Form 8-K INSIGNIA SYSTEMS INC/MN For: Nov 28
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
DC 20549-1004
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of
Report (Date of earliest event reported): November 28,
2016
INSIGNIA SYSTEMS, INC.
(Exact
name of registrant as specified in its chapter)
Minnesota
|
|
1-13471
|
|
41-1656308
|
(State
or other jurisdiction of incorporation)
|
|
(Commission
File Number)
|
|
(IRS Employer Identification No.)
|
8799
Brooklyn Blvd., Minneapolis, Minnesota
|
|
55445
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
Registrant’s
telephone number, including area code
(763)
392-6200
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
☐
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
☐
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
☐
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 5.02. Departure of Directors or
Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain
Officers.
On
November 28, 2016, the Board of Directors of Insignia Systems, Inc.
(the “Company”) approved an amendment to Section 7 of
the Company’s 2003 Incentive Stock Option Plan (the
“2003 Plan”) to permit equitable adjustments to
outstanding stock options in the event of an extraordinary cash
dividend. Also on November 28, 2016, the Board of Directors of the
Company approved an amendment to Section 4(c) of the
Company’s 2013 Omnibus Stock and Incentive Plan (the
“2013 Plan”) to permit equitable adjustments to
outstanding equity awards in the event of an extraordinary cash
dividend. The Board of Directors did not make any further
amendments to the 2003 Plan or 2013 Plan. The amendments to the
2003 Plan and 2013 Plan were effective immediately upon approval by
the Board of Directors.
The
descriptions of the amendments to the 2003 Plan and 2013 Plan in
this Current Report on Form 8-K are qualified by reference to the
full texts of the 2003 Plan and 2013 Plan, each as amended, filed
as Exhibits 10.1 and 10.2 hereto, respectively, which are
incorporated by reference herein.
Item 8.01. Other
Events.
On
November 28, 2016, the Company announced that its Board of
Directors declared a special dividend of $0.70 per share, payable
on January 6, 2017 to shareholders of record on December 16, 2016.
NASDAQ has established January 9, 2017 as the ex-dividend date for
the special dividend, which is the first business day following the
payment date for the special dividend, in accordance with NASDAQ
Listing Rule 11140(b)(2) due to the size of the special
dividend.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
|
|
INSIGNIA
SYSTEMS, INC.
|
|
|
|
|
|
|
|
|
|
Dated:
December 2, 2016
|
By:
|
/s/
Kristine A. Glancy
|
|
|
|
Kristine
A. Glancy
|
|
|
|
President
and Chief Executive Officer
|
|
|
|
(on
behalf of registrant)
|
|
EXHIBIT INDEX
Exhibit
Number
|
Description
|
|
|
10.1
|
|
|
|
10.2
|
Insignia Systems,
Inc. 2013 Omnibus Stock and Incentive Plan, as amended through
November 28, 2016
|
EXHIBIT 10.1
INSIGNIA SYSTEMS, INC.
2003
INCENTIVE STOCK OPTION PLAN
(As Amended through November 28, 2016)
1. Purpose
. The
purpose of this Plan is to provide a means whereby Insignia
Systems, Inc. (the “Company”), may be able, by granting
options to purchase stock in the Company, to attract, retain and
motivate capable and loyal employees, directors, consultants and
advisors of the Company and its subsidiaries, for the benefit of
the Company and its shareholders. Both incentive stock options
which qualify for favorable tax treatment under Section 422 of the
Internal Revenue Code (the “Code”), and nonqualified
stock options which do not qualify for favorable tax treatment, may
be granted under the Plan.
2. Reservation
of Shares
. A
total of 3,675,000 shares of the authorized but unissued shares of
Common Stock of the Company, par value $.01 per share, is reserved
for issue upon the exercise of options granted under the Plan. If
any option expires or terminates for any reason without having been
exercised in full, the unpurchased shares covered thereby shall
become available for additional options which may be issued to
persons eligible under the Plan so long as it remains in effect.
Shares reserved for issue as provided herein shall cease to be
reserved upon termination of the Plan.
3. Administration
. The
Plan shall be administered by the Compensation Committee of the
Board of Directors (the “Committee”). The Committee
shall be appointed by the Board of Directors and shall be comprised
solely of two or more “non-employee directors” within
the meaning of SEC Rule 16b-3. Each member of the Committee
shall also be an “outside director” within the meaning
of Code Section 162(m). The Committee shall have the full
power to construe and interpret the Plan and to establish and amend
rules and regulations for its administration. The Committee shall
determine which persons shall be granted options hereunder, the
number of shares for which each option shall be granted, the types
of options to be granted, and any limitations on the exercise of
options in addition to those imposed by this Plan. The Committee
may also waive any restrictions on the exercise of outstanding
options and approve amendments to outstanding options, provided
there is no conflict with the terms of the Plan. The Committee
shall apply such criteria as it deems appropriate in determining
the persons to whom options are granted and the number of shares to
be covered by each option.
4. Eligibility
. An
option may be granted to any employee, director, consultant or
advisor of the Company or its subsidiaries, except that no
consultant or advisor shall be granted options in connection with
the offer and sale of securities in a capital raising transaction
on behalf of the Company. The maximum number of shares for which
any person may be granted options under the Plan in any year is
limited to 100,000 shares.
5. Option
Grants To Outside Directors
. Each
outside director of the Company shall automatically be granted an
option to purchase 10,000 shares of Common Stock on the date first
appointed or elected as a director. Each outside director shall
also automatically be granted an option to purchase 5,000 shares of
Common Stock on (a) the date of each subsequent annual meeting of
the shareholders, provided the outside director is either reelected
or continues to serve as an outside director, or (b) the
anniversary of the prior year’s grant in any year in which
there is no meeting of the shareholders. In no event shall a
director receive more than one grant in any fiscal
year.
The
period within which an option granted to an outside director must
be exercised shall be the earlier of (a) ten years from the date of
grant, or (b) 90 days after the director ceases to be a director
for any reason. Options granted to outside directors shall be
immediately exercisable in full when granted.
6. Exercise
Price
. The
per share exercise price for each option shall be determined by the
Committee at the time of grant, provided that the per share
exercise price for any incentive stock option, and any option
granted to an outside director, shall be not less than the fair
market value of the Common Stock on the date the option is granted.
In making such determination, the Committee shall rely on market
quotations, if available, but if not available, upon independent
appraisals of the stock or such other information deemed
appropriate by the Committee.
7. Changes
in Present Stock
. In
the event of changes in the capital stock of the Company or in the
capital structure of the Company by reason of a recapitalization,
merger, consolidation, reorganization, stock or extraordinary cash
dividend, stock split or other change in capitalization,
appropriate adjustment may be made by the Committee, in its sole
discretion, in the number or kind of shares and the option price of
shares which are or may become subject to options granted or to be
granted hereunder or as otherwise determined by the Committee to be
equitable.
8. Exercise
of Option
.
Receipt by the Company of a written notice from an optionee,
specifying the number of shares to be purchased, and accompanied by
payment of the purchase price for such shares, shall constitute
exercise of the option as to such shares. The date of receipt by
the Company of such written notice shall be the date of exercise of
the option. The Company may accept payment from a broker and, upon
receipt of written instructions from the optionee, deliver the
purchased shares to the broker.
9. Option
Agreement Provisions
. Each
option granted under the Plan shall be evidenced by a Stock Option
Agreement executed by the Company and the optionee, and shall be
subject to the following terms and conditions, and such other terms
and conditions as may be prescribed by the Committee:
(a)
Payment
. The
full purchase price of the shares acquired upon exercise of an
option shall be paid in cash, certified or cashier’s check,
or in the form of Common Stock of the Company with a market value
equal to the option exercise price and free and clear of all liens
and encumbrances.
The
Committee in its sole discretion may also permit the
“cashless exercise” of an option. In the event of a
cashless exercise, the optionee shall surrender the option to the
Company, and the Company shall issue the optionee the number of
shares determined as follows:
X
=
Y (A-B) /A
where:
X
=
the number of
shares to be issued to the optionee.
Y
=
the number of
shares with respect to which the option is being
exercised.
A
=
the closing sale
price of the Common Stock on the date of exercise, or in the
absence thereof, the fair market value on the date of
exercise.
B
=
the option exercise
price.
(b)
Exercise Period
. The
period within which an option must be exercised shall be fixed by
the Committee, and shall not exceed ten years from the date of
grant for an incentive stock option. The Committee may provide that
an option will vest and become exercisable upon the completion of
specified periods of employment, or the attainment of specified
performance goals. To the extent exercisable, an option may be
exercised in whole or in part. Outstanding unvested options shall
become immediately exercisable in full in the event the Company is
acquired by merger, purchase of all or substantially all of the
Company’s assets, or purchase of a majority of the
outstanding stock by a single party or a group acting in
concert.
(c)
Rights of Optionee Before Exercise
. The
holder of an option shall not have the rights of a shareholder with
respect to the shares covered by his or her option until such
shares have been issued to him or her upon exercise of the
option.
(d)
No Rights to Continued Employment
.
Nothing in the Plan or in any Stock Option Agreement entered into
pursuant hereto shall be construed to confer upon any optionee any
right to continue in the employ of his or her employer or interfere
in any way with the right of his or her employer to terminate his
or her employment at any time.
(e)
Death of Optionee
. Upon
the death of an optionee, the option, or any portion thereof, may
be exercised to the extent the optionee was entitled to do so at
the time of the optionee’s death, by his or her executor or
administrator or other person entitled by law to the
optionee’s rights under the option, at any time within one
year subsequent to the date of death. The option shall
automatically expire one year after the optionee’s death to
the extent not exercised.
(f)
Disability of Optionee
. If an
optionee is an employee of the Company or its subsidiaries, and if
the optionee’s employment is terminated due to his or her
disability, the optionee may, within one year of such termination,
exercise any unexercised portion of the option to the extent he or
she was entitled to do so at the time of such termination. The
option shall automatically expire one year after such termination
to the extent not exercised.
(g)
Other Termination of Employment
. If an
optionee is an employee of the Company or its subsidiaries, and if
the optionee’s employment is terminated other than by death,
disability, or conduct which is contrary to the best interests of
his or her employer, the optionee may, within 90 days of such
termination, exercise any unexercised portion of the option to the
extent he or she was entitled to do so at the time of such
termination. The option shall automatically expire 90 days after
such termination to the extent not exercised. If the
optionee’s employment is terminated by his or her employer
for conduct which is contrary to the best interests of his or her
employer, or if the optionee violates any written nondisclosure
agreement with his or her employer, as determined in either case by
the optionee’s employer in its sole discretion, the
unexercised portion of the optionee’s option shall
automatically expire at that time. Inter-company transfers and
approved leaves of absence for up to 90 days shall not be
considered termination of employment.
(h)
Non-transferability of Option
. No
option shall be transferable by the optionee other than by will or
by the laws of descent and distribution, and each option shall be
exercisable during the optionee’s lifetime only by the
optionee. No option may be attached or subject to levy by an
optionee’s creditors.
(i)
Date of Grant
. The
date on which the Committee approves the granting of an option
shall be considered the date on which such option is
granted.
10. Additional
Provisions for Incentive Stock Options
(a)
Dollar Limit
. Each
option granted to an employee shall constitute an incentive stock
option, provided that no more than $100,000 of such options (based
upon the fair market value of the underlying shares as of the date
of grant) can first become exercisable for any employee in any
calendar year. To the extent an option grant exceeds the $100,000
limitation, it shall constitute a non-qualified stock option. Each
Stock Option Agreement with an employee shall specify the extent to
which it is an incentive and/or non-qualified stock option. For
purposes of applying the $100,000 limitation, options granted under
this Plan and all other incentive stock option plans of the Company
and any parent or subsidiary corporation shall be
included.
(b)
Ten Percent Shareholders
. No
incentive stock option shall be granted to any employee who at the
time directly or indirectly owns more than 10 percent of the
combined voting power of all classes of stock of the Company or of
a parent or subsidiary corporation, unless the exercise price is
not less than 110 percent of the fair market value of such stock on
the date of grant, and unless the option is not exercisable more
than five years after the date of grant.
11. Restrictions
on Transfer
.
During any period in which the offering of the shares under the
Plan is not registered under federal and state securities laws, an
optionee shall agree in his or her option agreement that he or she
is acquiring shares under the Plan for investment purposes, and not
for resale, and that the shares cannot be resold or otherwise
transferred except pursuant to registration or unless, in the
opinion of counsel for the Company, registration is not
required.
Any
restrictions upon shares acquired upon exercise of an option
pursuant to the Plan and the Stock Option Agreement shall be
binding upon the optionee, and his or her heirs, executors, and
administrators. Any stock certificate issued under the Plan which
is subject to restrictions shall be endorsed so as to refer to the
restrictions on transfer imposed by the Plan, and by applicable
securities laws.
12. Withholding
of Taxes
. The
Company shall make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of any taxes that
the Company is required by any law or regulation to withhold in
connection with any option including, but not limited to,
withholding a portion of the shares issuable on exercise of an
option, or requiring the optionee to pay to the Company, in cash,
an amount sufficient to cover the Company’s withholding
obligations.
13. Duration
of Plan
. The
Plan shall terminate ten years after the date of its adoption by
the Board of Directors, unless sooner terminated by issuance of all
shares reserved for issuance hereunder, or by the Board of
Directors pursuant to Section 13. No option shall be granted under
the Plan after such termination date.
14. Termination
or Amendment of the Plan
. The
Board of Directors may at any time terminate the Plan, or make such
modifications to the Plan as it shall deem advisable. No
termination or amendment of the Plan may, without the consent of
the optionee to whom any option shall previously have been granted,
adversely affect the rights of such optionee under such
option.
15. Shareholder
Approval
. The
Board of Directors shall submit the Plan to the shareholders for
their approval within 12 months of the date of its adoption by the
Board. Options granted prior to such approval are contingent on
receipt of such approval, and shall automatically lapse if such
approval is not granted. The Board shall also submit any amendments
to the shareholders for approval if required by applicable law or
regulation.
16. Interpretation
. The
Plan shall be interpreted in accordance with Minnesota
law.
EXHIBIT 10.2
INSIGNIA SYSTEMS, INC.
2013
OMNIBUS STOCK AND INCENTIVE PLAN
(As Amended through November 28, 2016)
Section
1. Purpose
The
purpose of the Plan is to attract, retain and motivate capable and
loyal employees, officers, consultants, advisors and directors by
offering such persons incentives to strive for the success of the
Company’s business through various stock-based compensation
arrangements, thereby aligning the interests of such persons with
the Company’s shareholders.
Section
2. Definitions
As used
in the Plan, the following terms shall have the meanings set forth
below:
(a) “Affiliate”
shall mean (i) any entity that, directly or indirectly through one
or more intermediaries, is controlled by the Company and (ii) any
entity in which the Company has a significant equity interest, in
each case as determined by the Committee.
(b) “Award”
shall mean any Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, Performance Award or Other Stock Grant
granted under the Plan.
(c) “Award
Agreement” shall mean any written agreement, contract or
other instrument or document evidencing an Award granted under the
Plan. Each Award Agreement shall be subject to the applicable terms
and conditions of the Plan and any other terms and conditions (not
inconsistent with the Plan) determined by the
Committee.
(d) “Board”
shall mean the Board of Directors of the Company.
(e) “Change in
Control” means a transaction involving any of the
following:
(i) the occurrence of
(1) any sale, lease, exchange or other transfer of all or
substantially all of the assets of the Company (in one transaction
or in a series of related transactions) to a corporation that is
not controlled by the Company, or (2) any consolidation or merger
of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which Shares would be
converted into cash, securities or other property, other than a
merger of the Company in which shareholders immediately prior to
the merger have the same proportionate ownership of stock of the
surviving corporation immediately after the merger;
(ii) the
public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section
13(d) of the Exchange Act) by the Company or any Person that such
Person has become the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined
voting power of the Company’s then outstanding
securities;
(iii) the
election to the Company’s board of directors of persons who
constitute a majority of the board of directors and who were not
nominated for election by the then-current board of directors,
including, but not limited to, the occurrence of any transaction
whereby individuals who constitute the board of directors of the
Company prior to the transaction cease for any reason to constitute
at least a majority thereof following the transaction;
or
(iv) the
approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(f) “Code”
shall mean the Internal Revenue Code of 1986, as amended from time
to time, and any regulations promulgated thereunder.
(g) “Committee”
shall mean the Compensation Committee of the Board or any other
committee of the Board designated by the Board to administer the
Plan. The Committee shall be comprised of not less than such number
of Directors as shall be required to permit Awards granted under
the Plan to qualify under Rule 16b-3 and Section 162(m), and each
member of the Committee shall be a “Non-Employee
Director.”
(h) “Company”
shall mean Insignia Systems, Inc., a Minnesota corporation,
including any subsidiaries, and any successor
corporation.
(i) “Director”
shall mean a member of the Board, including any Non-Employee
Director.
(j) “Eligible
Person” shall mean any employee, officer, consultant, advisor
or director providing services to the Company or any Affiliate who
the Committee determines to be an Eligible Person. An Eligible
Person must be a natural person.
(k) “Exchange
Act” shall mean the Securities Exchange Act of 1934, as
amended.
(l) “Fair Market
Value” means the closing price for the common stock on the
NASDAQ Stock Market (including the NASDAQ National Market System)
during a regular session trading for a single trading day as
reported for such day on www.nasdaq.com or such other source the
Committee deems reliable. The applicable trading day for
determining Fair Market Value (1) in connection with the grant of
Awards shall be the date of grant and (2) otherwise shall be as
determined by the Committee in its sole discretion. If no reported
price for the common stock exists on the NASDAQ Stock Market for
the applicable trading day, then such price shall be determined by
the Committee as follows:
(i) If the common stock
is listed for trading on one of more national securities exchanges,
or is traded on the NASDAQ Stock Market, then the price shall be
the last reported sales price on such national securities exchange
or the NASDAQ Stock Market, or if such common stock shall not have
been traded on such principal exchange on such date, the last
reported sales price on such principal exchange on the first day
prior thereto on which such common stock was so traded;
or
(ii) If
the common stock is not listed for trading on a national securities
exchange or the NASDAQ Stock Market, but is traded in the
over-the-counter market, including the NASDAQ OTC Bulletin Board,
then the price shall be the closing bid price for such common
stock, or if there is no closing bid price for such common stock on
such date, the closing bid price on the first day prior thereto on
which such price existed; or
(iii) If
neither (i) nor (ii) is applicable, by any means fair and
reasonable by the Committee in good faith in the exercise of its
reasonable discretion based upon a reasonable application of a
reasonable valuation method within the meaning of Code Section 409A
and treasury regulations or other authority promulgated thereunder,
which determination shall be final and binding on all
parties.
(m) “Incentive
Stock Option” shall mean an option granted under Section 6(a)
of the Plan that is intended to qualify as an “incentive
stock option” in accordance with the terms of Section 422 of
the Code or any successor provision.
(n) “Non-Employee
Director” shall mean any Director who is a
“non-employee director” as defined under subparagraph
(b)(3) of Rule 16b-3 and is an “outside director”
within the meaning of Section 162(m).
(o) “Non-Qualified
Stock Option” shall mean an option granted under Section 6(a)
of the Plan that is not an Incentive Stock Option.
(p) “Option”
shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
(q) “Other Stock
Grant” shall mean any right granted under Section 6(e) of the
Plan.
(r) “Participant”
shall mean an Eligible Person designated to be granted an Award
under the Plan.
(s) “Performance
Award” shall mean any right granted under Section 6(d) of the
Plan.
(t) “Performance
Goal” shall mean one or more of the following performance
goals, either individually, alternatively or in any combination,
applied on a corporate, subsidiary or business unit basis: revenue,
cash flow, gross profit, earnings before interest and taxes,
earnings before interest, taxes, depreciation and amortization, and
net earnings, earnings per share, margins (including one or more of
gross, operating and net income margins), returns (including one or
more of return on assets, equity, investment, capital and revenue
and total shareholder return), stock price, working capital, market
share, cost reductions, customer satisfaction, completion of key
projects, and strategic plan development and implementation. Such
goals may reflect an absolute standard of entity or business unit
performance or a relative comparison to the performance of a peer
group of entities or other external measure of the selected
performance criteria. Pursuant to rules and conditions adopted by
the Committee on or before the 90th day of the applicable
performance period for which Performance Goals are established, the
Committee may appropriately adjust any evaluation of performance
under such goals to exclude the effect of certain events, including
any of the following events: asset write-downs; litigation or claim
judgments or settlements; changes in tax law, accounting principles
or other such laws or provisions affecting reported results;
severance, contract termination and other costs related to exiting
certain business activities; and gains or losses from the
disposition of businesses or assets or from the early
extinguishment of debt.
(u) “Person”
shall mean any individual or entity, including a corporation,
partnership, limited liability company, association, joint venture
or trust.
(v) “Plan”
shall mean the Insignia Systems, Inc. 2013 Omnibus Stock and
Incentive Plan, as amended from time to time, the provisions of
which are set forth herein.
(w) “Restricted
Stock” shall mean any Share granted under Section 6(c) of the
Plan.
(x) “Restricted
Stock Unit” shall mean any unit granted under Section 6(c) of
the Plan evidencing the right to receive a Share (or a cash payment
equal to the Fair Market Value of a Share) at some future
date.
(y) “Rule
16b-3” shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Exchange Act, or any successor
rule or regulation.
(z) “Section
162(m)” shall mean Section 162(m) of the Code and the
applicable Treasury Regulations promulgated
thereunder.
(aa) “Share”
or “Shares” shall mean a share or shares of common
stock, $.01 par value per share, of the Company or such other
securities or property as may become subject to Awards pursuant to
an adjustment made under Section 4(c) of the Plan.
(bb) “Specified
Employee” shall mean a specified employee as defined in
Section 409A(a)(2)(B) of the Code.
(cc) “Stock
Appreciation Right” shall mean any right granted under
Section 6(b) of the Plan.
Section
3. Administration
(a) Power and Authority of the
Committee. The Plan shall be administered by the Committee.
Subject to the express provisions of the Plan and to applicable
law, the Committee shall have full power and authority to: (i)
designate Participants; (ii) determine the type or types of Awards
to be granted to each Participant under the Plan; (iii) determine
the number of Shares to be covered by (or the method by which
payments or other rights are to be determined in connection with)
each Award; (iv) determine the terms and conditions of any Award or
Award Agreement; (v) amend the terms and conditions of any Award or
Award Agreement and accelerate the exercisability of any Option or
waive any restrictions relating to any Award; (vi) determine
whether, to what extent and under what circumstances Awards may be
exercised in cash, Shares, other securities or other Awards, or
canceled, forfeited or suspended; (vii) determine whether, to what
extent and under what circumstances cash, Shares, other securities
or other Awards and other amounts payable with respect to an Award
under the Plan shall be deferred either automatically or at the
election of the holder thereof or the Committee; (viii) interpret
and administer the Plan and any instrument or agreement, including
any Award Agreement, relating to the Plan; (ix) establish, amend,
suspend or waive such rules and regulations and appoint such agents
as it shall deem appropriate for the proper administration of the
Plan; and (x) make any other determination and take any other
action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in
the Plan, all designations, determinations, interpretations and
other decisions under or with respect to the Plan or any Award or
Award Agreement shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive
and binding upon any Eligible Person and any holder or beneficiary
of any Award.
(b) Delegation of Authority. The
Committee may delegate all or any part of its authority under this
Plan to: (i) one or more subcommittees which may consist solely of
Non-Employee Directors and (ii) persons who are not non-employee
directors for purposes of determining and administering Awards
solely to Employees who are not then subject to the reporting
requirements of Section 16 of the Exchange Act, provided, however, that the Committee
shall not delegate its authority to amend or modify the Plan
pursuant to the provisions of Section 7.
(c) Indemnification. To the full
extent permitted by law, each member and former member of the
Committee and each person to whom the Committee delegates or has
delegated authority under this Plan shall be entitled to
indemnification by the Company against and from any loss,
liability, judgment, damages, cost and reasonable expense incurred
by such member, former member or other person by reason of any
action taken, failure to act or determination made in good faith
under or with respect to this Plan.
(d) Evidence of Awards. Awards
granted under the Plan shall be evidenced by a written instrument,
an Award Agreement, that shall contain such terms, conditions,
limitations and restrictions as the Committee shall deem advisable
and are not inconsistent with the Plan.
Section
4. Shares Available for Awards
(a) Shares Available. Subject to
adjustment as provided in Section 4(c) of the Plan, the aggregate
number of Shares that may be issued under the Plan shall be
1,100,000.
(b) Accounting for Awards. For
purposes of this Section 4, if an Award entitles the holder thereof
to receive or purchase Shares, the number of Shares covered by such
Award or to which such Award relates shall be counted on the date
of grant of such Award against the aggregate number of Shares
available for granting Awards under the Plan. If an Award
terminates or is forfeited or cancelled without the issuance of any
Shares, or if any Shares covered by an Award or to which an Award
relates are not issued for any other reason, then the number of
Shares counted against the aggregate number of Shares available
under the Plan with respect to such Award, to the extent of any
such termination, forfeiture, cancellation or other event, shall
again be available for granting Awards under the Plan. If Shares of
Restricted Stock are forfeited or otherwise reacquired by the
Company prior to vesting, whether or not dividends have been paid
on such Shares, then the number of Shares counted against the
aggregate number of Shares available under the Plan with respect to
such Award of Restricted Stock, to the extent of any such
forfeiture or reacquisition by the Company, shall again be
available for granting Awards under the Plan. Shares that are
withheld in full or partial payment to the Company of the purchase
or exercise price relating to an Award or in connection with the
satisfaction of tax obligations relating to an Award (other than an
Incentive Stock Option) shall again be available for granting
Awards under the Plan. Any previously issued Shares that are used
by a Participant as full or partial payment to the Company of the
purchase or exercise price relating to an Award or in connection
with the satisfaction of tax obligations relating to an Award shall
again be available for granting Awards under the Plan.
(c) Adjustments. If a Participant
exercises or receives all or any portion of an Award subsequent to
any change in the number of outstanding common stock or in the
capital structure of the Company occurring by reason of any stock
or extraordinary cash dividend, stock split, reverse stock split,
reclassification, combination, exchange of common stock or other
similar recapitalization of the Company, there shall be an
appropriate adjustment to the number of shares of common stock
underlying the Award, where applicable, to the per unit exercise
price of the Award and to other consideration subject to such
Awards to the extent necessary to preserve the economic intent of
such Award or as otherwise deemed equitable by the Committee. No
adjustment shall be made under this Section upon the issuance by
the Company of any warrants, rights or options to acquire
additional common stock or of securities convertible into common
stock unless such warrants, rights, options or convertible
securities are issued to all shareholders of the Company on a
proportionate basis.
(d) Award Limitations Under the
Plan.
(i) Section 162(m) Limitation for Certain Types of
Awards. No Eligible Person may be granted Options, Stock
Appreciation Rights or any other Award or Awards under the Plan,
the value of which Award or Awards is based solely on an increase
in the value of the Shares after the date of grant of such Award or
Awards, for more than 500,000 Shares (subject to adjustment as
provided in Section 4(c) of the Plan) in the aggregate in any
taxable year.
(ii) Section
162(m) Limitation for Performance Awards. If a Participant
is a “covered employee” as defined under Section 162(m)
(a “Covered Employee”) for any taxable year of the
Participant in which a Performance Award (or portion thereof) is
payable to the Participant, the maximum amount payable in the
aggregate to the Participant during that year pursuant to all
Performance Awards, shall be $1,000,000 in value, whether payable
in cash, Shares or other property; and such amount shall be
increased annually (as of each January 1st after the effective
date of the Plan) at a fixed percentage rate of 5% (the
“Annual Performance Award Limit”). The Annual
Performance Award Limit does not apply to any Award subject to the
limitation contained in Section 4(d)(i) of the Plan. Further, the
Annual Performance Award Limit applies only to Performance Awards
granted under this Plan. Any limitations on awards granted to the
Participant under any other executive incentive plan maintained by
the Company (a “Non-Plan Award”) will be governed
solely by the terms of such other plan; provided, however, that, if
any amount is payable to the Participant during a given year under
a Non-Plan Award that is subject to Code Section 409A, and the
terms of the Non-Plan Award permit or require the Company or any
Affiliate (or its delegate) to delay beyond that year the payment
of any portion of such Non-Plan Award to comply with Section
162(m), the Company shall cause payment of such portion to be
delayed for that purpose.
If the
Committee reasonably anticipates, on or before any date on which a
Performance Award (or portion thereof) is payable to a Participant,
that the Participant will be a Covered Employee for the taxable
year in which that amount is payable, the Committee will apply the
Annual Performance Award Limit to that amount and any other
Performance Award amount otherwise payable to the Participant
during that year; provided, however, that if the Committee
determines at any later time during the year that the Participant
is not a Covered Employee for that year, due to a termination of
employment or for any other reason, the Committee will direct
payment to the Participant of any portion of a Performance Award or
Performance Awards that would have been payable during that year or
any prior year, but was deferred to comply with the Annual
Performance Award Limit, as set forth in this Section 4(d)(ii); and
such payment of deferred Performance Award amounts shall be made no
later than the last day of the Participant’s first taxable
year for which the Participant is not a Covered Employee, unless
that payment is delayed beyond that year under Section 7(b) of this
Plan, to the extent permitted by or as required to comply with Code
Section 409A.
(iii) Plan
Limitation on Restricted Stock, Restricted Stock Units and Other
Stock Grants. No more than 500,000 Shares, subject to
adjustment as provided in Section 4(c) of the Plan, shall be
available under the Plan for issuance pursuant to grants of
Restricted Stock, Restricted Stock Units and Other Stock Grants;
provided, however, that if any Awards of Restricted Stock Units
terminate or are forfeited or cancelled without the issuance of any
Shares or if Shares of Restricted Stock are forfeited or otherwise
reacquired by the Company prior to vesting, whether or not
dividends have been paid on such Shares, then the Shares subject to
such termination, forfeiture, cancellation or reacquisition by the
Company shall again be available for grants of Restricted Stock,
Restricted Stock Units and Other Stock Grants for purposes of this
limitation on grants of such Awards.
(iv) Limitation
on Awards Granted to Non-Employee Directors. Directors who
are not also employees of the Company or an Affiliate may not be
granted Awards in the aggregate for more than 25% of the Shares
available for Awards under the Plan, subject to adjustment as
provided in Section 4(c) of the Plan.
(v) Limitation on Incentive Stock Options.
The number of Shares available for granting Incentive Stock Options
under the Plan shall not exceed 5,000,000, subject to adjustment as
provided in Section 4(c) of the Plan and subject to the provisions
of Section 422 or 424 of the Code or any successor
provision.
Section
5. Eligibility
Any
Eligible Person shall be eligible to be designated a Participant,
so long as: (a) Awards are not made to such Persons in connection
with the offer and sale of the Company’s securities in a
capital-raising transaction, and (b) such Persons do not directly
or indirectly promote or maintain a market for the Company’s
securities. In determining which Eligible Persons shall receive an
Award and the terms of any Award, the Committee may take into
account the nature of the services rendered by the respective
Eligible Persons, their present and potential contributions to the
success of the Company or such other factors as the Committee, in
its discretion, shall deem relevant. Notwithstanding the foregoing,
an Incentive Stock Option may only be granted to full-time or
part-time employees (which term as used herein includes, without
limitation, officers and Directors who are also employees), and an
Incentive Stock Option shall not be granted to an employee of an
Affiliate unless such Affiliate is also a “subsidiary
corporation” of the Company within the meaning of Section
424(f) of the Code or any successor provision.
Section
6. Awards
(a) Options. The Committee is
hereby authorized to grant Options to Eligible Persons with the
following terms and conditions and with such additional terms and
conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) Exercise Price. The purchase price per
Share purchasable under an Option shall be determined by the
Committee; provided, however, that such purchase price shall not be
less than 100% of the Fair Market Value of a Share on the date of
grant of such Option.
(ii) Option
Term; Vesting. The term of each Option shall be fixed by the
Committee at the time of grant, but shall not be longer than 10
years (except as provided in Section 6(a)(iv)) from the date of
grant. In addition, the Committee may adopt a policy regarding
standard vesting terms for Option grants, or if one is not adopted
or inapplicable, vesting terms shall be fixed by the Committee at
the time of grant.
(iii) Time
and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in
part and the method or methods by which, and the form or forms
(which may include, without limitation, cash, or cashless exercise,
having a Fair Market Value on the exercise date equal to the
applicable exercise price) in which, payment of the exercise price
with respect thereto may be made or deemed to have been made.
Unless otherwise provided in the agreement evidencing the Option,
any Non-Qualified Option may be exercised by instructing the
Company to withhold from the Shares issuable upon exercise of the
Option Shares in payment of all or any part of the exercise price
and/or any related withholding obligations consistent with Section
8, which Shares shall be valued for this purpose at their Fair
Market Value or in such other manner as may be authorized from time
to time by the Committee.
(iv) Restrictions.
In addition to the foregoing provisions of this Section 6, Options
that are intended to constitute Incentive Stock Options shall be
subject to the following additional provisions of this Section
6(a)(iv).
(A) Eligible
Participants. Incentive Stock Options may be granted only to
persons who are employees of the Company or an
Affiliate.
(B) Limit on
Exercisability. The aggregate Fair Market Value (determined
at the time the Option is granted) of the shares of Common Stock
with respect to which Incentive Stock Options are exercisable by
the Participant for the first time during any calendar year, under
this Plan or any other plan of the Company or any Affiliate, shall
not exceed $100,000. To the extent an Incentive Stock Option
exceeds this $100,000 limit, the portion of the Incentive Stock
Option in excess of such limit shall be deemed a Non-Statutory
Option.
(C) Limit on
Term. Subject to the provisions of Section 6(a)(iv)(D), an
Incentive Stock Option shall not be exercisable more than ten (10)
years after the date on which it is granted.
(D) Restrictions for
Certain Shareholders. The purchase price of shares of common
stock that are subject to an Incentive Stock Option granted to an
employee of the Company or any Affiliate who, at the time such
Option is granted, owns 10% or more of the total combined voting
power of all classes of stock of the Company or of any Affiliate,
shall not be less than 110% of the Fair Market Value of such shares
on the date such Option is granted, and such Option may not be
exercisable more than five (5) years after the date on which it is
granted. For the purposes of this subparagraph, the rules of
Section 424(d) of the Code shall apply in determining the stock
ownership of any employee of the Company or any
Affiliate.
(v) Payment of Exercise Price. The exercise
price for Shares purchased under an Option shall be paid in full to
the Company by delivery of consideration equal to the product of
the Option exercise price and the number of Shares purchased. Such
consideration must be paid before the Company will issue the Shares
being purchased and must be in a form or a combination of forms
acceptable to the Committee for that purchase, which forms may
include: (a) cash; (b) check or wire transfer; (c) tendering Shares
already owned by the Participant, provided that the Shares have
been held for the minimum period required by applicable accounting
rules to avoid a charge to the Company’s earnings for
financial reporting purposes or were not acquired from the Company
as compensation; (d) to the extent permitted by applicable law,
delivery of a properly executed exercise notice, together with
irrevocable instructions to a brokerage firm designated by the
Company to deliver promptly to the Company the aggregate amount of
sale or loan proceeds to pay the Option exercise price and any
withholding tax obligations that may arise in connection with the
exercise, all in accordance with the regulations of the Federal
Reserve Board; or (e) such other consideration as the Committee may
permit in its sole discretion.
(vi) Cashless
Exercise. The Committee, in its sole discretion, may also
permit the “cashless exercise” of an Option. In the
event of a cashless exercise, the Participant shall surrender the
Option to the Company, and the Company shall issue the Participant
the number of Shares determined as follows:
X
=
Y (A-B) /A
where:
X
=
the number of
Shares to be issued to the Participant.
Y
=
the number of
Shares with respect to which the Option is being
exercised.
A
=
the Fair Market
Value on the date of exercise.
B
=
the Option exercise
price.
(b) Stock Appreciation Rights. The
Committee is hereby authorized to grant Stock Appreciation Rights
to Eligible Persons subject to the terms of the Plan and any
applicable Award Agreement. A Stock Appreciation Right granted
under the Plan shall confer on the holder thereof a right to
receive upon exercise thereof the excess of (i) the Fair Market
Value of one Share on the date of exercise (or, if the Committee
shall so determine, at any time during a specified period before or
after the date of exercise) over (ii) the grant price of the Stock
Appreciation Right as determined by the Committee, which grant
price shall not be less than 100% of the Fair Market Value of one
Share on the date of grant of the Stock Appreciation Right. Subject
to the terms of the Plan, the grant price, term, methods of
exercise, dates of exercise, methods of settlement and any other
terms and conditions (including conditions or restrictions on the
exercise thereof) of any Stock Appreciation Right shall be as
determined by the Committee.
(c) Restricted Stock and Restricted Stock
Units. The Committee is hereby authorized to grant
Restricted Stock and Restricted Stock Units to Eligible Persons
with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the
Plan as the Committee shall determine:
(i) Restrictions. Shares of Restricted
Stock and Restricted Stock Units shall be subject to such
restrictions as the Committee may impose (including, without
limitation, any limitation on the right to vote a Share of
Restricted Stock or the right to receive any dividend or other
right or property with respect thereto), which restrictions may
lapse separately or in combination at such time or times, in such
installments or otherwise as the Committee may deem appropriate.
The Committee may adopt a policy regarding standard vesting terms
for Restricted Stock and Restricted Stock Units grants, or if one
is not adopted or inapplicable, vesting terms shall be fixed by the
Committee at the time of grant. In addition, the Committee may
permit acceleration of vesting of such Awards in the event of the
Participant’s death, disability or retirement or a Change in
Control of the Company.
(ii) Issuance
and Delivery of Shares. Any Restricted Stock granted under
the Plan shall be issued at the time such Awards are granted and
may be evidenced in such manner as the Committee may deem
appropriate, which shall be, unless otherwise required by law or
the Award Agreement by book-entry registration, but may be by
issuance of a stock certificate or certificates, which certificate
or certificates shall be held by the Company. Such certificate or
certificates shall be registered in the name of the Participant and
shall bear an appropriate legend referring to the restrictions
applicable to such Restricted Stock. Shares representing Restricted
Stock that is no longer subject to restrictions shall be delivered
to the Participant promptly after the applicable restrictions lapse
or are waived. In the case of Restricted Stock Units, no Shares
shall be issued at the time such Awards are granted. Upon the lapse
or waiver of restrictions and the restricted period relating to
Restricted Stock Units evidencing the right to receive Shares, such
Shares shall be issued and delivered to the holder of the
Restricted Stock Units.
(iii) Forfeiture.
Except as otherwise determined by the Committee, upon a
Participant’s termination of employment or resignation or
removal as a Director (in either case, as determined under criteria
established by the Committee) during the applicable restriction
period, all Shares of Restricted Stock and Restricted Stock Units
held by the Participant at such time subject to restriction shall
be forfeited and reacquired by the Company; provided, however, that
the Committee may, when it finds that a waiver would be in the best
interest of the Company, waive in whole or in part any or all
remaining restrictions with respect to Shares of Restricted Stock
or Restricted Stock Units.
(iv) Except
as otherwise provided in Section 6(f)(viii), any Award Agreement
granting Restricted Stock Units shall contain provisions that are
intended to allow the Restricted Stock Units to satisfy the
requirements of (or be exempt from) Code Section 409A and any
applicable provisions of Section 6(f)(viii) of this
Plan.
(d) Performance Awards. The
Committee is hereby authorized to grant to Eligible Persons
Performance Awards which are intended to be “qualified
performance-based compensation” within the meaning of Section
162(m). A Performance Award granted under the Plan may be payable
in cash or in Shares (including, without limitation, Restricted
Stock). Performance Awards shall, to the extent required by Section
162(m), be conditioned solely on the achievement of one or more
objective Performance Goals, and such Performance Goals shall be
established by the Committee within the time period prescribed by,
and shall otherwise comply with the requirements of, Section
162(m). Subject to the terms of the Plan and any applicable Award
Agreement, the Performance Goals to be achieved during any
performance period, the length of any performance period, the
amount of any Performance Award granted, the amount of any payment
or transfer to be made pursuant to any Performance Award and any
other terms and conditions of any Performance Award shall be
determined by the Committee. The Committee shall also certify in
writing that such Performance Goals have been met prior to payment
of the Performance Awards to the extent required by Section 162(m).
Except as otherwise provided in Section 6(f)(viii), any Award
Agreement granting a Performance Award shall contain provisions
that are intended to allow the Performance Award to satisfy the
requirements of (or be exempt from) Code Section 409A and any
applicable provisions of Section 6(f)(viii) of this
Plan.
(e) Other Stock Grants. The
Committee is hereby authorized, subject to the terms of the Plan,
to grant to Eligible Persons Shares without restrictions thereon as
are deemed by the Committee to be consistent with the purpose of
the Plan. Subject to the terms of the Plan and any applicable Award
Agreement, such Other Stock Grant may have such terms and
conditions as the Committee shall determine.
(f) General.
(i) Consideration for Awards. Awards may be
granted for no cash consideration, or for any cash or other
consideration as determined by the Committee or required by
applicable law.
(ii) Awards
May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition
to, in tandem with or in substitution for any other Award or any
award granted under any other plan of the Company or any Affiliate.
Awards granted in addition to or in tandem with other Awards or in
addition to or in tandem with awards granted under any such other
plan of the Company or any Affiliate may be granted either at the
same time as or at a different time from the grant of such other
Awards or awards.
(iii) Forms
of Payment under Awards. Subject to the terms of the Plan,
including Section 6(a)(v), and of any applicable Award Agreement,
payments or transfers to be made by the Company or an Affiliate
upon the grant, exercise or payment of an Award shall be made in
such form or forms as the Committee shall determine, including,
without limitation: cash, Shares, other securities, other Awards or
any combination thereof; and shall be made in a single payment, in
each case in accordance with rules and procedures established by
the Committee. Except as otherwise provided in Section 6(f)(viii),
any change in the timing of payment of an Award shall satisfy the
requirements of (or be exempt from) Code Section 409A and any
applicable provisions of Section 6(f)(viii) of this
Plan.
(iv) Limits
on Transfer of Awards. Except as otherwise provided by the
Committee or the terms of this Plan, no Award (other than Shares
that are not Restricted Stock), and no right under any such Award,
shall be transferable by a Participant either (A) for any
consideration or (B) without consideration other than by will or by
the laws of descent and distribution. The Committee may establish
procedures as it deems appropriate for a Participant to designate a
Person or Persons, as beneficiary or beneficiaries, to exercise the
rights of the Participant and receive any property distributable
with respect to any Award in the event of the Participant’s
death. Each Option, Stock Appreciation Right or right under any
other Award shall be exercisable during the Participant’s
lifetime only by the Participant (except as provided herein or in
an Award Agreement or amendment thereto relating to a Non-Qualified
Stock Option) or, if permissible under applicable law, by the
Participant’s guardian or legal representative. No Award or
right under any such Award may be pledged, alienated, attached or
otherwise encumbered, and any purported pledge, alienation,
attachment or encumbrance thereof shall be void and unenforceable
against the Company or any Affiliate; provided, however, that this
sentence shall apply to an Other Stock Grant only to the extent
provided under the terms of the Award Agreement for the Other Stock
Grant.
(v) Term of Awards. Subject to earlier
termination in accordance with the terms of the Plan and the
instrument evidencing the Award, the maximum term of an Award shall
be as established for that Award by the Committee, which shall not
be more than ten years from the date of grant, or, if not so
established, shall be ten (10) years from the date of
grant.
(vi) Restrictions;
Securities Exchange Listing. All Shares or other securities
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 Committee may deem advisable under the Plan,
applicable federal or state securities laws and regulatory
requirements, and the Committee may direct appropriate stop
transfer orders and cause other legends to be placed on the
certificates for such Shares or other securities to reflect such
restrictions. If the Shares or other securities are traded on a
securities exchange, the Company shall not be required to deliver
any Shares or other securities covered by an Award unless and until
such Shares or other securities have been and continue to be
admitted for trading on such securities exchange.
(vii) Prohibition
on Repricing. Except as provided in Section 4(c) of the
Plan, no Option or Stock Appreciation Right may be amended to
reduce its initial exercise or grant price and no Option or Stock
Appreciation Right shall be canceled, exchanged and replaced with
Options or Stock Appreciation Rights or other Awards having a lower
exercise or grant price, without the prior approval of the
shareholders of the Company.
(viii) Code
Section 409A Provisions. Notwithstanding anything in the
Plan or any Award Agreement to the contrary, to the extent that any
amount or benefit that constitutes “deferred
compensation” to a Participant under Section 409A of the Code
and applicable guidance thereunder is otherwise payable or
distributable to a Participant under the Plan or any Award
Agreement solely by reason of the occurrence of a Change in Control
or due to the Participant’s disability or separation from
service, such amount or benefit will not be payable or
distributable to the Participant by reason of such circumstance
unless the Committee determines in good faith that (A) the
circumstances giving rise to such Change in Control, disability or
separation from service meet the definition of a change in
ownership or control, disability or separation from service, as the
case may be, in Section 409A(a)(2)(A) of the Code; or (B) the
payment or distribution of such amount or benefit would be exempt
from the application of Section 409A of the Code by reason of the
short-term deferral exemption or otherwise. Any payment or
distribution that otherwise would be made to a Participant who is a
Specified Employee (as determined by the Committee in good faith)
on account of separation from service may not be made before the
date which is six (6) months after the date of the Specified
Employee’s separation from service unless the payment or
distribution is exempt from the application of Section 409A of the
Code by reason of the short-term deferral exemption or otherwise.
Notwithstanding the foregoing provisions of this Section
6(f)(viii), Award Agreements may be written or amended in a manner
that does not satisfy the requirements of Code Section 409A (or any
exemption therefrom), but only if and to the extent that the
Committee specifically provides in written resolutions that the
Award Agreement or amendment is not intended to comply with Code
Section 409A.
(ix) Book-entry
registration. Any Awards granted under the Plan may be
evidenced in such manner as the Committee may deem appropriate, but
shall, unless otherwise required or specified by the applicable
Award Agreement or applicable law, be evidenced through book-entry
registration.
(x) Death of Participant. Upon the death of
a Participant, an Award, or any portion thereof, may be exercised
to the extent the Participant was entitled to do so at the time of
the Participant’s death, by his or her executor or
administrator or other person entitled by law to the
Participant’s rights under the Award, at any time within one
year subsequent to the date of death. The Award shall automatically
expire one (1) year after the Participant’s death to the
extent not exercised.
(xi) Disability
of Participant. If a Participant is an employee of the
Company, and if the Participant’s employment is terminated
due to his or her disability, the Participant may, within one year
of such termination, exercise any unexercised portion of an Award
to the extent he or she was entitled to do so at the time of such
termination. The Award shall automatically expire one (1) year
after such termination to the extent not exercised.
(xii) Other
Termination of Employment. If a Participant is an employee
of the Company, and if the Participant’s employment is
terminated other than by death, disability, or conduct which is
contrary to the best interests of his or her employer, the
Participant may, within 90 days of such termination, exercise any
unexercised portion of an Award to the extent he or she was
entitled to do so at the time of such termination. The Award shall
automatically expire 90 days after such termination to the extent
not exercised. If the Participant’s employment is terminated
by his or her employer for conduct which is contrary to the best
interests of his or her employer, or if the Participant violates
any written nondisclosure agreement with his or her employer, as
determined in either case by the Participant’s employer in
its sole discretion, the unexercised portion of the
Participant’s Award shall automatically expire at the time of
termination. Inter-company transfers and approved leaves of absence
for up to 90 days shall not be considered termination of
employment.
Section
7. Amendment and Termination;
Adjustments
(a) Amendments to the Plan. The
Board or the Committee may amend, suspend or terminate the Plan or
any portion of the Plan at any time and in such respects as it
shall deem advisable; provided, however, that, to the extent
required by applicable law, regulation or rule, including, but not
limited to the rules and regulations of the NASDAQ Stock Market,
shareholder approval shall be required for any amendment,
suspension, or termination to the Plan.
(b) Amendments to Awards. The
Committee may waive any conditions of or rights of the Company
under any outstanding Award, prospectively or retroactively. Except
as otherwise provided by the terms of the Plan, including, without
limitation, Section 9(g), or an Award Agreement, the Committee may
not amend, alter, suspend, discontinue or terminate any outstanding
Award, prospectively or retroactively, if such action would
adversely affect the rights of the holder of such Award, without
the consent of the Participant or holder or beneficiary thereof.
The Company intends that Awards under the Plan shall satisfy the
requirements of Section 409A of the Code to avoid any adverse tax
results thereunder and the Committee shall administer and interpret
the Plan and all Award Agreements in a manner consistent with that
intent. In this regard, if any provision of the Plan or an Award
Agreement would result in adverse tax consequences under Section
409A of the Code, the Committee may amend that provision (or take
any other action reasonably necessary) to avoid any adverse tax
results and no action taken to comply with Section 409A of the Code
shall be deemed to impair or otherwise adversely affect the rights
of any holder of an Award or beneficiary thereof.
(c) Correction of Defects, Omissions and
Inconsistencies. The Committee may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or
in any Award or Award Agreement in the manner and to the extent it
shall deem desirable to implement or maintain the effectiveness of
the Plan.
Section
8. Income Tax Withholding
In
order to comply with all applicable federal, state, local or
foreign income tax laws or regulations, the Company may take such
action as it deems appropriate to ensure that all applicable
federal, state, local or foreign payroll, withholding, income or
other taxes, which are the sole and absolute responsibility of a
Participant, are withheld or collected from such Participant. In
order to assist a Participant in paying all or a portion of
applicable taxes to be withheld or collected upon exercise or
receipt of (or the lapse of restrictions relating to) an Award, the
Committee, in its discretion and subject to such additional terms
and conditions as it may adopt, may permit the Participant to
satisfy such tax obligation by (i) electing to have the Company
withhold a portion of the Shares otherwise to be delivered upon
exercise or receipt of (or the lapse of restrictions relating to)
such Award with a Fair Market Value equal to the amount of such
taxes or (ii) delivering to the Company Shares other than Shares
issuable upon exercise or receipt of (or the lapse of restrictions
relating to) such Award with a Fair Market Value equal to the
amount of such taxes.
Section
9. General Provisions
(a) No Rights to Awards. No
Eligible Person or other Person shall have any claim to be granted
any Award under the Plan, and there is no obligation for uniformity
of treatment of Eligible Persons or holders or beneficiaries of
Awards under the Plan. The terms and conditions of Awards need not
be the same with respect to any Participant or with respect to
different Participants.
(b) Award Agreements. No
Participant will have rights under an Award granted to such
Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company and, if requested by the
Company, signed by the Participant.
(c) Plan Provisions Control. In the
event that any provision of an Award Agreement conflicts with or is
inconsistent in any respect with the terms of the Plan as set forth
herein or subsequently amended, the terms of the Plan shall
control.
(d) No Rights of Shareholders.
Unless otherwise provided by the Committee or in the instrument
evidencing the Award or in any other written agreement between a
Participant and the Company, no Award shall entitle the Participant
to any voting or other right of a shareholder unless and until the
date of issuance under the Plan of the Shares that are the subject
of such Award.
(e) Issuance of Shares.
Notwithstanding any other provision of the Plan, the Company shall
have no obligation to issue or deliver any Shares under the Plan or
make any other distribution of benefits under the Plan unless, in
the opinion of the Company’s counsel, such issuance, delivery
or distribution would comply with all applicable laws (including,
without limitation, the requirements of the Securities Act of 1933,
as amended, or the laws of any state or foreign jurisdiction) and
the applicable requirements of any securities exchange or similar
entity.
The
Company shall be under no obligation to any Participant to register
for offering or resale or to qualify for exemption under the
Securities Act, or to register or qualify under the laws of any
state or foreign jurisdiction, any Shares, security or interest in
a security paid or issued under, or created by, the Plan, or to
continue in effect any such registrations or qualifications if
made. The Company may issue certificates for Shares with such
legends and subject to such restrictions on transfer and
stop-transfer instructions as counsel for the Company deems
necessary or desirable for compliance by the Company with federal,
state and foreign securities laws. The Company may also require
such other action or agreement by the Participants as may from time
to time be necessary to comply with applicable securities
laws.
As
further set forth under Section 6(f)(ix), to the extent the Plan or
any instrument evidencing an Award provides for issuance of stock
certificates to reflect the issuance of Shares, the issuance shall
be effected on a non-certificated basis, to the extent not
prohibited by applicable law or the applicable rules of any stock
exchange.
(f) No Limit on Other Compensation
Arrangements. Nothing contained in the Plan shall prevent
the Company or any Affiliate from adopting or continuing in effect
other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only
in specific cases.
(g) Change in Control.
Notwithstanding anything to the contrary set forth in the Plan,
upon any Change in Control, the Committee may, in its sole and
absolute discretion and without the need for the consent of any
Participant, take one or more of the following actions contingent
upon the occurrence of that Change in Control:
(i) cause any or all
outstanding Awards to become vested and immediately exercisable (as
applicable), in whole or in part;
(ii) cause
any outstanding Option to become fully vested and immediately
exercisable for a reasonable period in advance of the Change in
Control and, to the extent not exercised prior to that Change in
Control, cancel that Option upon closing of the Change in
Control;
(iii) cancel
any unvested Award or unvested portion thereof, with or without
consideration;
(iv) cancel
any Award in exchange for a substitute award;
(v) redeem any
Restricted Stock or Restricted Stock Unit for cash and/or other
substitute consideration with value equal to Fair Market Value of
an unrestricted Share on the date of the Change in
Control;
(vi) cancel
any Option in exchange for cash and/or other substitute
consideration with a value equal to: (A) the number of Shares
subject to that Option, multiplied by (B) the difference, if any,
between the Fair Market Value per Share on the date of the Change
in Control and the exercise price of that Option; provided, that if the Fair Market Value
per Share on the date of the Change in Control does not exceed the
exercise price of any such Option, the Committee may cancel that
Option without any payment of consideration therefor;
(vii) take
such other action as the Committee shall determine to be reasonable
under the circumstances; and/or
(viii) notwithstanding
any provision of this Section 9(g), in the case of any Award
subject to Section 409A of the Code, such Award shall vest and be
distributed only in accordance with the terms of the applicable
Award Agreement and the Committee shall only be permitted to use
discretion to the extent that such discretion would be permitted
under Section 409A of the Code.
In the
discretion of the Committee, any cash or substitute consideration
payable upon cancellation of an Award may be subjected to (i)
vesting terms substantially identical to those that applied to the
cancelled Award immediately prior to the Change in Control, or (ii)
earn-out, escrow, holdback or similar arrangements, to the extent
such arrangements are applicable to any consideration paid to
shareholders in connection with the Change in Control.
(h) No Right to Employment. The
grant of an Award shall not be construed as giving a Participant
the right to be retained as an employee of the Company or any
Affiliate, or a Director to be retained as a Director, nor will it
affect in any way the right of the Company or an Affiliate to
terminate a Participant’s employment at any time, with or
without cause. In addition, the Company or an Affiliate may at any
time dismiss a Participant from employment free from any liability
or any claim under the Plan or any Award, unless otherwise
expressly provided in the Plan or in any Award
Agreement.
(i) Successors and Assigns. All
obligations of the Company under the Plan with respect to Awards
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 the business and/or assets of the
Company.
(j) Governing Law. The validity,
construction and effect of the Plan or any Award, and any rules and
regulations relating to the Plan or any Award, shall be determined
in accordance with the internal laws, and not the law of conflicts,
of the State of Minnesota.
(k) Severability. If any provision
of the Plan or any Award is or becomes or is deemed to be invalid,
illegal or unenforceable in any jurisdiction or would disqualify
the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to
conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee,
materially altering the purpose or intent of the Plan or the Award,
such provision shall be stricken as to such jurisdiction or Award,
and the remainder of the Plan or any such Award shall remain in
full force and effect.
(l) No Trust or Fund Created.
Neither the Plan nor any Award shall create or be construed to
create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and an Eligible
Person or any other Person. To the extent that any Person acquires
a right to receive payments from the Company or any Affiliate
pursuant to an Award, such right shall be no greater than the right
of any unsecured general creditor of the Company or any
Affiliate.
(m) No Fractional Shares. No
fractional Shares shall be issued or delivered pursuant to the Plan
or any Award, and the Committee shall determine whether cash shall
be paid in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.
(n) Headings. Headings are given to
the Sections and subsections of the Plan or any Award Agreement
solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision
thereof.
(o) Code Interpretation. Each
reference in the Plan to a section of the Code will be interpreted
to include the section itself, any successor provision thereto, the
Treasury regulations thereunder (or under a successor provision),
and all applicable administrative or judicial guidance relating
thereto.
Section
10. Effective Date of the Plan
The
Plan became effective on February 26, 2013, upon its adoption by
the Board, subject to the approval of the shareholders of the
Company at the annual meeting of shareholders of the Company held
on May 22, 2013.
Section
11. Term of the Plan
The
Plan shall terminate at midnight on February 26, 2023, unless
terminated before then by the Board. Awards may be granted under
the Plan until the Plan terminates or until all Shares available
for Awards under the Plan have been purchased or acquired;
provided, however, that Incentive Stock Options may not be granted
following the 10-year anniversary of the Board’s adoption of
the Plan on February 26, 2013. The Plan shall remain in effect as
long as any Awards are outstanding.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- ADOCIA Announces Full Year 2023 Financial Results and Provides a Corporate and Financial Update
- Centurion Identifies High Quality Gold Target-Casa Berardi West Project; Acquires Additional Claims
- Press Release - Brødrene A & O Johansen A/S acquires Stockholm-based "Svenska VA-Grossisten AB"
Create E-mail Alert Related Categories
SEC FilingsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!