UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
Registration Statement under the Securities Act of 1933
STERICYCLE, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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36-3640402
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(State or other jurisdiction
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(I.R.S. Employer
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of incorporation or organization)
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Identification Number)
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28161 North Keith Drive, Lake Forest, Illinois 60045
(Address of principal executive offices)
Stericycle, Inc. 2008 Incentive Stock Plan
(Full title of the plan)
Mark C. Miller
President and Chief Executive Officer
Stericycle, Inc.
28161 North Keith Drive, Lake Forest, Illinois 60045
(Name and address of agent for service)
(847) 367-5910
(Telephone number, including area code, of agent for service)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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CALCULATION OF REGISTRATION FEE
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Proposed
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Proposed
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Title of
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maximum
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maximum
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securities to be
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Amount to be
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offering price per
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aggregate offering
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Amount of
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registered
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registered(1)
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share(2)
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price(2)
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registration fee
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Common stock, par
value $.01 per
share
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3,500,000 shs.
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$59.49
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$208,197,500.00
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$8,182.85
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(1)
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The aggregate number of shares to be registered is subject to adjustment by reason of stock
splits, stock dividends and other events pursuant to the anti-dilution provisions of the
Stericycle, Inc. 2008 Incentive Stock Plan. Accordingly, pursuant to Rule 416, this
registration statement covers, in addition to the number of shares of common stock shown in
the table above, an indeterminate number of shares of the registrant’s common stock that may
become issuable by reason of such provisions.
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(2)
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Computed pursuant to Rule 457(c), in accordance with Rule 457(h)(1), on the basis of the
average of the high and low reported sales price on August 4, 2008 of a share of the
registrant’s common stock on the NASDAQ Stock Market.
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TABLE OF CONTENTS
PART I
Information Required in the Section 10(a) Prospectus
Item 1. Plan Information
The information required by Item 1 is omitted from this registration statement in accordance
with the Note to Part I of Form S-8.
Item 2. Registrant Information and Employee Plan Annual Information
The information required by Item 2 is omitted from this Registration Statement in accordance
with the Note to Part I of Form S-8.
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
The registrant incorporates by reference in this registration statement the following
documents that the registrant has filed with the Securities and Exchange Commission (the
“Commission”):
(a) the registrant’s annual report on Form 10-K for the fiscal year ended December 31,
2007;
(b) the registrant’s quarterly reports on Form 10-Q for the quarters ended March 31 and
June 30, 2008;
(c) the registrant’s current reports on Form 8-K filed on February 6, February 22,
April 18, April 23 and July 24, 2008; and
(d) the description of the registrant’s common stock, par value $.01 per share,
contained in the registration statement on Form 8-A that the registrant filed on August 21,
1996, together with any amendment or report that the registrant may file for the purpose of
updating this description.
All documents that the registrant files with the Commission pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the filing of this
registration statement but prior to the filing of a post-effective amendment which (i) indicates
that all of the shares of the registrant’s common stock covered by this registration statement (the
“shares”) have been sold, or which (ii) deregisters all of the shares then remaining unsold, shall
be deemed to be incorporated by reference in and to be part of this registration statement from
their respective dates of filing.
Any statement in a document incorporated or deemed to be incorporated by reference in this
registration statement shall be deemed to be modified or superseded to the extent that a
statement in this registration statement, or in any document filed after the filing of this
registration statement which is deemed to be incorporated by reference in this registration
statement, modifies or supersedes the earlier statement. The earlier statement shall be deemed to
be incorporated in this registration statement only as so modified or superseded.
Item 4. Description of Securities
This item is not applicable.
Item 5. Interests of Named Experts and Counsel
The legality of the shares of the registrant’s common stock covered by this registration
statement is being passed upon for the registrant by Johnson and Colmar, 300 South Wacker Drive,
Suite 1000, Chicago, Illinois 60601, who serve as the registrant’s outside general counsel.
Partners of Johnson and Colmar beneficially own or have voting or investment power over 4,776
shares of the registrant’s common stock.
Item 6. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law provides generally that a person sued as a
director, officer, employee or agent of a corporation may be indemnified by the corporation in
non-derivative suits for expenses (including attorneys’ fees), judgments, fines, and amounts paid
in settlement if he or she acted in good faith and in a manner that he or she reasonably believed
to be in or not opposed to the corporation’s best interests. In the case of criminal actions and
proceedings, the person also must not have had reasonable cause to believe that his or her conduct
was unlawful. Indemnification of expenses is also authorized in stockholder derivative actions if
the person acted in good faith and in a manner that he or she reasonably believed to be in or not
opposed to the corporation’s best interests and if he or she has not been found liable to the
corporation. Even in this latter instance, the court may determine that, in view of all the
circumstances, the person is entitled to indemnification for such expenses as the court deems
proper. A person sued as a director, officer, employee or agent of a corporation who has been
successful in defense of the action must be indemnified by the corporation against expenses.
Article 5 of our amended and restated bylaws requires us to indemnify our directors, officers,
employees and agents to the maximum extent permitted by Delaware law. Article 5 also requires us to
advance the litigation expenses of a director or officer upon receipt of his or her written
undertaking to repay all amounts advanced if it is ultimately determined that he or she is not
entitled to indemnification. We have entered into individual indemnification agreements with each
of our directors and officers confirming and supplementing these rights to indemnification.
Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to include a
provision in its certificate of incorporation eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for a breach of the director’s
fiduciary duty of care. The provision may not eliminate or limit the liability of a director for
breaching his or her duty of loyalty, failing to act in good faith, engaging in intentional
misconduct or knowingly violating a law, declaring an illegal dividend or approving
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an illegal stock repurchase, or obtaining an improper personal benefit. Article 10 of our
amended and restated certificate of incorporation eliminates the personal liability of our
directors to the fullest extent permitted by Section 102(b)(7).
If a director of ours were to breach his or her fiduciary duty of care, neither we nor our
stockholders could recover monetary damages from the director, and the only course of action
available to our stockholders would be equitable remedies, such as an action to enjoin or rescind
the transaction or event involving the breach of the fiduciary duty of care. To the extent that
claims against directors are thereby limited to equitable remedies, this provision of our amended
and restated certificate of incorporation may reduce the likelihood of derivative litigation
against our directors for breach of their fiduciary duty of care. In addition, equitable remedies
may not be effective in many situations. If a stockholder’s only remedy is to enjoin the completion
of the action in question by the board of directors, this remedy would be ineffective if the
stockholder does not become aware of the transaction or event until after its has been completed.
In this situation, the stockholder would not have an effective remedy against the directors.
By reason of directors’ and officers’ liability insurance that we maintain, our directors and
officers are insured against actual liabilities, including liabilities under the federal securities
laws, for acts or omissions related to the conduct of their duties.
Item 7. Exemption from Registration Claimed
This item is not applicable.
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Item 8.
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Exhibits
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4.1
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Stericycle, Inc. 2008 Incentive Stock Plan
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5.1
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Opinion of Johnson and Colmar
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23.1
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Consent of Independent Registered Public Accounting Firm
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23.2
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Consent of Johnson and Colmar (included in Exhibit 5.1)
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24.1
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Power of attorney (included under the caption “Power of Attorney” on page 6)
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Item 9. Undertakings
Rule 415 Offering
The registrant undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933, as amended (the “Securities Act”);
(ii) to reflect in the prospectus any facts or events arising after the effective
date of this registration statement (or the most recent post-effective amendment)
which, individually or in the aggregate, represent a fundamental change in the
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information set forth in this registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may be
reflected in the form of a prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the effective
registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any material
change to such information in this registration statement;
provided, however, that undertakings (1)(i) and (1)(ii) shall not apply if the information
required to be included in a post-effective amendment by those undertakings is contained in
periodic reports filed with or furnished to the Commission by the registrant pursuant to
sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
that are incorporated by reference in this registration statement;
(2) that, for the purpose of determining any liability under the Securities Act, each
such post-effective amendment shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the offering; and
Filings Incorporating Subsequent Exchange Act Documents by Reference
The registrant hereby undertakes that, for purposes of determining any liability under the
Securities Act, each filing of the registrant’s annual report pursuant to sections 13(a) or 15(d)
of the Exchange Act which is incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona fide offering
thereof.
Commission Position on Indemnification
Insofar as indemnification for liabilities arising under the Securities Act may be permitted
to directors, officers and controlling persons of the registrant pursuant to the Delaware General
Corporation Law or the registrant’s certificate of incorporation and bylaws or individual
indemnification agreements, as described in Item 6, or otherwise, the registrant has been advised
that in the opinion of the Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by
a director, officer or controlling person of the registrant in the successful
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defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final adjudication of such
issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and
has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Lake Forest, State of Illinois, on August 8, 2008.
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Stericycle, Inc.
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By
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/s/
Mark C. Miller
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Mark C. Miller
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President and Chief Executive Officer
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Power of Attorney
Each person whose signature appears below who is then an officer or director of the registrant
authorizes Mark C. Miller, Richard T. Kogler and Frank J.M. ten Brink, or any one of them, with
full power of substitution and resubstitution, to sign in his name and to file any amendments
(including post-effective amendments) to this registration statement and all related documents
necessary or advisable to enable the registrant to comply with the Securities Act of 1933, as
amended, in connection with the registration of the securities which are the subject of this
registration statement, which amendments may make such changes in this registration statement (as
it may be so amended) as Mark C. Miller, Richard T. Kogler and Frank J.M. ten Brink, or any one of
them, may deem appropriate, and to do and perform all other related acts and things necessary to be
done.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has
been signed below by the following persons in the capacities and on the dates indicated.
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Name
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Title
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Date
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/s/
Jack W. Schuler
Jack W. Schuler
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Chairman of the
Board of Directors
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August 8, 2008
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/s/
Mark C. Miller
Mark C. Miller
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President, Chief
Executive Officer
and a Director
(Principal
Executive Officer)
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August 8, 2008
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/s/
Frank J.M. ten Brink
Frank J.M. ten Brink
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Chief Financial
Officer (Principal
Finance and
Accounting Officer)
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August 8, 2008
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/s/
Thomas D. Brown
Thomas D. Brown
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Director
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August 8, 2008
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/s/
Rod F. Dammeyer
Rod F. Dammeyer
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Director
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August 8, 2008
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Name
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Title
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Date
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/s/
William K. Hall
Patrick F. Graham
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Director
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August 8, 2008
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/s/
Jonathan T. Lord, M.D.
Jonathan T. Lord, M.D.
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Director
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August 8, 2008
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/s/
John Patience
John Patience
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Director
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August 8, 2008
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/s/
Thomas R. Reusché
Thomas R. Reusché
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Director
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August 8, 2008
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/s/
Ronald G. Spaeth
Ronald G. Spaeth
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Director
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August 8, 2008
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/s/
L. John Wilkerson, Ph.D.
L. John Wilkerson, Ph.D.
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Director
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August 8, 2008
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7
Exhibit 4.1
Stericycle, Inc. 2008 Incentive Stock Plan
Article 1
Purpose
The purpose of this plan is to recognize and reward participants for their efforts on the
Company’s behalf, to motivate participants by appropriate incentives to contribute to the Company’s
attainment of its performance objectives, and to align participants’ interests with those of the
Company’s other stockholders through compensation based on the performance of the Company’s common
stock.
Article 2
Definitions
Award
means an Option, SAR Award, Restricted Stock Award or RSU Award under the Plan.
Award Agreement
means a written or electronic agreement between the Company and a Participant
incorporating the terms of an Award to the Participant.
Board
means the Company’s Board of Directors.
Change of Control
is defined in Article 7. The terms “continuing Director,” “appointed
Director” and “elected Director” are also defined in Article 7.
Code
means the Internal Revenue Code of 1986, as amended.
common stock
means the Company’s common stock, par value $.01 per share.
Committee
is defined in Paragraph 3.1. Unless the Board designates a different committee, the
Compensation Committee of the Board shall serve as the Committee (as long as all of the members of
the Compensation Committee qualify under Paragraph 3.1).
Company
means Stericycle, Inc., a Delaware corporation.
Consultant
means any individual who provides
bona fide
consulting or advisory services to the
Company or a Subsidiary.
Director
means a director of the Company.
Eligible Person
means, in respect of all types of Awards except ISOs, any Employee, Director
or Consultant and, in respect of ISOs, any Employee.
Employee
means a full-time or part-time employee of the Company or a Subsidiary.
Exchange Act
means the Securities Exchange Act of 1934, as amended.
Expiration Date
means the last day on which an Option or SAR may be exercised.
Fair Market Value
means, for a given day, the last reported sales price of a share of common
stock on The NASDAQ National Market (or if the day in question is not a trading day, the last
reported sales price on the most recent trading day).
Grant Date
means, in respect of an Award, the date that the Committee grants the Award or any
later date that the Committee specifies as the effective date of the Award.
ISO
means an incentive stock option described in §422 of the Code.
NSO
means a nonstatutory stock option (i.e., any stock option other than an ISO).
Option
means an award pursuant to Article 5 of an option to purchase shares of common stock.
The Committee shall designate at the time of grant whether an Option is an ISO or a NSO.
Participant
means an Eligible Person who holds an Award under the Plan.
Performance Goals
means one or more of the following objective performance goals for the
Company, a division or a Subsidiary, measured over a 12-month or longer period and specified either
in absolute terms or in percentage terms relative to a target, base period, index or peer group:
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earnings per share
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earnings before interest, taxes, depreciation and amortization
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revenues
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income from operations
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return on invested capital
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return on assets
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internal rate of return
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return on stockholders’ equity
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total return to stockholders
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Plan
means this plan, as it may be amended. The name of this Plan is the “Stericycle, Inc.
2008 Incentive Stock Plan.”
Restricted Shares
means shares of common stock subject to a risk of forfeiture or other
restrictions that will lapse if and when specified service requirements, Performance Goals or other
conditions are satisfied.
Restricted Stock Award
means an award of Restricted Shares pursuant to Article 6.
Restricted Stock Unit
means a contractual right to receive one share of common stock in the
future if and when specified service requirements, performance goals or other conditions are
satisfied.
RSU Award
means an award pursuant to Article 6 of Restricted Stock Units to an Eligible
Person.
SAR
, or stock appreciation right, means a contractual right to receive a payment representing
the excess of the Fair Market Value of a share of common stock on the date that the right is
exercised over the exercise price per share of the right.
SAR Award
means an award of a Stand-Alone SAR or Tandem SAR pursuant to Article 5.
Stand-Alone SAR
means an SAR that is not related to an Option.
share
means a share of the Company’s common stock.
Subsidiary
means a “subsidiary corporation” as defined in § 424(f) of the Code.
Tandem SAR
means an SAR that is related to an Option.
Termination Date
means the date of termination of employment of an Employee by the Company or
a Subsidiary. A transfer of employment from the Company to a Subsidiary, or from a Subsidiary to
the Company or to another Subsidiary, shall not be considered a termination of employment.
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Article 3
Administration
3.1
Committee
The Board of Directors shall designate a committee of the Board (the “Committee”) to
administer the Plan. The Committee shall consist of two or more directors all of whom shall be (i)
“non-employee directors” as defined in Rule 16b-3 under the Exchange Act, (ii) “independent
directors” under the applicable listing standards of the NASDAQ Stock Market and (iii) “outside
directors” under § 162(m) of the Code.
3.2
Authority
Subject to the terms of the Plan, the Committee shall have the authority to select the
Eligible Persons to whom Awards are to be granted and to determine the time, type, number of
shares, vesting, restrictions, limitations and other terms and conditions of each Award.
Awards under the Plan need not be uniform in respect of different Eligible Persons, whether or
not similarly situated. The Committee may consider such factors as it deems relevant in selecting
Eligible Persons for Awards and in determining their Awards.
The Committee may condition the vesting of any Award on the attainment of one or more
Performance Goals. Performance Goals may differ from Participant to Participant and from Award to
Award. The Committee shall specify the applicable Performance Goal or Goals in the underlying Award
Agreement (but in no event later than the latest permissible date to enable the Award to qualify as
performance-based compensation under § 162(m) of the Code). The Committee’s evaluation of a
Performance Goal’s attainment may be adjusted to exclude any extraordinary events and transactions
as described in Accounting Principles Board Opinion No. 30, but in all other respects, the
measurement of Performance Goals shall be determined in accordance with the Company’s financial
statements and U.S. generally accepted accounting principles.
The Committee may interpret the Plan, adopt, revise and rescind policies and procedures to
administer the Plan, and make all factual and other determinations required for Plan’s
administration.
The Committee’s determinations, interpretations and other actions shall be final and binding.
No member of the Committee shall be liable for any action of the Committee in good faith.
3.3
Procedures
The members of the Committee shall elect a chairman, and the Committee shall meet as necessary
at the call of the chairman or any two members of the Committee. A majority of the members of the
Committee shall constitute a quorum, and all actions of the Committee at a meeting at which a
quorum is present shall be taken by majority vote.
A member of the Committee may participate in any meeting of the Committee by a conference
telephone call or other means that enable all persons participating in the meeting to hear one
another, and participation in this manner shall constitute his or her presence in person at the
meeting. The Committee also may act by the unanimous written consent of its members.
Article 4
Plan Operation
4.1
Effective Date
This Plan shall become effective if and when approved by the Company’s stockholders at the
2008 Annual Meeting of Stockholders.
4.2
Term
This Plan shall have a term of 10 years, expiring on the tenth anniversary of the date of the
Company’s 2008
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Annual Meeting of Stockholders (but remaining in effect, however, for outstanding Awards). No
Award may be granted under the Plan after its expiration.
4.3
Maximum Number of Shares
The maximum total number of shares of common stock for which Awards may be granted under this
Plan is 3,500,000 shares. This maximum shall be subject to the capitalization adjustments under
Paragraph 4.6.
The shares for which Options and SARs are granted shall count against this limit on a 1-for-1
basis, and the shares for which Restricted Stock Awards and RSU Awards are granted shall count
against this limit on a 2-for-1 basis (so that each share for which a Restricted Stock Award or RSU
Award is granted reduces by two shares the available number of shares for which Awards may be
granted).
The shares for which Awards may be granted shall be shares currently authorized but unissued
or shares that the Company currently holds or subsequently acquires as treasury shares, including
shares purchased in the open market or in private transactions.
4.4
Shares Available for Awards
The determination of the number of shares of common stock available for Awards under the Plan
shall take into account the following:
(a) If an Option lapses or expires unexercised, the number of shares in respect of which
the Option lapsed or expired shall be added back to the available number of shares for which
Awards may be granted.
(b) If a Restricted Stock Award or RSU Award lapses or is forfeited, the shares in
respect of which the Award lapsed or was forfeited shall be added back to the available number
of shares for which Awards may be granted.
(c) If a SAR Award or RSU Award is settled in cash, the number of shares in respect of
which the Award was settled in cash shall not be added back to the available number of shares
for which Awards may be granted.
(d) If the exercise price of an Option is paid by delivery of shares of common stock
pursuant to Paragraph 5.8, the number of shares issued upon exercise of the Option, without
netting the shares delivered in payment of the exercise price, shall be taken into account in
determining the available number of shares for which Awards may be granted.
4.5
Individual Limit on Awards
In any calendar year, the maximum number of shares for which Awards may be granted to any
Eligible Person shall not exceed 200,000 shares in the case of Options and SARS and 100,000 shares
in the case of Restricted Stock and RSU Awards, in each case taking into account all similar types
of grants and awards under other stock option and equity compensation plans of the Company (other
than the Company’s bonus conversion program and the Company’s employee stock purchase plan). These
maximums shall be subject to the capitalization adjustments under Paragraph 4.6.
4.6
Capitalization Adjustments
In the event of a change in the number of outstanding shares of common stock by reason of a
stock dividend, stock split, recapitalization, reorganization or the like, the Committee may, and
in the case of a reverse stock split, the Committee shall, equitably adjust the following in order
to prevent a dilution or enlargement of the benefits or potential benefits intended to be provided
under the Plan: (i) the number of shares for which Awards may be granted under the Plan, (ii) the
maximum number of shares for which Awards may be granted to any Eligible Person in a calendar year,
(iii) the aggregate number of shares in respect of each outstanding Award and (iv) the exercise
price of each outstanding Option and SAR. The Committee may also make any other equitable
adjustments that the
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Committee considers appropriate. Except in the case of a reverse stock split, adjustments
shall be made in the Committee’s discretion, and its decisions shall be final and binding.
Article 5
Stock Options and SARs
5.1
Grant
The Committee may grant an Option or SAR to any Eligible Person. Subject to the terms of this
Plan, the Committee shall determine the restrictions, limitations and other terms and conditions of
each Option and SAR Award.
The Committee shall designate each Option as either an ISO or NSO, and shall designate each
SAR Award as either a Stand-Alone SAR or a Tandem SAR. A Tandem SAR may not be granted later than
the time that its related Option is granted.
5.2
Exercise Price
The Committee shall determine the exercise price of each Option and SAR. The exercise price
per share may not be less than the Closing Price on the Grant Date of the Option or SAR.
Except for capitalization adjustments under Paragraph 4.6 or as approved by the Company’s
stockholders, the exercise price per share of any outstanding Option or SAR may not be reduced, and
the Option or SAR may not be surrendered to the Company for cash or as consideration for the grant
of a new Option or SAR with a lower exercise price per share.
5.3
Vesting and Term
The Committee shall determine the time or times at which each Option and Stand-Alone SAR
becomes vested. Vesting may be based on continuous service or on the attainment of Performance
Goals or other conditions specified in the Award Agreement. A Tandem SAR shall vest if and to the
extent that its related Option vests, and shall expire or be canceled when its related Option
expires or is canceled. No Option or SAR may have an Expiration Date more than 10 years from its
Grant Date.
Each Option and SAR held by an Employee shall become fully vested as of his or her Termination
Date if the Employee’s termination of employment occurs by reason of his or her death. In addition,
the Committee, in its discretion, may accelerate the vesting of an Option or SAR at any time.
5.4
Termination of Employment
In the case of an Option or SAR held by an Employee whose employment terminates:
(a) if and to the extent that the Option or SAR is unvested as of the Employee’s
Termination Date, the Option or SAR shall lapse on the Termination Date; and
(b) if and to the extent that the Option or SAR is vested as of the Employee’s
Termination Date, the Option or SAR shall expire as specified in the underlying Award
Agreement, or if no date is specified, (i) on the earlier of 30 days after the Employee’s
Termination Date or the expiration date of the Option or SAR, or (ii) if the Employee’s
employment terminated by reason of his or her death, on the earlier of the first anniversary
of the Employee’s death or the expiration date of the Option or SAR.
The Committee may extend the expiration date of the Option or SAR to any date up to the last
day of the term of the Option or SAR.
5.5
Transferability
No Option or SAR may be transferred, assigned or pledged, whether by operation of law or
otherwise, except
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(i) as provided in the underlying Award Agreement or as the Committee otherwise permits, or
(ii) as provided by will or the applicable laws of intestacy or (iii) if:
(a) the transferee is a revocable trust that the employee established for estate planning
reasons (in respect of which the employee is treated as the owner for federal income tax
purposes); or
(b) (i) the transferee is the spouse of the employee or a child, step-child, grandchild,
parent, sibling or child of a sibling of the employee (each an “eligible transferee”), (ii) a
custodian for an eligible transferee under any Uniform Transfers to Minors Act or Uniform
Gifts to Minors Act or (iii) a trust for the primary benefit of one or more eligible
transferees.
Transfers described in the preceding clause (b) shall be subject to any restrictions and
requirements that the Committee considers appropriate (for example, the transferee’s written
agreement to be bound by the terms of the Plan and the underlying Award Agreement).
No Option or SAR shall be subject to execution, attachment or similar process.
5.6
Additional ISO Rules
To the extent that the aggregate fair market value (determined in respect of each ISO on the
basis of the Fair Market Value of a share of common stock on the ISO’s Grant Date) of the
underlying shares of all ISOs that become exercisable by an individual for the first time in any
calendar year exceeds $100,000, the Options shall be treated as NSOs. This limitation shall be
applied by taking ISOs into account in the order in which they were granted.
In the case of an ISO granted to an Employee who at the time of grant owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the Company (or any
Subsidiary), the exercise price per share may not be less than 110% of the Closing Price on the
Grant Date and the ISO may not have an Expiration Date more than five years from the Grant Date.
The Award Agreement underlying an Option that the Committee designates as an ISO may contain
any additional terms, beyond those of this Plan, that the Committee considers necessary or
desirable to include to assure that the Option complies with the requirements of § 422 of the Code.
5.7
Manner of Exercise
A vested Option or SAR may be exercised in full or only partially (but in the case of a
partial exercise, only in respect of a whole number of shares) by (i) written notice to the
Committee or its designee stating the number of shares in respect of which the Option or SAR is
being exercised and, in the case of an Option, (ii) full payment of the exercise price of those
shares.
5.8
Payment of Exercise Price
Payment of the exercise price of an Option shall be made by check or, if permitted by the
Committee (either in the underlying Award Agreement or at the time of exercise), by: (i) delivery
of shares of common stock having a Fair Market Value on the date of exercise equal to the exercise
price; (ii) directing the Company to withhold, from the shares otherwise issuable upon exercise of
the Option, shares having a Fair Market Value on the date of exercise equal to the exercise price;
(iii) by an open-market broker-assisted sale pursuant to which the Company is promptly delivered
the portion of the sales proceeds necessary to pay the exercise price; (iv) any combination of
these methods of payment; or (v) any other method of payment that the Committee authorizes.
5.9
Tandem SARs
A Tandem SAR shall entitle the Participant to elect to exercise either the SAR or the related
Option as to all or any portion of the shares subject to the SAR and Option. The exercise of a
Tandem SAR shall cause the immediate and automatic cancellation of its related Option with respect
to the same number of shares, and the exercise, expiration or cancellation of the related Option
(other than by reason of the exercise of the Tandem SAR)
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shall cause the automatic and immediate cancellation of the Tandem SAR with respect to the
same number of shares.
5.10
Settlement of SARs
Settlement of a SAR may be made, in the Committee’s discretion, in shares of common stock or
in cash, or in a combination of the two, subject to applicable tax withholding requirements. Any
cash payment in settlement of a SAR shall be made on the basis of the Fair Market Value of a share
of common stock on the date that the SAR is exercised.
Article 6
Restricted Stock
and Restricted Stock Units
6.1
Grant
The Committee may issue Restricted Shares or grant Restricted Stock Units to any Eligible
Person. Subject to the terms of this Plan, the Committee shall determine the restrictions,
limitations and other terms and conditions of each Restricted Stock Award and RSU Award.
6.2
Vesting
The Committee shall determine the time or times at which each Restricted Stock Award or RSU
Award becomes vested. Vesting may be based on continuous service or on the attainment of specified
Performance Goals or other conditions specified in the Award Agreement.
Each Restricted Stock Award and RSU Award held by an Employee shall become fully vested as of
his or her Termination Date if the Employee’s termination of employment occurs by reason of his or
her death. In addition, the Committee, in its discretion, may accelerate the vesting of a
Restricted Stock Award or RSU Award at any time.
6.3
Transferability
Prior to the vesting of a Restricted Stock Award, the Restricted Shares subject to the Award
may not be transferred, assigned or pledged (except as provided in the Award Agreement or as the
Committee permits) and shall not be subject to execution, attachment or similar process. (After
vesting, the shares may still remain subject to restrictions on transfer under applicable
securities laws and any restrictions imposed by the Award Agreement.) The Committee may require
each certificate representing Restricted Shares to bear a legend making appropriate reference to
the restrictions on the shares, and may also require that the certificate, together with a stock
power duly endorsed in blank by the Participant, remain in the Company’s physical custody or in
escrow with a third party until all restrictions have lapsed.
6.4
Rights as Stockholder
Subject to the terms of the Plan and the underlying Award Agreement, a Participant shall have
all of the rights of a stockholder in respect of the Restricted Shares subject to a Restricted
Stock Award, including the right to vote the shares and to receive all dividends and other
distributions in respect of the shares. The Committee may provide in the Award Agreement for the
payment of dividends and distributions to the Participant when dividends are paid to stockholders
generally or at the time of vesting or distribution of the Restricted Shares.
A Participant shall not have any rights as a stockholder in respect of the shares of common
stock subject to a RSU Award until those shares have been issued and delivered to the Participant
pursuant to the terms of the Award.
6.5
Settlement of RSU Award
Settlement of a RSU Award may be made, in the Committee’s discretion, in shares of common
stock or in cash, or in a combination of the two, subject to applicable tax withholding
requirements. Any cash payment in settlement of a RSU Award shall be made on the basis of the Fair
Market Value of a share of common stock on the date that the shares subject to the Award become
issuable to the Participant.
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6.6
Deferrals
The Committee may (but shall not be required to) permit a Participant to elect to defer the
delivery of shares upon the vesting or settlement of a Restricted Stock Award or RSU Award. Any
such election shall be for a deferral period and in a manner and on terms that the Committee
approves and that comply with the requirements of § 409A of the Code.
Article 7
Change of Control
Upon a Change of Control, all outstanding Awards shall become fully vested and exercisable,
and all restrictions on the shares underlying Restricted Stock Awards shall lapse.
A “Change of Control” means an event or the last of a series of related events by which:
(a) any Person directly or indirectly acquires or otherwise becomes entitled to vote
stock having 51% or more of the voting power in elections for directors; or
(b) during any 24-month period a majority of the members of the Board of Directors ceases
to consist of directors who were:
(1) Directors at the beginning of the period (“continuing Directors”); or
(2) elected to office after the start of the period by the Board of Directors with
the approval of two-thirds of the incumbent continuing Directors (“appointed
Directors”); or
(3) elected to office after the start of the period by the Company’s stockholders
following nomination for election by the Board of Directors with the approval of
two-thirds of the incumbent continuing and appointed Directors (“elected Directors”); or
(4) elected to office after the start of the period by the Board of Directors with
the approval of two-thirds of the incumbent continuing, appointed and elected Directors;
or
(5) elected to office after the start of the period by the Company’s stockholders
following nomination for election by the Board of Directors with the approval of
two-thirds of the incumbent continuing, appointed and elected Directors; or
(c) the Company merges or consolidates with another corporation, and holders of
outstanding shares of the Company’s common stock immediately prior to the merger or
consolidation do not own stock in the survivor of the merger or consolidation having more than
75% of the voting power in elections for directors; or
(d) the Company sells all or a substantial portion of the consolidated assets of the
Company and its Subsidiaries, and the Company does not own stock in the purchaser having more
than 75% of the voting power in elections for directors.
As used in this definition, a “Person” means any “person” as that term is used in sections
13(d) and 14(d) of the Exchange Act, together with all of that person’s “affiliates” and
“associates” as those terms are defined in Rule 12b-2 under the Exchange Act.
Article 8
Miscellaneous Provisions
8.1
Award Agreement
Each Award under the Plan shall be evidenced by an Award Agreement which shall be subject to and
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incorporate the terms of the Plan.
8.2
Tax Withholding
The Company may withhold an amount sufficient to satisfy its withholding tax obligations, if
any, in connection with any Award under the Plan, and the Company may defer making any payment or
delivery of shares pursuant to the Award unless and until the Participant indemnifies the Company
to its satisfaction in respect of its withholding obligation.
8.3
Amendment and Termination
The Board may amend, suspend or terminate the Plan at any time. The Company’s stockholders
shall be required to approve any amendment that would materially increase the number of shares of
common stock for which Awards may be granted or that would increase the number of shares of common
stock for which ISOs may be granted (other than an amendment authorized under Paragraph 4.6). If
the Plan is terminated, the Plan shall remain in effect for Awards outstanding as of its
termination. No amendment, suspension or termination of the Plan shall adversely affect the rights
of the holder of any outstanding Award without his or her consent.
8.4
Foreign Jurisdictions
The Committee may adopt, amend and terminate a supplement to the Plan to permit Employees in
another country to receive Awards under the supplement (on terms not inconsistent with the terms of
Awards under the Plan) in compliance with that country’s securities, tax and other laws.
8.5
No Right To Employment
Nothing in this Plan or in any Award Agreement shall give any person the right to continue in
the employ of the Company or any Subsidiary or limit the right of the Company or Subsidiary to
terminate his or her employment.
8.6
Notices
Notices required or permitted under this Plan shall be considered to have been duly given if
sent by certified or registered mail addressed to the Committee at the Company’s principal office
or to any other person at his or her address as it appears on the Company’s payroll or other
records.
8.7
Severability
If any provision of this Plan is held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining provisions, and the Plan shall be construed and
administered as if the illegal or invalid provision had not been included.
8.8
Governing Law
This Plan and all Award Agreements shall be governed in accordance with the laws of the State
of Illinois.
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