Exhibit 10.1
VIRCO MFG. CORPORATION
2011 STOCK INCENTIVE PLAN
1. Purpose
The purpose of the Virco Mfg. Corporation 2011 Stock Incentive Plan (the Plan) is
to advance the interests of Virco Mfg. Corporation (the Company) by stimulating the efforts of
employees, officers, non-employee directors and other service providers, in each case who are
selected to be participants, by heightening the desire of such persons to continue working toward
and contributing to the success and progress of the Company. The Plan provides for the grant of
Incentive and Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock and
Restricted Stock Units, any of which may be performance-based, as determined by the Administrator.
2. Definitions
As used in the Plan, the following terms shall have the meanings set forth below:
(a) Administrator means the Administrator of the Plan in accordance with
Section 16.
(b) Award means an Incentive Stock Option, Nonqualified Stock Option, Stock
Appreciation Right, Restricted Stock or Restricted Stock Unit granted to a Participant pursuant to
the provisions of the Plan, any of which the Administrator may structure to qualify in whole or in
part as a Performance Award.
(c) Award Agreement means a written or electronic agreement or other instrument as
may be approved from time to time by the Administrator implementing the grant of each Award. An
Agreement may be in the form of an agreement to be executed by both the Participant and the Company
(or an authorized representative of the Company) or certificates, notices or similar instruments as
approved by the Administrator.
(d) Board means the board of directors of the Company.
(e) Code means the Internal Revenue Code of 1986, as amended from time to time,
and the rulings and regulations issues thereunder.
(f) Company means Virco Mfg. Corporation, a Delaware corporation.
(g) Exchange Act means the Securities Exchange Act of 1934, as amended from time
to time, or any successor Act thereto.
(h) Fair Market Value means, as of any given date, the closing sales price on such
date during normal trading hours (or, if there are no reported sales on such date, on the last date
prior to such date on which there were sales) of the Shares on the NASDAQ Stock Exchange or, if not
listed on such exchange, on any other national securities exchange on which the Shares are listed
or on an inter-dealer quotation system, in any case, as reported in such source as the
Administrator shall select. If there is no regular public trading market for the Shares, the Fair
Market Value of the Shares shall be determined by the Administrator in good faith and in compliance
with Section 409A of the Code.
(i) Incentive Stock Option means a stock option that is intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
(j) Nonemployee Director means each person who is, or is elected to be, a member
of the Board and who is not an employee of the Company or any Subsidiary.
(k) Nonqualified Stock Option means a stock option that is not intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(l) Option means an Incentive Stock Option and/or a Nonqualified Stock Option
granted pursuant to Section 6 of the Plan.
(m) Participant means any individual described in Section 3 to whom Awards have
been granted from time to time by the Administrator and any authorized transferee of such
individual.
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(n) Performance Award means an Award, the grant, issuance, retention, vesting or
settlement of which is subject to satisfaction of one or more performance criteria pursuant to
Section 12.
(o) Person shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a group as described in
Section 13(d) thereof.
(p) Plan means the Virco Mfg. Corporation 2011 Stock Incentive Plan as set forth
herein and as amended from time to time.
(q) Qualifying Performance Criteria has the meaning set forth in Section 12(b).
(r) Restricted Stock means Shares granted pursuant to Section 8 of the Plan.
(s) Restricted Stock Unit means an Award granted to a Participant pursuant to
Section 8 pursuant to which Shares or cash in lieu thereof may be issued in the future.
(t) Share means a share of the Companys common stock, $0.01 par value per share
(or such other par value as may be designated by act of the Companys stockholders), subject to
adjustment as provided in Section 11.
(u) Stock Appreciation Right means a right granted pursuant to Section 7 of the
Plan that entitles the Participant to receive, in cash or Shares or a combination thereof, as
determined by the Administrator, value equal to or otherwise based on the excess of (i) the Fair
Market Value of a specified number of Shares at the time of exercise over (ii) the exercise price
of the right, as established by the Administrator on the date of grant.
(v) Subsidiary means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company where each of the corporations in the unbroken chain
other than the last corporation owns stock possessing at least 50 percent or more of the total
combined voting power of all classes of stock in one of the other corporations in the chain, and if
specifically determined by the Administrator in the context other than with respect to Incentive
Stock Options, may include an entity in which the Company has a significant ownership interest or
that is directly or indirectly controlled by the Company.
(w) Substitute Awards means 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, by a company acquired by the Company or any Subsidiary or with
which the Company or any Subsidiary combines.
(x) Termination of Employment means ceasing to serve as an employee of the Company
and its Subsidiaries or, with respect to a Nonemployee Director or other service provider, ceasing
to serve as such for the Company, except that with respect to all or any Awards held by a
Participant (i) the Administrator may determine that a leave of absence or employment on a less
than full-time basis is not considered a Termination of Employment, (ii) the Administrator may
determine that a transition of employment to service with a partnership, joint venture or
corporation not meeting the requirements of a Subsidiary in which the Company or a Subsidiary is a
party is not considered a Termination of Employment, (iii) service as a member of the Board shall
constitute continued employment with respect to Awards granted to a Participant while he or she
served as an employee, and (iv) service as an employee of the Company or a Subsidiary shall
constitute continued employment with respect to Awards granted to a Participant while he or she
served as a member of the Board or other service provider. The Administrator shall determine
whether any corporate transaction, such as a sale or spin-off of a division or subsidiary that
employs a Participant, shall be deemed to result in a Termination of Employment with the Company
and its Subsidiaries for purposes of any affected Participants Awards, and the Administrators
decision shall be final and binding.
3. Eligibility
Any person who is a current or prospective officer or employee (including any
director who is also an employee, in his or her capacity as such) or other service provider of the
Company or of any Subsidiary shall be eligible for selection by the Administrator for the grant of
Awards hereunder. To the extent provided by Section 5(d), any Nonemployee Director shall be
eligible for the grant of Awards hereunder as determined by the Administrator. Options intending to
qualify as Incentive Stock Options may only be granted to employees of the Company or any
Subsidiary within the meaning of the Code and as selected by the Administrator.
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4. Effective Date and Termination of Plan
This Plan was adopted by the Board on May 6, 2011 and will become effective upon
approval by the Companys stockholders (the Effective Date), which approval must be obtained
within twelve (12) months of the adoption of this Plan by the Board. The Plan shall remain
available for the grant of Awards until the tenth (10th) anniversary of the date of Board approval
of the Plan. Notwithstanding the foregoing, the Plan may be terminated at such earlier time as the
Board may determine. Termination of the Plan will not affect the rights and obligations of the
Participants and the Company arising under Awards theretofore granted and then in effect.
5. Shares Subject to the Plan and to Awards
(a)
Aggregate Limits
. The aggregate number of Shares issuable pursuant to all
Awards under this Plan shall not exceed 1,000,000. The aggregate number of Shares available for
grant under this Plan and the number of Shares subject to outstanding Awards shall be subject to
adjustment as provided in Section 11. The Shares issued pursuant to Awards granted under this Plan
may be Shares that are authorized and unissued or Shares that were reacquired by the Company,
including Shares purchased in the open market.
(b)
Issuance of Shares
. For purposes of Section 5(a), the aggregate number of
Shares issued under this Plan at any time shall equal only the number of Shares actually issued
upon exercise or settlement of an Award under this Plan. Without limiting the foregoing, Shares
subject to an Award under this Plan shall not again be made available for issuance under this Plan
if such Shares are: (i) Shares that were subject to a stock-settled Stock Appreciation Right and
were not issued upon the net settlement or net exercise of such Stock Appreciation Right,
(ii) Shares used to pay the exercise price of an Option, (iii) Shares delivered to or withheld by
the Company to pay the withholding taxes related to an Award, or (iv) Shares repurchased on the
open market with the proceeds of an Option exercise. In addition, Shares subject to Awards that
have been canceled, expired, forfeited or otherwise not issued under an Award and Shares subject to
Awards settled in cash shall not count as Shares issued under this Plan.
(c)
Tax Code Limits
. The aggregate number of Shares subject to Awards granted under
this Plan during any calendar year to any one Participant shall not exceed 100,000, which number
shall be calculated and adjusted pursuant to Section 11 only to the extent that such calculation or
adjustment will not affect the status of any Award intended to qualify as performance-based
compensation under Section 162(m) of the Code but which number shall not count any tandem SARs (as
defined in Section 7). The aggregate number of Shares that may be issued pursuant to the exercise
of Incentive Stock Options granted under this Plan shall not exceed 1,000,000, which number shall
be calculated and adjusted pursuant to Section 11 only to the extent that such calculation or
adjustment will not affect the status of any option intended to qualify as an Incentive Stock
Option under Section 422 of the Code.
(d)
Director Awards
. The aggregate number of Shares subject to Awards granted under
this Plan during any calendar year to any one Nonemployee Director shall not exceed 25,000;
provided, however, that in the calendar year in which a Nonemployee Director first joins the Board
of Directors or is first designated as Chairman of the Board of Directors or Lead Director, the
maximum number of Shares subject to Awards granted to the Participant may be up to two hundred
percent (200%) of the number of Shares set forth in the foregoing limits and the foregoing limits
shall not count any tandem SARs (as defined in Section 7).
(e)
Substitute Awards.
Substitute Awards shall not reduce the Shares authorized for
issuance under the Plan or authorized for grant to a Participant in any calendar year.
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
stockholders 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 issuance under the Plan; 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 employees, directors or other service providers of such acquired or
combined company before such acquisition or combination.
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6. Options
(a)
Option Awards
. Options may be granted at any time and from time to time prior
to the termination of the Plan to Participants as determined by the Administrator. No Participant
shall have any rights as a stockholder with respect to any Shares subject to Option hereunder until
said Shares have been issued. Each Option
shall be evidenced by an Award Agreement. Options granted pursuant to the Plan need not be
identical but each Option must contain and be subject to the terms and conditions set forth below.
(b)
Price
. The Administrator will establish the exercise price per Share under each
Option, which in no event will be less than the Fair Market Value of the Shares on the date of
grant; provided, however, that the exercise price per Share with respect to an Option that is
granted in connection with a merger or other acquisition as a substitute or replacement award for
options held by optionees of the acquired entity may be less than 100% of the market price of the
Shares on the date such Option is granted if such exercise price is based on a formula set forth in
the terms of the options held by such optionees or in the terms of the agreement providing for such
merger or other acquisition. The exercise price of any Option may be paid in Shares, cash or a
combination thereof, as determined by the Administrator, including an irrevocable commitment by a
broker to pay over such amount from a sale of the Shares issuable under an Option, the delivery of
previously owned Shares and withholding of Shares otherwise deliverable upon exercise.
(c)
No Repricing without Stockholder Approval
. Other than in connection with a
change in the Companys capitalization (as described in Section 11), at any time when the exercise
price of an Option is above the Fair Market Value of a Share, the Company shall not, without
stockholder approval, (i) reduce the exercise price of such Option, (ii) exchange such Option for
cash, another Award or a new Option or Stock Appreciation Right with a lower exercise or base price
or (iii) otherwise reprice such Option.
(d)
Provisions Applicable to Options
. The date on which Options become exercisable
shall be determined at the sole discretion of the Administrator and set forth in an Award
Agreement. The Administrator shall establish the term of each Option, which in no case shall exceed
a period of ten (10) years from the date of grant.
(e)
Termination of Employment.
Unless an Option earlier expires upon the expiration
date established pursuant Section 6(d), upon the Participants Termination of Employment, his or
her rights to exercise an Option then held shall be determined by the Administrator and set forth
in an Award Agreement.
(f)
Incentive Stock Options
. Notwithstanding anything to the contrary in this
Section 6, in the case of the grant of an Option intending to qualify as an Incentive Stock Option:
(i) if the Participant owns stock possessing more than 10 percent of the combined voting power of
all classes of stock of the Company (a 10% Shareholder), the exercise price of such Option must
be at least 110 percent of the Fair Market Value of the Shares on the date of grant and the Option
must expire within a period of not more than five (5) years from the date of grant, and
(ii) Termination of Employment will occur when the person to whom an Award was granted ceases to be
an employee (as determined in accordance with Section 3401(c) of the Code and the regulations
promulgated thereunder) of the Company and its Subsidiaries. Notwithstanding anything in this
Section 6 to the contrary, Options designated as Incentive Stock Options shall not be eligible for
treatment under the Code as Incentive Stock Options (and will be deemed to be Nonqualified Stock
Options) to the extent that either (a) the aggregate Fair Market Value of Shares (determined as of
the time of grant) with respect to which such Options are exercisable for the first time by the
Participant during any calendar year (under all plans of the Company and any Subsidiary) exceeds
$100,000, taking Options into account in the order in which they were granted, or (b) such Options
otherwise remain exercisable but are not exercised within three (3) months of Termination of
Employment (or such other period of time provided in Section 422 of the Code).
7. Stock Appreciation Rights
Stock Appreciation Rights may be granted to Participants from time to time either in
tandem with or as a component of other Awards granted under the Plan (tandem SARs) or not in
conjunction with other Awards (freestanding SARs) and may, but need not, relate to a specific
Option granted under Section 6. The provisions of Stock Appreciation Rights need not be the same
with respect to each grant or each recipient. Any Stock Appreciation Right granted in tandem with
an Award may be granted at the same time such Award is granted or at any time thereafter before
exercise or expiration of such Award. All freestanding SARs shall be granted subject to the same
terms and conditions applicable to Options as set forth in Section 6 and all tandem SARs shall have
the same exercise price, vesting, exercisability, forfeiture and termination provisions as the
Award to which they relate.
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Subject to the provisions of Section 6 and the immediately preceding
sentence, the Administrator may impose such other conditions or restrictions on any Stock
Appreciation Right as it shall deem appropriate. Stock Appreciation Rights may be settled in
Shares, cash or a combination thereof, as determined by the Administrator and set forth in the
applicable Award Agreement. Other than in connection with a change in the Companys capitalization
(as described in Section 11), at any time when the exercise price of a Stock Appreciation Right is
above the Fair Market Value of a Share, the Company shall not, without stockholder approval,
(i) reduce the exercise or base price of such Stock Appreciation Right, (ii) exchange such Stock
Appreciation Right for cash, another Award or a new Option or
Stock Appreciation Right with a lower exercise or base price or (iii) otherwise reprice such Stock
Appreciation Right.
8. Restricted Stock and Restricted Stock Units
(a)
Restricted Stock and Restricted Stock Unit Awards
. Restricted Stock and
Restricted Stock Units may be granted at any time and from time to time prior to the termination of
the Plan to Participants as determined by the Administrator. Restricted Stock is an award of
Shares, the grant, issuance, retention, vesting and/or transferability of which is subject during
specified periods of time to such conditions (including continued employment or performance
conditions) and terms as the Administrator deems appropriate. Restricted Stock Units are Awards
denominated in units of Shares under which the issuance of Shares is subject to such conditions
(including continued employment or performance conditions) and terms as the Administrator deems
appropriate. Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an
Award Agreement. Unless determined otherwise by the Administrator, each Restricted Stock Unit will
be equal to one Share and will entitle a Participant to either the issuance of Shares or payment of
an amount of cash determined with reference to the value of Shares. To the extent determined by the
Administrator, Restricted Stock and Restricted Stock Units may be satisfied or settled in Shares,
cash or a combination thereof. Restricted Stock and Restricted Stock Units granted pursuant to the
Plan need not be identical but each grant of Restricted Stock and Restricted Stock Units must
contain and be subject to the terms and conditions set forth below.
(b)
Contents of Agreement
. Each Award Agreement shall contain provisions regarding
(i) the number of Shares or Restricted Stock Units subject to such Award or a formula for
determining such number, (ii) the purchase price of the Shares, if any, and the means of payment,
(iii) the performance criteria, if any, and level of achievement versus these criteria that shall
determine the number of Shares or Restricted Stock Units granted, issued, retainable and/or vested,
(iv) such terms and conditions on the grant, issuance, vesting and/or forfeiture of the Shares or
Restricted Stock Units as may be determined from time to time by the Administrator, (v) the term of
the performance period, if any, as to which performance will be measured for determining the number
of such Shares or Restricted Stock Units, and (vi) restrictions on the transferability of the
Shares or Restricted Stock Units. Shares issued under a Restricted Stock Award may be issued in the
name of the Participant and held by the Participant or held by the Company, in each case as the
Administrator may provide.
(c)
Vesting and Performance Criteria
. The grant, issuance, retention, vesting
and/or settlement of Shares of Restricted Stock and Restricted Stock Units will occur when and in
such installments as the Administrator determines or under criteria the Administrator establishes,
which may include Qualifying Performance Criteria. Notwithstanding anything in this Plan to the
contrary, the performance criteria for any Restricted Stock or Restricted Stock Unit that is
intended to satisfy the requirements for performance-based compensation under Section 162(m) of
the Code will be a measure based on one or more Qualifying Performance Criteria selected by the
Administrator and specified when the Award is granted.
(d)
Termination of Employment
: Upon the Participants Termination of Employment,
his or her rights to unvested Restricted Stock or Restricted Stock Units then held shall be
determined by the Administrator and set forth in an Award Agreement.
(e)
Discretionary Adjustments and Limits
. Subject to the limits imposed under
Section 162(m) of the Code for Awards that are intended to qualify as performance-based
compensation, notwithstanding the satisfaction of any performance goals, the number of Shares
granted, issued, retainable and/or vested under an Award of Restricted Stock or Restricted Stock
Units on account of either financial performance or personal performance evaluations may, to the
extent specified in the Award Agreement, be reduced, but not increased, by the Administrator on the
basis of such further considerations as the Administrator shall determine.
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(f)
Voting Rights
. Unless otherwise determined by the Administrator, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect
to those Shares during the period of restriction. Participants shall have no voting rights with
respect to Shares underlying Restricted Stock Units unless and until such Shares are reflected as
issued and outstanding Shares on the Companys stock ledger.
(g)
Dividends and Distributions
. Participants in whose name an Award of Restricted
Stock and/or Restricted Stock Units is granted shall be entitled to receive all dividends and other
distributions paid with respect to the Shares underlying such Award, unless determined otherwise by
the Administrator. The Administrator will determine whether any such dividends or distributions
will be automatically reinvested in additional Shares or will be payable in cash; provided that
such additional Shares and/or cash shall subject to the same restrictions and vesting conditions as
the Award with respect to which they were distributed. Notwithstanding anything herein to the
contrary, in no event shall dividends or dividend equivalents be currently payable with respect to
unvested or unearned Performance Awards.
9. Deferral of Gains
The Administrator may, in an Award Agreement or otherwise, provide for the deferred
delivery of Shares upon settlement, vesting or other events with respect to Restricted Stock or
Restricted Stock Units. Notwithstanding anything herein to the contrary, in no event will any
deferral of the delivery of Shares or any other payment with respect to any Award be allowed if the
Administrator determines, in its sole discretion, that the deferral would result in the imposition
of the additional tax under Section 409A(a)(1)(B) of the Code. No Award shall provide for deferral
of compensation that does not comply with Section 409A of the Code, unless the Board, at the time
of grant, specifically provides that the Award is not intended to comply with Section 409A of the
Code. The Company shall have no liability to a Participant, or any other party, if an Award that is
intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or
compliant or for any action taken by the Board.
10. Conditions and Restrictions Upon Securities Subject to Awards
The Administrator may provide that the Shares issued upon exercise of an Option or
Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such
further agreements, restrictions, conditions or limitations as the Administrator in its discretion
may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting
or settlement of such Award, including without limitation, conditions on vesting or
transferability, forfeiture or repurchase provisions and method of payment for the Shares issued
upon exercise, vesting or settlement of such Award (including the actual or constructive surrender
of Shares already owned by the Participant) or payment of taxes arising in connection with an
Award. Without limiting the foregoing, such restrictions may address the timing and manner of any
resales by the Participant or other subsequent transfers by the Participant of any Shares issued
under an Award, including without limitation (i) restrictions under an insider trading policy or
pursuant to applicable law, (ii) restrictions designed to delay and/or coordinate the timing and
manner of sales by Participant and holders of other Company equity compensation arrangements, (iii)
restrictions as to the use of a specified brokerage firm for such resales or other transfers, and
(iv) provisions requiring Shares to be sold on the open market or to the Company in order to
satisfy tax withholding or other obligations.
11. Adjustment of and Changes in the Shares
The number and kind of Shares available for issuance under this Plan (including
under any Awards then outstanding), and the number and kind of Shares subject to the individual
limits set forth in Section 5 of this Plan, shall be equitably adjusted by the Administrator as it
determines appropriate to reflect any reorganization, reclassification, combination of Shares,
stock split, reverse stock split, spin-off, dividend or distribution of securities, property or
cash (other than regular, quarterly cash dividends), or any other event or transaction that affects
the number or kind of Shares of the Company outstanding. Such adjustment shall be designed to
comply with Sections 409A and 424 of the Code or, except as otherwise expressly provided in Section
5(c) of this Plan, may be designed to treat the Shares available under the Plan and subject to
Awards as if they were all outstanding on the record date for such event or transaction or to
increase the number of such Shares to reflect a deemed reinvestment in Shares of the amount
distributed to the Companys securityholders. The terms of any outstanding Award shall also be
equitably adjusted by the Administrator as to price, number or kind of Shares subject to such
Award, vesting,
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and other terms to reflect the foregoing events, which adjustments need not be
uniform as between different Awards or different types of Awards.
In the event there shall be any other change in the number or kind of outstanding
Shares, or any stock or other securities into which such Shares shall have been changed, or for
which it shall have been exchanged, by reason of a change in control, other merger, consolidation
or otherwise, then the Administrator shall, in its sole discretion, determine the appropriate and
equitable adjustment, if any, to be effected.
No right to purchase fractional Shares shall result from any adjustment in Awards
pursuant to this Section 11. In case of any such adjustment, the Shares subject to the Award shall
be rounded down to the nearest whole share. The Company shall notify Participants holding Awards
subject to any adjustments pursuant to this Section 11 of such adjustment, but (whether or not
notice is given) such adjustment shall be effective and binding for all purposes of the Plan.
Unless otherwise expressly provided in the Award Agreement or another contract,
including an employment agreement, or under the terms of a transaction constituting a change in
control, the Administrator may provide that any or all of the following shall occur upon a
Participants Termination of Employment within twenty-four (24) months following a change in
control: (a) in the case of an Option or Stock Appreciation
Right, the Participant shall
have the ability to exercise any portion of the Option or Stock Appreciation Right not previously
exercisable, (b) in the case of a Performance Award, the Participant shall have the right to
receive a payment equal to the target amount payable or, if greater, a payment based on performance
through a date determined by the Administrator prior to the change in control, and (c) in the case
of outstanding Restricted Stock and/or Restricted Stock Units, all conditions to the grant,
issuance, retention, vesting or transferability of, or any other restrictions applicable to, such
Award shall immediately lapse. Notwithstanding anything herein to the contrary, in the event of a
change in control in which the acquiring or surviving company in the transaction does not assume or
continue outstanding Awards upon the change in control, immediately prior to the change in control,
all Awards that are not assumed or continued shall be treated as follows effective immediately
prior to the change in control: (a) in the case of an Option or Stock Appreciation Right, the
Participant shall have the ability to exercise such Option or Stock Appreciation Right, including
any portion of the Option or Stock Appreciation Right not previously exercisable, (b) in the case
of a Performance Award, the Participant shall have the right to receive a payment equal to the
target amount payable or, if greater, a payment based on performance through a date determined by
the Administrator prior to the change in control, and (c) in the case of outstanding Restricted
Stock and/or Restricted Stock Units, all conditions to the grant, issuance, retention, vesting or
transferability of, or any other restrictions applicable to, such Award shall immediately lapse.
12. Qualifying Performance-Based Compensation
(a)
General
. The Administrator may establish performance criteria and level of
achievement versus such criteria that shall determine the number of Shares, units, or cash to be
granted, retained, vested, issued or issuable under or in settlement of or the amount payable
pursuant to an Award, which criteria may be based on Qualifying Performance Criteria or other
standards of financial performance and/or personal performance evaluations. A Performance Award may
be identified as Performance Share, Performance Equity, Performance Unit or other such term
as chosen by the Administrator. In addition, the Administrator may specify that an Award or a
portion of an Award is intended to satisfy the requirements for performance-based compensation
under Section 162(m) of the Code, provided that the performance criteria for such Award or portion
of an Award that is intended by the Administrator to satisfy the requirements for
performance-based compensation under Section 162(m) of the Code shall be a measure based on one
or more Qualifying Performance Criteria selected by the Administrator and specified at the time the
Award is granted. The Administrator shall certify the extent to which any Qualifying Performance
Criteria has been satisfied, and the amount payable as a result thereof, prior to payment,
settlement or vesting of any Award that is intended to satisfy the requirements for
performance-based compensation under Section 162(m) of the Code. Notwithstanding satisfaction of
any performance goals, the number of Shares issued under or the amount paid under an award may, to
the extent specified in the Award Agreement, be reduced, but not increased, by the Administrator on
the basis of such further considerations as the Administrator in its sole discretion shall
determine.
(b)
Qualifying Performance Criteria
. For purposes of this Plan, the term
Qualifying Performance Criteria shall mean any one or more of the following performance criteria,
or derivations of such performance criteria, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business unit or
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Subsidiary, either
individually, alternatively or in any combination, and measured either annually or cumulatively
over a period of years, on an absolute basis or relative to a pre-established target, to previous
years results or to a designated comparison group, in each case as specified by the Administrator:
(i) cash flow (before or after dividends), (ii) earning or earnings per share (including earnings
before interest, taxes, depreciation and amortization), (iii) stock price, (iv) return on equity,
(v) total stockholder return, (vi) return on capital or investment (including return on total
capital, return on invested capital, or return on investment), (vii) return on assets or net
assets, (viii) market capitalization, (ix) economic value added, (x) debt leverage (debt to
capital), (xi) revenue, (xii) income or net income, (xiii) operating income or net operating
income, (xiv) operating profit or net operating profit, (xv) operating margin or profit margin,
(xvi) return on operating revenue, (xvii) cash from operations, (xviii) operating ratio,
(xix) operating revenue, (xx) NSR and/or total backlog, (xxi) days sales outstanding,
(xxii) customer service, (xxiii) operational safety, reliability and/or efficiency, and/or
(xxiv) environmental incidents. To the extent consistent with Section 162(m) of the Code, the
Administrator (A) shall appropriately adjust any evaluation of performance under a Qualifying
Performance Criteria to eliminate the effects of charges for restructurings, discontinued
operations, extraordinary items and all items of gain, loss or expense determined to be
extraordinary or unusual in nature or related to the acquisition or disposal of a segment of a
business or related to a change in accounting principle all as determined in accordance with
applicable accounting provisions, as well as the cumulative effect of accounting changes, in each
case as determined in accordance with generally accepted accounting principles or identified in the
Companys financial statements or notes to the financial statements, and (B) may appropriately
adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the
following events that occurs during a performance period: (i) asset write-downs, (ii) litigation,
claims, judgments or settlements, (iii) the effect of changes in tax law or other such laws or
provisions affecting reported results, (iv) accruals for reorganization and restructuring programs
and (v) accruals of any amounts for payment under this Plan or any other compensation arrangement
maintained by the Company.
13. Transferability
Each Award may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated by a Participant other than by will or the laws of descent and distribution, and
each Option or Stock Appreciation Right shall be exercisable only by the Participant during his or
her lifetime. Notwithstanding the foregoing, to the extent permitted by the Administrator, the
person to whom an Award is initially granted (the Grantee) may transfer an Award to any family
member of the Grantee (as such term is defined in Section 1(a)(5) of the General Instructions to
Form S-8 under the Securities Act of 1933, as amended (Form S-8)), to trusts solely for the
benefit of such family members and to partnerships in which such family members and/or trusts are
the only partners; provided that, (i) as a condition thereof, the transferor and the transferee
must execute a written agreement containing such terms as specified by the Administrator, and
(ii) the transfer is pursuant to a gift or a domestic relations order to the extent permitted under
the General Instructions to Form S-8. Except to the extent specified otherwise in the agreement the
Administrator provides for the Grantee and transferee to execute, all vesting, exercisability and
forfeiture provisions that are conditioned on the Grantees continued employment or service shall
continue to be determined with reference to the Grantees employment or service (and not to the
status of the transferee) after any transfer of an Award pursuant to this Section 13, and the
responsibility to pay any taxes in connection with an Award shall remain with the Grantee
notwithstanding any transfer other than by will or intestate succession.
14. Compliance with Laws and Regulations
This Plan, the grant, issuance, vesting, exercise and settlement of Awards
hereunder, and the obligation of the Company to sell, issue or deliver Shares under such Awards,
shall be subject to all applicable foreign, federal, state and local laws, rules and regulations,
stock exchange rules and regulations, and to such approvals by any governmental or regulatory
agency as may be required. The Company shall not be required to register in a Participants name or
deliver any Shares prior to the completion of any registration or qualification of such Shares
under any foreign, federal, state or local law or any ruling or regulation of any government body
which the Administrator shall determine to be necessary or advisable. To the extent the Company is
unable to or the Administrator deems it infeasible to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Companys counsel to be necessary to the
lawful issuance and sale of any Shares hereunder, the Company and its Subsidiaries shall be
relieved of any liability with respect to the failure to issue or sell such Shares as to which such
requisite authority shall not have been obtained. No Option shall be exercisable and no Shares
shall be issued and/or transferable under any other Award unless a registration statement with
respect to the Shares
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underlying such Option is effective and current or the Company has determined
that such registration is unnecessary.
In the event an Award is granted to or held by a Participant who is employed or
providing services outside the United States, the Administrator may, in its sole discretion, modify
the provisions of the Plan or of such Award as they pertain to such individual to comply with
applicable foreign law or to recognize differences in local law, currency or tax policy. The
Administrator may also impose conditions on the grant, issuance, exercise, vesting, settlement or
retention of Awards in order to comply with such foreign law and/or to minimize the Companys
obligations with respect to tax equalization for Participants employed outside their home country.
15. Withholding
To the extent required by applicable federal, state, local or foreign law, a
Participant shall be required to satisfy, in a manner satisfactory to the Company, any withholding
tax obligations that arise by reason of an Option exercise, the vesting of or settlement of an
Award, an election pursuant to Section 83(b) of the Code or otherwise with respect to an Award. To
the extent a Participant makes an election under Section 83(b) of the Code, within ten days of
filing such election with the Internal Revenue Service, the Participant must notify the Company in
writing of such election. The Company and its Subsidiaries shall not be required to issue Shares,
make any payment or to recognize the transfer or disposition of Shares until all withholding tax
obligations are satisfied. The Administrator may provide for or permit these obligations to be
satisfied through the mandatory or elective sale of Shares and/or by having the Company withhold a
portion of the Shares that otherwise would be issued to him or her upon exercise of the Option or
the vesting or settlement of an Award, or by tendering Shares previously acquired. In addition, the
Company shall be entitled to deduct from other compensation payable to each Participant any
withholding tax obligations that arise in connection with an Award or require the Participant to
pay such sums directly to the Company in cash or by check.
16. Administration of the Plan
(a)
Administrator of the Plan
. The Plan shall be administered by the Administrator
who shall be the Compensation Committee of the Board or, in the absence of a Compensation
Committee, the Board itself. Any power of the Administrator may also be exercised by the Board,
except to the extent that the grant or exercise of such authority would cause any Award or
transaction to become subject to (or lose an exemption under) the short-swing profit recovery
provisions of Section 16 of the Securities Exchange Act of 1934 or cause an Award designated as a
Performance Award not to qualify for treatment as performance-based compensation under Section
162(m) of the Code. To the extent that any permitted action taken by the Board conflicts with
action taken by the Administrator, the Board action shall control. The Compensation Committee may
by resolution authorize one or more officers of the Company to perform any or all things that the
Administrator is authorized and empowered to do or perform under the Plan, and for all purposes
under this Plan, such officer or officers shall be treated as the Administrator; provided, however,
that the resolution so authorizing such officer or officers shall specify the total number of
Awards (if any) such officer or officers may award pursuant to such delegated authority. No such
officer shall designate himself or herself as a recipient of any Awards granted under authority
delegated to such officer. In addition, the Compensation Committee may delegate any or all aspects
of the day-to-day administration of the Plan to one or more officers or employees of the Company or
any Subsidiary, and/or to one or more agents.
(b)
Powers of Administrator
. Subject to the express provisions of this Plan, the
Administrator shall be authorized and empowered to do all things that it determines to be necessary
or appropriate in connection with the administration of this Plan, including, without limitation:
(i) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms
not otherwise defined herein; (ii) to determine which persons are Participants, to which of such
Participants, if any, Awards shall be granted hereunder and the timing of any such Awards; (iii) to
grant Awards to Participants and determine the terms and conditions thereof, including the number
of Shares subject to Awards and the exercise or purchase price of such Shares and the circumstances
under which Awards become exercisable or vested or are forfeited or expire, which terms may but
need not be conditioned upon the passage of time, continued employment, the satisfaction of
performance criteria, the occurrence of certain events, or other factors; (iv) to establish and
verify the extent of satisfaction of any performance goals or other conditions applicable to the
grant, issuance, exercisability, vesting and/or ability to retain any Award; (v) to prescribe and
amend the terms of the agreements or other documents evidencing Awards made under this Plan (which
need not be identical) and the terms of or form of any document or notice required to be delivered
to the
15
Company by Participants under this Plan; (vi) to determine whether, and the extent to which,
adjustments are required pursuant to Section 11; (vii) to interpret and construe this Plan, any
rules and regulations under this Plan and the terms and conditions of any Award granted hereunder,
and to make exceptions to any such provisions if the Administrator, in good faith, determines that
it is necessary to do so in light of extraordinary circumstances and for the benefit of the
Company; (viii) to approve corrections in the documentation or administration of any Award; and
(ix) to make all other determinations deemed necessary or advisable for the administration of this
Plan. The Administrator may, in its sole and absolute discretion, without amendment to the Plan,
waive or amend the operation of Plan provisions respecting exercise after Termination of Employment
or service to the Company or an affiliate and, except as otherwise provided herein, adjust any of
the terms of any Award.
(c)
Determinations by the Administrator
. All decisions, determinations and
interpretations by the Administrator regarding the Plan, any rules and regulations under the Plan
and the terms and conditions of or operation of any Award granted hereunder, shall be final and
binding on all Participants, beneficiaries, heirs, assigns or other persons holding or claiming
rights under the Plan or any Award. The Administrator shall consider such factors as it deems
relevant, in its sole and absolute discretion, to making such decisions, determinations and
interpretations including, without limitation, the recommendations or advice of any officer or
other employee of the Company and such attorneys, consultants and accountants as it may select.
(d)
Subsidiary Awards
. In the case of a grant of an Award to any Participant
employed by a Subsidiary, such grant may, if the Administrator so directs, be implemented by the
Company issuing Shares to the Subsidiary, for such lawful consideration as the Administrator may
determine, upon the condition or understanding that the Subsidiary will transfer the Shares to the
Participant in accordance with the terms of the Award specified by the Administrator pursuant to
the provisions of the Plan. Notwithstanding any other provision hereof, such Award may be issued by
and in the name of the Subsidiary and shall be deemed granted on such date as the Administrator
shall determine.
17. Amendment of the Plan or Awards
The Board may amend, alter or discontinue this Plan and the Administrator may amend,
or alter any agreement or other document evidencing an Award made under this Plan but, except as
provided pursuant to the provisions of Section 11, no such amendment shall, without the approval of
the stockholders of the Company amend the Plan in any manner requiring stockholder approval by law
or under the NASDAQ listing requirements.
No amendment or alteration to the Plan or an Award or Award Agreement shall be made
which would impair the rights of the holder of an Award, without such holders consent, provided
that no such consent shall be required if the Administrator determines in its sole discretion and
prior to the date of any change in control that such amendment or alteration either is required or
advisable in order for the Company, the Plan or the Award to satisfy any law or regulation or to
meet the requirements of or avoid adverse financial accounting consequences under any accounting
standard.
18. No Liability of Company
The Company and any Subsidiary or affiliate which is in existence or hereafter comes
into existence shall not be liable to a Participant or any other person as to: (i) the non-issuance
or sale of Shares as to which the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Companys counsel to be necessary to the lawful issuance
and sale of any Shares hereunder; and (ii) any tax consequence expected, but not realized, by any
Participant or other person due to the receipt, exercise or settlement of any Award granted
hereunder.
19. Non-Exclusivity of Plan
Neither the adoption of this Plan by the Board nor the submission of this Plan to
the stockholders of the Company for approval shall be construed as creating any limitations on the
power of the Board or the Administrator to adopt such other incentive arrangements as either may
deem desirable, including without limitation, an arrangement not intended to qualify under Section
162(m) of the Code, and such arrangements may be either generally applicable or applicable only in
specific cases.
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20. Governing Law
This Plan and any agreements or other documents hereunder shall be interpreted and
construed in accordance with the laws of the Delaware to the extent not preempted by federal law.
Any reference in this Plan or in the agreement or other document evidencing any Awards to a
provision of law or to a rule or regulation shall be deemed to include any successor law, rule or
regulation of similar effect or applicability.
21. No Right to Employment, Reelection or Continued Service
Nothing in this Plan or an Award Agreement shall interfere with or limit in any way
the right of the Company, its Subsidiaries and/or its affiliates to terminate any Participants
employment, service on the Board or service for the Company at any time or for any reason not
prohibited by law, nor shall this Plan or an Award itself confer upon any Participant any right to
continue his or her employment or service for any specified period of time. Neither an Award nor
any benefits arising under this Plan shall constitute an employment contract with the Company, any
Subsidiary and/or its affiliates. Subject to Sections 4 and 18, this Plan and the benefits
hereunder may be terminated at any time in the sole and exclusive discretion of the Board without
giving rise to any liability on the part of the Company, its Subsidiaries and/or its affiliates.
22. Unfunded Plan
The Plan is intended to be an unfunded plan. Participants are and shall at all times
be general creditors of the Company with respect to their Awards. If the Administrator or the
Company chooses to set aside funds in a trust or otherwise for the payment of Awards under the
Plan, such funds shall at all times be subject to the claims of the creditors of the Company in the
event of its bankruptcy or insolvency.
23. Section 409A
It is intended that any Options, Stock Appreciation Rights, and Restricted Stock
issued pursuant to this Plan and any Award Agreement shall not constitute deferrals of
compensation within the meaning of Section 409A of the Code and, as a result, shall not be subject
to the requirements of Section 409A of the Code. It is further intended that any Restricted Stock
Units issued pursuant to this Plan and any Award Agreement or other written document establishing
the terms and conditions of the Award (which may or may not constitute deferrals of compensation,
depending on the terms of each Award) shall avoid any plan failures within the meaning of Section
409A(a)(1) of the Code. The Plan and each Award Agreement or other written document establishing
the terms and conditions of an Award is to be interpreted and administered in a manner consistent
with these intentions. However, no guarantee
or commitment is made that the Plan, any Award Agreement or any other written document establishing
the terms and conditions of an Award shall be administered in accordance with the requirements of
Section 409A of the Code, with respect to amounts that are subject to such requirements, or that
the Plan, any Award Agreement or any other written document establishing the terms and conditions
of an Award shall be administered in a manner that avoids the application of Section 409A of the
Code, with respect to amounts that are not subject to such requirements.
24. Required Delay in Payment on Account of a Separation from Service
Notwithstanding any other provision in this Plan, any Award Agreement or any other
written document establishing the terms and conditions of an Award, if any Award recipient is a
specified employee, as defined in Treasury Regulations Section 1.409A-1(i), as of the date of his
or her Separation from Service (as defined in authoritative IRS guidance under Section 409A of
the Code), then, to the extent required by Treasury Regulations Section 1.409A-3(i)(2), any payment
made to the Award recipient on account of his or her Separation from Service shall not be made
before a date that is six months after the date of his or her Separation from Service. The
Administrator may elect any of the methods of applying this rule that are permitted under Treasury
Regulations Section 1.409A-3(i)(2)(ii).
This news release contains forward-looking statements as defined by the Private Securities
Litigation Reform Act of 1995. These statements include, but are not limited to, statements
regarding: business strategies; market demand and product development; order rates; economic
conditions; the educational furniture industry; state and municipal bond funding; cost control
initiatives; pricing; and seasonality. Forward-looking statements are based on current expectations
and beliefs about future events or circumstances, and you should not place undue reliance on these
17
statements. Such statements involve known and unknown risks, uncertainties, assumptions and other
factors, many of which are out of our control and difficult to forecast. These factors may cause
actual results to differ materially from those which are anticipated. Such factors include, but are
not limited to: changes in general economic conditions including raw material, energy and freight
costs; state and municipal bond funding; state, local and municipal tax receipts; the seasonality
of our markets; the markets for school and office furniture generally; the specific markets and
customers with which we conduct our principal business; and the competitive landscape, including
responses of our competitors to changes in our prices. See our Annual Report on Form 10-K for the
year ended January 31, 2011, and other materials filed with the Securities and Exchange Commission
for a further description of these and other risks and uncertainties applicable to our business. We
assume no, and hereby disclaim any, obligation to update any of our forward-looking statements. We
nonetheless reserve the right to make such updates from time to time by press release, periodic
reports or other methods of public disclosure without the need for specific reference to this press
release. No such update shall be deemed to indicate that other statements which are not addressed
by such an update remain correct or create an obligation to provide any other updates.
End of filing
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