JOHN WILEY & SONS, INC.
2022 OMNIBUS STOCK PLAN AND LONG-TERM INCENTIVE PLAN
John Wiley & Sons, Inc. (the “Company”), a New York corporation, hereby establishes and adopts the following 2022 Omnibus Stock Plan and Long-Term Incentive Plan (the “Plan”).
1.PURPOSE OF THE PLAN
The Plan is intended to further align the interests of non-employee directors, consultants, officers and other key employees of the Company and of its Subsidiaries and Affiliates, upon whose judgment, initiative and efforts the Company depends for its growth and for the profitable conduct of its business, with the interests of the shareholders of the Company by encouraging such directors, consultants and employees to acquire or increase their proprietary interests in the Company.
2. DEFINITIONS
2.1. “Affiliate” shall mean (i) any Person that directly, or through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company or (ii) any entity in which the Company has a significant equity interest, as determined by the Committee.
2.2. “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Other Share-Based Award, Performance Award or any other right, interest or option relating to Shares or other property (including cash) granted pursuant to the provisions of the Plan.
2.3. “Award Agreement” shall mean any agreement, contract or other instrument or document evidencing any Award hereunder, whether in writing or through an electronic medium.
2.4. “Board” shall mean the board of directors of the Company.
2.5. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
2.6. “Committee” shall mean, unless otherwise determined by the Board, the Executive Compensation and Development Committee (ECDC) of the Board or a subcommittee thereof formed by the ECDC to act as the Committee hereunder. The Committee shall consist of no fewer than two Directors, all of whom is (i) a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, and (ii) an “independent director” for purpose of Securties and Exchange Commission rules and the rules of the principal U.S. national securities exchange on which the Shares are traded, to the extent required by such rules. Notwithstanding the foregoing, with respect to Awards made to Directors, all references to the Committee shall refer to Governance Committee of the Board.
2.7. “Consultant” means any consultant or other person permitted to be issued Awards hereunder pursuant to the instructions to Form S-8 under the Securities Act of 1933, as amended, who performs services for the Company or a Subsidiary.
2.8. “Director” shall mean a member of the Board who is not an employee.
2.9. “Dividend Equivalents” shall have the meaning set forth in Section 11.6.
2.10. “Effective Date” shall mean the date as of which the Plan is approved by the Company’s shareholders at a duly constituted meeting.
2.11. “Employee” shall mean any employee of the Company or any Subsidiary or Affiliate and any prospective employee conditioned upon, and effective not earlier than, such person becoming an employee of the Company or any Subsidiary.
2.12. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
2.13. “Fair Market Value” shall mean, with respect to Shares as of any date, (i) the closing price of the Shares as reported on the principal U.S. national securities exchange on which the Shares are listed and traded on such date, or, if there is no closing price on that date, then on the next date on which such a closing price is reported; (ii) if the Shares are not listed on any U.S. national securities exchange but are quoted in an inter-dealer quotation system on a last sale basis, the final ask price of the Shares reported on the inter-dealer quotation system for such date, or, if there is no such sale on such date, then on the last preceding date on which a sale was reported; or (iii) if the Shares are neither listed on a U.S. national securities exchange nor quoted on an inter-dealer quotation system on a last sale basis, the amount determined by the Committee to be the fair market value of the Shares as determined by the Committee in its sole discretion. The Fair Market Value of any property other than Shares shall mean the market value of such property determined by such methods or procedures as shall be established from time to time by the Committee.
2.14. “Incentive Stock Option” shall mean an Option which when granted is intended to qualify as an incentive stock option for purposes of Section 422 of the Code.
2.15. “Option” shall mean any right granted to a Participant under the Plan allowing such Participant to purchase Shares at such price or prices and during such period or periods as the Committee shall determine.
2.16. “Other Share-Based Award” shall have the meaning set forth in Section 8.1.
2.17. “Participant” shall mean an Employee, a Consultant or a Director who is selected by the Committee to receive an Award under the Plan.
2.18. “Performance Award” shall mean any Award of Performance Cash, Performance Shares or Performance Units granted pursuant to Article 9.
2.19. “Performance Cash” shall mean any cash incentives granted pursuant to Article 9 payable to the Participant upon the achievement of such performance goals as the Committee shall establish.
2.20. “Performance Period” shall mean the period established by the Committee during which any performance goals specified by the Committee with respect to a Performance Award are to be measured.
2.21. “Performance Share” shall mean any grant pursuant to Article 9 of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant in Shares or cash as determined by the Committee in its sole discretion, upon achievement of such performance goals as the Committee shall establish.
2.22. “Performance Unit” shall mean any grant pursuant to Article 9 of a unit valued by reference to a designated amount of cash or property other than Shares, which value may be paid to the Participant in cash or Shares as determined by the Committee in its sole discretion, upon achievement of such performance goals during the Performance Period as the Committee shall establish.
2.23. “Permitted Assignee” shall have the meaning set forth in Section 11.3.
2.24. “Person” shall mean any individual, corporation, partnership, association, limited liability company, joint-stock company, trust or unincorporated organization.
2.25. “Prior Plans” shall mean, collectively, the Company’s 2009 Key Employee Stock Plan, 2014 Key Employee Stock Plan and 2018 Director Stock Plan.
2.26. “Restricted Stock” shall mean any Share issued with the restriction that the holder may not sell, transfer, pledge or assign such Share and with such other restrictions as the Committee, in its sole discretion, may impose, which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.
2.27. “Restricted Stock Award” shall have the meaning set forth in Section 7.1.
2.28. “Restricted Stock Unit” means an Award that is valued by reference to a Share, which value may be paid to the Participant in Shares or cash as determined by the Committee in its sole discretion upon the satisfaction of vesting restrictions as the Committee may establish, which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.
2.29. “Restricted Stock Unit Award” shall have the meaning set forth in Section 7.1
2.30. “Retirement” shall mean a Participant’s retirement after attaining a minimum of age 55 with 10 or more years of continuous employment with the Company, or any Subsidiary or Affiliate.
2.31. “SEC” means the Securities and Exchange Commission.
2.32. “Shares” shall mean the shares of Class A Common Stock of the Company, par value $1.00 per share (and not the Class B Common Stock).
2.33. “Stock Appreciation Right” shall mean the right granted to a Participant pursuant to Article 6.
2.34. “Subsidiary” shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the relevant time each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.
2.35. “Substitute Awards” shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.
2.36. “Vesting Period” shall mean the period of time specified by the Committee during which vesting restrictions for an Award are applicable.
3. SHARES SUBJECT TO THE PLAN
3.1. Number of Shares. (a) Subject to adjustment as provided in Sections 3.1(b) and 11.2, a total of 6,200,000 Shares shall be authorized for Awards granted under the Plan, less one (1) Share for every one (1) Share that was subject to an award granted under a Prior Plan after July 13, 2022 and prior to the Effective Date. After the Effective Date of the Plan, no awards may be granted under any Prior Plan.
(b) If any Shares subject to an Award are forfeited or an Award expires or is settled for cash (in whole or in part), or (ii) after July 13, 2022 any Shares subject to an award under any Prior Plan are forfeited or an award under any Prior Plan expires or is settled for cash (in whole or in part), then in each such case the Shares subject to such Award or award under any Prior Plan shall, to the extent of such forfeiture, expiration or cash settlement, be added to the Shares available for Awards under the Plan, on a one-for-one basis. In the event that withholding tax liabilities arising from an Award other than an Option or Stock Appreciation Right (or, after July 13, 2022, an award other than an option or stock appreciation right under any Prior Plan) are satisfied by the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company, the Shares so tendered or withheld shall be added to the Shares available for Awards under the Plan, on a one-for-one basis. Notwithstanding anything to the contrary contained herein, the following Shares (or Shares subject to awards under a Prior Plan) shall not be added to the Shares authorized for grant under paragraph (a) of this Section: (i) Shares tendered by the Participant or withheld by the Company in payment of the purchase price of an Option, (ii) Shares tendered by the Participant or withheld by the Company to satisfy any tax withholding obligation with respect to Options or Stock Appreciation Rights, (iii) Shares subject to a Stock Appreciation Right that are not issued in connection with its stock settlement on exercise thereof, and (iv) Shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of Options.
(c) Substitute Awards shall not reduce the Shares authorized for grant under the Plan, nor shall Shares subject to a Substitute Award be added to the Shares available for Awards under the Plan as provided in paragraph (b) above. Additionally, in the event that 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 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 not reduce the Shares authorized for grant under the Plan (and Shares subject to such Awards shall not be added to the Shares available for Awards under the Plan as provided in paragraphs (b) above); provided that 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 prior to such acquisition or combination.
3.2. Character of Shares. Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares purchased in the open market or otherwise.
4. ELIGIBILITY AND ADMINISTRATION; CHANGE IN STATUS
4.1. Eligibility. Any Employee. Consultant or Director shall be eligible to be selected as a Participant.
4.2. Administration. (a) The Plan shall be administered by the Committee. The Committee shall have full power and authority, subject to the provisions of the Plan and subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board, to: (i) select the Employees, Consultants and Directors to whom Awards may from time to time be granted hereunder; (ii) determine the type or types of Awards to be granted to each Participant hereunder; (iii) determine the number of Shares (or dollar value) to be covered by each Award granted hereunder; (iv) determine the terms and conditions, not inconsistent with the provisions of the Plan, of any Award granted hereunder; (v) determine whether, to what extent and under what circumstances Awards may be settled in cash, Shares or
other property; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other property and other amounts payable with respect to an Award made under the Plan shall be deferred either automatically or at the election of the Participant (including, for Directors, under the John Wiley & Sons, Inc. Deferred Compensation Plan for Directors' 2005 & After Compensation); (vii) determine whether, to what extent and under what circumstances any Award shall be canceled or suspended; (viii) interpret and administer the Plan and any instrument or agreement entered into under or in connection with the Plan, including any Award Agreement; (ix) correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent that the Committee shall deem desirable to carry it into effect; (x) establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xi) determine whether any Award, other than an Option or Stock Appreciation Right, will have Dividend Equivalents; and (xii) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. Notwithstanding the foregoing, to the extent provided in the charter of a Committee, the Board shall have the authorities set forth in this Section 4.2(a).
(b) Decisions of the Committee with respect to Awards shall be final, conclusive and binding on all persons or entities, including the Company, any Participant, and any Subsidiary. A majority of the members of the Committee may determine its actions, including fixing the time and place of its meetings.
(c) To the extent not inconsistent with applicable law and the rules and regulations of the principal U.S. national securities exchange on which the Shares are traded, the Committee may (i) delegate to a committee of one or more directors of the Company any of the authority of the Committee under the Plan, including the right to grant, cancel or suspend Awards and (ii) authorize one or more executive officers to do one or more of the following with respect to Employees and Consultants who are not Directors or executive officers of the Company (A) designate Employees and Consultants to be recipients of Awards, (B) determine the number of Shares subject to such Awards to be received by such Employees and Consultants and (C) cancel or suspend Awards to such Employees and Consultants; provided that (x) any resolution of the Committee authorizing such officer(s) must specify the total number of Shares subject to Awards that such officer(s) may so award and (y) the Committee may not authorize any officer to designate himself or herself as the recipient of an Award.
4.3. Director Grants. The aggregate dollar value of equity-based (based on the grant date Fair Market Value of equity-based Awards) and cash compensation granted under this Plan or otherwise to any Director shall not exceed $660,000 during any calendar year for services rendered as a Director for such calendar year; provided, however, that in the calendar year in which a Director first joins the Board or during any calendar year in which a Director is serving as Chair of the Board or Lead Director, the maximum aggregate dollar value of equity-based and cash compensation granted to the Director may be up to $900,000. For the avoidance of doubt, any compensation that is deferred shall be counted toward this limit for the year in which it was first earned, and not when paid or settled (if later).
4.4. Change in Status. A Participant’s change in status between an Employee, Consultant or Director to another such status shall not be deemed to constitute a termination of employment or other service for any purpose under the Plan.
5. OPTIONS
5.1. Grant. Options may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan. Any Option shall be subject to the terms and conditions of this Article and to such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable.
5.2. Award Agreements. All Options shall be evidenced by an Award Agreement in such form and containing such terms and conditions as the Committee shall determine which are not inconsistent with the provisions of the Plan. The terms and conditions of Options need not be the same with respect to each Participant. Granting an Option pursuant to the Plan shall impose no obligation on the recipient to exercise such Option. Any individual who is granted an Option pursuant to this Article may hold more than one Option granted pursuant to the Plan at the same time.
5.3. Option Price. Other than in connection with Substitute Awards, the option price per each Share purchasable under any Option granted pursuant to this Article shall not be less than the Fair Market Value of one Share on the date of grant of such Option; provided, however, that in the case of an Incentive Stock Option granted to a Participant who, at the time of the grant, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Subsidiary, the option price per share shall be no less than 110% of the Fair Market Value of one Share on the date of grant. Other than pursuant to Section 11.2, the Committee shall not without the approval of the Company’s shareholders (a) lower the option price per Share of an Option after it is granted, (b) cancel an Option when the option price per Share exceeds the Fair Market Value of one Share in exchange for cash, an Option with a lower option price per Share or another Award (other than in connection with a Change of Control as defined in Section 10.3), or (c) take any other action with respect to an Option that would be treated as a repricing under the rules and regulations of the principal U.S. national securities exchange on which the Shares are listed.
5.4. Option Term. The term of each Option shall be fixed by the Committee in its sole discretion; provided that no Option shall be exercisable after the expiration of ten (10) years from the date the Option is granted; provided, however, that the term of the Option shall not exceed five (5) years from the date the Option is granted in the case of an Incentive Stock Option granted to a Participant who, at the time of the grant, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Subsidiary. Notwithstanding the foregoing and unless otherwise determined by the Committee, in the event that on the last business day of the term of an Option (other than an Incentive Stock Option) (i) the exercise of the Option is prohibited by applicable law or (ii) Shares may not be purchased or sold by certain employees or directors of the Company due to the “black-out period” of a Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term of the Option shall be extended for a period of thirty (30) days following the end of the legal prohibition, black-out period or lock-up agreement.
5.5. Vesting and Exercisability of Options. Options shall vest and become exercisable as set forth in the applicable Award Agreement.
5.6 Exercise of Options. (a) Vested Options granted under the Plan shall be exercised by the Participant (or by a Permitted Assignee thereof or the Participant’s executors, administrators, guardian or legal representative, to the extent provided in an Award Agreement) as to all or part of the Shares covered thereby, by giving notice of exercise to the Company or its designated agent, specifying the number of Shares to be purchased. The notice of exercise shall be in such form, made in such manner, and shall comply with such other requirements consistent with the provisions of the Plan as the Committee may prescribe from time to time.
(b) Unless otherwise provided in an Award Agreement, full payment of such purchase price shall be made at the time of exercise and shall be made (i) in cash or cash equivalents (including certified check or bank check or wire transfer of immediately available funds), (ii) by tendering previously acquired Shares (either actually or by attestation) valued at their then Fair Market Value, (iii) with the consent of the Committee, by delivery of other consideration having a Fair Market Value on the exercise date equal to the total purchase price, (iv) with the consent of the Committee, by withholding Shares otherwise issuable in connection
with the exercise of the Option, (v) through any other method specified in an Award Agreement (including same-day sale through a broker), or (vi) any combination of any of the foregoing; provided, however, to the extent required by applicable law, that the Participant must pay in cash an amount not less than the aggregate par value (if any) of the Shares being acquired. The notice of exercise, accompanied by such payment, shall be delivered to the Company at its principal business office or such other office as the Committee may from time to time direct, and shall be in such form, containing such further provisions consistent with the provisions of the Plan, as the Committee may from time to time prescribe. In no event may any Option granted hereunder be exercised for a fraction of a Share.
5.7. Termination of Employment/Service as a Director.
(a) Other Than by Death or Permanent Disability. Unless otherwise provided in an Award Agreement, each vested Option may be exercised only while the Participant is regularly employed by or providing services to the Company, a Subsidiary or an Affiliate, as the case may be, or within three months after the Participant’s employment or other service has been terminated (but no later than the expiration of the Option term), whether such termination was by the Company (unless such termination was for cause as determined by the Committee) or by the Participant for any reason. If the Participant's employment is terminated for cause (as determined by the Committee), the Option may not be exercised after the Participant's employment or other service has been terminated. A Participant's employment shall not be deemed to have terminated for purposes of this Section 5.7 as long as the Participant is employed by the Company, or any Subsidiary or Affiliate. For purposes of this Section 5.7, “employment” shall mean continuous employment (either full or part time), except that leaves of absence for such periods and purposes as may be approved by the Company or the Subsidiary or Affiliate, shall not be deemed to terminate employment. Notwithstanding the foregoing, the Committee, in its discretion, may permit the exercise of an Option for such period after such termination of employment as the Committee may specify and may also increase the number of Shares subject to exercise up to the full number of Shares covered by the Option. In no event may an Option be exercised after the expiration date of the Option.
(b) Death or Permanent Disability. If a Participant shall die or his or her employment is terminated by reason of permanent disability (as described in Section 22(e)(3) of the Code) while in the employ of the Company or a Subsidiary or Affiliate, the Participant or the Participant's estate or any person who acquires the right to exercise such Option by bequest, inheritance or by reason of the death of the Participant shall have the right to exercise the Option within twelve months from the date of the Participant's death or permanent disability (but not later than the expiration of the Option term), without regard to whether the right to exercise such Option shall have otherwise accrued.
(c) Notwithstanding the foregoing, the Committee may in its sole discretion specify alternative terms and conditions relating to the vesting and exercise of Options in the applicable Award Agreement (including specific terms relating to Incentive Stock Options that are intended to comply with Section 422 of the Code), in which case the Award Agreement terms relating thereto shall govern.
5.8. Form of Settlement. In its sole discretion, the Committee may provide that the Shares to be issued upon an Option's exercise shall be in the form of Restricted Stock or other similar securities.
5.9. Incentive Stock Options. The Committee may grant Incentive Stock Options to any employee of the Company or any Subsidiary, subject to the requirements of Section 422 of the Code. Solely for purposes of determining whether Shares are available for the grant of
Incentive Stock Options under the Plan, the maximum aggregate number of Shares that may be issued pursuant to Incentive Stock Options granted under the Plan shall be 6,200,000 Shares, subject to adjustment as provided in Section 11.2.
6. STOCK APPRECIATION RIGHTS
6.1. Grant and Vesting. The Committee may grant Stock Appreciation Rights (a) in tandem with all or part of any Option granted under the Plan or at any subsequent time during the term of such Option, (b) in tandem with all or part of any Award (other than an Option) granted under the Plan or at any subsequent time during the term of such Award, or (c) without regard to any Option or other Award in each case upon such terms and conditions as the Committee may establish in its sole discretion. Stock Appreciation Rights shall vest and become exercisable as set forth in the applicable Award Agreement.
6.2. Terms and Conditions. Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, including the following:
(a)Upon the exercise of a Stock Appreciation Right, the holder shall have the right to receive the excess of (i) the Fair Market Value of one Share on the date of exercise (or such amount less than such Fair Market Value as the Committee shall so determine at any time during a specified period before the date of exercise) over (ii) the grant price of the Stock Appreciation Right.
(b)The Committee shall determine in its sole discretion whether payment on exercise of a Stock Appreciation Right shall be made in whole Shares, in cash or other property, or any combination thereof.
(c)The terms and conditions of Stock Appreciation Rights need not be the same with respect to each recipient.
(d)The Committee may impose such other terms and conditions on the exercise of any Stock Appreciation Right, as it shall deem appropriate. A Stock Appreciation Right shall (i) have a grant price per Share of not less than the Fair Market Value of one Share on the date of grant or, if applicable, on the date of grant of an Option with respect to a Stock Appreciation Right granted in exchange for or in tandem with, but subsequent to, the Option (subject to the requirements of Section 409A of the Code) except in the case of Substitute Awards or in connection with an adjustment provided in Section 11.2, and (ii) have a term not greater than ten (10) years. Notwithstanding clause (ii) of the preceding sentence, in the event that on the last business day of the term of a Stock Appreciation Right (x) the exercise of the Stock Appreciation Right is prohibited by applicable law or (y) Shares may not be purchased or sold by certain employees or directors of the Company due to the “black-out period” of a Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term shall be extended for a period of thirty (30) days following the end of the legal prohibition, black-out period or lock-up agreement.
(e)Without the approval of the Company’s shareholders, other than pursuant to Section 11.2, the Committee shall not (i) reduce the grant price of any Stock Appreciation Right after the date of grant (ii) cancel any Stock Appreciation Right when the grant price per Share exceeds the Fair Market Value of one Share in exchange for cash, a Stock Appreciation Right with a lower grant price per Share or another Award (other than in connection with a Change of Control as defined in Section 10.3), or (iii) take any other action with respect to a Stock Appreciation Right that would be treated as a repricing under the rules and regulations of the principal U.S. national securities exchange on which the Shares are listed.
7. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
7.1. Grants. Awards of Restricted Stock and of Restricted Stock Units may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan (a “Restricted Stock Award” or “Restricted Stock Unit Award,” respectively), and such Restricted Stock Awards and Restricted Stock Unit Awards shall also be available as a form of payment of Performance Awards and other earned cash-based incentive compensation. The Committee has absolute discretion to determine whether any consideration (other than services) is to be received by the Company or any Subsidiary as a condition precedent to the grant of Restricted Stock or Restricted Stock Units, subject to such minimum consideration as may be required by applicable law.
7.2. Award Agreements. The terms of any Restricted Stock Award or Restricted Stock Unit Award granted under the Plan shall be set forth in an Award Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan. The terms of Restricted Stock Awards and Restricted Stock Unit Awards need not be the same with respect to each Participant
7.3. Rights of Holders of Restricted Stock and Restricted Stock Units. Unless otherwise provided in the Award Agreement, beginning on the date of grant of the Restricted Stock Award and subject to execution of the Award Agreement, the Participant shall become a shareholder of the Company with respect to all Shares subject to the Award Agreement and shall have all of the rights of a shareholder, including the right to vote such Shares and the right to receive distributions made with respect to such Shares, except as otherwise provided in this Section. A Participant who holds a Restricted Stock Unit Award shall only have those rights specifically provided for in the Award Agreement; provided, however, in no event shall the Participant have voting rights with respect to such Award. Notwithstanding anything to the contrary in this Plan, any Shares or any other property distributed or credited as a dividend, a dividend equivalent right or otherwise with respect to any Restricted Stock Award or Restricted Stock Unit Award as to which the restrictions have not yet lapsed shall be subject to the same vesting terms, restrictions and risks of forfeiture as such Restricted Stock Award or Restricted Stock Unit Award, and the Committee shall have the sole discretion to determine whether, if at all, any cash amount that is subject to such restrictions shall earn interest and at what rate.
7.4 Vesting Period. Restricted Stock and Restricted Stock Units shall vest as set forth in the applicable Award Agreement.
7.5. Issuance of Shares. Any Restricted Stock granted under the Plan may be evidenced in such manner as the Board may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company. Any 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.
7.6 Termination of Employment/Service.
(a) Other than Death or Disability. Restricted Stock and Restricted Stock Units shall be forfeited and revert to the Company upon the termination of employment or other service during the Vesting Period for any reason other than death or permanent disability (as described in Section 22(e)(3) of the Code), except to the extent the Committee, in its discretion, determines that a lesser number of Restricted Stock or Restricted Stock Units or no Restricted Stock and Restricted Stock Units shall be forfeited pursuant to the foregoing provisions of this Section 7.
(b) Death or Permanent Disability. Restricted Stock and Restricted Stock Units shall not be forfeited as a result of the Participant’s death or his or her termination of employment by reason of permanent disability (as described in Section 22(e)(3) of the Code), as determined by the Committee. The Committee may require medical evidence of permanent disability, including medical examinations by physicians selected by it. Such shares shall remain subject to forfeiture if any performance objectives specified in the award are not met.
(c) Notwithstanding the foregoing, the Committee may in its sole discretion specify alternative terms and conditions relating to the vesting and forfeiture of Restricted Stock and Restricted Stock Units in the applicable Award Agreement, in which case the Award Agreement terms relating thereto shall govern.
8. OTHER SHARE-BASED AWARDS
8.1. Grants. Other Awards of Shares and other Awards that are valued in whole or in part by reference to, or are otherwise based on, Shares or other property (“Other Share-Based Awards”), including deferred stock units, may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan. Other Share-Based Awards shall also be available as a form of payment of other Awards granted under the Plan and other earned cash-based compensation.
8.2. Award Agreements. The terms of Other Share-Based Awards granted under the Plan shall be set forth in an Award Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan. The terms of such Awards need not be the same with respect to each Participant. Notwithstanding the provisions of this Section, Dividend Equivalents with respect to the Shares covered by an Other Share-Based Award shall be subject to restrictions and risk of forfeiture to the same extent as the Shares covered by an Other Share-Based Award with respect to which such Dividend Equivalents have been credited. Other Share-Based Awards may be subject to vesting restrictions during the Vesting Period as specified by the Committee.
8.3. Vesting Period. Other Share-Based Awards shall vest and become exercisable as set forth in the applicable Award Agreement. The Committee may, in its sole discretion, waive the vesting restrictions and any other conditions set forth in any Award Agreement under such terms and conditions as the Committee shall deem appropriate.
8.4. Payment. Except as may be provided in an Award Agreement, Other Share-Based Awards may be paid in Shares, cash or other property, or any combination thereof, in the sole discretion of the Committee. Other Share-Based Awards may be paid in a lump sum or in installments or, in accordance with procedures established by the Committee, on a deferred basis subject to the requirements of Section 409A of the Code.
9. PERFORMANCE AWARDS
9.1. Grants; Performance Goals.
(a) Performance Awards in the form of Performance Cash, Performance Shares or Performance Units, as determined by the Committee in its sole discretion, may be granted hereunder to Participants, for no consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The performance goals to be achieved for each Performance Period shall be conclusively determined by the Committee and may be based upon such criteria as determined by the Committee in its discretion. Performance Awards may not be granted to Directors.
(b) Any performance goals that are financial metrics, may be determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), in accordance with accounting principles established by the International Accounting Standards Board (“IASB Principles”), or may be adjusted when established to include or exclude any items otherwise includable or excludable under GAAP or under IASB Principles. Such performance goals also may be based solely by reference to the Company’s performance or the performance of a Subsidiary, division, business segment or business unit of the Company or a Subsidiary, or based upon performance relative to performance of other companies or upon comparisons of any of the indicators of performance relative to performance of other companies. The Committee may provide for exclusion of the impact of an event or occurrence which the Committee determines should appropriately be excluded, including (a) restructurings, discontinued operations, extraordinary items, and other unusual, infrequently occurring or non-recurring charges or events, (b) asset write-downs, (c) litigation or claim judgments or settlements, (d) acquisitions or divestitures, (e) reorganization or change in the corporate structure or capital structure of the Company, (f) an event either not directly related to the operations of the Company, Subsidiary, division, business segment or business unit or not within the reasonable control of management, (g) foreign exchange gains and losses, (h) a change in the fiscal year of the Company, (i) the refinancing or repurchase of bank loans or debt securities, (j), unbudgeted capital expenditures, (k) the issuance or repurchase of equity securities and other changes in the number of outstanding shares, (l) conversion of some or all of convertible securities to common stock, (m) any business interruption event (n) the cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles, or (o) the effect of changes in other laws or regulatory rules affecting reported results. The Committee may also adjust the amount payable pursuant to such an Award, as determined in its discretion to be appropriate.
9.2. Award Agreements. The terms of any Performance Award granted under the Plan shall be set forth in an Award Agreement (or, if applicable, in a resolution duly adopted by the Committee) which shall contain provisions determined by the Committee and not inconsistent with the Plan, including whether such Awards shall have Dividend Equivalents. The terms of Performance Awards need not be the same with respect to each Participant.
9.3. Terms and Conditions. The performance criteria to be achieved during any Performance Period and the length of the Performance Period shall be determined by the Committee upon the grant of each Performance Award. The amount of the Award to be distributed shall be conclusively determined by the Committee.
9.4. Payment. Except as provided in Article 11, as provided by the Committee or as may be provided in an Award Agreement, Performance Awards will be distributed only after the end of the relevant Performance Period. Performance Awards may be paid in Shares, cash or other property, or any combination thereof, in the sole discretion of the Committee. Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in accordance with procedures established by the Committee, on a deferred basis subject to the requirements of Section 409A of the Code.
10. CHANGE OF CONTROL PROVISIONS
10.1. Impact on Certain Awards. Unless otherwise specifically provided in an Award Agreement, the Committee shall have the right to provide that in the event of a Change of Control of the Company (as defined in Section 10.3): (i) Options and Stock Appreciation Rights outstanding as of the date of the Change of Control shall be cancelled and terminated without payment if the Fair Market Value of one Share as of the date of the Change of Control is less than the per Share Option exercise price or Stock Appreciation Right grant price, and (ii) all Performance Awards shall be (x) considered to be earned and payable based on achievement of performance goals or based on target performance (either in full or pro rata based on the portion of Performance Period completed as of the date of the Change of Control), and any limitations or
other restrictions shall lapse and such Performance Awards shall be immediately settled or distributed or (y) converted into Restricted Stock or Restricted Stock Unit Awards based on achievement of performance goals or based on target performance (either in full or pro rata based on the portion of Performance Period completed as of the date of the Change of Control) that are subject to Section 10.2.
10.2. Assumption or Substitution of Certain Awards. (a) Unless otherwise provided in an Award Agreement, in the event of a Change of Control in connection with which the successor company assumes or substitutes for an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Share-Based Award (or in which the Company is the ultimate parent corporation and continues the Award), if a Participant’s employment with such successor company (or the Company) or a subsidiary thereof terminates within 24 months following such Change of Control (or such other period set forth in the Award Agreement, including prior thereto if applicable) under the circumstances specified in the Award Agreement (e.g., a termination without “cause”): (i) Options and Stock Appreciation Rights outstanding as of the date of such termination of employment will immediately vest, become fully exercisable, and may thereafter be exercised for 24 months (or the period of time set forth in the Award Agreement), (ii) the restrictions, limitations and other conditions applicable to Restricted Stock and Restricted Stock Units outstanding as of the date of such termination of employment shall lapse and the Restricted Stock and Restricted Stock Units shall become free of all restrictions, limitations and conditions and become fully vested, and (iii) the restrictions, limitations and other conditions applicable to any Other Share-Based Awards shall lapse, and such Other Share-Based Awards shall become free of all restrictions, limitations and conditions and become fully vested and transferable to the full extent of the original grant. For the purposes of this Section 10.2, an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Share-Based Award shall be considered assumed or substituted for if following the Change of Control the Award confers the right to purchase or receive, for each Share subject to the Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Share-Based Award immediately prior to the Change of Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting the Change of Control by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the transaction constituting a Change of Control is not solely common stock of the successor company, the Committee may, with the consent of the successor company, provide that the consideration to be received upon the exercise or vesting of an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Share-Based Award, for each Share subject thereto, will be solely common stock of the successor company with a fair market value substantially equal to the per Share consideration received by holders of Shares in the Change of Control. The determination of whether fair market value is substantially equal shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding.
(b) Unless otherwise provided in an Award Agreement, in the event of a Change of Control to the extent (i) the successor company does not assume or substitute for an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Share-Based Award (or in which the Company is the ultimate parent corporation and does not continue the Award), or (ii) common stock of the successor company is not publicly traded, then immediately prior to the Change of Control: (1) those Options and Stock Appreciation Rights outstanding as of the date of the Change of Control that are not assumed or substituted for (or continued) shall immediately vest and become fully exercisable, (2) restrictions, limitations and other conditions applicable to Restricted Stock and Restricted Stock Units that are not assumed or substituted for (or continued) shall lapse and the Restricted Stock and Restricted Stock Units shall become free of all restrictions, limitations and conditions and become fully vested, (3) the restrictions, other limitations and other conditions applicable to any Other Share-
Based Awards or any other Awards that are not assumed or substituted for (or continued) shall lapse, and such Other Share-Based Awards or such other Awards shall become free of all restrictions, limitations and conditions and become fully vested and transferable to the full extent of the original grant, and (4) any performance based Award shall be deemed fully earned at the target amount as of the date on which the Change of Control occurs.
(c) The Committee, in its discretion, may determine that, upon the occurrence of a Change of Control, each Option and Stock Appreciation Right outstanding shall terminate within a specified number of days after notice to the Participant, and/or that each Participant shall receive, with respect to each Share subject to such Option or Stock Appreciation Right, an amount equal to the excess of the Fair Market Value of such Share immediately prior to the occurrence of such Change of Control over the exercise price per Share of such Option and/or Stock Appreciation Right; such amount to be payable in cash, in one or more kinds of stock or property (including the stock or property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine.
10.3. Definitions
(a) “Change of Control” shall mean an event which shall occur if there is: (i) a change in the ownership of the Company; (ii) a change in the effective control of the Company; or (iii) a change in the ownership of a substantial portion of the assets of the Company.
(b) For purposes of this Section 10.3, a change in the ownership occurs on the date on which any one person, or more than one person acting as a group (as defined in Treasury regulations 1.409A-2(i)(5)(v)(B)), acquires ownership of stock that, together with stock held by such person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Company.
(c) For purposes of this Section 10.3, a change in the effective control occurs on the date on which either (i) a person, or more than one person acting as a group (as defined in Treasury regulations 1.409A-2(i)(5)(v)(B)), acquires ownership of stock possessing 30% or more of the total voting power of the stock of the Company, taking into account all such stock acquired during the 12-month period ending on the date of the most recent acquisition, or (ii) a majority of the members of the Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of such Board of Directors prior to the date of the appointment or election, but only if no other corporation is a majority shareholder.
(d) For purposes of this Section 10.3, a change in the ownership of a substantial portion of assets occurs on the date on which any one person, or more than one person acting as a group (as defined in Treasury regulations 1.409A-2(i)(5)(v)(B)), other than a person or group of persons that is related to the Company, acquires assets that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions, taking into account all such assets acquired during the 12-month period ending on the date of the most recent acquisition.
(e) For purposes of this Section 10.3, a liquidation or dissolution of the Company occurs on the date of the consummation of a complete liquidation or dissolution of the Company.
(f) The determination as to the occurrence of a Change of Control for purposes of Sections 11.3 (b), (c) and (d) shall be based on objective facts and in accordance with the requirements of Code Section 409A and the regulations promulgated thereunder.
11. GENERALLY APPLICABLE PROVISIONS
11.1. Amendment and Termination of the Plan. The Board may, from time to time, alter, amend, suspend or terminate the Plan as it shall deem advisable, subject to any requirement for shareholder approval imposed by applicable law, including the rules and regulations of the principal U.S. national securities exchange on which the Shares are traded; provided that the Board may not amend the Plan in any manner that would result in noncompliance with Rule 16b-3 under the Exchange Act; and further provided that the Board may not, without the approval of the Company's shareholders to the extent required by such applicable law, amend the Plan to (a) increase the number of Shares that may be the subject of Awards under the Plan (except for adjustments pursuant to Section 11.2), (b) expand the types of awards available under the Plan, (c) materially expand the class of persons eligible to participate in the Plan, (d) amend Section 5.3 or Section 6.2(e) to eliminate the requirements relating to minimum exercise price, minimum grant price and shareholder approval, or (e) increase the maximum permissible term of any Option specified by Section 5.4 or the maximum permissible term of a Stock Appreciation Right specified by Section 6.2(d). The Board may not (except pursuant to Section 11.2 or in connection with a Change of Control), without the approval of the Company’s shareholders, cancel an Option or Stock Appreciation Right in exchange for cash when the exercise or grant price per share exceeds the Fair Market Value of one Share or take any action with respect to an Option or Stock Appreciation Right that would be treated as a repricing under the rules and regulations of the principal securities exchange on which the Shares are traded, including a reduction of the exercise price of an Option or the grant price of a Stock Appreciation Right or the exchange of an Option or Stock Appreciation Right for another Award. In addition, no amendments to, or termination of, the Plan shall impair the rights of a Participant in any material respect under any Award previously granted without such Participant's consent.
11.2. Adjustments. In the event of any merger, reorganization, consolidation, recapitalization, dividend or distribution (whether in cash, shares or other property, other than a regular cash dividend), stock split, reverse stock split, spin-off or similar transaction or other change in corporate structure affecting the Shares or the value thereof, such adjustments and other substitutions shall be made to the Plan and to Awards in a manner the Committee deems equitable or appropriate taking into consideration the accounting and tax consequences, including such adjustments in the aggregate number, class and kind of securities that may be delivered under the Plan, the maximum number of Shares that may be issued pursuant to Incentive Stock Options and, in the aggregate or to any Participant, in the number, class, kind and option or exercise price of securities subject to outstanding Awards granted under the Plan (including, if the Committee deems appropriate, the substitution of similar options to purchase the shares of, or other awards denominated in the shares of, another company); provided, however, that the number of Shares subject to any Award shall always be a whole number.
11.3. Transferability of Awards. Except as provided below, no Award and no Shares that have not been issued or as to which any applicable restriction, performance or deferral period has not lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered, other than by will or the laws of descent and distribution, and such Award may be exercised during the life of the Participant only by the Participant or the Participant’s guardian or legal representative except that shares of Restricted Stock may be used, if the Award Agreement permits, to pay the exercise price of an Option granted under the Plan (or an option granted under any Prior Plan), provided an equal number of Shares delivered to the Participant shall carry the same restrictions and be subject to the same provisions regarding forfeiture as the shares of Restricted Stock so used. To the extent and under such terms and conditions as determined by the Committee, a Participant may assign or transfer an Award without consideration (each transferee thereof, a “Permitted Assignee”) (i) to the Participant’s spouse, children or grandchildren (including any adopted and step children or grandchildren), parents, grandparents or siblings, (ii) to a trust for the benefit of one or more of the Participant or the persons referred to in clause (i), (iii) to a partnership, limited liability company or corporation in which the Participant or the persons referred to in clause (i) are the only partners, members or shareholders or (iv) for charitable donations; provided that such Permitted Assignee shall be bound by and
subject to all of the terms and conditions of the Plan and the Award Agreement relating to the transferred Award and shall execute an agreement satisfactory to the Company evidencing such obligations; and provided further that such Participant shall remain bound by the terms and conditions of the Plan. No Award may be transferred for value to a third-party financial institution. The Company shall cooperate with any Permitted Assignee and the Company’s transfer agent in effectuating any transfer permitted under this Section.
11.4. Termination of Employment or Services. The Committee shall determine and set forth in each Award Agreement whether any Awards granted in such Award Agreement will continue to be exercisable, continue to vest or be earned and the terms of such exercise, vesting or earning, on and after the date that a Participant ceases to be employed by or to provide services to the Company or any Subsidiary (including as a Director), whether by reason of death, disability, voluntary or involuntary termination of employment or services, or otherwise. The date of termination of a Participant’s employment or services will be determined by the Committee, which determination will be final.
11.5. Deferral. The Committee shall be authorized to establish procedures pursuant to which the payment of any Award may be deferred.
11.6. Dividend Equivalents. Subject to the provisions of the Plan and any Award Agreement, the recipient of an Award other than an Option or Stock Appreciation Right may, if so determined by the Committee, be entitled to receive amounts equivalent to cash, stock or other property dividends on Shares (“Dividend Equivalents”) with respect to the number of Shares covered by the Award, as determined by the Committee, in its sole discretion. The Committee may provide that the Dividend Equivalents (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested. Notwithstanding the foregoing, Dividend Equivalents credited in connection with an Award that is subject to vesting conditions shall be subject to the same vesting conditions, restrictions and risks of forfeiture as the Award with respect to which such Dividend Equivalents have been credited.
12. MISCELLANEOUS
12.1. Award Agreements. Each Award Agreement shall either be (a) in writing in a form approved by the Committee and executed by the Company by an officer duly authorized to act on its behalf, or (b) an electronic notice in a form approved by the Committee and recorded by the Company (or its designee) in an electronic recordkeeping system used for the purpose of tracking one or more types of Awards as the Committee may provide; in each case and if required by the Committee, the Award Agreement shall be executed or otherwise electronically accepted by the recipient of the Award in such form and manner as the Committee may require. The Committee may authorize any officer of the Company to execute any or all Award Agreements on behalf of the Company. The Award Agreement shall set forth the material terms and conditions of the Award as established by the Committee consistent with the provisions of the Plan.
12.2. Tax Withholding. The Company shall have the right to make all payments or distributions pursuant to the Plan to a Participant (or a Permitted Assignee thereof) net of any applicable federal, state and local taxes required to be paid or withheld as a result of (a) the grant of any Award, (b) the exercise of an Option or Stock Appreciation Right, (c) the delivery of Shares or cash, (d) the lapse of any restrictions in connection with any Award or (e) any other event occurring pursuant to the Plan. The Company or any Subsidiary shall have the right to withhold from wages or other amounts otherwise payable to a Participant (or Permitted Assignee) such withholding taxes as may be required by law, or to otherwise require the Participant (or Permitted Assignee) to pay such withholding taxes. If the Participant (or Permitted Assignee) shall fail to make such tax payments as are required, the Company or its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from
any payment of any kind otherwise due to such Participant (or Permitted Assignee) or to take such other action as may be necessary to satisfy such withholding obligations. The Committee shall be authorized to establish procedures for election by Participants (or Permitted Assignee) to satisfy such obligation for the payment of such taxes by tendering previously acquired Shares (either actually or by attestation, valued at their then Fair Market Value), or by directing the Company to retain Shares (up to the minimum required tax withholding rate for the Participant (or Permitted Assignee) or such other rate that will not cause an adverse accounting consequence or cost) otherwise deliverable in connection with the Award.
12.3. Right of Discharge Reserved; Claims to Awards. Nothing in the Plan nor the grant of an Award hereunder shall confer upon any Employee, Consultant or Director the right to continue in the employment or service of the Company or any Subsidiary or affect any right that the Company or any Subsidiary may have to terminate the employment or service of (or to demote or to exclude from future Awards under the Plan) any such Employee, Consultant or Director at any time for any reason. The Company shall not be liable for the loss of existing or potential profit from an Award granted in the event of termination of an employment or other relationship. No Employee, Consultant or Director shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Employees, Consultants or Directors under the Plan.
12.4. Substitute Awards. Notwithstanding any other provision of the Plan, the terms of Substitute Awards may vary from the terms set forth in the Plan to the extent the Committee deems appropriate to conform, in whole or in part, to the provisions of the awards in substitution for which they are granted.
12.5. Awards are Subject to Clawback. All awards under the Plan are subject to the Company’s clawback policy as in effect from time to time. Without limiting the generality of the foregoing, in the event that the Company is required to file a restatement of its financial results due to fraud, gross negligence or intentional misconduct by one or more employees, and/or material non-compliance with securities laws, the Company may require reimbursement of any Award in the amount by which the payment under the Award exceeded any lower payment that would have been made based on the restated financial results, for the fiscal year in which the restatement was required, to the full extent required or permitted by law. If a Participant is directly responsible for or involved in fraud, gross negligence or intentional misconduct that causes the Company to file a restatement of its financial results, the Company may require reimbursement of all incentive compensation awarded to such Participant, for the fiscal year in which the restatement was required, to the full extent required or permitted by law.
12.6. Competition with the Company.
(a) If the Participant, without the consent of the Company, while employed by or providing services to the Company or any Subsidiary or Affiliate or after termination of such employment or service, violates a non-competition, non-solicitation or non-disclosure covenant or agreement or otherwise engages in a competitive activity that is in conflict with or adverse to the interest of the Company, or any Subsidiary or Affiliate, as determined by the Committee in its sole discretion, then (i) any outstanding, vested or unvested, earned or unearned portion of the Award may, at the Committee’s discretion, be canceled and (ii) the Committee, in its discretion, may require the Participant or other person to whom any payment has been made or Shares or other property have been transferred in connection with the Award to forfeit and pay over to the Company, on demand, all or any portion of the gain (whether or not taxable) realized upon the exercise of any Option or Stock Appreciation Right and the value realized (whether or not taxable) on the vesting or payment of any other Award during the time period specified in the Award Agreement.
(c) Any remittance to the Company required by Section 12.6(a) shall be payable in cash or by delivery of Shares duly assigned to the Company or by a combination of the foregoing. Any such Shares so delivered shall be deemed to have a value per Share equal to the Fair Market Value of the Shares on such date of issuance (or, if such date is not determinable, the date of vesting).
(d) The foregoing provisions of this Section 12.6 shall not apply following a Change of Control.
(e) Unless otherwise provided in the Award Agreement, for purposes of this Section 12.6 a Participant is deemed to be "engaged in a competing activity" if he or she owns, manages, controls, is employed by, or otherwise engages in or assists another to engage in any activity or which competes with any business or activity of the Company in which the employee was engaged or involved, at the time of the employee's termination.
12.7 Stop Transfer Orders. All certificates for Shares delivered under the Plan pursuant to any Award shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the SEC, any stock exchange upon which the Shares are then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
12.8. Nature of Payments. All Awards made pursuant to the Plan are in consideration of services performed or to be performed for the Company or any Subsidiary, division or business unit of the Company or a Subsidiary. Any income or gain realized pursuant to Awards under the Plan constitutes a special incentive payment to the Participant and shall not be taken into account, to the extent permissible under applicable law, as compensation for purposes of any of the employee benefit plans of the Company or any Subsidiary except as may be determined by the Committee or by the Board or board of directors of the applicable Subsidiary (or as may be required by the terms of such plan).
12.9. Other Plans. Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.
12.10. Severability. The provisions of the Plan shall be deemed severable. If any provision of the Plan shall be held unlawful or otherwise invalid or unenforceable in whole or in part by a court of competent jurisdiction or by reason of change in a law or regulation, such provision shall (a) be deemed limited to the extent that such court of competent jurisdiction deems it lawful, valid and/or enforceable and as so limited shall remain in full force and effect, and (b) not affect any other provision of the Plan or part thereof, each of which shall remain in full force and effect. If the making of any payment or the provision of any other benefit required under the Plan shall be held unlawful or otherwise invalid or unenforceable by a court of competent jurisdiction or any governmental regulatory agency, or impermissible under the rules of any securities exchange on which the Shares are listed, such unlawfulness, invalidity, unenforceability or impermissibility shall not prevent any other payment or benefit from being made or provided under the Plan, and if the making of any payment in full or the provision of any other benefit required under the Plan in full would be unlawful or otherwise invalid or impermissible, then such unlawfulness, invalidity or impermissibility shall not prevent such payment or benefit from being made or provided in part, to the extent that it would not be unlawful, invalid or impermissible and the maximum payment or benefit that would not be unlawful, invalid or impermissible shall be made or provided under the Plan.
12.11. Construction. As used in the Plan, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”
12.12. Unfunded Status of the Plan. The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver the Shares or payments in lieu of or with respect to Awards hereunder; provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.
12.13. Governing Law. The Plan and all determinations made and actions taken thereunder, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of New York, without reference to principles of conflict of laws, and construed accordingly.
12.14. Effective Date of Plan; Termination of Plan. The Plan shall be effective on the date of the approval of the Plan by the holders of the shares entitled to vote at a duly constituted meeting of the shareholders of the Company. The Plan shall be null and void and of no effect if the foregoing condition is not fulfilled and in such event each Award shall, notwithstanding any of the preceding provisions of the Plan, be null and void and of no effect. Awards may be granted under the Plan at any time and from time to time on or prior to the tenth anniversary of the Effective Date of the Plan, on which date the Plan will expire except as to Awards then outstanding under the Plan; provided, however, in no event may an Incentive Stock Option be granted more than ten (10) years after the earlier of (i) the date of the adoption of the Plan by the Board or (ii) the Effective Date of the Plan as provided in the first sentence of this Section. Such outstanding Awards shall remain in effect until they have been exercised or terminated, or have expired.
12.15. Foreign Employees. Awards may be granted to Participants who are foreign nationals or employed or providing services outside the United States, or both, on such terms and conditions different from those applicable to Awards to Employees providing services in the United States as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company's obligation with respect to tax equalization for Employees on assignments outside their home country.
12.16. Compliance with Section 409A of the Code. This Plan is intended to comply and shall be administered in a manner that is intended to comply with Section 409A of the Code and shall be construed and interpreted in accordance with such intent. To the extent that an Award or the payment, settlement or deferral thereof is subject to Section 409A of the Code, the Award shall be granted, paid, settled or deferred in a manner that will comply with Section 409A of the Code, including regulations or other guidance issued with respect thereto, except as otherwise determined by the Committee. Any provision of this Plan that would cause the grant of an Award or the payment, settlement or deferral thereof to fail to satisfy Section 409A of the Code shall be amended to comply with Section 409A of the Code on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Section 409A of the Code. To the extent any Award under this Plan is considered deferred compensation subject to Section 409A of the Code, to the extent required by Section 409A of the Code, payment of such Award may not be made to a specified employee (as determined in accordance with a uniform policy adopted by the Company with respect to all arrangements subject to Section 409A of the Code) as a result of the Participant’s “separation from service” (as defined in Section 409A of the Code) before the date that is six months after the specified
employee’s separation form service (or, if earlier, the specified employee’s death), and any payment that would otherwise be made during this period of delay shall be accumulated and paid on the sixth month plus one day following the specified employee’s separation from service (or, if earlier, as soon as administratively practicable after the specified employee’s death).
12.17. No Registration Rights; No Right to Settle in Cash. The Company has no obligation to register with any governmental body or organization (including, without limitation, the SEC) any of (a) the offer or issuance of any Award, (b) any Shares issuable upon the exercise of any Award, or (c) the sale of any Shares issued upon exercise of any Award, regardless of whether the Company in fact undertakes to register any of the foregoing. In particular, in the event that any of (x) any offer or issuance of any Award, (y) any Shares issuable upon exercise of any Award, or (z) the sale of any Shares issued upon exercise of any Award are not registered with any governmental body or organization (including, without limitation, the SEC), the Company will not under any circumstance be required to settle its obligations, if any, under this Plan in cash.
12.18. Data Privacy. As a condition of acceptance of an Award, the Participant explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this Section by and among, as applicable, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that the Company and its Subsidiaries hold certain personal information about the Participant, including the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company or any Subsidiary, details of all Awards or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the purpose of implementing, managing and administering the Plan (the “Data”). The Participant further understands that the Company and its Subsidiaries may transfer the Data amongst themselves as necessary for the purpose of implementation, management and administration of the Participant’s participation in the Plan, and that the Company and its Subsidiaries may each further transfer the Data to any third parties assisting the Company in the implementation, management, and administration of the Plan. The Participant understands that these recipients may be located in the Participant’s country, or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country. The Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Participant, through participation in the Plan and acceptance of an Award under the Plan, authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Participant’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Participant may elect to deposit any Shares. The Participant understands that the Data will be held only as long as is necessary to implement, manage, and administer the Participant’s participation in the Plan. The Participant understands that he or she may, at any time, view the Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data, or refuse or withdraw the consents herein in writing, in any case without cost, by contacting his or her local human resources representative. The Participant understands that refusal or withdrawal of consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative.
12.19. Indemnity. To the extent allowable pursuant to applicable law, each member of the Committee or of the Board and any person to whom the Committee has delegated any of its authority under the Plan shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such person in
connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company’s Certificate of Incorporation or By-laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
12.20. Captions. The captions in the Plan are for convenience of reference only, and are not intended to narrow, limit or affect the substance or interpretation of the provisions contained herein.
JOHN WILEY & SONS, INC.
DEFERRED COMPENSATION PLAN
FOR DIRECTORS' 2005 & AFTER COMPENSATION
Amended and Restated as of September 29, 2022
JOHN WILEY & SONS, INC. DEFERRED COMPENSATION PLAN
FOR DIRECTORS' 2005 & AFTER COMPENSATION
The John Wiley & Sons, Inc. Deferred Compensation Plan for Directors' 2005 & After Compensation (the “Plan”) was established by the Board of Directors of, John Wiley & Sons, Inc. pursuant to resolutions adopted by said Board at its meeting on December 16, 2004. The purpose of the Plan is to provide a Nonemployee Director with a means of deferring director fees and stock compensation in accordance with the terms of the Plan.
It is the intent of John Wiley & Sons, Inc. and the plan administrator to operate the Plan in accordance with the provisions of Section 409A of the Internal Revenue Code (the “Code”) as enacted by the American Jobs Creation Act of 2004, in all respects, including but not limited to its transition rules applicable to distribution payment elections by directors in 2005 through 2008.
Effective January 1, 2009, the Plan was amended and restated to comply with the Treasury Regulations issued pursuant to Code Section 409A subsequent to the original effective date of the Plan, and the Plan was subsequently amended thereafter.
Effective September 29, 2022, the Plan is hereby amended and restated to make certain technical and conforming amendments.
JOHN WILEY & SONS, INC. DEFERRED COMPENSATION PLAN
FOR DIRECTORS' 2005 & AFTER COMPENSATION
TABLE OF CONTENTS
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ARTICLE 1 - | DEFINITIONS | 1 |
ARTICLE 2 - | PARTICIPATION | 3 |
ARTICLE 3 - | DEFERRALS | 4 |
ARTICLE 4 - | MAINTENANCE OF ACCOUNTS | 6 |
ARTICLE 5 - | PAYMENT OF BENEFITS | 7 |
ARTICLE 6 - | AMENDMENT OR TERMINATION | 10 |
ARTICLE 7 - | GENERAL PROVISIONS | 11 |
ARTICLE 8 - | ADMINISTRATION | 14 |
ARTICLE 1 - DEFINITIONS
1.01“Accounts” shall mean the bookkeeping account (or subaccounts) maintained for each Participant to record the amount of Director Fees and/or Director Stock Compensation such Participant has elected to defer in accordance with Article 3, adjusted pursuant to Section 4.02. Accounts shall include, but not be limited to the Director Fee Account and the Stock Compensation Account.
1.02“Administrative Committee” shall mean the committee appointed by the Board to administer the Plan, as provided in Section 8.01.
1.03“Beneficiary” shall mean the person or persons designated by a Participant pursuant to the provisions of Section 5.03 in a time and manner determined by the Administrative Committee to receive the amounts, if any, payable under the Plan upon the death of the Participant.
1.04“Board of Directors” or “Board” shall mean the Board of Directors of the Company.
1.05“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
1.06“Company” shall mean John Wiley & Sons, Inc., a New York corporation, or any successor by merger, purchase, or otherwise.
1.07“Deferral Agreement” shall mean the completed election form, including any amendments, attachments, and appendices thereto, in such form approved by the Administrative Committee, between a Nonemployee Director and the Company, under which the Nonemployee Director agrees to defer all or a portion of his Director Fees and/or Director Stock Compensation for a specified Service Year.
1.08“Deferrals” shall mean the amount of deferrals credited to a Participant pursuant to Article 3.
1.09“Director Fee Account” shall mean the bookkeeping account maintained for each Participant to record the amount of Director Fees such Participant has elected to defer in cash in accordance with Article 3, adjusted pursuant to Section 4.02.
1.1“Director Fees” shall mean the fees or compensation to be received by a Nonemployee Director for services rendered as a member of the Board of Directors, including cash fees paid for attendance at meetings of the Board of Directors or its committees.
1.2“Director Stock Compensation” shall mean the shares of Stock to be awarded to a Nonemployee Director under the Company's 2022 Omnibus Stock Plan, as amended, or any other stock plan which may hereafter be adopted.
1.3“Effective Date” shall mean January 1, 2005.
1.4“Nonemployee Director” shall mean a member of the Board of Directors who is not concurrently an employee of the Company and who is not otherwise ineligible to receive Director Fees.
1.5“Participant” shall mean, except as otherwise provided in Article 2, each Nonemployee Director who has executed a Deferral Agreement pursuant to the requirements of Section 2.01 and is credited with an amount under Section 3.03.
1.6“Plan” shall mean the John Wiley & Sons, Inc. Deferred Compensation Plan For Directors' 2005 & After Compensation as set forth in this document, as it may be amended from time to time.
1.7“Plan Year” shall mean the calendar year. The first Plan Year began on the Effective Date.
1.8“Retirement'' shall mean the date the Nonemployee Director incurs a Separation from Service.
1.9“Separation from Service” shall mean the date that a Participant ceases to be a Nonemployee Director, provided that such Participant is not at that time considered a service provider to the Company or an affiliate of the Company under Code Section 409A.
1.10“Service Year” shall mean a Plan Year.
1.11“Specified Distribution Year” shall mean a calendar year selected by a Participant pursuant to Section 5.01(a).
1.12“Stock” shall mean shares of the Company's Class A Common Stock
1.13“Stock Compensation Account” shall mean the bookkeeping account maintained for each Participant to record the amount of Director Stock Compensation such Participant has elected to defer in accordance with Article 3, adjusted pursuant to Section 4.03.
ARTICLE 2 - PARTICIPATION
2.01In General
(a)An individual who is determined to be a Nonemployee Director with respect to a Plan Year and who desires to have deferrals credited on his behalf pursuant to Article 3 for such Plan Year must execute a Deferral Agreement with the Administrative Committee authorizing Deferrals under this Plan for such year in accordance with the provisions of Sections 3.01 and 3.02.
(h) The Deferral Agreement shall be in writing and be properly completed upon a form approved by the Administrative Committee, which shall be the sole judge of the proper completion thereof. Such Deferral Agreement shall provide, subject to the provisions of Article 3, for the deferral of all or a portion of the Nonemployee Director's Director Fees and Director Stock Compensation earned and paid during a Service Year but after the Deferral Election Deadline and shall include such other provisions as the Administrative Committee deems appropriate.
(c) A Nonemployee Director shall become a Participant when Deferrals are credited on his behalf pursuant to Article 3.
2.02Termination of Participation
Participation shall cease when all benefits to which a Participant is entitled to hereunder are distributed to him.
ARTICLE 3 - DEFERRALS
3.01Filing Requirements
(b)Prior to the close of business on the date or dates specified by the Administrative Committee in a calendar year but not later than December 31 of such calendar year (the “Deferral Election Deadline”) and except as otherwise provided below, each individual who is a Nonemployee Director may elect, subject to Section 3.02, to defer all or a portion of his Director Fees and/or Director Stock Compensation that are earned and payable for the Service Year beginning in the calendar year following such Deferral Election Deadline by filing a Deferral Agreement with the Administrative Committee.
(c)Notwithstanding Section 3.0l(a), each individual who becomes a Nonemployee Director after January I of a Service Year may elect, subject to Section 3.02, to defer a portion of his Director Fees and/or Director Stock Compensation otherwise earned and payable in that Service Year, by duly completing, executing, and filing with the Administrative Committee a Deferral Agreement no later the 30th day following the date such individual first becomes a Nonemployee Director. The Deferral Election Deadline applicable to that initial Deferral Agreement shall be the date established by the Administrative Committee but no later than the 30th day following the date such individual first becomes a Nonemployee Director. Such Deferral Agreement shall be first effective with respect to the Director Fees and/or Director Stock Compensation paid and earned by the Participant following the Administrative Committee's receipt of the Deferral Agreement applicable to that Service Year. The determination of whether an individual may file a Deferral Agreement under this paragraph(b) with respect to the Service Year in which he first becomes a Nonemployee Director shall be determined in accordance with the rules of Code Section 409A, including the provisions of Treasury Reg. Section l .409A-2(a)(7).
(d)A Participant shall submit a Deferral Agreement in the manner specified by the Administrative Committee. A Nonemployee Director's election to defer all or a portion of his Director Fees and/or Director Stock Compensation for any Service Year shall become irrevocable on the close of business on the applicable Deferral Election Deadline. A Nonemployee Director may revoke or change his election as to the amount of deferrals he authorizes on his Deferral Agreement filed under Section 3.01(a) or (b) at any time prior to the date the election becomes irrevocable. Any such revocation or change shall be made in a form and manner determined by the Administrative Committee.
(e)A Participant's election as to the amount of deferrals he authorizes on his Deferral Agreement filed under Section 3.0l(a) or (b) shall remain in effect for subsequent Plan Years unless the Participant files with the Administrative Committee a new Deferral Agreement modifying or revoking that election in accordance with the preceding provisions of this Section 3.01. The new Deferral Agreement must be filed not later than the Deferral Election Deadline applicable to the Service Year with respect to which the new election is to apply and shall apply to Director Fees and/or Director Stock Compensation earned in the Service Year commencing after such Deferral Election Deadline.
3.02Amount of Deferral
A Nonemployee Director may defer all or a portion of his Director Fees and/or Director Stock Compensation that is otherwise earned and payable in the next Service Year (or with respect to a
Participant who makes an election pursuant to Section 3.0l(b), earned and payable subsequent to the date the Participant's Deferral Agreement is filed with the Administrative Committee). Any deferral shall be in increments of 25%. A Nonemployee Director shall be given written notice of the opportunity to defer his Director Fees and/or Director Stock Compensation at least ten business days prior to the Deferral Election Deadline for the applicable Service Year.
3.03Crediting to Accounts
The amount of Director Fees deferred shall be credited to a Participant's Director Fee Account on the day such Director Fees would have otherwise been paid in the absence of a Deferral Agreement. The Participant's Director Stock Compensation Account shall be credited with the number of units equal to the number of shares of Stock deferred as Director Stock Compensation as of the date when the Director Stock Compensation would have otherwise been paid in the absence of a Deferral Agreement.
3.04Vesting
A Participant shall at all times be 100% vested in his Director Fee Account. A Participant shall be vested in the units credited to his Stock Compensation Account to the extent the underlying Director Stock Compensation would have been vested.
ARTICLE 4 - MAINTENANCE OF ACCOUNTS
4.01Individual Accounts
The Administrative Committee shall maintain, or cause to be maintained, records showing the balances of each Participant's Accounts. Periodically, each Participant shall be furnished with a statement setting forth the value of his Accounts.
4.02Adjustment of Director Fee Accounts
(a) Each Participant may designate, in accordance with the procedures established from time to time by the Administrative Committee, the Participant’s preference for the manner in which the amounts in his or her Director Fee Account will be invested from among the investment funds made available for such designation from time to time by the Administrative Committee. The available investment funds will be attached to the Plan as Attachment A. The Administrative Committee may add or delete any investment fund at any time. If a Participant fails to make a designation, then his or her Director Fee Account will be deemed to be invested in the investment fund designated by the Administrative Committee from time to time for such default. The Administrative Committee may establish restrictions on the investment funds in such manner as it deems appropriate.
(b) A Participant may change his or her investment designation for future contributions to be allocated to his or her Director Fee Account. Any such change will be made in accordance with the procedures established by the Administrative Committee, and the frequency of such changes may be limited by the Administrative Committee.
(c) A Participant may also convert his or her investment designation with respect to the amounts already allocated to his or her Director Fee Account. Any such conversion will be made in accordance with the procedures established by the Administrative Committee, and the frequency of such conversions may be limited by the Administrative Committee.
4.03Adjustment of Stock Compensation Accounts
(f)The units under the Stock Compensation Accounts shall be appropriately adjusted for any changes in the Stock by reason of any recapitalization, reorganization, merger, consolidation, spin-off, split-up or any similar change affecting the Stock.
(g)From time to time additional units (or fractional units) shall be credited to Stock Compensation Accounts in amounts equal to the number of shares of Stock (or fractional share) and determined as (i) the amount of any dividend or distribution paid in cash (or the fair market value of a dividend or distribution paid in property) which a Nonemployee Director would have received if on the record date of such dividend or distribution the Nonemployee Director had been the owner of record of a number of shares of Stock equal to the number of units then credited to the Stock Compensation Account, divided by (ii) the market value per share on the date such dividend or distribution is paid. For purposes of the Plan, “market value per share” shall be equal to the closing price for a share of Stock as reported by any exchange on which the Stock may be listed on such date, or, if no shares of the Stock were traded on such date, on the next preceding date on which the Stock was so traded.
4.04Valuation of Accounts
Whenever an event requires a determination of the value of a Participant's Accounts, the value shall be computed as of the date of the event, or if the date of the event is not a business day, the close of the next business day, except as otherwise specified in this Plan. For this purpose, a “business day” is any day on which the New York Stock Exchange is open.
ARTICLE 5- PAYMENT OF BENEFITS
5.01Commencement of Payment
(h)Subject to the limitations set forth below, each time a Participant elects to defer Director Fees and/or Director Stock Compensation otherwise earned and payable in a Service Year commencing prior to January 1, 2009, the Participant shall specify on the applicable Deferral Agreement whether the value of his Director Fees and the value of his Director Stock Compensation deferred pursuant to that Deferral Agreement will be distributed on the occurrence of one of the following events:
(i)The January 15th following the calendar year in which the Participant's Separation from Service occurs.
(ii)The January 15th of the Specified Distribution Year designated by the Participant, or, if earlier, the January 15th following the calendar year in which the Participant's Separation from Service occurs; provided however, the Specified Distribution Year elected begins at least 12 months after the last day of the Service Year in which the amounts being deferred were earned.
1n the event a Nonemployee Director fails to select a payment date on his initial Deferral Agreement, the Nonemployee Director shall be deemed to have elected to have the value of the Deferrals made pursuant to that Agreement distributed as of January 15th of the calendar year following the calendar year in which the Participant incurs a Separation from Service. Subject to the limitations contained herein, the payment date (or dates) indicated on a Director's initial Deferral Agreement shall apply to all subsequent Plan Year deferrals, except as otherwise provided on a subsequent election made in accordance with the provisions of Section 5.0l(a).
(i)Notwithstanding any Plan provisions to the contrary, the portion of the Director Fees Account and/or Director Stock Compensation Account attributable to Director Fees or Director Stock Compensation deferred by a Participant with respect to a Service Year commencing on or after January 1, 2009 will be distributed as of the January 15th following the calendar year in which the Participant's Separation from Service occurs.
5.02Method and Form of Payment
(j)(i) All distributions from the Participant's Director Fee Account shall be made in cash.
(ii) All distributions from the Participant's Stock Compensation Account shall be distributed in Stock. The number of shares of Stock to be distributed to the Participant (or on his behalf) shall be equal to the number of units then credited to his Stock Compensation Account. However, if fractional shares of Stock would have to be delivered, such distribution shall be adjusted by rounding upward or downward to the nearest whole share of Stock.
(k)(i) Each time a Participant elects to defer Director Fees and/or Director Stock Compensation otherwise earned and payable in a Service Year commencing prior to January 1, 2009, the Participant shall specify on the applicable Deferral Agreement whether the value of his Director Fees and the value of his Director Stock Compensation deferred pursuant to that Deferral Agreement will be distributed in either a lump sum or in ratable installments over a period not to exceed 10 years.
(ii) Notwithstanding any Plan provision to the contrary, a Participant shall elect prior to December 31, 2008, or if later, on his initial Deferral Agreement, whether the value of the portion of his Director Fees Account and Director Stock Compensation Account attributable to Director Fees or Director Stock Compensation, whichever is applicable, deferred to said Accounts on or after January 1, 2009, or the date he first became a Participant, if later, will be distributed in a lump sum or in ratable installments over a period not to exceed 10 years.
A Participant's election of installment payments must specify the number of installments in which the Participant's distribution is to be paid. Installments will be paid on an annual basis for the number of years specified by the Participant. The value of each installment paid during a calendar year shall be equal to the value of the portion of the Participant's Account to be paid in such installments as of the December 31 preceding the calendar year in which payment will be made, divided by the number of remaining installments. However, if fractional shares of Stock would have to be delivered, such installments shall be adjusted by rounding upward or downward to the nearest whole share of Stock. In the case of Director Fee Accounts, the amount of each installment shall be determined by assuming that the rate of interest in effect when the first installment is paid will remain in effect throughout the payout period. Any surplus or shortfall resulting from a change in the interest rate shall be taken into account in making the last installment.
(l)The form of payment indicated on a Nonemployee Director's initial Deferral Agreement shall apply to all subsequent Plan Year deferrals, except as otherwise provided on a subsequent election made in accordance with the provisions of Section 5.02(b)(i).
(m)In the event a Nonemployee Director fails to select a form of payment on his initial Deferral Agreement, the Nonemployee Director shall be deemed to have elected payment in annual installments over 10 years. Such form of payment shall apply to all subsequent Plan Year deferrals, except as otherwise provided on a subsequent election made in accordance with the provisions of Section 5.02(b)(i).
5.01Death Benefit
(n)Notwithstanding any Plan provision to the contrary, in the event of the death of the Participant prior to full payment of amounts credited to the Participant's Accounts, the unpaid amount shall be, pursuant to the provisions of Section 5.02(a) above, paid, in the case of cash, or delivered, in the case of shares of Stock in a single lump sum payment to the Participant's Beneficiary on the January 15th of the calendar year following the calendar year in which the death of the Participant occurs.
(o)Each Participant shall file with the Administrative Committee a written designation of one or more persons as the Beneficiary who shall be entitled to receive the amount, if any, payable under paragraph (a) above. A Participant may, from time to time, revoke or change his Beneficiary designation without the consent of any prior Beneficiary by filing a new designation with the Administrative Committee. The last such designation received by the Administrative Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Administrative Committee prior to the Participant's death, and in no event shall it be effective as of a date prior to such receipt. If no such Beneficiary designation is in effect at the time of a Participant's death, or if no designated Beneficiary survives the Participant, payment shall be made to the estate of the Participant.
5.03Changes
A Participant may change his election of form of payment under Section 5.02(b) only as follows: (i) the change must be submitted on a written “Distribution Election Change Form” provided by the Administrative Committee at least 12 months before the date previously specified for payment (in the case of a lump sum payment) or commencement of payments (in the case of annual installments); (ii) the Distribution Election Change Form shall not take effect until 12 months after the date it is received; and (iii) the Distribution Election Change Form must specify an additional deferral period of at least 5 years. For this purpose, distributions that are to be paid in installments (as opposed to in a lump sum) shall be treated as a single payment payable on the date the installments are due to commence, so that in making the change in election, the entire installment series will be subject to an additional deferral of at least 5 years; Only one distribution election change is permitted per Plan Year. If a Distribution Election Change Form does not satisfy the conditions set forth in this Section 5.04 in form or in operation, the prior election in the Participant's initial Deferral Agreement shall be used to determine the form and timing of payment. Notwithstanding the foregoing, if the rules under Section 409A are modified with respect to changes to payment elections, those rules shall apply in lieu of those provided, however, that the additional period of deferral shall not in any way limit a distribution made pursuant to Section 5.03 (Death Benefit). The changed election otherwise will be subject to all of the terms of that election under Section 5.02(b).
ARTICLE 6 - AMENDMENT OR TERMINATION
6.01Right to Terminate
Notwithstanding any Plan provision to the contrary, the Company may, by action of the Board of Directors, terminate the Plan and the related Deferral Agreements at any time. The Company shall continue to maintain the Accounts until distributed in accordance with the Participant’s elections and the provisions of Section 409A of the Code. The Nonemployee Directors shall remain 100% vested in all amounts credited to their Accounts.
6.02Right to Amend
The Board of Directors may amend or modify this Plan and the related Deferral Agreements in any way either retroactively or prospectively. However, except that without the consent of the Participant or Beneficiary, if applicable, no amendment or modification shall reduce or diminish such person's right to receive any benefit accrual hereunder prior to the date of such amendment or modification, and no amendment shall be made that would violate any applicable provision of Section 409A of the Code. Notice of an amendment or modification to the Plan shall be given in writing to each Participant and Beneficiary of a deceased Participant having an interest in the Plan.
ARTICLE 7 - GENERAL PROVISIONS
7.01Funding
All amounts payable in accordance with this Plan shall constitute a general unsecured obligation of the Company. Such amounts, as well as any administrative costs relating to the Plan, shall be paid out of the general assets of the Company. Notwithstanding the foregoing, shares of Stock to be delivered to or on behalf of a Participant pursuant to the provisions of Article 5 may be paid from Treasury Shares, authorized but unissued.
7.02Unsecured Interest
No special or separate fund shall be established, and no segregation of assets shall be made, to assure the payments thereunder. No Participant hereunder shall have any right, title, or interest whatsoever in any specific assets of the Company. Nothing contained in this Plan and no action taken pursuant to its provisions shall create or be construed to create a trust of any kind or a fiduciary relationship between the Company and a Participant or any other person. To the extent that any person acquires a right to receive payments under this Plan, such right shall be no greater than the right of any unsecured creditor of the Company.
7.03Facility of Payment
In the event that the Administrative Committee shall find that a Participant or Beneficiary is incompetent to care for his affairs or is a minor, the Administrative Committee may direct that any benefit payment due him, unless claim shall have been made therefore by a duly appointed legal representative, be paid on his behalf to bis spouse, a child, a parent or other relative, and any such payment so made shall thereby be a complete discharge of the liability of the Company and the Plan for that payment.
7.04Nonalienation
Subject to any applicable law, no benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void, nor shall any such benefit be in any manner liable for or subject to garnishment, attachment, execution or levy, or liable for or subject to the debts, contracts, liabilities, engagements or torts of a person entitled to such benefits.
7.05No Interest As a Shareholder
The crediting of units to a Stock Compensation Account shall not be deemed to create for a Nonemployee Director any interest in any class of equity securities of the Company.
7.06Stock Certificates
Notwithstanding any other provision of the Plan or agreement made pursuant thereto, the Company shall not be required to issue or deliver any certificates for shares of Stock under the Plan prior to the fulfillment of all of the following conditions:
a.Listing or approval for listing upon official notice of issuance of such shares on the New York Stock Exchange, or such other securities exchange as may at the time be a market for the Stock.
b.Any registration or other qualification of shares under any state or federal law or regulation which the Company, upon advice of counsel, deems necessary or advisable.
7.07 Payment of Expenses
All administrative expenses of the Plan and all benefits under the Plan shall be paid from the general assets of the Company.
7.08 Withholding Taxes
The Company shall have the right to deduct from each payment to be made under the Plan any required withholding taxes.
7.09 Compliance
It is the intent of the Company that the Plan complies with the provisions of Section 409A of the Code, any regulations and other guidance promulgated with respect thereto and the provisions of the Plan shall be interpreted to be consistent therewith.
7.10 Compliance with Securities and Other Laws
Notwithstanding any Plan provision to the contrary, the Administrative Committee may at any time impose such restrictions on the Plan and participation therein, including limiting the amount of any deferral or the timing thereof, as the Administrative Committee may deem advisable from time to time in order to comply or preserve compliance with any applicable laws, including any applicable state and federal securities laws and exemptions from registration available thereunder.
7.11 Compliance with Section 409A
This Plan is intended to comply with Section 409A of the Code, and the Treasury Regulations promulgated, and other official guidance issued thereunder (“Section 409A”), and shall be construed accordingly. To the extent there is any ambiguity as to whether any provision of this Plan would otherwise contravene one or more requirements or limitations of Section 409A, such provision shall be interpreted and applied in a manner that does not result in a violation of the applicable requirements or limitations of Section 409A. For purposes of this Section 7.11, each installment of any payments made under Section 5.02(b)(ii) of the Plan shall be considered to be a separate payment. The Administrative Committee, in its sole and absolute discretion, may accelerate the time or form of payment of a benefit owed hereunder, provided such acceleration is permitted under Treas. Reg. Section 1.409A-3(j)(4). The Administrative Committee may also, in
its sole and absolute discretion, delay the time for payment of a benefit owed hereunder, to the extent permitted under Treas. Reg. Section 1.409A-2(b)(7).
7.12 Discharge of Company's Obligation
The payment by the Company of the benefits due under each and every Deferral Agreement to the Participant or his Beneficiary shall discharge the Company's obligation under the Plan, and the Participant or Beneficiary shall have no further rights under this Plan or the Deferral Agreements upon receipt by the appropriate person of all such benefits.
7.1Construction/Representations
(p)The Plan shall be construed, regulated and administered in accordance with the laws of the State of New York, subject to the provisions of applicable federal laws.
(q)The masculine pronoun shall mean the feminine wherever appropriate.
(r)The illegality of any particular provision of this document shall not affect the other provisions, and the document shall be construed in all respects as if such invalid provision were omitted.
(s)The Company makes no representations regarding the tax benefits or consequences of deferring compensation under this Plan, and specifically disclaims any responsibility for tax advice in connection with participation in this Plan. Each participant is responsible for making bis own determination as to the benefits and consequences of Plan participation.
ARTICLE 8 - ADMINISTRATION
8.01Administration
(t)The Administrative Committee shall be the Governance Committee of the Board of Directors.
(u)The Administrative Committee shall have the exclusive responsibility and complete discretionary authority to control the operation, management and administration of the Plan, with all powers necessary to enable it properly to carry out such responsibilities, including, but not limited to, the power to interpret the Plan and any related documents, to establish procedures for making any elections called for under the Plan, to make factual determinations regarding any and all matters arising hereunder, including, but not limited to, the right to determine eligibility for benefits, the right to construe the terms of the Plan, the right to remedy possible ambiguities, inequities, inconsistencies or omissions, and the right to resolve all interpretive, equitable or other questions arising under the Plan. The Administrative Committee may employ and rely on such legal counsel, actuaries, accountants and agents, as it may deem advisable to assist in the administration of the Plan.
(v)To the extent permitted by law, all agents and representatives of the Administrative Committee shall be indemnified by the Company and held harmless against any claims and the expenses of defending against such claims and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of the Plan, except claims arising from gross negligence, willful neglect or willful misconduct.
