. Bonus Shares....................................................20
10.2. Deferred Shares.................................................20
Article 11. Beneficiary Designation.........................................21
Article 12. Rights of Employees.............................................21
12.1. Employment......................................................21
12.2. Participation...................................................21
Article 13. Amendment, Modification, and Termination........................21
13.1. Amendment, Modification, and Termination........................21
13.2. Adjustments Upon Certain Unusual or Nonrecurring
Events..........................................................21
13.3. Awards Previously Granted.......................................21
Article 14. Withholding.....................................................22
14.1. Mandatory Tax Withholding.......................................22
14.2. Notification under Code Section 83(b)...........................22
Article 15. Equity Incentive Plans of Foreign Subsidiaries..................22
Article 16. Additional Provisions...........................................22
16.1. Successors......................................................22
16.2. Gender and Number...............................................23
16.3. Severability....................................................23
16.4. Requirements of Law.............................................23
16.5. Securities Law Compliance.......................................23
16.6. No Rights as a Shareholder......................................23
16.7. Nature of Payments..............................................24
16.8. Governing Law...................................................24
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GARMIN LTD.
2005 Equity Incentive Plan
Article 1. Establishment, Objectives and Duration
1.1. Establishment of the Plan. Garmin Ltd., a Cayman Islands company (the
"Company"), hereby establishes an incentive compensation plan to be known as the
Garmin Ltd. 2005 Equity Incentive Plan (the "Plan"). The Plan was adopted by the
Board of Directors of the Company (the "Board"), on March 1, 2005, and was
approved by the shareholders of the Company on June 3, 2005. The Plan is
effective as of June 3, 2005 (the "Effective Date").
1.2. Objectives of the Plan. The Plan is intended to allow employees of the
Company and its Subsidiaries to acquire or increase equity ownership in the
Company, or to be compensated under the Plan based on growth in the Company's
equity value, thereby strengthening their commitment to the success of the
Company and stimulating their efforts on behalf of the Company, and to assist
the Company and its Subsidiaries in attracting new employees and retaining
existing employees. The Plan is also intended to optimize the profitability and
growth of the Company through incentives which are consistent with the Company's
goals; to provide incentives for excellence in individual performance; and to
promote teamwork.
1.3. Duration of the Plan. The Plan shall commence on the Effective Date
and shall remain in effect, subject to the right of the Board to amend or
terminate the Plan at any time pursuant to Article 13 hereof, until all Shares
subject to it shall have been purchased or acquired according to the Plan's
provisions.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings set
forth below:
2.1. "Article" means an Article of the Plan.
2.2. "Award" means Options, Restricted Shares, Bonus Shares, Deferred
Shares, SARs, Performance Units or Performance Shares granted under the Plan.
2.3. "Award Agreement" means a written agreement by which an Award is
evidenced.
2.4. "Beneficial Owner" has the meaning specified in Rule 13d-3 of the SEC
under the Exchange Act.
2.5. "Board" has the meaning set forth in Section 1.1.
2.6. "Bonus Shares" means Shares that are awarded to a Grantee without cost
and without restrictions in recognition of past performance (whether determined
by reference to another employee benefit plan of the Company or otherwise) or as
an incentive to become an employee of the Company or a Subsidiary.
2.7. "Cause" means, unless otherwise defined in an Award Agreement,
(a) a Grantee's conviction of, plea of guilty to, or plea of nolo
contendere to a felony or other crime that involves fraud, dishonesty or moral
turpitude,
(b) any willful action or omission by a Grantee which would constitute
grounds for immediate dismissal under the employment policies of the Company or
the Subsidiary by which Grantee is employed, including but not limited to
intoxication with alcohol or illegal drugs while on the premises of the Company
or any Subsidiary, or violation of sexual harassment laws or the internal sexual
harassment policy of the Company or the Subsidiary by which Grantee is employed,
(c) a Grantee's habitual neglect of duties, including but not limited to
repeated absences from work without reasonable excuse, or
(d) a Grantee's willful and intentional material misconduct in the
performance of his duties that results in financial detriment to the Company or
any Subsidiary;
provided, however, that for purposes of clauses (b), (c) and (d), Cause shall
not include any one or more of the following: bad judgment, negligence or any
act or omission believed by the Grantee in good faith to have been in or not
opposed to the interest of the Company (without intent of the Grantee to gain,
directly or indirectly, a profit to which the Grantee was not legally entitled).
A Grantee who agrees to resign from his affiliation with the Company or a
Subsidiary in lieu of being terminated for Cause may be deemed to have been
terminated for Cause for purposes of this Plan.
2.8. "Change of Control" means, unless otherwise defined in an Award
Agreement, any one or more of the following:
(a) any Person other than (i) a Subsidiary, (ii) any employee benefit
plan (or any related trust) of the Company or any of its Subsidiaries or
(iii) any Excluded Person, becomes the Beneficial Owner of 35% or more of
the common shares of the Company or of Voting Securities representing 35%
or more of the combined voting power of the Company (such a person or
group, a "35% Owner"), except that (i) no Change of Control shall be deemed
to have occurred solely by reason of such beneficial ownership by a
corporation with respect to which both more than 60% of the common shares
of such corporation and Voting Securities representing more than 60% of the
aggregate voting power of such corporation are then owned, directly or
indirectly, by the persons who were the direct or indirect owners of the
common shares and Voting Securities of the Company immediately before such
acquisition in substantially the same proportions as their ownership,
immediately before such acquisition, of the common shares and Voting
Securities of the Company, as the case may be and (ii) such corporation
shall not be deemed a 35% Owner; or
(b) the Incumbent Directors (determined using the Effective Date as
the baseline date) cease for any reason to constitute at least a majority
of the directors of the Company then serving; or
(c) the consummation by the Company (whether directly involving the
Company or indirectly involving the Company through one or more
intermediaries) of a merger, reorganization, consolidation, or similar
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transaction, or the sale or other disposition of all or substantially all
(at least 40%) of the consolidated assets of the Company or a plan of
liquidation of the Company (any of the foregoing transactions, a
"Reorganization Transaction") which is not an Exempt Reorganization
Transaction.
The definition of "Change of Control" may be amended at any time prior to the
occurrence of a Change of Control, and such amended definition shall be applied
to all Awards granted under the Plan whether or not outstanding at the time such
definition is amended, without requiring the consent of any Grantee.
Notwithstanding the occurrence of any of the foregoing events, (a) a Change of
Control shall be deemed not to have occurred with respect to any Section 16
Person if such Section 16 Person is, by agreement (written or otherwise), a
participant on such Section 16 Person's own behalf in a transaction which causes
the Change of Control to occur and (b) a Change of Control shall not occur with
respect to a Grantee if, in advance of such event, the Grantee agrees in writing
that such event shall not constitute a Change of Control.
2.9. "Change of Control Period" has the meaning set forth in Section
5.6(c).
2.10. "Change of Control Value" means the Fair Market Value of a Share on
the date of a Change of Control.
2.11. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and regulations and rulings thereunder. References to a particular
section of the Code include references to successor provisions of the Code or
any successor statute.
2.12. "Company" has the meaning set forth in Section 1.1.
2.13. "Deferred Shares" means Shares that are awarded to a Grantee on a
deferred basis pursuant to Section 10.2
2.14. "Disabled" or "Disability" means an individual (i) is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than twelve
(12) months or (ii) is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months, receiving
income replacement benefits for a period of not less than 3 months under a
Company-sponsored accident and health plan. Notwithstanding the foregoing, with
respect to an Incentive Stock Option, "Disability" means a permanent and total
disability, within the meaning of Code Section 22(e)(3), as determined by the
Board in good faith, upon receipt of medical advice from one or more
individuals, selected by the Board, who are qualified to give professional
medical advice.
2.15. "Effective Date" has the meaning set forth in Section 1.1.
2.16. "Eligible Person" means any employee (including any officer) of the
Company or any Subsidiary, including any such employee who is on an approved
leave of absence or has been subject to a disability which does not qualify as a
Disability.
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2.17. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
References to a particular section of the Exchange Act include references to
successor provisions.
2.18. "Excluded Person" means any Person who, along with such Person's
Affiliates and Associates (as such terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act) is the Beneficial Owner of
15% or more of the Shares outstanding as of the Effective Date.
2.19. "Exempt Reorganization Transaction" means a Reorganization
Transaction which (i) results in the Persons who were the direct or indirect
owners of the outstanding common shares and Voting Securities of the Company
immediately before such Reorganization Transaction becoming, immediately after
the consummation of such Reorganization Transaction, the direct or indirect
owners of both more than 60% of the then-outstanding common shares of the
Surviving Corporation and Voting Securities representing more than 60% of the
aggregate voting power of the Surviving Corporation, in substantially the same
respective proportions as such Persons' ownership of the common shares and
Voting Securities of the Company immediately before such Reorganization
Transaction, or (ii) after such transaction, more than 50% of the members of the
board of directors of the Surviving Corporation were Incumbent Directors at the
time of the Board's approval of the agreement providing for the Reorganization
Transaction or other action of the Board approving the transaction (or whose
election or nomination was approved by a vote of at least two-thirds of the
members who were members of the Board at that time).
2.20. "Fair Market Value" means (A) with respect to any property other than
Shares, the fair market value of such property determined by such methods or
procedures as shall be established from time to time by the Board, and (B) with
respect to Shares, the average of the high and low trading prices on such date
on the NASDAQ National Market System (or, if no sale of Shares was reported for
such date, on the next preceding date on which a sale of Shares was reported),
(i) if the Shares are not listed on the NASDAQ NMS, the average of the high and
low trading prices of the Shares on such date on the New York Stock Exchange
Composite Transactions Tape (or, if no sale of Shares was reported for such
date, on the next preceding date on which a sale of Shares was reported), (ii)
if the Shares are not listed on the NASDAQ NMS or the New York Stock Exchange,
the average of the high and low trading prices of the Shares on such other
national exchange on which the Shares are principally traded or as reported by
the NASDAQ Stock Market, or similar organization, or if no such quotations are
available, the average of the high bid and low asked quotations in the
over-the-counter market; in either case for such date (or if no such
transactions in Shares were reported for such date, on the next preceding date
on which a sale of Shares was reported; or (iii) in the event that there shall
be no public market for the Shares, the fair market value of the Shares as
determined in good faith by the Board.
2.21. "Freestanding SAR" means any SAR that is granted independently of any
Option.
2.22. "Good Reason" means any action by the Company or the Subsidiary
employing a Grantee which results in any of the following without the Grantee's
consent: (a) a material diminution or other material adverse change in the
Grantee's position, authority or duties, (b) requiring the Grantee to be based
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at any office or location more than 50 miles from the location where he or she
was previously based; (c) a material diminution in the Grantee's compensation in
the aggregate, other than a diminution applicable to all similarly situated
employees. A Grantee shall not have Good Reason to terminate his or her position
unless, (1) within 60 days following the event or circumstance set forth above
in (a), (b) or (c), the Grantee notifies the Company of such event or
circumstance, (2) the Grantee gives the Company 30 days to correct the event or
circumstance, and (3) the Company does not correct, in all material respects,
such event or circumstance.
2.23. "Grant Date" has the meaning set forth in Section 5.2.
2.24. "Grantee" means an individual who has been granted an Award.
2.25. "Including" or "includes" mean "including, without limitation," or
"includes, without limitation", respectively.
2.26. "Incumbent Directors" means, as of any specified baseline date,
individuals then serving as members of the Board who were members of the Board
as of the date immediately preceding such baseline date; provided that any
subsequently-appointed or elected member of the Board whose election, or
nomination for election by shareholders of the Company or the Surviving
Corporation, as applicable, was approved by a vote or written consent of a
majority of the directors then comprising the Incumbent Directors shall also
thereafter be considered an Incumbent Director, unless the initial assumption of
office of such subsequently-elected or appointed director was in connection with
(i) an actual or threatened election contest, including a consent solicitation,
relating to the election or removal of one or more members of the Board, (ii) a
"tender offer" (as such term is used in Section 14(d) of the Exchange Act), or
(iii) a proposed Reorganization Transaction.
2.27. "Option" means an option granted under Article 6 of the Plan,
including an incentive stock option.
2.28. "Option Price" means the price at which a Share may be purchased by a
Grantee pursuant to an Option.
2.29. "Option Term" means the period beginning on the Grant Date of an
Option and ending on the expiration date of such Option, as specified in the
Award Agreement for such Option and as may, consistent with the provisions of
the Plan, be extended from time to time by the Board prior to the expiration
date of such Option then in effect.
2.30. "Performance Period" has the meaning set forth in Section 9.2.
2.31. "Performance Share" or "Performance Unit" has the meaning set forth
in Article 9.
2.32. "Period of Restriction" means the period during which the transfer of
Restricted Shares is limited in some way (based on the passage of time, the
achievement of performance goals, or upon the occurrence of other events as
determined by the Board) or the Share are subject to a substantial risk of
forfeiture, as provided in Article 8.
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2.33. "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
2.34. "Plan" has the meaning set forth in Section 1.1.
2.35. "Plan Committee" has the meaning set forth in Article 3.
2.36. "Reorganization Transaction" has the meaning set forth in Section
2.8(c).
2.37. "Restricted Shares" means Shares that are subject to transfer
restrictions and are subject to forfeiture if conditions specified in the Award
Agreement applicable to such Shares are not satisfied.
2.38. "Rule 16b-3" means Rule 16b-3 promulgated by the SEC under the
Exchange Act, together with any successor rule, as in effect from time to time.
2.39. "SAR" means a stock appreciation right and includes both Tandem SARs
and Freestanding SARs.
2.40. "SAR Term" means the period beginning on the Grant Date of a SAR and
ending on the expiration date of such SAR, as specified in the Award Agreement
for such SAR and as may, consistent with the provisions of the Plan, be extended
from time to time by the Board prior to the expiration date of such SAR then in
effect.
2.41. "SEC" means the United States Securities and Exchange Commission, or
any successor thereto.
2.42. "Section" means, unless the context otherwise requires, a Section of
the Plan.
2.43. "Section 16 Person" means a person who is subject to obligations
under Section 16 of the Exchange Act with respect to transactions involving
equity securities of the Company.
2.44. "Share" means a common share, $0.01 par value, of the Company.
2.45. "Subsidiary" means with respect to any Person (a) any corporation of
which more than 50% of the Voting Securities are at the time, directly or
indirectly, owned by such Person, and (b) any partnership or limited liability
company in which such Person has a direct or indirect interest (whether in the
form of voting power or participation in profits or capital contribution) of
more than 50%. Solely with respect to a grant of an incentive stock option under
the requirements of Section 422 of the Code, "Subsidiary" means a "subsidiary
corporation" as defined in Section 424(f) of the Code.
2.46. "Substitute Option" has the meaning set forth in Section 6.3.
2.47. "Surviving Corporation" means the corporation resulting from a
Reorganization Transaction or, if Voting Securities representing at least 50% of
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the aggregate voting power of such resulting corporation are directly or
indirectly owned by another corporation, such other corporation.
2.48. "Tandem SAR" means a SAR that is granted in connection with, or
related to, an Option, and which requires forfeiture of the right to purchase an
equal number of Shares under the related Option upon the exercise of such SAR;
or alternatively, which requires the cancellation of an equal amount of SARs
upon the purchase of the Shares subject to the Option.
2.49. "Tax Withholding" has the meaning set forth in Section 14.1(a).
2.50. "Termination of Affiliation" occurs on the first day on which an
individual is for any reason no longer providing services to the Company or any
Subsidiary in the capacity of an employee, or with respect to an individual who
is an employee of a Subsidiary, the first day on which such Subsidiary ceases to
be a Subsidiary. A Termination of Affiliation shall have the same meaning as a
"separation from service" under Code Section 409A(2)(A)(i).
2.51. "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors,
but not including any other class of securities of such corporation that may
have voting power by reason of the occurrence of a contingency.
Article 3. Administration
3.1. Board and Committee. Subject to Article 13, and to Section 3.2, the
Plan shall be administered by the Board, or a committee of the Board appointed
by the Board to administer the Plan ("Plan Committee"). To the extent the Board
considers it desirable for transactions relating to Awards to be eligible to
qualify for an exemption under Rule 16b-3, the Plan Committee shall consist of
two or more directors of the Company, all of whom qualify as "non-employee
directors" within the meaning of Rule 16b-3. To the extent the Board considers
it desirable for compensation delivered pursuant to Awards to be eligible to
qualify for an exemption from the limit on tax deductibility of compensation
under Section 162(m) of the Code, the Plan Committee shall consist of two or
more directors of the Company, all of whom shall qualify as "outside directors"
within the meaning of Code Section 162(m). The number of members of the Plan
Committee shall from time to time be increased or decreased, and shall be
subject to such conditions, including, but not limited to having exclusive
authority to make certain grants of Awards or to perform such other acts, in
each case as the Board deems appropriate to permit transactions in Shares
pursuant to the Plan to satisfy such conditions of Rule 16b-3 or Code Section
162(m) as then in effect.
Any references herein to "Board" are, except as the context requires
otherwise, references to the Board or the Plan Committee, as applicable.
3.2. Powers of the Board. Subject to the express provisions of the Plan,
the Board has full and final authority and sole discretion as follows:
(a) taking into consideration the reasonable recommendations of
management, to determine when, to whom and in what types and amounts Awards
should be granted and the terms and conditions applicable to each Award,
including the Option Price, the Option Term, the benefit payable under any
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SAR, Performance Unit or Performance Share and whether or not specific
Awards shall be granted in connection with other specific Awards, and if so
whether they shall be exercisable cumulatively with, or alternatively to,
such other specific Awards;
(b) to determine the amount, if any, that a Grantee shall pay for
Restricted Shares, whether and on what terms to permit or require the
payment of cash dividends thereon to be deferred, when Restricted Shares
(including Restricted Shares acquired upon the exercise of an Option) shall
be forfeited and whether such shares shall be held in escrow;
(c) to construe and interpret the Plan and to make all determinations
necessary or advisable for the administration of the Plan;
(d) to make, amend, and rescind rules relating to the Plan, including
rules with respect to the exercisability and nonforfeitability of Awards
upon the Termination of Affiliation of a Grantee;
(e) to determine the terms and conditions of all Award Agreements
(which need not be identical) and, with the consent of the Grantee, to
amend any such Award Agreement at any time, among other things, to permit
transfers of such Awards to the extent permitted by the Plan; provided that
the consent of the Grantee shall not be required for any amendment which
(A) does not adversely affect the rights of the Grantee, or (B) is
necessary or advisable (as determined by the Board) to carry out the
purpose of the Award as a result of any new or change in existing
applicable law;
(f) to cancel, with the consent of the Grantee, outstanding Awards and
to grant new Awards in substitution therefor;
(g) to accelerate the exercisability (including exercisability within
a period of less than six months after the Grant Date) of, and to
accelerate or waive any or all of the terms and conditions applicable to,
any Award or any group of Awards for any reason and at any time, including
in connection with a Termination of Affiliation;
(h) subject to Section 5.3, to extend the time during which any Award
or group of Awards may be exercised;
(i) to make such adjustments or modifications to Awards to Grantees
who are working outside the United States as are advisable to fulfill the
purposes of the Plan or to comply with applicable local law, and to
authorize foreign Subsidiaries to adopt plans as provided in Article 15;
(j) to delegate to any member of the Board or committee of Board
members such of its powers as it deems appropriate, including the power to
subdelegate, except that only a member of the Board of Directors of the
Company (or a committee thereof) may grant Awards from time to time to
specified categories of Eligible Persons in amounts and on terms to be
specified by the Board; provided that no such grants shall be made other
than by the Board of Directors of the Company or the Plan Committee to
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individuals who are then Section 16 Persons or other than by the Plan
Committee to individuals who are then or are deemed likely to become a
"covered employee" within the meaning of Code Section 162(m);
(k) to delegate to officers, employees or independent contractors of
the Company matters involving the routine administration of the Plan and
which are not specifically required by any provision of this Plan of to be
performed by the Board of Directors of the Company;
(l) to delegate its duties and responsibilities under the Plan with
respect to foreign Subsidiary plans, except its duties and responsibilities
with respect to Section 16 Persons, and (A) the acts of such delegates
shall be treated hereunder as acts of the Board and (B) such delegates
shall report to the Board regarding the delegated duties and
responsibilities;
(m) to impose such additional terms and conditions upon the grant,
exercise or retention of Awards as the Board may, before or concurrently
with the grant thereof, deem appropriate, including limiting the percentage
of Awards which may from time to time be exercised by a Grantee; and
(n) to take any other action with respect to any matters relating to
the Plan for which it is responsible.
All determinations on any matter relating to the Plan or any Award
Agreement may be made in the sole and absolute discretion of the Board, and all
such determinations of the Board shall be final, conclusive and binding on all
Persons. No member of the Board shall be liable for any action or determination
made with respect to the Plan or any Award.
Article 4. Shares Subject to the Plan
4.1. Number of Shares Available.
(a) Plan Limit. Subject to adjustment as provided in Section 4.2, the
number of Shares hereby reserved for delivery under the Plan is 5,000,000.
The number of Shares that may be delivered pursuant to the exercise of
Options or SARs is 5,000,000. The number of Shares over which Performance
Units may be granted is 1,000,000. The maximum number of Shares that may be
delivered as Restricted Shares is 1,000,000 and the maximum number of Bonus
Shares that may be awarded is 500,000. If any Shares subject to an Award
granted hereunder are forfeited or an Award or any portion thereof
otherwise terminates or is settled without the issuance of Shares, or in
the case of SARs and Performance Units, without the payment of cash, the
Shares subject to such Award, to the extent of any such forfeiture,
termination or settlement, shall again be available for grant under the
Plan. The Board may from time to time determine the appropriate methodology
for calculating the number of Shares issued pursuant to the Plan.
(b) Individual Limit. No Grantee may be granted Options, SARs,
Restricted Shares, Bonus Shares or Deferred Shares, Performance Units or
Performance Shares in Shares, or in any combination thereof, relating to an
aggregate number of Shares under the Plan that exceeds 1,000,000 shares in
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any 5-year period. If a previously granted Option, SAR, Performance Unit,
or Performance Share is forfeited, canceled or repriced, such forfeited,
canceled or repriced Option, SAR, Performance Unit, or Performance Share as
the case may be, shall continue to be counted against the maximum number of
Shares, SARs, Performance Units or Performance Shares that may be delivered
to any Grantee over the life of the Plan.
4.2. Adjustments in Authorized Shares.
(a) Adjustment Principle. In the event that the Board determines that
any dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property), recapitalization, share split,
reverse share split, subdivision, consolidation or reduction of capital,
reorganization, merger, scheme of arrangement, split-up, spin-off or
combination involving the Company or repurchase or exchange of Shares or
other rights to purchase Shares or other securities of the Company, or
other similar corporate transaction or event affects the Shares such that
any adjustment is determined by the Board to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Board shall, in such
manner as it may deem equitable, adjust any or all of (i) the number and
type of Shares (or other securities or property of the Company or any
Person that is a party to a Reorganization Transaction with the Company)
with respect to which Awards may be granted, (ii) the number and type of
Shares (or other securities or property of the Company or any Person that
is a party to a Reorganization Transaction with the Company) subject to
outstanding Awards, and (iii) the grant or exercise price with respect to
any Award or, if deemed appropriate, make provision for a cash payment to
the holder of an outstanding Award or the substitution of other property
for Shares subject to an outstanding Award; provided, that the number of
Shares subject to any Award denominated in Shares shall always be a whole
number.
(b) Example. By way of illustration, and not by way of limitation, the
following illustrates how the foregoing adjustment principles would apply
in the context of a stock split: Assume a Grantee holds an Option to
purchase 1,000 shares of Company stock at an Option Price of $50 per share.
Assume further that the Company completes a two-for-one stock split such
that every stockholder on the requisite record date receives two shares of
Company stock for every one share held on the record date. Pursuant to the
adjustment principles set forth above in Section 4.2(a), the Grantee's
Option would be adjusted such that, after such adjustment, the Grantee
would hold an Option to purchase 2,000 shares of Company stock at an Option
Price of $25 per share. All other terms and conditions of the Option would
remain the same. Similar adjustment principles would apply to SARs,
Performance Shares, Performance Units, Bonus Shares and Deferred Shares.
This Section 4.2(b) is for illustrative purposes only, assumes hypothetical
facts, and shall not, under any event or circumstance, be interpreted as
the adjustment outcome with respect to specific factual situations.
4.3. Newly Issued Shares. Shares delivered in connection with Awards may
only be newly issued Shares.
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Article 5. Eligibility and General Conditions of Awards
5.1. Eligibility. The Board may grant Awards to any Eligible Person,
whether or not he or she has previously received an Award.
5.2. Grant Date. The Grant Date of an Award shall be the date on which the
Board grants the Award or such later date as specified by the Board (i) in the
Board's resolutions or minutes addressing the Award grants or (ii) in the Award
Agreement.
5.3. Maximum Term. Subject to the following proviso, the Option Term or
other period during which an Award may be outstanding shall not extend more than
10 years after the Grant Date, and shall be subject to earlier termination as
herein specified.
5.4. Award Agreement. To the extent not set forth in the Plan, the terms
and conditions of each Award (which need not be the same for each grant or for
each Grantee) shall be set forth in an Award Agreement.
5.5. Restrictions on Share Transferability. The Board may include in the
Award Agreement such restrictions on any Shares acquired pursuant to the
exercise or vesting of an Award as it may deem advisable, including restrictions
under applicable federal securities laws.
5.6. Termination of Affiliation. Except as otherwise provided in an Award
Agreement (including an Award Agreement as amended by the Board pursuant to
Section 3.2), and subject to the provisions of Section 13.1, the extent to which
the Grantee shall have the right to exercise, vest in, or receive payment in
respect of an Award following Termination of Affiliation shall be determined in
accordance with the following provisions of this Section 5.6.
(a) For Cause. If a Grantee has a Termination of Affiliation for
Cause:
(i) the Grantee's Restricted Shares and Deferred Shares that are
forfeitable immediately before such Termination of Affiliation shall
automatically be forfeited on such date, subject in the case of
Restricted Shares to the provisions of Section 8.4 regarding repayment
of certain amounts to the Grantee;
(ii) the Grantee's Deferred Shares that were vested immediately
before such Termination of Affiliation shall promptly be settled by
delivery to such Grantee of a number of unrestricted Shares equal to
the aggregate number of such vested Deferred Shares, and
(iii) any unexercised Option or SAR, and any Performance Share or
Performance Unit with respect to which the Performance Period has not
ended immediately before such Termination of Affiliation, shall
terminate effective immediately upon such Termination of Affiliation.
(b) On Account of Death or Disability. If a Grantee has a Termination
of Affiliation on account of death or Disability:
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(i) the Grantee's Restricted Shares that were forfeitable
immediately before such Termination of Affiliation shall thereupon
become nonforfeitable;
(ii) the Grantee's Deferred Shares that were forfeitable
immediately before such Termination of Affiliation shall thereupon
become nonforfeitable and the Company shall, unless otherwise provided
in an Award Agreement, promptly settle all Deferred Shares, whether or
not forfeitable, by delivery to the Grantee (or, after his or her
death, to his or her personal representative or beneficiary designated
in accordance with Article 11) of a number of unrestricted Shares
equal to the aggregate number of the Grantee's Deferred Shares;
(iii) any unexercised Option or SAR, whether or not exercisable
immediately before such Termination of Affiliation, shall be fully
exercisable and may be exercised, in whole or in part, at any time up
to one year after such Termination of Affiliation (but only during the
Option Term or SAR Term, respectively) by the Grantee or, after his or
her death, by (A) his or her personal representative or the person to
whom the Option or SAR, as applicable, is transferred by will or the
applicable laws of descent and distribution, or (B) the Grantee's
beneficiary designated in accordance with Article 11; and
(iv) the benefit payable with respect to any Performance Share or
Performance Unit with respect to which the Performance Period has not
ended immediately before such Termination of Affiliation on account of
death or Disability shall be equal to the product of the Fair Market
Value of a Share as of the date of such Termination of Affiliation or
the value of the Performance Unit specified in the Award Agreement
(determined as of the date of such Termination of Affiliation), as
applicable, multiplied successively by each of the following:
(A) a fraction, the numerator of which is the number of
months (including as a whole month any partial month) that have
elapsed since the beginning of such Performance Period until the
date of such Termination of Affiliation and the denominator of
which is the number of months (including as a whole month any
partial month) in the Performance Period; and
(B) a percentage determined by the Plan Committee that would
be earned under the terms of the applicable Award Agreement
assuming that the rate at which the performance goals have been
achieved as of the date of such Termination of Affiliation would
continue until the end of the Performance Period, or, if the
Board elects to compute the benefit after the end of the
Performance Period, the Performance percentage, as determined by
the Board, attained during the Performance Period.
(c) Change of Control Period. If a Grantee has a Termination of
Affiliation during the period ("Change of Control Period") commencing on a
Change of Control and ending on the first anniversary of the Change of
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Control, which Termination of Affiliation is initiated by the Company or a
Subsidiary other than for Cause, or initiated by the Grantee for Good
Reason, then
(i) the Grantee's Restricted Shares that were forfeitable shall
thereupon become nonforfeitable;
(ii) the Grantee's Deferred Shares that were forfeitable shall
thereupon become nonforfeitable and the Company shall immediately
settle all Deferred Shares, whether or not previously forfeitable, by
delivery to such Grantee of a number of unrestricted Shares equal to
the aggregate number of the Grantee's Deferred Shares;
(iii) any unexercised Option or SAR, whether or not exercisable
on the date of such Termination of Affiliation, shall thereupon be
fully exercisable and may be exercised, in whole or in part for ninety
(90) days following such Termination of Affiliation (but only during
the Option Term or SAR Term, respectively); and
(iv) the Company shall immediately pay to the Grantee, with
respect to any Performance Share or Performance Unit with respect to
which the Performance Period has not ended as of the date of such
Termination of Affiliation, a cash payment equal to the product of (A)
in the case of a Performance Share, the Change of Control Value or (B)
in the case of a Performance Unit, the value of the Performance Unit
specified in the Award Agreement, as applicable, multiplied
successively by each of the following:
(A) a fraction, the numerator of which is the number of
whole and partial months that have elapsed between the beginning
of such Performance Period and the date of such Termination of
Affiliation and the denominator of which is the number of whole
and partial months in the Performance Period; and
(B) a percentage equal to a greater of (x) the target
percentage, if any, specified in the applicable Award Agreement
or (y) the maximum percentage, if any, that would be earned under
the terms of the applicable Award Agreement assuming that the
rate at which the performance goals have been achieved as of the
date of such Termination of Affiliation would continue until the
end of the Performance Period.
(d) Any Other Reason. If a Grantee has a Termination of Affiliation
for any reason other than for Cause, death or Disability, and other than
under the circumstances described in Section 5.6(c), then:
(i) the Grantee's Restricted Shares and Deferred Shares, to the
extent forfeitable immediately before such Termination of Affiliation,
shall thereupon automatically be forfeited, subject in the case of
Restricted Shares to the provisions of Section 8.4 regarding repayment
of certain amounts to the Grantee;
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(ii) the Grantee's Deferred Shares that were not forfeitable
immediately before such Termination of Affiliation shall promptly be
settled by delivery to the Grantee of a number of unrestricted Shares
equal to the aggregate number of the Grantee's vested Deferred Shares;
(iii) any unexercised Option or SAR, to the extent exercisable
immediately before such Termination of Affiliation, shall remain
exercisable in whole or in part for ninety (90) days after such
Termination of Affiliation (but only during the Option Term or SAR
Term, respectively) by the Grantee or, after his or her death, by (A)
his or her personal representative or the person to whom the Option or
SAR, as applicable, is transferred by will or the applicable laws of
descent and distribution, or (B) the Grantee's beneficiary designated
in accordance with Article 11; and
(iv) any Performance Shares or Performance Units with respect to
which the Performance Period has not ended as of the date of such
Termination of Affiliation shall terminate immediately upon such
Termination of Affiliation.
5.7. Nontransferability of Awards.
(a) Except as provided in Section 5.7(c) below, each Award, and each right
under any Award, shall be exercisable only by the Grantee during the Grantee's
lifetime, or, if permissible under applicable law, by the Grantee's guardian or
legal representative.
(b) Except as provided in Section 5.7(c) below, no Award (prior to the
time, if applicable, Shares are issued in respect of such Award), and no right
under any Award, may be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Grantee otherwise than by will or by
the laws of descent and distribution and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any Subsidiary; provided, that the
designation of a beneficiary shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance.
(c) To the extent and in the manner permitted by the Board, and subject to
such terms and conditions as may be prescribed by the Board, a Grantee may
transfer an Award to (a) a child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of
the Grantee, (including adoptive relationships), (b) any person sharing the
Grantee's household (other than a tenant or employee), (c) a trust in which
persons described in (a) or (b) have more than 50% of the beneficial interest,
(d) a foundation in which persons described in (a) or (b) or the Grantee own
more than 50% of the voting interests; provided such transfer is not for value.
The following shall not be considered transfers for value: (i) a transfer under
a domestic relations order in settlement of marital property rights; and (ii) a
transfer to an entity in which more than 50% of the voting interests are owned
by persons described in (a) or (b) above or the Grantee, in exchange for an
interest in that entity.
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Article 6. Stock Options
6.1. Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to any Eligible Person in such number, and upon such
terms, and at any time and from time to time as shall be determined by the
Board. Without limiting the generality of the foregoing, the Board may grant to
any Eligible Person, or permit any Eligible Person to elect to receive, an
Option in lieu of or in substitution for any other compensation (whether payable
currently or on a deferred basis, and whether payable under this Plan or
otherwise) which such Eligible Person may be eligible to receive from the
Company or a Subsidiary, which Option may have a value (as determined by the
Board under Black-Scholes or any other option valuation method) that is equal to
or greater than the amount of such other compensation.
6.2. Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the Option Term, the number of
shares to which the Option pertains, the time or times at which such Option
shall be exercisable and such other provisions as the Board shall determine.
6.3. Option Price. The Option Price of an Option under this Plan shall be
determined by the Board, and shall be no less than 100% of the Fair Market Value
of a Share on the Grant Date; provided, however, that any Option ("Substitute
Option") that is (x) granted to a Grantee in connection with the acquisition
("Acquisition"), however effected, by the Company of another corporation or
entity ("Acquired Entity") or the assets thereof, (y) associated with an option
to purchase shares of stock or other equity interest of the Acquired Entity or
an affiliate thereof ("Acquired Entity Option") held by such Grantee immediately
prior to such Acquisition, and (z) intended to preserve for the Grantee the
economic value of all or a portion of such Acquired Entity Option, shall be
granted such that such option substitution is completed in conformity with the
rules set forth in Section 424(a) of the Code.
6.4. Grant of Incentive Stock Options.
(a) At the time of the grant of any Option to an Eligible Person who
is an employee of the Company or a Subsidiary, the Board may designate that
such option shall be made subject to additional restrictions to permit it
to qualify as an "incentive stock option" under the requirements of Section
422 of the Code. Any option designated as an incentive stock option:
(i) shall not be granted to a person who owns shares (including
shares treated as owned under Section 424(d) of the Code) possessing
more than 10% of the total combined voting power of all classes of
shares of the Company;
(ii) shall be for a term of not more than 10 years from the Grant
Date, and shall be subject to earlier termination as provided herein
or in the applicable Award Agreement;
(iii) shall not have an aggregate Fair Market Value (determined
for each incentive stock option at its Grant Date) of Shares with
respect to which incentive stock options are exercisable for the first
time by such Grantee during any calendar year (under the Plan and any
other employee stock option plan of the Grantee's employer or any
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parent or Subsidiary thereof ("Other Plans")), determined in
accordance with the provisions of Section 422 of the Code, which
exceeds $100,000 (the "$100,000 Limit");
(iv) shall, if the aggregate Fair Market Value of a Share
(determined on the Grant Date) with respect to the portion of such
grant which is exercisable for the first time during any calendar year
("Current Grant") and all incentive stock options previously granted
under the Plan and any Other Plans which are exercisable for the first
time during a calendar year ("Prior Grants") would exceed the $100,000
Limit, be exercisable as follows:
(A) the portion of the Current Grant which would, when added
to any Prior Grants, be exercisable with respect to Shares which
would have an aggregate Fair Market Value (determined as of the
respective Grant Date for such options) in excess of the $100,000
Limit shall, notwithstanding the terms of the Current Grant, be
exercisable for the first time by the Grantee in the first
subsequent calendar year or years in which it could be
exercisable for the first time by the Grantee when added to all
Prior Grants without exceeding the $100,000 Limit; and
(B) if, viewed as of the date of the Current Grant, any
portion of a Current Grant could not be exercised under the
preceding provisions of this Subsection (iv) during any calendar
year commencing with the calendar year in which it is first
exercisable through and including the last calendar year in which
it may by its terms be exercised, such portion of the Current
Grant shall not be an incentive stock option, but shall be
exercisable as a separate Option at such date or dates as are
provided in the Current Grant;
(v) shall be granted within 10 years from the earlier of the date
the Plan is adopted or the date the Plan is approved by the
shareholders of the Company;
(vi) shall require the Grantee to notify the Board of any
disposition of any Shares issued pursuant to the exercise of the
incentive stock option under the circumstances described in Section
421(b) of the Code (relating to certain disqualifying dispositions),
within 10 days of such disposition; and
(vii) shall by its terms not be assignable or transferable other
than by will or the laws of descent and distribution and may be
exercised, during the Grantee's lifetime, only by the Grantee;
provided, however, that the Grantee may, to the extent provided in the
Plan in any manner specified by the Board, designate in writing a
beneficiary to exercise such incentive stock option after the
Grantee's death.
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Notwithstanding the foregoing, the Board may, without the consent of the
Grantee, at any time before the exercise of an option (whether or not an
incentive stock option), take any action necessary to prevent such option from
being treated as an incentive stock option.
6.5. Exercise of Options. Options shall be exercised by the delivery of a
written notice of exercise to the Company or its designee, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares made by cash, personal check or wire
transfer or, subject to the approval of the Board pursuant to procedures
approved by the Board,
(a) through the sale of the Shares acquired on exercise of the Option
through a broker-dealer to whom the Grantee has submitted an irrevocable
notice of exercise and irrevocable instructions to deliver promptly to the
Company the amount of sale or loan proceeds sufficient to pay for such
Shares, together with, if requested by the Company, the amount of federal,
state, local or foreign withholding taxes payable by Grantee by reason of
such exercise,
(b) through simultaneous sale through a broker of Shares acquired on
exercise, as permitted under Regulation T of the Federal Reserve Board, or
(c) by delivery to the Company of certificates representing the number
of Shares then owned by the Grantee, the Fair Market Value of which equals
the purchase price of the Shares purchased in connection with the Option
exercise, properly endorsed for transfer to the Company; provided however,
that Shares used for this purpose must have been held by the Grantee for
such minimum period of time as may be established from time to time by the
Board; and provided further that the Fair Market Value of any Shares
delivered in payment of the purchase price upon exercise of the Options
shall be the Fair Market Value as of the exercise date, which shall be the
date of delivery of the certificates for the Stock used as payment of the
exercise price. For purposes of this Section 6.5(c), in lieu of actually
surrendering to the Company the stock certificates representing the number
of Shares then owned by the Grantee, the Board may, in its discretion
permit the Grantee to submit to the Company a statement affirming ownership
by the Grantee of such number of Shares and request that such Shares,
although not actually surrendered, be deemed to have been surrendered by
the Grantee as payment of the exercise price.
Article 7. Stock Appreciation Rights
7.1. Grant of SARs. Subject to the terms and conditions of this Plan, SARs
may be granted to any Eligible Person at any time and from time to time as shall
be determined by the Board in its sole discretion. The Board may grant
Freestanding SARs or Tandem SARs, or any combination thereof.
(a) Number of Shares. The Board shall have complete discretion to
determine the number of SARs granted to any Grantee, subject to the
limitations imposed in this Plan and by applicable law.
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(b) Exercise Price and Other Terms. All SARs shall be granted with an
exercise price no less than the Fair Market Value of the underlying Shares
of Stock on the SARs' Grant Date. The Board, subject to the provisions of
this Plan, shall have complete discretion to determine the terms and
conditions of SARs granted under this Plan. The exercise price per Share of
Tandem SARs shall equal the exercise price per Share of the related Option.
7.2. SAR Award Agreement. Each SAR granted under the Plan shall be
evidenced by a written SAR Award Agreement which shall be entered into by the
Company and the Grantee to whom the SAR is granted and which shall specify the
exercise price per share, the SAR Term, the conditions of exercise, and such
other terms and conditions as the Board in its sole discretion shall determine.
7.3. Exercise of SARs. SARs shall be exercised by the delivery of a written
notice of exercise to the Company or its designee, setting forth the number of
Shares over which the SAR is to be exercised. Tandem SARs (a) may be exercised
with respect to all or part of the Shares subject to the related Option upon the
surrender of the right to exercise the equivalent portion of the related Option;
(b) may be exercised only with respect to the Shares for which its related
Option is then exercisable; and (c) may be exercised only when the Fair Market
Value of the Shares subject to the Option exceeds the Option Price of the
Option. The value of the payment with respect to the Tandem SAR may be no more
than 100% of the difference between the Option Price of the underlying Option
and the Fair Market Value of the Shares subject to the underlying Option at the
time the Tandem SAR is exercised.
7.4. Expiration of SARs. A SAR granted under this Plan shall expire on the
date set forth in the SAR Award Agreement, which date shall be determined by the
Board in its sole discretion. Unless otherwise specifically provided for in the
SAR Award agreement, a Tandem SAR granted under this Plan shall be exercisable
at such time or times and only to the extent that the related Option is
exercisable. The Tandem SAR shall terminate and no longer be exercisable upon
the termination or exercise of the related Options, except that Tandem SARs
granted with respect to less than the full number of shares covered by a related
Option shall not be reduced until the exercise or termination of the related
Option exceeds the number of Shares not covered by the SARs.
7.5. Payment of SAR Amount. Upon exercise of a SAR, a Grantee shall be
entitled to receive payment from the Company in an amount determined by
multiplying (i) the positive difference between the Fair Market Value of a Share
on the date of exercise over the exercise price per Share by (ii) the number of
Shares with respect to which the SAR is exercised. The payment upon a SAR
exercise shall be solely in whole Shares of equivalent value. Fractional Shares
shall be rounded down to the nearest whole Share with no cash consideration
being paid upon exercise.
Article 8. Restricted Shares
8.1. Grant of Restricted Shares. Subject to the terms and provisions of the
Plan, the Board, at any time and from time to time, may grant Restricted Shares
to any Eligible Person in such amounts as the Board shall determine.
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8.2. Award Agreement. Each grant of Restricted Shares shall be evidenced by
an Award Agreement, which shall specify the Period(s) of Restriction, the number
of Restricted Shares granted, and such other provisions as the Board shall
determine. The Board may impose such conditions or restrictions on any
Restricted Shares as it may deem advisable, including restrictions based upon
the achievement of specific performance goals (Company-wide, divisional,
Subsidiary or individual), time-based restrictions on vesting or restrictions
under applicable securities laws.
8.3. Consideration. The Board shall determine the amount, if any, that a
Grantee shall pay for Restricted Shares. Such payment shall be made in full by
the Grantee before the delivery of the shares and in any event no later than 10
business days after the Grant Date for such shares.
8.4. Effect of Forfeiture. If Restricted Shares are forfeited, and if the
Grantee was required to pay for such shares or acquired such Restricted Shares
upon the exercise of an Option, the Grantee shall be deemed to have resold such
Restricted Shares to the Company at a price equal to the lesser of (x) the
amount paid by the Grantee for such Restricted Shares, or (y) the Fair Market
Value of a Share on the date of such forfeiture. The Company shall pay to the
Grantee the required amount as soon as is administratively practical. Such
Restricted Shares shall cease to be outstanding, and shall no longer confer on
the Grantee thereof any rights as a shareholder of the Company, from and after
the date of the event causing the forfeiture, whether or not the Grantee accepts
the Company's tender of payment for such Restricted Shares.
8.5. Escrow; Legends. The Board may provide that the certificates for any
Restricted Shares (x) shall be held (together with a stock power executed in
blank by the Grantee) in escrow by the Secretary of the Company until such
Restricted Shares become nonforfeitable or are forfeited or (y) shall bear an
appropriate legend restricting the transfer of such Restricted Shares. If any
Restricted Shares become nonforfeitable, the Company shall cause certificates
for such shares to be issued without such legend.
Article 9. Performance Units and Performance Shares
9.1. Grant of Performance Units and Performance Shares. Subject to the
terms of the Plan, Performance Units or Performance Shares may be granted to any
Eligible Person in such amounts and upon such terms, and at any time and from
time to time, as the Board shall determine. Each grant of Performance Units or
Performance Shares shall be evidenced by an Award Agreement which shall specify
the terms and conditions applicable to the Performance Units or Performance
Shares, as the Board determines.
9.2. Value/Performance Goals. Each Performance Unit shall have an initial
value that is established by the Board at the time of grant, that is equal to
the Fair Market Value of a Share on the Grant Date. The Board shall set
performance goals which, depending on the extent to which they are met, will
determine the number or value of Performance Units or Performance Shares that
will be paid to the Grantee. For purposes of this Article 9, the time period
during which the performance goals must be met shall be called a "Performance
Period." The Board shall have complete discretion to establish the performance
goals. Without limitation, the performance goals may provide for a targeted
level or levels of achievement using one or more of the following measures: (a)
earnings per share, (b) net income, (c) return on equity, (d) pro forma net
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income, (e) return on designated assets, (f) return on revenues, (g) Fair Market
Value per share, (i) book value per share, (j) debt reduction, or (k) any
combination of the above, in the conjunctive or disjunctive, at the discretion
of the Board. Objective and measurable goals set by a "management by objectives"
process, and approved by the Board may also be considered. Such goals may relate
to the satisfaction of external or internal requirements.
9.3. Payment of Performance Units and Performance Shares. Subject to the
terms of this Plan, after the applicable Performance Period has ended, the
holder of Performance Units or Performance Shares shall be entitled to receive a
payment based on the number and value of Performance Units or Performance Shares
earned by the Grantee over the Performance Period, determined as a function of
the extent to which the corresponding performance goals have been achieved.
If a Grantee is promoted, demoted or transferred to a different business
unit of the Company during a Performance Period, then, to the extent the Board
determines appropriate, the Board may adjust, change or eliminate the
performance goals or the applicable Performance Period as it deems appropriate
in order to make them appropriate and comparable to the initial performance
goals or Performance Period.
9.4. Form and Timing of Payment of Performance Units and Performance
Shares. Payment of earned Performance Units or Performance Shares shall be made
in a lump sum following the close of the applicable Performance Period. The
Board may cause earned Performance Units or Performance Shares to be paid in
cash or in Shares (or in a combination thereof) which have an aggregate Fair
Market Value equal to the value of the earned Performance Units or Performance
Shares at the close of the applicable Performance Period. Such Shares may be
granted subject to any restrictions deemed appropriate by the Board. The form of
payout of such Awards shall be set forth in the Award Agreement pertaining to
the grant of the Award.
As determined by the Board, a Grantee may be entitled to receive any
dividends declared with respect to Shares which have been earned in connection
with grants of Performance Units or Performance Shares but not yet distributed
to the Grantee. In addition, a Grantee may, as determined by the Board, be
entitled to exercise his or her voting rights with respect to such Shares.
Article 10. Bonus Shares and Deferred Shares
10.1. Bonus Shares. Subject to the terms of the Plan, the Board may grant
Bonus Shares to any Eligible Person, in such amount and upon such terms and at
any time and from time to time as shall be determined by the Board.
10.2. Deferred Shares. Subject to the terms and provisions of the Plan,
Deferred Shares may be granted to any Eligible Person in such amounts and upon
such terms, and at any time and from time to time, as shall be determined by the
Board. The Board may impose such conditions or restrictions on any Deferred
Shares as it may deem advisable, including time-vesting restrictions and
deferred payment features. The Board may cause the Company to establish a
grantor trust to hold Shares subject to Deferred Share Awards. Without limiting
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the generality of the foregoing, the Board may grant to any Eligible Person, or
permit any Eligible Person to elect to receive, Deferred Shares in lieu of or in
substitution for any other compensation (whether payable currently or on a
deferred basis, and whether payable under this Plan or otherwise) which such
Eligible Person may be eligible to receive from the Company or a Subsidiary. Any
grant of Deferred Shares shall comply with Section 409A of the Code.
Article 11. Beneficiary Designation
Each Grantee under the Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of the Grantee's death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Grantee, shall be in a form prescribed by the
Company, and will be effective only when filed by the Grantee in writing with
the Company during the Grantee's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Grantee's death shall be paid to
the Grantee's estate.
Article 12. Rights of Employees
12.1. Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Grantee's employment at any time,
nor confer upon any Grantee the right to continue in the employ of the Company.
12.2. Participation. No employee shall have the right to be selected to
receive an Award, or, having been so selected, to be selected to receive a
future Award.
Article 13. Amendment, Modification, and Termination
13.1. Amendment, Modification, and Termination. Subject to the terms of the
Plan, the Board of Directors of the Company may at any time and from time to
time, alter, amend, suspend or terminate the Plan in whole or in part without
the approval of the Company's shareholders, except to the extent the Board of
Directors of the Company determines it is desirable to obtain approval of the
Company's shareholders, to retain eligibility for exemption from the limitations
of Code Section 162(m), to have available the ability for Options to qualify as
ISOs, to comply with the requirements for listing on any exchange where the
Company's Shares are listed, or for any other purpose the Board of Directors of
the Company deems appropriate.
13.2. Adjustments Upon Certain Unusual or Nonrecurring Events. The Board
may make adjustments in the terms and conditions of Awards in recognition of
unusual or nonrecurring events (including the events described in Section 4.2)
affecting the Company or the financial statements of the Company or of changes
in applicable laws, regulations, or accounting principles, whenever the Board
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan.
13.3. Awards Previously Granted. Notwithstanding any other provision of the
Plan to the contrary (but subject to Section 2.7 and Section 13.2), no
termination, amendment or modification of the Plan shall adversely affect in any
material way any Award previously granted under the Plan, without the written
consent of the Grantee of such Award.
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Article 14. Withholding
14.1. Mandatory Tax Withholding.
(a) Whenever under the Plan, Shares are to be delivered upon exercise
or payment of an Award, or upon Restricted Shares becoming nonforfeitable,
or any other event with respect to rights and benefits hereunder, the
Company shall be entitled to require and may accommodate the Grantee's
request if so requested, (x) that the Grantee remit an amount in cash
sufficient to satisfy all federal, state, local and foreign tax withholding
requirements related thereto ("Tax Withholding"), (y) the withholding of
such Tax Withholding from compensation otherwise due to the Grantee or from
any Shares or other payment due to the Grantee under the Plan or (z) any
combination of the foregoing.
(b) Any Grantee who makes a disqualifying disposition of an incentive
stock option granted under the Plan or who makes an election under Section
83(b) of the Code shall remit to the Company an amount sufficient to
satisfy all resulting Tax Withholding; provided that, in lieu of or in
addition to the foregoing, the Company shall have the right to withhold
such Tax Withholding from compensation otherwise due to the Grantee or from
any Shares or other payment due to the Grantee under the Plan.
14.2. Notification under Code Section 83(b). If the Grantee, in connection
with the exercise of any Option, or the grant of Restricted Shares, makes the
election permitted under Section 83(b) of the Code to include in such Grantee's
gross income in the year of transfer the amounts specified in Section 83(b) of
the Code, then such Grantee shall notify the Company of such election within 10
days of filing the notice of the election with the Internal Revenue Service, in
addition to any filing and notification required pursuant to regulations issued
under Section 83(b) of the Code. The Board may, in connection with the grant of
an Award or at any time thereafter prior to such an election being made,
prohibit a Grantee from making the election described above.
Article 15. Equity Incentive Plans of Foreign Subsidiaries
The Board may authorize any foreign Subsidiary to adopt a plan for granting
Awards ("Foreign Equity Incentive Plan"). All awards granted under such Foreign
Equity Incentive Plans shall be treated as grants under the Plan. Such Foreign
Equity Incentive Plans shall have such terms and provisions as the Board permits
not inconsistent with the provisions of the Plan and which may be more
restrictive than those contained in the Plan. Awards granted under such Foreign
Equity Incentive Plans shall be governed by the terms of the Plan except to the
extent that the provisions of the Foreign Equity Incentive Plans are more
restrictive than the terms of the Plan, in which case such terms of the Foreign
Equity Incentive Plans shall control.
Article 16. Additional Provisions
16.1. Successors. All obligations of the Company under the Plan with
respect to Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise of all or substantially
all of the business or assets of the Company.
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16.2. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
16.3. Severability. If any part of the Plan is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any other part of the Plan. Any Section or part
of a Section so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will give effect to the terms of such Section or
part of a Section to the fullest extent possible while remaining lawful and
valid.
16.4. Requirements of Law. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or stock
exchanges as may be required. Notwithstanding any provision of the Plan or any
Award, Grantees shall not be entitled to exercise, or receive benefits under,
any Award, and the Company shall not be obligated to deliver any Shares or other
benefits to a Grantee, if such exercise or delivery would constitute a violation
by the Grantee or the Company of any applicable law or regulation.
16.5. Securities Law Compliance.
(a) If the Board deems it necessary to comply with any applicable
securities law, or the requirements of any stock exchange upon which Shares
may be listed, the Board may impose any restriction on Shares acquired
pursuant to Awards under the Plan as it may deem advisable. All
certificates for Shares delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Board may deem advisable under the rules,
regulations and other requirements of the SEC, any stock exchange upon
which Shares are then listed, any applicable securities law, and the Board
may cause a legend or legends to be placed on any such certificates to
refer to such restrictions. If so requested by the Company, the Grantee
shall represent to the Company in writing that he or she will not sell or
offer to sell any Shares unless a registration statement shall be in effect
with respect to such Shares under the Securities Act of 1933 or unless he
or she shall have furnished to the Company evidence satisfactory to the
Company that such registration is not required.
(b) If the Board determines that the exercise of, or delivery of
benefits pursuant to, any Award would violate any applicable provision of
securities laws or the listing requirements of any stock exchange upon
which any of the Company's equity securities are then listed, then the
Board may postpone any such exercise or delivery, as applicable, but the
Company shall use all reasonable efforts to cause such exercise or delivery
to comply with all such provisions at the earliest practicable date.
16.6. No Rights as a Shareholder. A Grantee shall not have any rights as a
shareholder with respect to the Shares (other than Restricted Shares) which may
be deliverable upon exercise or payment of such Award until such shares have
been delivered to him or her. Restricted Shares, whether held by a Grantee or in
escrow by the Secretary of the Company, shall confer on the Grantee all rights
of a shareholder of the Company, except as otherwise provided in the Plan or
Award Agreement. Unless otherwise determined by the Board at the time of a grant
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of Restricted Shares, any cash dividends that become payable on Restricted
Shares shall be deferred and, if the Board so determines, reinvested in
additional Restricted Shares. Except as otherwise provided in an Award
Agreement, any share dividends and deferred cash dividends issued with respect
to Restricted Shares shall be subject to the same restrictions and other terms
as apply to the Restricted Shares with respect to which such dividends are
issued. The Board may provide for payment of interest on deferred cash
dividends.
16.7. Nature of Payments. Awards shall be special incentive payments to the
Grantee and shall not be taken into account in computing the amount of salary or
compensation of the Grantee for purposes of determining any pension, retirement,
death or other benefit under (a) any pension, retirement, profit-sharing, bonus,
insurance or other employee benefit plan of the Company or any Subsidiary or (b)
any agreement between (i) the Company or any Subsidiary and (ii) the Grantee,
except as such plan or agreement shall otherwise expressly provide.
16.8. Governing Law. The Plan and the rights of any Grantee receiving an
Award thereunder shall be construed and interpreted in accordance with and
governed by the laws of the State of Kansas without giving effect to the
principles of the conflict of laws to the contrary.
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