Registration of Securities to be Offered to Employees Pursuant to an Employee Benefit Plan — Form S-8 Filing Table of Contents
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1: S-8 Registration of Securities to be Offered to HTML 46K
Employees Pursuant to an Employee
Benefit Plan
2: EX-5.1 Opinion re: Legality HTML 10K
3: EX-23.1 Consent of Experts or Counsel HTML 7K
4: EX-99.1 Miscellaneous Exhibit HTML 98K
5: EX-99.2 Miscellaneous Exhibit HTML 37K
1. Purpose.
The purpose of the Insignia Systems, Inc. 2018 Equity Incentive
Plan (the “Plan”) is to attract and retain the best
available personnel for positions of responsibility with the
Company, to provide additional incentives to them and align their
interests with those of the Company’s shareholders, and to
thereby promote the Company’s long-term business
success.
2. Definitions.
In this Plan, the following definitions will apply.
(a)“Affiliate”
means any entity that is a Subsidiary of the Company.
(b)“Agreement”
means the written or electronic agreement, notice or other document
containing the terms and conditions applicable to each Award
granted under the Plan, including all amendments thereto. An
Agreement is subject to the terms and conditions of the
Plan.
(c)“Award”
means a grant made under the Plan in the form of Options, Stock
Appreciation Rights, Restricted Stock, Stock Units or an Other
Stock-Based Award.
(d)“Board”
means the Board of Directors of the Company.
(e)“Cause”
means, unless otherwise defined in a then-effective written
agreement (including an Agreement) between a Participant and the
Company or any Affiliate, a Participant’s (i) material
failure to perform satisfactorily the duties reasonably required of
the Participant by the Company (other than by reason of
Disability); (ii) material violation of any law, rule, regulation,
court order or regulatory directive (other than traffic violations,
misdemeanors or other minor offenses); (iii) material breach
of the Company’s business conduct or ethics code or of any
fiduciary duty or nondisclosure, non-solicitation, non-competition
or similar obligation owed to the Company or any Affiliate; (iv)
engaging in any act or practice that involves personal dishonesty
on the part of the Participant or demonstrates a willful and
continuing disregard for the best interests of the Company and its
Affiliates; or (v) engaging in dishonorable or disruptive behavior,
practices or acts which would be reasonably expected to harm or
bring disrepute to the Company or any of its Affiliates, their
business or any of their customers, employees or
vendors.
(f)“Change in
Control” means, unless otherwise defined in a then-effective
written agreement (including an Agreement) between a Participant
and the Company or any Affiliate, one of the
following:
(1) An Exchange Act
Person becomes the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of securities of the Company
representing 50% or more of the combined voting power of the
Company’s then outstanding Voting Securities, except that the
following will not constitute a Change in Control:
(A) any
acquisition of securities of the Company by an Exchange Act Person
from the Company for the purpose of providing financing to the
Company;
(B) any formation of a
Group consisting solely of beneficial owners of the Company’s
Voting Securities as of the effective date of this Plan;
or
(C) any repurchase or
other acquisition by the Company of its Voting Securities that
causes any Exchange Act Person to become the beneficial owner of
50% or more of the Company’s Voting Securities.
If,
however, an Exchange Act Person or Group referenced in clause (A),
(B) or (C) above acquires beneficial ownership of additional
Company Voting Securities after initially becoming the beneficial
owner of 50% or
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C:
more of
the combined voting power of the Company’s Voting Securities
by one of the means described in those clauses, then a Change in
Control will be deemed to have occurred. Furthermore, a Change in
Control will occur if a Person becomes the beneficial owner of more
than 50% of the Company’s Voting Securities as the result of
a Corporate Transaction only if the Corporate Transaction is itself
a Change in Control pursuant to subsection 2(f)(3).
(2) Individuals who are
Continuing Directors cease for any reason to constitute a majority
of the members of the Board.
(3) A
Corporate Transaction is consummated, unless, immediately following
such Corporate Transaction, all or substantially all of the
individuals and entities who were the beneficial owners of the
Company’s Voting Securities immediately prior to such
Corporate Transaction beneficially own, directly or indirectly, 50%
or more of the combined voting power of the then outstanding Voting
Securities of the surviving or acquiring entity resulting from such
Corporate Transaction (including beneficial ownership through any
Parent of such entity) in substantially the same proportions as
their ownership, immediately prior to such Corporate Transaction,
of the Company’s Voting Securities.
Notwithstanding
the foregoing, to the extent that any Award constitutes a deferral
of compensation subject to Code Section 409A, and if that Award
provides for a change in the time or form of payment upon a Change
in Control, then no Change in Control shall be deemed to have
occurred upon an event described in this Section 2(f) unless the
event would also constitute a change in ownership or effective
control of, or a change in the ownership of a substantial portion
of the assets of, the Company under Code Section 409A.
(g)“Code”
means the Internal Revenue Code of 1986, as amended and in effect
from time to time. For purposes of the Plan, references to sections
of the Code shall be deemed to include any applicable regulations
thereunder and any successor or similar statutory
provisions.
(h)“Committee”
means two or more Non-Employee Directors designated by the Board to
administer the Plan under Section 3, each member of which shall be
(i) an independent director within the meaning of applicable stock
exchange rules and regulations and (ii) a non-employee director
within the meaning of Exchange Act Rule 16b-3.
(i)“Company”
means Insignia Systems, Inc., a Minnesota corporation, and any
successor thereto.
(j)“Continuing
Director” means an individual (i) who is, as of the effective
date of the Plan, a director of the Company, or (ii) who becomes a
director of the Company after the effective date hereof and whose
initial election, or nomination for election by the Company’s
shareholders, was approved by at least a majority of the then
Continuing Directors, but excluding, for purposes of this clause
(ii), an individual whose initial assumption of office occurs as
the result of an actual proxy contest involving the solicitation of
proxies or consents by a person or Group other than the Board, or
by reason of an agreement intended to avoid or settle an actual or
threatened proxy contest.
(k)“Corporate
Transaction” means (i) a sale or other disposition of all or
substantially all of the assets of the Company, or (ii) a merger,
consolidation, share exchange or similar transaction involving the
Company, regardless of whether the Company is the surviving
corporation.
(l)“Disability”
means (A) any permanent and total disability under any long-term
disability plan or policy of the Company or its Affiliates that
covers the Participant, or (B) if there is no such long-term
disability plan or policy, “total and permanent
disability” within the meaning of Code
Section 22(e)(3).
(m)“Employee”
means an employee of the Company or an Affiliate.
(n)“Exchange
Act” means the Securities Exchange Act of 1934, as amended
and in effect from time to time.
(o)“Exchange Act
Person” means any natural person, entity or Group other than
(i) the Company or any Affiliate; (ii) any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
Affiliate; (iii) an underwriter temporarily holding securities in
connection with a registered public offering of such securities; or
(iv) an entity whose Voting Securities are beneficially owned by
the beneficial owners of the Company’s
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Voting Securities
in substantially the same proportions as their beneficial ownership
of the Company’s Voting Securities.
(p)“Fair Market
Value” means the fair market value of a Share determined as
follows:
(1) If the Shares are
readily tradable on an established securities market (as determined
under Code Section 409A), then Fair Market Value will be the
closing sales price for a Share on the principal securities market
on which it trades on the date for which it is being determined, or
if no sale of Shares occurred on that date, on the next preceding
date on which a sale of Shares occurred, as reported in
The Wall Street Journal or
such other source as the Committee deems reliable; or
(2) If
the Shares are not then readily tradable on an established
securities market (as determined under Code Section 409A), then
Fair Market Value will be determined by the Committee as the result
of a reasonable application of a reasonable valuation method that
satisfies the requirements of Code Section 409A.
(q)“Full
Value Award” means an Award other than an Option Award or
Stock Appreciation Right Award.
(r)“Grant
Date” means the date on which the Committee approves the
grant of an Award under the Plan, or such later date as may be
specified by the Committee on the date the Committee approves the
Award.
(s)“Group”
means two or more persons who act, or agree to act together, as a
partnership, limited partnership, syndicate or other group for the
purpose of acquiring, holding, voting or disposing of securities of
the Company.
(t)“Non-Employee
Director” means a member of the Board who is not an
Employee.
(u)“Option”
means a right granted under the Plan to purchase a specified number
of Shares at a specified price. An “Incentive Stock
Option” or “ISO” means any Option designated as
such and granted in accordance with the requirements of Code
Section 422. A “Non-Qualified Stock Option” or
“NQSO” means an Option other than an Incentive Stock
Option.
(v)“Other
Stock-Based Award” means an Award described in Section 11 of
this Plan.
(w)“Parent”
means a “parent corporation,” as defined in Code
Section 424(e).
(x)“Participant”
means a Service Provider to whom a then-outstanding Award has been
granted under the Plan.
(y)“Plan”
means this Insignia Systems, Inc. 2018 Equity Incentive Plan, as
amended and in effect from time to time.
(z)“Prior
Plan” means the Insignia Systems, Inc. 2013 Omnibus Stock and
Incentive Plan.
(aa)“Restricted
Stock” means Shares issued to a Participant that are subject
to such restrictions on transfer, vesting conditions and other
restrictions or limitations as may be set forth in this Plan and
the applicable Agreement.
(bb)“Service”
means the provision of services by a Participant to the Company or
any Affiliate in any Service Provider capacity. A Service
Provider’s Service shall be deemed to have terminated either
upon an actual cessation of providing services to the Company or
any Affiliate or upon the entity to which the Service Provider
provides services ceasing to be an Affiliate. Except as otherwise
provided in this Plan or any Agreement, Service shall not be deemed
terminated in the case of (i) any approved leave of absence; (ii)
transfers among the Company and any Affiliates in any Service
Provider capacity; or (iii) any change in status so long as the
individual remains in the service of the Company or any Affiliate
in any Service Provider capacity.
(cc)“Service
Provider” means an Employee, a Non-Employee Director, or any
natural person who is a consultant or advisor, or is employed by a
consultant or advisor retained by the Company or any Affiliate, and
who
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provides services
(other than in connection with (i) a capital-raising transaction or
(ii) promoting or maintaining a market in Company securities)
to the Company or any Affiliate.
(dd)“Share”
means a share of Stock.
(ee)“Stock”
means the common stock, $.01 par value per Share, of the
Company.
(ff)“Stock
Appreciation Right” or “SAR” means the right to
receive, in cash and/or Shares as determined by the Committee, an
amount equal to the appreciation in value of a specified number of
Shares between the Grant Date of the SAR and its exercise
date.
(gg)“Stock
Unit” means a right to receive, in cash and/or Shares as
determined by the Committee, the Fair Market Value of a Share,
subject to such restrictions on transfer, vesting conditions and
other restrictions or limitations as may be set forth in this Plan
and the applicable Agreement.
(hh)“Subsidiary”
means a “subsidiary corporation,” as defined in Code
Section 424(f), of the Company.
(ii)“Substitute
Award” means an Award granted upon the assumption of, or in
substitution or exchange for, outstanding awards granted by a
company or other entity acquired by the Company or any Affiliate or
with which the Company or any Affiliate combines. The terms and
conditions of a Substitute Award may vary from the terms and
conditions set forth in the Plan to the extent that the Committee
at the time of the grant may deem appropriate to conform, in whole
or in part, to the provisions of the award in substitution for
which it has been granted.
(jj)“Voting
Securities” of an entity means the outstanding equity
securities (or comparable equity interests) entitled to vote
generally in the election of directors of such entity.
3. Administration
of the Plan.
(a) Administration. The authority
to control and manage the operations and administration of the Plan
shall be vested in the Committee in accordance with this Section
3.
(b) Scope of Authority. Subject to
the terms of the Plan, the Committee shall have the authority, in
its discretion, to take such actions as it deems necessary or
advisable to administer the Plan, including:
(1) determining the
Service Providers to whom Awards will be granted, the timing of
each such Award, the type of and the number of Shares covered by
each Award, the terms, conditions, performance criteria,
restrictions and other provisions of Awards, and the manner in
which Awards are paid or settled;
(2) cancelling or
suspending an Award, accelerating the vesting of an Award in
connection with a Participant’s death or Disability,
extending the exercise period of an Award, or otherwise amending
the terms and conditions of any outstanding Award, subject to the
requirements of Sections 15(d) and 15(e);
(3) adopting sub-plans
or special provisions applicable to Awards, establishing, amending
or rescinding rules to administer the Plan, interpreting the Plan
and any Award or Agreement, reconciling any inconsistency,
correcting any defect or supplying an omission in the Plan or any
Agreement, and making all other determinations necessary or
desirable for the administration of the Plan;
(4) granting Substitute
Awards under the Plan; and
(5) requiring or
permitting the deferral of the settlement of an Award, and
establishing the terms and conditions of any such
deferral.
(c) Acts
of the Committee; Delegation. A majority of the members of
the Committee shall constitute a quorum for any meeting of the
Committee, and any act of a majority of the members present at any
meeting at which a quorum is present or any act unanimously
approved in writing by all members of the Committee shall be the
act of the Committee. Any such action of the Committee shall be
valid and effective even if one or more members of the Committee at
the time of such action are later determined not to have satisfied
all of the criteria for membership in clauses (i) and (ii) of
Section 2(h). To the extent not inconsistent with applicable law or
stock exchange rules, the
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Committee may
delegate all or any portion of its authority under the Plan to any
one or more of its members or, as to Awards to Participants who are
not subject to Section 16 of the Exchange Act, to one or more
directors or executive officers of the Company or to a committee of
the Board comprised of one or more directors of the Company. The
Committee may also delegate non-discretionary administrative
responsibilities in connection with the Plan to such other persons
as it deems advisable.
(d) Finality of Decisions. The
Committee’s interpretation of the Plan and of any Award or
Agreement made under the Plan and all related decisions or
resolutions of the Board or Committee shall be final and binding on
all parties with an interest therein.
(e) Indemnification. Each person
who is or has been a member of the Committee or of the Board, and
any other person to whom the Committee delegates authority under
the Plan, shall be indemnified by the Company, to the maximum
extent permitted by law, against liabilities and expenses imposed
upon or reasonably incurred by such person in connection with or
resulting from any claims against such person by reason of the
performance of the individual’s duties under the Plan. This
right to indemnification is conditioned upon such person providing
the Company an opportunity, at the Company’s expense, to
handle and defend the claims before such person undertakes to
handle and defend them on such person’s own behalf. The
Company will not be required to indemnify any person for any amount
paid in settlement of a claim unless the Company has first
consented in writing to the settlement. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which such person or persons may be entitled
under the Company’s Articles of Incorporation or Bylaws, as a
matter of law, or otherwise.
4. Shares
Available Under the Plan.
(a) Maximum Shares Available.
Subject to Section 4(b) and to adjustment as provided in Section
12(a), the number of Shares that may be the subject of Awards and
issued under the Plan shall be 900,000, plus any Shares of Stock
remaining available for future grants under the Prior Plan on the
effective date of this Plan. No further awards may be made under
the Prior Plan after the effective date of this Plan. Shares issued
under the Plan may come from authorized and unissued shares. In
determining the number of Shares to be counted against this share
reserve in connection with any Award, the following rules shall
apply:
(1) Where the number of
Shares subject to an Award is variable on the Grant Date, the
number of Shares to be counted against the share reserve shall be
the maximum number of Shares that could be received under that
particular Award, until such time as it can be determined that only
a lesser number of shares could be received.
(2) Shares subject to
Substitute Awards shall not be counted against the share reserve,
nor shall they reduce the Shares authorized for grant to a
Participant in any calendar year.
(3) Awards that may be
settled solely in cash shall not be counted against the share
reserve, nor shall they reduce the Shares authorized for grant to a
Participant in any calendar year.
(b) Effect of Forfeitures and Other
Actions. Any Shares subject to an Award, or to an award
granted under the Prior Plan that is outstanding on the effective
date of this Plan (a “Prior Plan Award”), that expires,
is cancelled or forfeited or is settled for cash shall, to the
extent of such cancellation, forfeiture, expiration or cash
settlement, again become available for Awards under this Plan, and
the share reserve under Section 4(a) shall be correspondingly
replenished as provided in Section 4(c) below. The following Shares
shall not, however, again become available for Awards or replenish
the share reserve under Section 4(a): (i) Shares tendered
(either actually or by attestation) by the Participant or withheld
by the Company in payment of the exercise price of a stock option
issued under this Plan or the Prior Plan, (ii) Shares tendered
(either actually or by attestation) by the Participant or withheld
by the Company to satisfy any tax withholding obligation with
respect to an award under this Plan or the Prior Plan, (iii) Shares
repurchased by the Company with proceeds received from the exercise
of a stock option issued under this Plan or the Prior Plan, and
(iv) Shares subject to a Stock Appreciation Right award issued
under this Plan or the Prior Plan that are not issued in connection
with the stock settlement of that award upon its
exercise.
(c) Effect of Plans Operated by Acquired
Companies. If a company acquired by the Company or any
Subsidiary or with which the Company or any Subsidiary combines has
shares available under a pre-existing plan approved by shareholders
and not adopted in contemplation of such acquisition or
combination, the shares available for grant pursuant to the terms
of such pre-existing plan (as adjusted, to the extent appropriate,
using the exchange ratio or other adjustment or valuation ratio or
formula used in such acquisition or combination to determine
the
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consideration
payable to the holders of common stock of the entities party to
such acquisition or combination) may be used for Awards under the
Plan and shall supplement the Share reserve under Section 4(a).
Awards using such available shares shall not be made after the date
awards or grants could have been made under the terms of the
pre-existing plan absent the acquisition or combination, and shall
only be made to individuals who were not Employees or Non-Employee
Directors prior to such acquisition or combination.
(d) No Fractional Shares. Unless
otherwise determined by the Committee, the number of Shares subject
to an Award shall always be a whole number. No fractional Shares
may be issued under the Plan, but the Committee may, in its
discretion, adopt any rounding convention it deems suitable or pay
cash in lieu of any fractional Share in settlement of an
Award.
(e) Limits on Awards to Non-Employee
Directors. The aggregate grant date fair value (as
determined in accordance with generally accepted accounting
principles applicable in the United States) of all Awards granted
during any calendar year to any Non-Employee Director (excluding
any Awards granted at the election of a Non-Employee Director in
lieu of all or any portion of retainers or fees otherwise payable
to Non-Employee Directors in cash) with respect to such
individual’s Service as a Non-Employee Director shall not
exceed $200,000.
5. Eligibility.
Participation in the Plan is limited to Service Providers.
Incentive Stock Options may only be granted to
Employees.
6. General
Terms of Awards.
(a) Award
Agreement. Each Award shall be evidenced by an Agreement
setting forth the amount of the Award together with such other
terms and conditions applicable to the Award (and not inconsistent
with the Plan) as determined by the Committee. An Award to a
Participant may be made
singly or in combination with any form of Award. Two types of
Awards may be made in tandem with each other such that the exercise
of one type of Award with respect to a number of Shares reduces the
number of Shares subject to the related Award by at least an equal
amount.
(b) Vesting
and Term. Each Agreement shall set forth the period until
the applicable Award is scheduled to vest and, if applicable,
expire (which shall not be more than ten years from the Grant
Date), and, consistent with the requirements of this Section 6(b),
the applicable vesting conditions and any applicable performance
period. Awards that vest based solely on the satisfaction by the
Participant of service-based vesting conditions shall be subject to
a vesting period of not less than one year from the applicable
Grant Date (during which no portion of the award may be scheduled
to vest), and Awards whose grant or vesting is subject to the
satisfaction of performance goals over a performance period shall
be subject to a performance period of not less than one year. The
foregoing minimum vesting and performance periods will not,
however, apply in connection with: (i) a Change in Control as
provided in Section 12(b)(2), 12(b)(4) or 12(c), (ii) a
termination of Service due to death or Disability, (iii) a
Substitute Award that does not reduce the vesting period of the
award being replaced, (iv) Awards made to Non-Employee Directors in
payment of or exchange for other compensation already earned and
payable, and (v) outstanding, exercised and settled Awards
involving an aggregate number of Shares not in excess of 5% of the
Plan’s share reserve specified in Section 4(a). For
purposes of Awards to Non-Employee Directors, a vesting period will
be deemed to be one year if it runs from the date of one annual
meeting of the Company’s shareholders to the date of the next
annual meeting of the Company’s shareholders. Unless the
Committee provides otherwise, the vesting of Awards granted
hereunder will be suspended during any unpaid leave of
absence.
(c) Transferability. Except as
provided in this Section 6(c), (i) during the lifetime of a
Participant, only the Participant or the Participant’s
guardian or legal representative may exercise an Option or SAR, or
receive payment with respect to any other Award; and (ii) no Award
may be sold, assigned, transferred, exchanged or encumbered,
voluntarily or involuntarily, other than by will or the laws of
descent and distribution. Any attempted transfer in violation of
this Section 6(c) shall be of no effect. The Committee may,
however, provide in an Agreement or otherwise that an Award (other
than an Incentive Stock Option) may be transferred pursuant to a
domestic relations order or may be transferable by gift to any
“family member” (as defined in General Instruction
A.1(a)(5) to Form S-8 under the Securities Act of 1933) of the
Participant. Any Award held by a transferee shall continue to be
subject to the same terms and conditions that were applicable to
that Award immediately before the transfer thereof. For purposes of
any provision of the Plan relating to notice to a Participant or to
acceleration or termination of an Award upon the death or
termination of Service of a Participant, the references to
“Participant” shall mean the original grantee of an
Award and not any transferee.
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(d) Termination of Service. Unless
otherwise provided in an applicable Agreement or another
then-effective written agreement between a Participant and the
Company, and subject to Section 12 of this Plan, if a
Participant’s Service with the Company and all of its
Affiliates terminates, the following provisions shall apply (in all
cases subject to the scheduled expiration of an Option or SAR
Award, as applicable):
(1) Upon termination of
Service for Cause, all unexercised Option and SAR Awards and all
unvested portions of any other outstanding Awards shall be
immediately forfeited without consideration.
(2) Upon termination of
Service for any other reason, all unvested and unexercisable
portions of any outstanding Awards shall be immediately forfeited
without consideration.
(3) Upon termination of
Service for any reason other than Cause, death or Disability, the
currently vested and exercisable portions of Option and SAR Awards
may be exercised for a period of three months after the date of
such termination. However, if a Participant thereafter dies during
such three-month period, the vested and exercisable portions of the
Option and SAR Awards may be exercised for a period of one year
after the date of such termination.
(4) Upon termination of
Service due to death or Disability, the currently vested and
exercisable portions of Option and SAR Awards may be exercised for
a period of one year after the date of such
termination.
(e) Rights as Shareholder. No
Participant shall have any rights as a shareholder with respect to
any Shares covered by an Award unless and until the date the
Participant becomes the holder of record of the Shares, if any, to
which the Award relates.
(f) Performance-Based Awards. Any
Award may be granted as a performance-based Award if the Committee
establishes one or more measures of corporate, business unit or
individual performance which must be attained, and the performance
period over which the specified performance is to be attained, as a
condition to the grant, vesting, exercisability, lapse of
restrictions and/or settlement in cash or Shares of such Award. In
connection with any such Award, the Committee shall determine the
extent to which performance measures have been attained and other
applicable terms and conditions have been satisfied, and the degree
to which the grant, vesting, exercisability, lapse of restrictions
and/or settlement of such Award has been earned. The Committee
shall also have the authority to provide, in an Agreement or
otherwise, for the modification of a performance period and/or
adjustments to or waivers of the achievement of performance goals
under specified circumstances such as (i) the occurrence of events
that are unusual in nature or infrequently occurring, such as a
Change in Control, an equity restructuring (as described in Section
12(a)), acquisitions, divestitures, restructuring activities,
recapitalizations, or asset write-downs, (ii) a change in
applicable tax laws or accounting principles, or (iii) the
Participant’s death or Disability.
(g) Dividends
and Dividend Equivalents. No dividends, dividend equivalents
or distributions will be paid with respect to Shares subject to an
Option or SAR Award. Any dividends or
distributions payable with respect to Shares that are subject to
the unvested portion of a Restricted Stock Award will be subject to
the same restrictions and risk of forfeiture as the Shares to which
such dividends or distributions relate. In its discretion,
the Committee may provide in an Award Agreement for a Stock Unit
Award or an Other Stock-Based Award that the Participant will be
entitled to receive dividend equivalents, based on dividends
actually declared and paid on outstanding Shares, on the units or
other Share equivalents subject to the Stock Unit Award or Other
Stock-Based Award, and such dividend equivalents will be subject to the same restrictions and risk
of forfeiture as the units or other Share equivalents
to which such dividend equivalents
relate. The additional terms of any such dividend
equivalents will be as set forth in the applicable Agreement,
including the time and form of payment and whether such dividend
equivalents will be credited with interest or deemed to be
reinvested in additional units or Share equivalents. Any Shares
issued or issuable during the term of this Plan as the result of
the reinvestment of dividends or the deemed reinvestment of
dividend equivalents in connection with an Award or a Prior Plan
Award shall be counted against, and replenish upon any subsequent
forfeiture, the Plan’s share reserve as provided in Section
4.
7. Stock
Option Awards.
(a) Type
and Exercise Price. The Agreement pursuant to which an
Option Award is granted shall specify whether the Option is an
Incentive Stock Option or a Non-Qualified Stock Option. The
exercise price at which each Share subject to an Option Award may
be purchased shall be determined by the Committee and set forth in
the
7
Agreement, and
shall not be less than the Fair Market Value of a Share on the
Grant Date, except in the case of Substitute Awards (to the extent
consistent with Code Section 409A and, in the case of
Incentive Stock Options, Code Section 424).
(b) Payment of Exercise Price. The
purchase price of the Shares with respect to which an Option Award
is exercised shall be payable in full at the time of exercise. The
purchase price may be paid in cash or in such other manner as the
Committee may permit, including by payment under a broker-assisted
sale and remittance program, by withholding Shares otherwise
issuable to the Participant upon exercise of the Option or by
delivery to the Company of Shares (by actual delivery or
attestation) already owned by the Participant (in either case, such
Shares having a Fair Market Value as of the date the Option is
exercised equal to the purchase price of the Shares being
purchased).
(c) Exercisability
and Expiration. Each Option Award shall be exercisable in
whole or in part on the terms provided in the Agreement. No Option
Award shall be exercisable at any time after its scheduled
expiration. When an Option Award is no longer exercisable, it shall
be deemed to have terminated.
(d) Incentive Stock
Options.
(1) An Option Award
will constitute an Incentive Stock Option Award only if the
Participant receiving the Option Award is an Employee, and only to
the extent that (i) it is so designated in the applicable Agreement
and (ii) the aggregate Fair Market Value (determined as of the
Option Award’s Grant Date) of the Shares with respect to
which Incentive Stock Option Awards held by the Participant first
become exercisable in any calendar year (under the Plan and all
other plans of the Company and its Affiliates) does not exceed
$100,000 or such other amount specified by the Code. To the extent
an Option Award granted to a Participant exceeds this limit, the
Option Award shall be treated as a Non-Qualified Stock Option
Award. The maximum number of Shares that may be issued upon the
exercise of Incentive Stock Option Awards under the Plan shall be
100,000, subject to adjustment as provided in Section
12(a).
(2) No Participant may
receive an Incentive Stock Option Award under the Plan if,
immediately after the grant of such Award, the Participant would
own (after application of the rules contained in Code Section
424(d)) Shares possessing more than 10% of the total combined
Voting Power of all classes of stock of the Company or an
Affiliate, unless (i) the per Share exercise price for such Award
is at least 110% of the Fair Market Value of a Share on the Grant
Date and (ii) such Award will expire no later than five years after
its Grant Date.
(3) For purposes of
continued Service by a Participant who has been granted an
Incentive Stock Option Award, no approved leave of absence may
exceed three months unless reemployment upon expiration of such
leave is provided by statute or contract. If reemployment is not so
provided, then on the date six months following the first day of
such leave, any Incentive Stock Option held by the Participant
shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Non-Qualified Stock
Option.
(4) If an Incentive
Stock Option Award is exercised after the expiration of the
exercise periods that apply for purposes of Code Section 422, such
Option shall thereafter be treated as a Non-Qualified Stock
Option.
(5) The Agreement
covering an Incentive Stock Option Award shall contain such other
terms and provisions that the Committee determines necessary to
qualify the Option Award as an Incentive Stock Option
Award.
8. Stock
Appreciation Right Awards.
(a) Nature of Award. An Award of
Stock Appreciation Rights shall be subject to such terms and
conditions as are determined by the Committee, and shall provide a
Participant the right to receive upon exercise of the SAR Award all
or a portion of the excess of (i) the Fair Market Value as of the
date of exercise of the SAR Award of the number of Shares as to
which the SAR Award is being exercised, over (ii) the aggregate
exercise price for such number of Shares. The per Share exercise
price for any SAR Award shall be determined by the Committee and
set forth in the applicable Agreement, and shall not be less than
the Fair Market Value of a Share on the Grant Date, except in the
case of Substitute Awards (to the extent consistent with Code
Section 409A).
8
(b) Exercise
of SAR. Each SAR Award may be exercisable in whole or in
part at the times, on the terms and in the manner provided in the
Agreement. No SAR Award shall be exercisable at any time after its
scheduled expiration. When a SAR Award is no longer exercisable, it
shall be deemed to have terminated. Upon exercise of a SAR Award,
payment to the Participant shall be made at such time or times as
shall be provided in the Agreement in the form of cash, Shares or a
combination of cash and Shares as determined by the Committee. The
Agreement may
provide for a limitation upon the amount or percentage of the total
appreciation on which payment (whether in cash and/or Shares) may
be made in the event of the exercise of a SAR Award.
9. Restricted
Stock Awards.
(a) Vesting and Consideration.
Shares subject to a Restricted Stock Award shall be subject to
vesting and the lapse of applicable restrictions based on such
conditions or factors and occurring over such period of time as the
Committee may determine in its discretion. The Committee may
provide whether any consideration other than Services must be
received by the Company or any Affiliate as a condition precedent
to the grant of a Restricted Stock Award, and may correspondingly
provide for Company reacquisition or repurchase rights if such
additional consideration has been required and some or all of a
Restricted Stock Award does not vest.
(b) Shares Subject to Restricted Stock
Awards. Unvested Shares subject to a Restricted Stock Award
shall be evidenced by a book-entry in the name of the Participant
with the Company’s transfer agent or by one or more Stock
certificates issued in the name of the Participant. Any such Stock
certificate shall be deposited with the Company or its designee,
together with an assignment separate from the certificate, in
blank, signed by the Participant, and bear an appropriate legend
referring to the restricted nature of the Restricted Stock
evidenced thereby. Any book-entry shall be subject to comparable
restrictions and corresponding stop transfer instructions. Upon the
vesting of Shares of Restricted Stock, and the Company’s
determination that any necessary conditions precedent to the
release of vested Shares (such as satisfaction of tax withholding
obligations and compliance with applicable legal requirements) have
been satisfied, such vested Shares shall be made available to the
Participant in such manner as may be prescribed or permitted by the
Committee. Except as otherwise provided in the Plan or an
applicable Agreement, a Participant with a Restricted Stock Award
shall have all the rights of a shareholder, including the right to
vote the Shares of Restricted Stock.
10. Stock
Unit Awards.
(a) Vesting and Consideration. A
Stock Unit Award shall be subject to vesting and the lapse of
applicable restrictions based on such conditions or factors and
occurring over such period of time as the Committee may determine
in its discretion. If vesting of a Stock Unit Award is conditioned
on the achievement of specified performance goals, the extent to
which they are achieved over the specified performance period shall
determine the number of Stock Units that will be earned and
eligible to vest, which may be greater or less than the target
number of Stock Units stated in the Agreement. The Committee may
provide whether any consideration other than Services must be
received by the Company or any Affiliate as a condition precedent
to the settlement of a Stock Unit Award.
(b) Settlement
of Award. Following the vesting of a Stock Unit Award, and
the Company’s determination that any necessary conditions
precedent to the settlement of the Award (such as satisfaction of
tax withholding obligations and compliance with applicable legal
requirements) have been satisfied, settlement of the Award and
payment to the Participant shall be made at such time or times in
the form of cash, Shares (which may themselves be considered
Restricted Stock under the Plan) or a combination of cash and
Shares as determined by the Committee.
11. Other
Stock-Based Awards.
The Committee may from time to time grant Shares and other Awards
that are valued by reference to and/or payable in whole or in part
in Shares under the Plan. The Committee shall determine the terms
and conditions of such Awards, which shall be consistent with the
terms and purposes of the Plan. The Committee may direct the
Company to issue Shares subject to restrictive legends and/or stop
transfer instructions that are consistent with the terms and
conditions of the Award to which the Shares relate.
12. Changes
in Capitalization, Corporate Transactions, Change in
Control.
(a) Adjustments
for Changes in Capitalization. In the event of any equity
restructuring (within the meaning of FASB ASC Topic 718) that
causes the per share value of Shares to change, such as a stock
dividend, stock split, spinoff, rights offering or recapitalization
through an extraordinary dividend, the Committee shall make such
adjustments as it deems equitable and appropriate to (i) the
aggregate number and kind of Shares or other
securities
9
issued or reserved
for issuance under the Plan, (ii) the number and kind of Shares or
other securities subject to outstanding Awards, (iii) the exercise
price of outstanding Options and SARs, and (iv) any maximum
limitations prescribed by the Plan with respect to certain types of
Awards or the grants to individuals of certain types of Awards. In
the event of any other change in corporate capitalization,
including a merger, consolidation, reorganization, or partial or
complete liquidation of the Company, such equitable adjustments
described in the foregoing sentence may be made as determined to be
appropriate and equitable by the Committee to prevent dilution or
enlargement of rights of Participants. In either case, any such
adjustment shall be conclusive and binding for all purposes of the
Plan. No adjustment shall be made pursuant to this Section 12(a) in
connection with the conversion of any convertible securities of the
Company, or in a manner that would cause Incentive Stock Options to
violate Section 422(b) of the Code or cause an Award to be subject to adverse
tax consequences under Section 409A of the
Code.
(b)Corporate Transactions. The
following provisions shall apply to
outstanding Awards in the event of a Change in Control that
involves a Corporate Transaction.
(1) Continuation, Assumption or Replacement of
Awards. In the event of a Corporate Transaction, then the
surviving or successor entity (or its Parent) may continue, assume
or replace Awards outstanding as of the date of the Corporate
Transaction (with such adjustments as may be required or permitted
by Section 12(a)), and such Awards or replacements therefor shall
remain outstanding and be governed by their respective terms,
subject to Section 12(b)(4) below. A surviving or successor entity
may elect to continue, assume or replace only some Awards or
portions of Awards. For purposes of this Section 12(b)(1), an Award
shall be considered assumed or replaced if, in connection with the
Corporate Transaction and in a manner consistent with Code Section
409A (and Code Section 424 if the Award is an ISO), either (i) the
contractual obligations represented by the Award are expressly
assumed by the surviving or successor entity (or its Parent) with
appropriate adjustments to the number and type of securities
subject to the Award and the exercise price thereof that preserves
the intrinsic value of the Award existing at the time of the
Corporate Transaction, or (ii) the Participant has received a
comparable equity-based award that preserves the intrinsic value of
the Award existing at the time of the Corporate Transaction and
contains terms and conditions that are substantially similar to
those of the Award.
(2) Acceleration. If and to the extent that
outstanding Awards under the Plan are not continued, assumed or
replaced in connection with a Corporate Transaction, then (i) all
outstanding Option and SAR Awards shall become fully vested and
exercisable for such period of time prior to the effective time of
the Corporate Transaction as is deemed fair and equitable by the
Committee, and shall terminate at the effective time of the
Corporate Transaction, (ii) all outstanding Full Value Awards shall
fully vest immediately prior to the effective time of the Corporate
Transaction, and (iii) to the extent vesting of any Award is
subject to satisfaction of specified performance goals, such Award
shall be deemed “fully vested” for purposes of this
Section 12(b)(2) if the performance goals are deemed to have been
satisfied at the target level of performance and the vested portion
of the Award at that level of performance is proportionate to the
portion of the performance period that has elapsed as of the
effective time of the Corporate Transaction. The Committee shall
provide written notice of the period of accelerated exercisability
of Option and SAR Awards to all affected Participants. The exercise
of any Option or SAR Award whose exercisability is accelerated as
provided in this Section 12(b)(2) shall be conditioned upon the
consummation of the Corporate Transaction and shall be effective
only immediately before such consummation.
(3) Payment for Awards. If and to the
extent that outstanding Awards under the Plan are not continued,
assumed or replaced in connection with a Corporate Transaction,
then the Committee may provide that some or all of such outstanding
Awards shall be canceled at or immediately prior to the effective
time of the Corporate Transaction in exchange for payments to the
holders as provided in this Section 12(b)(3). The Committee will
not be required to treat all Awards similarly for purposes of this
Section 12(b)(3). The payment for any Award canceled shall be in an
amount equal to the difference, if any, between (i) the fair market
value (as determined in good faith by the Committee) of the
consideration that would otherwise be received in the Corporate
Transaction for the number of Shares subject to the Award, and (ii)
the aggregate exercise price (if any) for the Shares subject to
such Award. If the amount determined pursuant to the preceding
sentence is not a positive number with respect to any Award, such
Award may be canceled pursuant to this Section 12(b)(3) without
payment of any kind to the affected Participant. With respect to an
Award whose vesting is subject to the satisfaction of specified
performance goals, the number of Shares subject to such an Award
for purposes of this Section 12(b)(3) shall be the number of
Shares as to which the Award would have been deemed “fully
vested” for purposes of Section 12(b)(2). Payment of any
amount under this Section 12(b)(3) shall be made in such form, on
such terms and subject to such conditions as the
Committee
10
determines in its
discretion, which may or may not be the same as the form, terms and
conditions applicable to payments to the Company’s
shareholders in connection with the Corporate Transaction, and may,
in the Committee’s discretion, include subjecting such
payments to vesting conditions comparable to those of the Award
canceled, subjecting such payments to escrow or holdback terms
comparable to those imposed upon the Company’s shareholders
under the Corporate Transaction, or calculating and paying the
present value of payments that would otherwise be subject to escrow
or holdback terms.
(4) Termination After a Corporate
Transaction. If and to the extent that Awards are continued,
assumed or replaced under the circumstances described in Section
12(b)(1), and if within 12 months after the Corporate
Transaction a Participant experiences an involuntary termination of
Service for reasons other than Cause, then (i) outstanding
Option and SAR Awards issued to the Participant that are not yet
fully exercisable shall immediately become exercisable in full and
shall remain exercisable for one year following the
Participant’s termination of employment, and (ii) any Full
Value Awards that are not yet fully vested shall immediately vest
in full (with vesting in full for a performance-based award
determined as provided in Section 12(b)(2), except that the
proportionate vesting amount will be determined with respect to the
portion of the performance period during which the Participant was
a Service Provider).
(c) Other
Change in Control. In the event of a Change in Control that
does not involve a Corporate Transaction, if within 12 months after
the Change in Control a Participant experiences an involuntary
termination of Service for reasons other than Cause, then (i)
outstanding Option and SAR Awards issued to the Participant that
are not yet fully exercisable shall immediately become exercisable
in full and shall remain exercisable for one year following the
Participant’s termination of employment, (ii) subject to
clause (iii) below, any Full Value Awards that are not yet fully
vested shall immediately vest in full, and (iii) to the extent
vesting of any Award is subject to satisfaction of specified
performance goals, such Award shall be deemed “fully
vested” for purposes of this Section 12(c) if the performance
goals are deemed to have been satisfied at the target level of
performance and the vested portion of the Award at that level of
performance is proportionate to the portion of the performance
period that has occurred up to the date of such Participant’s
termination of Service.
(d) Dissolution or Liquidation.
Unless otherwise provided in an applicable Agreement, in the event
of a proposed dissolution or liquidation of the Company, the
Committee will notify each Participant as soon as practicable prior
to the effective date of such proposed transaction. An Award will
terminate immediately prior to the consummation of such proposed
action.
13. Plan
Participation and Service Provider Status. Status as a Service Provider shall not
be construed as a commitment that any Award will be made under the
Plan to that Service Provider or to eligible Service Providers
generally. Nothing in the Plan or in any Agreement or related
documents shall confer upon any Service Provider or Participant any
right to continued Service with the Company or any Affiliate, nor
shall it interfere with or limit in any way any right of the
Company or any Affiliate to terminate the person’s Service at
any time with or without Cause or change such person’s
compensation, other benefits, job responsibilities or
title.
14. Tax
Withholding. The
Company or any Affiliate, as applicable, shall have the right to
(i) withhold from any cash payment under the Plan or any other
compensation owed to a Participant an amount sufficient to cover
any required withholding taxes related to the grant, vesting,
exercise or settlement of an Award, and (ii) require a Participant
or other person receiving Shares under the Plan to pay a cash
amount sufficient to cover any required withholding taxes before
actual receipt of those Shares. In lieu of all or any part of a
cash payment from a person receiving Shares under the Plan, the
Committee may permit the Participant to satisfy all or any part of
the required tax withholding obligations (but not to exceed the
maximum individual statutory tax rate in each applicable
jurisdiction) by authorizing the Company to withhold a number of
the Shares that would otherwise be delivered to the Participant
pursuant to the Award, or by transferring to the Company Shares
already owned by the Participant, with the Shares so withheld or
delivered having a Fair Market Value on the date the taxes are
required to be withheld equal to the amount of taxes to be
withheld.
15. Effective
Date, Duration, Amendment and Termination of the
Plan.
(a) Effective Date. The Plan shall
become effective on the date it is approved by the Company’s
shareholders, which shall be considered the date of its adoption
for purposes of Treasury Regulation §1.422-2(b)(2)(i). No
Awards shall be made under the Plan prior to its effective date. If
the Company’s shareholders fail to approve the Plan by
July 31, 2019, the Plan will be of no further force or
effect.
11
(b) Duration of the Plan. The Plan
shall remain in effect until all Shares subject to it are
distributed, all Awards have expired or terminated, the Plan is
terminated pursuant to Section 15(c), or the tenth anniversary of
the effective date of the Plan, whichever occurs first (the
“Termination Date”). Awards made before the Termination
Date shall continue to be outstanding in accordance with their
terms and the terms of the Plan unless otherwise provided in the
applicable Agreements.
(c) Amendment and Termination of the
Plan. The Board may at any time terminate, suspend or amend
the Plan. The Company shall submit any amendment of the Plan to its
shareholders for approval only to the extent required by applicable
laws or regulations or the rules of any securities exchange on
which the Shares may then be listed. No termination, suspension, or
amendment of the Plan may materially impair the rights of any
Participant under a previously granted Award without the
Participant’s consent, unless such action is necessary to
comply with applicable law or stock exchange rules.
(d) Amendment of Awards. Subject to
Section 15(e), the Committee may unilaterally amend the terms of
any Agreement evidencing an Award previously granted, except that
no such amendment may materially impair the rights of any
Participant under the applicable Award without the
Participant’s consent, unless such amendment is necessary to
comply with applicable law or stock exchange rules or any
compensation recovery policy as provided in Section
16(i).
(e) No Option or SAR Repricing.
Except as provided in Section 12(a), no Option or Stock
Appreciation Right Award granted under the Plan may be (i) amended
to decrease the exercise price thereof, (ii) cancelled in
conjunction with the grant of any new Option or Stock Appreciation
Right Award with a lower exercise price, (iii) cancelled in
exchange for cash, other property or the grant of any Full Value
Award at a time when the per share exercise price of the Option or
Stock Appreciation Right Award is greater than the current Fair
Market Value of a Share, or (iv) otherwise subject to any action
that would be treated under accounting rules as a
“repricing” of such Option or Stock Appreciation Right
Award, unless such action is first approved by the Company’s
shareholders.
16. Other
Provisions.
(a) Unfunded Plan. The Plan shall
be unfunded and the Company shall not be required to segregate any
assets that may at any time be represented by Awards under the
Plan. Neither the Company, its Affiliates, the Committee, nor the
Board shall be deemed to be a trustee of any amounts to be paid
under the Plan nor shall anything contained in the Plan or any
action taken pursuant to its provisions create or be construed to
create a fiduciary relationship between the Company and/or its
Affiliates, and a Participant. To the extent any person has or
acquires a right to receive a payment in connection with an Award
under the Plan, this right shall be no greater than the right of an
unsecured general creditor of the Company.
(b) Limits of Liability. Except as
may be required by law, neither the Company nor any member of the
Board or of the Committee, nor any other person participating
(including participation pursuant to a delegation of authority
under Section 3(c) of the Plan) in any determination of any
question under the Plan, or in the interpretation, administration
or application of the Plan, shall have any liability to any party
for any action taken, or not taken, in good faith under the
Plan.
(c) Compliance with Applicable Legal
Requirements and Company Policies. No Shares distributable
pursuant to the Plan shall be issued and delivered unless and until
the issuance of the Shares complies with all applicable legal
requirements, including compliance with the provisions of
applicable state and federal securities laws, and the requirements
of any securities exchanges on which the Company’s Shares
may, at the time, be listed. During any period in which the
offering and issuance of Shares under the Plan is not registered
under federal or state securities laws, Participants shall
acknowledge that they are acquiring Shares under the Plan for
investment purposes and not for resale, and that Shares may not be
transferred except pursuant to an effective registration statement
under, or an exemption from the registration requirements of, such
securities laws. Any stock certificate or book-entry evidencing
Shares issued under the Plan that are subject to securities law
restrictions shall bear or be accompanied by an appropriate
restrictive legend or stop transfer instruction. Notwithstanding
any other provision of this Plan, the acquisition, holding or
disposition of Shares acquired pursuant to the Plan shall in all
events be subject to compliance with applicable Company policies,
including those relating to insider trading, pledging or hedging
transactions, minimum post-vesting holding periods and stock
ownership guidelines, and to forfeiture or recovery of compensation
as provided in Section 16(i).
12
(d) Other Benefit and Compensation
Programs. Payments and other benefits received by a
Participant under an Award made pursuant to the Plan shall not be
deemed a part of a Participant’s regular, recurring
compensation for purposes of the termination, indemnity or
severance pay laws of any country and shall not be included in, nor
have any effect on, the determination of benefits under any other
employee benefit plan, contract or similar arrangement provided by
the Company or an Affiliate unless expressly so provided by such
other plan, contract or arrangement, or unless the Committee
expressly determines that an Award or portion of an Award should be
included to accurately reflect competitive compensation practices
or to recognize that an Award has been made in lieu of a portion of
competitive cash compensation.
(e) Governing Law. To the extent
that federal laws do not otherwise control, the Plan and all
determinations made and actions taken pursuant to the Plan shall be
governed by the laws of the State of Minnesota without regard to
its conflicts-of-law principles and shall be construed
accordingly.
(f) Severability. If any provision
of the Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.
(g) Code Section 409A. It is
intended that (i) all Awards of Options, SARs and Restricted Stock
under the Plan will not provide for the deferral of compensation
within the meaning of Code Section 409A and thereby be exempt from
Code Section 409A, and (ii) all other Awards under the Plan will
either not provide for the deferral of compensation within the
meaning of Code Section 409A, or will comply with the requirements
of Code Section 409A, and Awards shall be structured and the Plan
administered and interpreted in accordance with this intent. The
Plan and any Agreement may be unilaterally amended by the Company
in any manner deemed necessary or advisable by the Committee or
Board in order to maintain such exemption from or compliance with
Code Section 409A, and any such amendment shall conclusively be
presumed to be necessary to comply with applicable law.
Notwithstanding anything to the contrary in the Plan or any
Agreement, with respect to any Award that constitutes a deferral of
compensation subject to Code Section 409A:
(1) If
any amount is payable under such Award upon a termination of
Service, a termination of Service will be deemed to have occurred
only at such time as the Participant has experienced a
“separation from service” as such term is defined for
purposes of Code Section 409A;
(2) If
any amount shall be payable with respect to any such Award as a
result of a Participant’s “separation from
service” at such time as the Participant is a
“specified employee” within the meaning of Code Section
409A, then no payment shall be made, except as permitted under Code
Section 409A, prior to the first business day after the
earlier of (i) the date that is six months after the
Participant’s separation from service or (ii) the
Participant’s death. Unless the Committee has adopted a
specified employee identification policy as contemplated by Code
Section 409A, specified employees will be identified in accordance
with the default provisions specified under Code
Section 409A.
None of
the Company, the Board, the Committee nor any other person involved
with the administration of this Plan shall (i) in any way be
responsible for ensuring the exemption of any Award from, or
compliance by any Award with, the requirements of Code Section
409A, (ii) have any obligation to design or administer the Plan or
Awards granted thereunder in a manner that minimizes a
Participant’s tax liabilities, including the avoidance of any
additional tax liabilities under Code Section 409A, and
(iii) shall have any liability to any Participant for any such
tax liabilities.
(h) Rule 16b-3. It is intended that
the Plan and all Awards granted pursuant to it shall be
administered by the Committee so as to permit the Plan and Awards
to comply with Exchange Act Rule 16b-3. If any provision of the
Plan or of any Award would otherwise frustrate or conflict with the
intent expressed in this Section 16(h), that provision to the
extent possible shall be interpreted and deemed amended in the
manner determined by the Committee so as to avoid the conflict. To
the extent of any remaining irreconcilable conflict with this
intent, the provision shall be deemed void as applied to
Participants subject to Section 16 of the Exchange Act to the
extent permitted by law and in the manner deemed advisable by the
Committee.
(i) Forfeiture and Compensation
Recovery.
(1) The Committee may
specify in an Agreement that the Participant’s rights,
payments, and benefits with respect to an Award will be subject to
reduction, cancellation, forfeiture or recovery by the Company upon
the occurrence of certain specified events, in addition to any
otherwise applicable vesting or
13
performance
conditions of an Award. Such events may include termination of
Service for Cause; violation of any material Company or Affiliate
policy; breach of noncompetition, non-solicitation or
confidentiality provisions that apply to the Participant; a
determination that the payment of the Award was based on an
incorrect determination that financial or other criteria were met
or other conduct by the Participant that is detrimental to the
business or reputation of the Company or its
Affiliates.
(2) Awards and any
compensation associated therewith may be made subject to
forfeiture, recovery by the Company or other action pursuant to any
compensation recovery policy adopted by the Board or the Committee
at any time, including in response to the requirements of Section
10D of the Exchange Act and any implementing rules and regulations
thereunder, or as otherwise required by law. Any Agreement may be
unilaterally amended by the Committee to comply with any such
compensation recovery policy.
14
Dates Referenced Herein and Documents Incorporated by Reference