Exhibit
10.1
ATRION CORPORATION
NONQUALIFIED DEFERRED COMPENSATION PLAN
1.
Establishment
of Plan
. Atrion Corporation (the “Company”)
hereby adopts and establishes this unfunded deferred compensation
plan for a select group of key management or highly compensated
employees of the Company and its Affiliates which shall be known as
the Atrion Corporation Nonqualified Deferred Compensation Plan (the
“Plan”).
2.
Purpose
of Plan
. The purpose of the Plan is to provide a select
group of management or highly compensated employees (within the
meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA) of
the Company and its Affiliates who contribute significantly to the
future business success of the Company with supplemental retirement
income benefits through the deferral of Base Salary and Bonus
Compensation and through Company contributions. This Plan provides
for the deferral of compensation within the meaning of Section 409A
and is intended to be operated in accordance with the applicable
provisions of said Section 409A.
3.
Definitions
.
3.1
“Acceleration
Events” is defined in
Section
11
hereof.
3.2
“Account”
means a hypothetical bookkeeping account or accounts established in
the name of each Participant and maintained by the Company to
reflect each Participant’s interests under the
Plan.
3.3
“Affiliate”
means any corporation, trade, or business which is treated as a
single employer with the Company under Sections 414(b) or 414(c) of
the Code and any other entity designated by the Committee as an
“Affiliate” for purposes of the Plan.
3.4
“Base
Salary” means the annual rate of base pay paid by the Company
or an Affiliate to or for the benefit of the Participant for
services rendered.
3.5
“Beneficiary”
means any person or entity, designated in accordance with
Section
16.7
, entitled to
receive benefits which are payable upon or after a
Participant’s death pursuant to the terms of the
Plan.
3.6
“Board”
means the Board of Directors of the Company, as constituted from
time to time.
3.7
“Bonus
Compensation” means any cash compensation earned by a
Participant for services rendered by a Participant under any bonus
or cash incentive plan maintained by the Company or an
Affiliate.
3.8
“Change in
Control” means the first to occur of any of the following
events:
(a)
the date one
person (or more than one person acting as a group) acquires
ownership of stock of the Company that, together with the stock
held by such person or group, constitutes more than fifty percent
(50%) of the total fair market value or total voting power of the
stock of the Company; provided that a Change in Control shall not
occur if any person (or more than one person acting as a group)
owns more than fifty percent (50%) of the total fair market value
or total voting power of the Company’s stock and acquires
additional stock;
(b)
the date one
person (or more than one person acting as a group) acquires (or has
acquired during the twelve (12) month period ending on the date of
the most recent acquisition) ownership of the Company’s stock
possessing thirty percent (30%) or more of the total voting
power;
(c)
the date a
majority of the members of the Board are replaced during any twelve
(12) month period by directors whose appointment or election is not
endorsed by a majority of the Board before the date of appointment
or election; or
(d)
the date one
person (or more than one person acting as a group) acquires (or has
acquired during the twelve (12) month period ending on the date of
the most recent acquisition) assets from the Company that have a
total gross fair market value equal to or more than forty percent
(40%) of the total gross fair market value of all of the assets of
the Company immediately before such acquisition or acquisitions.
For this purpose, gross fair market value means the value of the
assets of the Company, or the value of the assets being disposed
of, determined without regard to any liabilities associated with
such assets. There is no Change in Control under this subsection
when there is a transfer to an entity that is controlled by the
stockholders of the transferring corporation immediately after the
transfer.
Notwithstanding
the foregoing, a Change in Control shall not occur unless such
transaction constitutes a change in the ownership of the Company, a
change in the effective control of the Company, or a change in the
ownership of a substantial portion of the Company’s assets
under Section 409A.
3.9
“Claimant”
has the meaning set forth in
Section
17
.
3.10
“Code”
means the U.S. Internal Revenue Code of 1986, as amended, or any
successor statute, and the Treasury Regulations and other
authoritative guidance issued thereunder.
3.11
“Committee”
means the Compensation Committee of the Board.
3.12
“Company”
means Atrion Corporation, a Delaware corporation, or any successor
thereto.
3.13
“Deferral
Election” means an election by an Eligible Employee to defer
Base Salary or Bonus Compensation. A Participant shall make new
Deferral Elections for every Plan Year.
3.14
“Determination
Date” means the last Valuation Date of the week preceding the
payment date.
3.15
“Disabled or
Disability” means that a Participant is: (a) unable to engage
in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period
of not less than twelve (12) months; (b) by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period
of not less than twelve (12) months, receiving income replacement
benefits for a period of not less than three (3) months under an
accident and health plan covering employees of the Company or its
Affiliates; or (c) determined to be totally disabled by the Social
Security Administration.
3.16
“Distribution
Date” means a date specified by a Participant in his or her
Election Form for the payment of all or a portion of such
Participant’s Account.
3.17
“Effective
Date” means September 1, 2017.
3.18
“Election
Form” means the form, which may be in electronic format,
established from time to time by the Committee for making Deferral
Elections under the Plan. The Election Form includes the percentage
of Base Salary or Bonus Compensation to be deferred (subject to
minimum and maximum percentages established by the Committee); the
Distribution Date; and the form of distribution (lump sum or
installments). Each Election Form shall be completed in accordance
with such procedures as established by the Committee and shall
become irrevocable as of the last day of the Election
Period.
3.19
“Election
Period” means the period established by the Committee with
respect to each Plan Year during which Deferral Elections for such
Plan Year must be made in accordance with the requirements of
Section 409A, as follows:
(a)
Except as provided
in (b), (c), and (d) below, the Election Period shall end no later
than the last day of the Plan Year immediately preceding the Plan
Year to which the Deferral Election relates.
(b)
If any Bonus
Compensation constitutes “performance-based
compensation” within the meaning of Treas. Reg. Section
1.409A-1(e), then the Election Period for such amounts shall end no
later than six (6) months before the end of the Plan Year during
which the Bonus Compensation is earned (and in no event later than
the date on which the amount of the Bonus Compensation becomes
readily ascertainable).
(c)
The Election
Period for newly Eligible Employees shall end no later than thirty
(30) days after the Employee first becomes eligible to participate
in the Plan and shall apply only with respect to compensation
earned after the date of the Deferral Election.
(d)
The Election
Period for Deferral Elections for Bonus Compensation payable for
each plan year under the Atrion Corporation Short-Term Incentive
Compensation Plan shall end on the September 30 preceding the next
Plan Year.
3.20
“Elective
Deferrals” means Base Salary deferrals and Bonus Compensation
deferrals.
3.21
“Eligible
Employee” means an Employee who is selected by the Committee
to participate in the Plan. Participation in the Plan is limited to
a select group of key management or highly compensated employees of
the Company and its Affiliates.
3.22
“Employee”
means an employee of the Company or any Affiliate.
3.23
“Entry
Date” means, with respect to an Eligible Employee, the first
day of the pay period commencing on or following the effective date
of such Eligible Employee’s participation in the
Plan.
3.24
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
3.25
“FICA
Amount” has the meaning set forth in
Section
11.3
.
3.26
“401(k)
Plan” means the Atrion Corporation 401(k) Savings
Plan.
3.27
“Investment
Options” an investment fund, index, or vehicle selected by
the Committee and made available to Participants for the deemed
investment of their Accounts.
3.28
“Make-Up
Contribution” has the meaning set forth in
Section 6
.
3.29
“Participant”
means an Eligible Employee who elects to participate in the Plan by
filing an Election Form in accordance with
Section
5.1
and any former Eligible
Employee who continues to be entitled to a benefit under the
Plan.
3.30
“Payment
Event” has the meaning set forth in
Section
9.1
.
3.31
“Plan
Year” means the twelve (12) consecutive month period which
begins on January 1 and ends on the following December 31 except
the first Plan Year which begins on September 1, 2017 and ends on
December 31, 2017.
3.32
“Re-deferral
Election” has the meaning set forth in
Section
5.4
.
3.33
“Section
409A” means Section 409A of the Code and the regulations
promulgated thereunder.
3.34
“Separation
from Service” means the termination of the Participant's
employment with the Company and its Affiliates for any reason,
other than death or Disability, as determined in accordance with
Section 409A. Whether a Separation from Service takes place is
determined based on the facts and circumstances surrounding the
termination of the Participant's employment and whether the Company
and the Participant intended for the Participant to provide
significant services for the Company or its Affiliates following
such termination. A change in the Participant's employment status
will not be considered a Separation from Service if:
(a)
the Participant
continues to provide services as an Employee of the Company or
Affiliate at an annual rate that is twenty percent (20%) or more of
the services rendered, on average, during the immediately preceding
three full calendar years of employment (or, if employed less than
three years, such lesser period) and the annual remuneration for
such services is twenty percent (20%) or more of the average annual
remuneration earned during the final three full calendar years of
employment (or, if less, such lesser period), or
(b)
the Participant
continues to provide services to the Company or an Affiliate in a
capacity other than as an Employee at an annual rate that is fifty
percent (50%) or more of the services rendered, on average, during
the immediately preceding three full calendar years of employment
(or if employed less than three years, such lesser period) and the
annual remuneration for such services is fifty percent (50%) or
more of the average annual remuneration earned during the final
three full calendar years of employment (or if less, such lesser
period).
3.35
“Specified
Employee” has the meaning set forth in Section
409A(a)(2)(B)(i) of the Code and Treas. Reg. Section
1.409A-1(i).
3.36
“Specified
Employee Distribution Date” has the meaning set forth in
Section
9.4
.
3.37
“State,
Local, and Foreign Tax Amount” has the meaning set forth in
Section
11.6
.
3.38
“Unforeseeable
Emergency” means a severe financial hardship of the
Participant resulting from (a) an illness or accident of the
Participant, the Participant’s spouse, the
Participant’s beneficiary, or the Participant’s
dependent; (b) a loss of the Participant’s property due to
casualty; or (c) such other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of
the Participant, all as determined in the sole discretion of the
Committee in accordance with, and subject to, Section
409A.
3.39
“Valuation
Date” means each business day of the Plan Year.
4.
Eligibility;
Participation
.
4.1
Requirements for
Participation
. Before the beginning of each Plan Year (other
than the first Plan Year), the Committee shall select those
Employees who shall be Eligible Employees for such Plan Year. Any
Eligible Employee may participate in the Plan commencing as of the
Entry Date occurring on or after the date on which he or she
becomes an Eligible Employee.
4.2
Election to
Participate
. An Eligible Employee may become a Participant
in the Plan by making a Deferral Election in accordance with
Section
5
.
4.3
Cessation of
Participation
. If a Participant ceases to be an Eligible
Employee for a Plan Year, then the Participant’s Deferral
Elections shall no longer be effective. However, such
Participant’s Account shall continue to be credited with
gains and losses until the applicable Determination
Date.
5.1
Deferral
Election
. An Eligible Employee may elect to defer Base
Salary or Bonus Compensation by completing an Election Form and
returning it to the Committee during the Election Period. The
Election Form must specify:
(a)
The percentage of
Base Salary or Bonus Compensation to be deferred (subject to any
minimum and maximum percentages established by the
Committee);
(b)
The Distribution
Date for the Participant’s Account (subject to the provisions
of the Plan);
(c)
The percentage or
amount of the Participant’s Account to be allocated to each
Investment Option available under the Plan; and
(d)
The form of
distribution for the Participant’s Account (lump sum or
installments).
5.2
Base Salary
Deferrals
. A Participant may elect to defer receipt of no
less than a minimum percentage and up to a maximum percentage of
the Participant’s Base Salary for any Plan Year by making a
Deferral Election in accordance with this
Section
5
, with such minimum and
maximum percentages to be established by the Committee. Base Salary
deferrals shall be credited to a Participant’s Account on, or
as soon as practicable after, the date the Base Salary otherwise
would have been paid.
5.3
Bonus Compensation
Deferrals
. A Participant may elect to defer receipt of no
less than a minimum percentage and up to a maximum percentage of
the Participant’s Bonus Compensation for any Plan Year by
making a Deferral Election in accordance with this
Section
5
, with such minimum and
maximum percentages to be established by the Committee. Bonus
Deferrals shall be credited to a Participant’s Account on, or
as soon as practicable after, the date the deferred Bonus
Compensation otherwise would have been paid.
5.4
Re-deferrals and
Changing the Form of Distribution
. The Participant may make
an election to re-defer all or a portion of the amounts in his or
her Account until a later Distribution Date or to change the form
of a distribution (a “Re-deferral Election”); provided
that, the following requirements are met:
(a)
The Re-deferral
Election is made at least twelve (12) months before the original
Distribution Date;
(b)
The Distribution
Date for the re-deferred amounts is at least five (5) years later
than the original Distribution Date; and
(c)
The Re-deferral
Election will not take effect for at least twelve (12) months after
the Re-deferral Election is made.
For
purposes of this
Section
5.4
, all payments, other than installment payments, shall be
treated as separate payments, and a series of installment payments
shall be treated as one payment, under Section 409A. The provisions
of this
Section 5.4
are intended to comply with Section 409A and shall be interpreted
in a manner consistent with the requirements thereof.
6.
Make-Up Contributions
. The
Company shall credit Make-Up Contributions to the Account of each
Participant who is eligible to participate in the 401(k) Plan and
who makes a Deferral Election for Base Salary hereunder for any
Plan Year that results in a reduction in the Company's matching
contributions for such Participant in the 401(k) Plan. The Make-Up
Contributions for each Participant shall be equal to the amount by
which the Company's matching contributions to the 401(k) Plan for
such Participant are reduced as a result of the Participant's
Deferral Election hereunder. The Make-Up Contributions shall be
made no later than thirty (30) days after the Company’s total
matching contributions to the 401(k) Plan for such Plan Year have
been determined and made.
7.
Accounts
.
7.1
Crediting or Debiting of
Accounts
. In accordance with, and subject to, the rules and
procedures that are established from time to time by the Committee,
amounts shall be credited or debited to a Participant’s
Account in accordance with the following:
(a)
Each Participant
may elect one or more of the Investment Options selected by the
Committee for the purpose of crediting or debiting amounts to his
or her Account. As necessary, the Committee may, in its sole
discretion, discontinue, substitute, or add an Investment
Option.
(b)
A Participant, in
connection with his or her initial Deferral Election in accordance
with
Section 5.1
above, shall
elect, on the Election Form, one (1) or more Investment Options (as
described in
Section 7.1(a)
above) to
be used to determine the amounts to be credited or debited to his
or her Account. If a Participant does not elect any of the
Investment Options as described in the previous sentence, the
Participant’s Account shall be allocated to the Investment
Option or Options determined by the Committee in its sole
discretion. The Participant may (but is not required to) elect, by
completing an Election Form in accordance with such rules and
procedures established by the Committee, to add or delete one or
more Investment Options to be used to determine the amounts to be
credited or debited to his or her Account, or to change the portion
of his or her Account allocated to each previously or newly elected
Investment Option. If an election is made in accordance with the
previous sentence, it shall apply as of the first business day
deemed reasonably practicable by the Company, in its sole
discretion, and shall continue thereafter for each subsequent day
in which the Participant participates in the Plan, unless changed
in accordance with the previous sentence. Notwithstanding the
foregoing, the Company, in its sole discretion, may impose
limitations on the frequency with which one (1) or more of the
Investment Options elected in accordance with this
Section 7.1(b)
may be added or
deleted by such Participant; furthermore, the Company, in its sole
discretion, may impose limitations on the frequency with which a
Participant may change the portion of his or her Account allocated
to each previously or newly elected Investment Option.
(c)
In making any
election described in this
Section 7.1
, the
Participant shall specify on the Election Form, in increments of
one percent (1%), the percentage of his or her Account or
Investment Option, as applicable, to be allocated or
reallocated.
(d)
Each Account
(including Accounts from which payments are being made in
installments) shall be adjusted for gains and losses based on the
performance of the Investment Options selected. Gains and losses
shall be computed on each Valuation Date. The amount paid to a
Participant on the payment date shall be determined as of the
applicable Determination Date.
7.2
Nature of
Accounts
. Accounts are not actually invested in any
Investment Option, and Participants do not have any real or
beneficial ownership in any Investment Option. Each Investment
Option is solely a device for the measurement and determination of
the amounts to be paid to the Participant pursuant to the Plan, and
a Participant’s Account shall not constitute or be treated as
a trust fund of any kind.
7.3
Statements
.
Each Participant shall be provided with statements setting out the
amounts in his or her Account which shall be delivered quarterly or
at such other intervals as determined by the
Committee.
8.
Vesting of Base
Salary Deferrals, Bonus Compensation Deferrals, and Make-Up
Contributions
. Participants shall be fully vested at all
times in their Base Salary deferrals, their Bonus Compensation
deferrals, and Make-Up Contributions, and any earnings
thereon.
9.
Payment
of Participant Accounts
.
9.1
In General
.
Payment of a Participant’s Account shall be made (or
commence, in the case of installments) on the earliest to occur of
the following events (each a “Payment
Event”):
(a)
The Distribution
Date specified in the Participant’s Deferral Election;
provided that, the Participant must select from among the available
Distribution Dates designated by the Committee and set forth in the
Election Form;
(b)
The
Participant’s Separation from Service;
(c)
The
Participant’s death;
(d)
The
Participant’s Disability; and
(e)
The occurrence of
a Change in Control.
9.2
Timing of
Valuation
. The value of a Participant’s Account on the
payment date shall be determined as of the applicable Determination
Date.
9.3
Timing of
Payments
. Except as otherwise provided in this
Section 9
, payments shall be
made or commence within thirty (30) days following a Payment Event
and installment payments shall be made annually on such date as
determined by the Committee.
9.4
Timing of Payments
to Specified Employees
. Notwithstanding anything in the Plan
to the contrary, if a Participant is a Specified Employee as of the
date of his or her Separation from Service, then no distribution of
such Participant’s Account shall be made upon the
Participant’s Separation from Service until the first day of
the seventh month following the Participant’s Separation from
Service or, if earlier, upon the date of the Participant’s
death (the “Specified Employee Distribution Date”). Any
payments to which a Specified Employee otherwise would have been
entitled under the Plan during the period between the
Participant’s Separation from Service and the Specified
Employee Distribution Date shall be accumulated and paid in a lump
sum payment on the Specified Employee Distribution
Date.
9.5
Death
. In the event a
Participant dies while there are amounts remaining in his or her
Account:
(a)
If, at the
time of the Participant’s death, installment payments of the
Participant’s Account have commenced pursuant to this
Section 9
, such
payments shall continue to the Participant’s Beneficiary at
the same time and in the same form as if the Participant had
remained alive until the last installment payment was scheduled to
be made. Notwithstanding the foregoing, a Beneficiary may make a
request for payment pursuant to
Section 10
upon an
Unforeseeable Emergency, applying the provisions of said
Section 10
by
substituting the term “Beneficiary” for
“Participant” as the context requires
thereunder.
(b)
If, at the time of
the Participant’s death, payments of the Participant’s
Account have not commenced pursuant to this
Section 9
, the payments made
pursuant to this
Section
9.5
shall be made to the Participant’s Beneficiary in
the form (lump sum or installments) elected by the Participant in
accordance with the Participant’s last valid Election Form
and shall be paid or commence within ninety (90) days after the
Participant’s death. Notwithstanding the foregoing, a
Beneficiary may make a request for payment pursuant to
Section 10
upon an
Unforeseeable Emergency or change the timing and form of payment
pursuant to
Section
9.6
applying the provisions of said Sections by substituting
the term “Beneficiary” for “Participant” as
the context requires thereunder.
(c)
In the event a
Beneficiary dies while there are amounts remaining in his or her
Account, the remaining amounts shall be paid to the
Beneficiary’s estate in a lump sum within ninety (90) days
after the Beneficiary’s death.
9.6
Form of
Payment
. Each Participant shall specify in his or her
Election Form the form of payment (lump sum or installments) for
amounts in his or her Account that are covered by the election;
provided that, if the Participant elects to have amounts paid in
installments, the Participant must select from among the
permissible installment schedules selected by the Committee and set
forth in the Election Form. In the absence of a valid election with
respect to the form of payment, amounts will be paid in a single
lump sum.
9.7
Medium of
Payment
. All payments from a Participant’s Account
shall be made in cash.
10.
Payments
Due to Unforeseeable Emergency
.
10.1
Request for
Payment
. If a Participant suffers an Unforeseeable
Emergency, he or she may submit a written request to the Committee
for payment of his or her Account.
10.2
No Payment If
Other Relief Available
. The Committee will evaluate the
Participant’s request for payment due to an Unforeseeable
Emergency taking into account the Participant’s circumstances
and the requirements of Section 409A. In no event will payments be
made pursuant to this
Section 10
to the extent that
the Participant’s hardship can be relieved: (a) through
reimbursement or compensation by insurance or otherwise; or (b) by
liquidation of the Participant’s assets, to the extent that
liquidation of the Participant’s assets would not itself
cause severe financial hardship; or (c) by the cessation of
deferrals under the Plan.
10.3
Limitation on
Payment Amount
. The amount of any payment made on account of
an Unforeseeable Emergency shall not exceed the amount reasonably
necessary to satisfy the Participant’s financial need,
including amounts necessary to pay any Federal, state or local
income taxes or penalties reasonably anticipated to result from the
payment, as determined by the Committee.
10.4
Timing of
Payment
. Payments shall be made from a Participant’s
Account as soon as practicable and in any event within thirty (30)
days following the Committee’s determination that an
Unforeseeable Emergency has occurred and authorization of payment
from the Participant’s Account.
10.5
Cessation of
Deferrals
. If a Participant receives payment on account of
an Unforeseeable Emergency, the Participant may make no more
Elective Deferrals for the remainder of the Plan Year.
11.
Acceleration
Events
.
Notwithstanding anything in the Plan to the contrary, the
Committee, in its sole discretion, may accelerate payment of all or
a portion of a Participant’s Account upon the occurrence of
any of the events (“Acceleration Events”) set forth in
this
Section 11
.
The Committee’s determination of whether payment may be
accelerated in accordance with this
Section
11
shall be made in accordance
with Treas. Reg. Section 1.409A-3(j)(4).
11.1
Domestic Relations Orders
. The
Committee may accelerate payment of a Participant’s Account
to the extent necessary to comply with a domestic relations order
(as defined in Section 414(p)(1)(B) of the Code).
11.2
Limited Cashouts
. The Committee
may accelerate payment of a Participant’s Account to the
extent that (i) the aggregate amount in the Participant’s
Account does not exceed the applicable dollar amount under Section
402(g)(1)(B) of the Code, (ii) the payment results in the
termination of the Participant’s entire interest in the Plan
and any plans that are aggregated with the Plan pursuant to Treas.
Reg. Section 1.409A-1(c)(2), and (iii) the Committee’s
decision to cash out the Participant’s Account is evidenced
in writing no later than the date of payment.
11.3
Payment of Employment Taxes
.
The Committee may accelerate payment of all or a portion of a
Participant’s Account (i) to pay the Federal Insurance
Contributions Act (“FICA”) tax imposed under Sections
3010, 3121(a), and 3121(v)(2) of the Code (the “FICA
Amount”), or (ii) to pay the income tax at source on wages
imposed under Section 3401 of the Code or the corresponding
withholding provisions of applicable state, local, or foreign tax
laws as a result of the payment of the FICA Amount and the
additional income tax at source on wages attributable to the
pyramiding Section 3401 wages and taxes; provided, however, that
the total payment under this
Section 11.3
shall not exceed
the FICA Amount and the income tax withholding related to the FICA
Amount.
11.4
Payment Upon Income Inclusion
.
The Committee may accelerate payment of all or a portion of a
Participant’s Account to the extent that the Plan fails to
meet the requirements of Section 409A; provided that the amount
accelerated shall not exceed the amount required to be included in
income as a result of the failure to comply with Section
409A.
11.5
Termination of the Plan
. The
Committee may accelerate payment of all or a portion of a
Participant’s Account upon termination of the Plan in
accordance with Treas. Reg. Section
1.409A-3(j)(4)(ix).
11.6
Payment of State, Local, or Foreign
Taxes
. The Committee may accelerate payment of all or a
portion of a Participant’s Account for:
(a)
the payment of
state, local, or foreign tax obligations arising from participation
in the Plan that relate to an amount deferred under the Plan before
the amount is paid or made available to the Participant (the
“State, Local, and Foreign Tax Amount”); provided,
however, the accelerated payment amount shall not exceed the taxes
due as a result of participation in the Plan, or
(b)
the payment of
income tax at source on wages imposed under Section 3401 of the
Code as a result of such payment and the payment of the additional
income tax at source on wages imposed under Section 3401 of the
Code attributable to the additional Section 3401 wages and taxes;
provided however, the accelerated payment amount shall not exceed
the aggregate of the State, Local, and Foreign Tax Amount and the
income tax withholding related to such amount.
11.7
Certain Offsets
. The Committee
may accelerate payment of all or a portion of the
Participant’s Account to satisfy a debt of the Participant to
the Company or an Affiliate incurred in the ordinary course of the
service relationship between the Company and the Participant;
provided, however, the amount accelerated shall not exceed Five
Thousand and No/100 Dollars ($5,000.00) and the payment shall be
made at the same time and in the same amount as the debt otherwise
would have been due and collected from the
Participant.
11.8
Bona Fide Disputes as to Right to
Payment
. The Committee may accelerate payment of all or a
portion of a Participant’s Account where the payment is part
of a settlement between the Company or an Affiliate and the
Participant of an arm’s length, bona fide dispute as to the
Participant’s right to the deferred amount.
11.9
Ethics or Conflicts of
Interest
. The Committee may accelerate payment of all or a
portion of a Participant’s Account to comply with bona fide
foreign ethics or conflicts of interest law.
11.10
Federal Debt Collection Laws
.
The Committee may accelerate payment of all of a portion of a
Participant’s Account to comply with federal debt collection
laws.
12.
Payments
to Beneficiaries.
Notwithstanding any other provision of the
Plan, the Committee may accelerate the payment of all or a portion
of a Participant’s Account in connection with the death,
Disability, or Unforeseeable Emergency of a Beneficiary who has
become entitled to payment of a Participant’s Account under
the Plan pursuant to
Section
16.7
hereof. Payments made
pursuant to this
Section
12
shall be subject to the same terms and conditions as
payments made to Participants pursuant to
Section 9
hereof.
13.
Section
162(m) of the Code
. If the Committee reasonably anticipates
that if a payment were made as scheduled under the Plan it would
result in a loss of the Company’s tax deduction due to the
application of Section 162(m) of the Code, such payment can be
delayed and paid (a) during the Participant’s first taxable
year in which the Committee reasonably anticipates that the
Company’s tax deduction will not be limited or eliminated by
the application of Section 162(m) of the Code or (b) subject to
Section
9.4
, during the
period beginning with the Participant’s Separation from
Service and ending on the later of the last day of the
Company’s taxable year in which the Participant separates
from service or the 15th day of the third month following the
Participant’s Separation from Service. Notwithstanding the
foregoing, no payment under the Plan may be deferred in accordance
with this
Section
13
unless all
scheduled payments to the Participant that could be delayed in
accordance with Treas. Reg. Section 1.409A-2(b)(7)(i) are also
delayed.
14.
Plan
Administration
.
14.1
Administration by
Committee
. The Plan shall be administered by the Committee
which shall have the authority to:
(a)
construe and
interpret the Plan and apply its provisions;
(b)
promulgate, amend,
and rescind rules and regulations relating to the administration of
the Plan;
(c)
authorize any
person to execute, on behalf of the Company, any instrument
required to carry out the purposes of the Plan;
(d)
determine minimum
or maximum percentages or amounts that Participants may elect to
defer under the Plan;
(e)
select, subject to
the limitations set forth in the Plan, those Employees who shall be
Eligible Employees;
(f)
evaluate whether a
Participant who has requested payment from his or her Account on
account of an Unforeseeable Emergency has experienced an
Unforeseeable Emergency and the amount of any payment necessary to
satisfy the Participant’s emergency need;
(g)
calculate deemed
investment gains and losses;
(h)
interpret,
administer, reconcile any inconsistency in, correct any defect in,
and supply any omission in the Plan and any instrument, Election
Form, or agreement relating to the Plan; and
(i)
exercise
discretion to make any and all other determinations which it
determines to be necessary or advisable for the administration of
the Plan.
14.2
Non-Uniform
Treatment
. The Committee’s determinations under the
Plan need not be uniform and any such determinations may be made
selectively among the Participants. Without limiting the generality
of the foregoing, the Committee shall be entitled, among other
things, to make non-uniform and selective determinations with
regard to the terms or conditions of any Elective
Deferrals.
14.3
Committee
Decisions Final
. Subject to
Section
17
, all decisions made by the
Committee pursuant to the provisions of the Plan shall be final and
binding on the Company and the Participants, unless such decisions
are determined by a court having jurisdiction to be arbitrary and
capricious.
14.4
Indemnification
.
No member of the Committee or any designee shall be liable for any
action, failure to act, determination, or interpretation made in
good faith with respect to the Plan, except for any liability
arising from his or her own willful malfeasance, gross negligence,
or reckless disregard of his or her duties.
15.
Amendment
and Termination
. The Board may, at any time, and in its
discretion, alter, amend, modify, suspend, or terminate the Plan or
any portion thereof; provided, however, that no such amendment,
modification, suspension, or termination shall, without the consent
of a Participant, adversely affect such Participant’s rights
with respect to amounts credited to or accrued in his or her
Account, and provided, further, that, no payment of benefits shall
occur upon termination of the Plan unless the requirements of
Section 409A have been met.
16.
Miscellaneous
.
16.1
No Employment or
Other Service Rights
. Nothing in the Plan or any instrument
executed pursuant hereto shall confer upon any Participant any
right to continue to serve the Company or an Affiliate or interfere
in any way with the right of the Company or any Affiliate to
terminate the Participant’s employment or service at any time
with or without notice and with or without cause.
16.2
Tax
Withholding
. The Company and its Affiliates shall have the
right to deduct from any amounts credited or otherwise payable
under the Plan any federal, state, local, or other applicable taxes
required to be withheld.
16.3
Governing
Law
. The Plan shall be administered, construed, and governed
in all respects under and by the laws of Texas, without reference
to the principles of conflicts of law (except and to the extent
preempted by applicable Federal law).
16.4
Section
409A
. The Company intends that the Plan comply with the
requirements of Section 409A, and the Plan shall be operated and
interpreted consistent with that intent. Notwithstanding the
foregoing, the Company makes no representation that the Plan
complies with Section 409A and shall have no liability to any
Participant for any failure to comply with Section 409A. This Plan
shall constitute an “account balance plan” as defined
in Treas. Reg. Section 31.3121(v)(2)-1(c)(1)(ii)(A). For purposes
of Section 409A, all amounts deferred under this Plan shall be
aggregated with amounts deferred under other account balance
plans.
16.5
General
Assets
. All amounts provided under the Plan shall be paid
from the general assets of the Company and no separate fund shall
be established to secure payment.
16.6
No
Warranties
. Neither the Company nor the Committee warrants
or represents that the value of any Participant’s Account
will increase. Each Participant assumes the risk in connection with
the deemed investment of his or her Account.
16.7
Beneficiary
Designation
. Each Participant under the Plan may from time
to time name any Beneficiary or Beneficiaries to receive the
Participant’s interest in the Plan in the event of the
Participant’s death. Each designation will revoke all prior
designations by the same Participant, shall be in a form reasonably
prescribed by the Committee, and shall be effective only when filed
by the Participant in writing with the Company during the
Participant’s lifetime. If a Participant fails to designate a
Beneficiary, then the Participant’s designated Beneficiary
shall be deemed to be the Participant’s estate.
16.8
No
Assignment
. Neither a Participant nor any other person shall
have any right to sell, assign, transfer, pledge, anticipate, or
otherwise encumber, transfer, hypothecate, or convey any amounts
payable hereunder prior to the date that such amounts are paid
(except for the designation of beneficiaries pursuant to
Section
16.7
).
16.9
Expenses
.
The costs of administering the Plan shall be paid by the
Company.
16.10
Severability
.
If any provision of the Plan is held to be invalid, illegal, or
unenforceable, whether in whole or in part, such provision shall be
deemed modified to the extent of such invalidity, illegality, or
unenforceability and the remaining provisions shall not be
affected.
16.11
Headings and
Subheadings
. Headings and subheadings in the Plan are for
convenience only and are not to be considered in the construction
of the provisions hereof.
17.1
Filing a
Claim
. Any Participant or other person claiming an interest
in the Plan (the “Claimant”) may file a claim in
writing with the Committee. The Committee shall review the claim
itself or appoint an individual or entity to review the
claim.
17.2
Claim
Decision
. The Claimant shall be notified within ninety (90)
days after the claim is filed whether the claim is approved or
denied, unless the Committee determines that special circumstances
beyond the control of the Committee require an extension of time,
in which case the Committee may have up to an additional ninety
(90) days to process the claim. If the Committee determines that an
extension of time for processing is required, the Committee shall
furnish written or electronic notice of the extension to the
Claimant before the end of the initial ninety (90) day period. Any
notice of extension shall describe the special circumstances
necessitating the additional time and the date by which the
Committee expects to render its decision.
17.3
Notice of
Denial
. If the Committee denies the claim, it must provide
to the Claimant, in writing or by electronic communication, a
notice which includes:
(a)
The specific
reasons for the denial;
(b)
Specific reference
to the pertinent Plan provisions on which such denial is
based;
(c)
A description of
any additional material or information necessary for the Claimant
to perfect his or her claim and an explanation of why such material
or information is necessary;
(d)
A description of
the Plan’s appeal procedures and the time limits applicable
to such procedures, including a statement of the Claimant’s
right to bring a civil action under Section 502(a) of ERISA
following a denial of the claim on appeal; and
(e)
If an internal
rule was relied on to make the decision, either a copy of the
internal rule or a statement that this information is available at
no charge upon request.
17.4
Appeal
Procedures
. A request for appeal of a denied claim must be
made in writing to the Committee within sixty (60) days after
receiving notice of denial. The decision on appeal will be made
within sixty (60) days after the Committee’s receipt of a
request for appeal, unless special circumstances require an
extension of time for processing, in which case a decision will be
rendered not later than one hundred twenty (120) days after receipt
of a request for appeal. A notice of such an extension must be
provided to the Claimant within the initial sixty (60) day period
and must explain the special circumstances and provide an expected
date of decision. The reviewer shall afford the Claimant an
opportunity to review and receive, without charge, all relevant
documents, information and records and to submit issues and
comments in writing to the Committee. The reviewer shall take into
account all comments, documents, records, and other information
submitted by the Claimant relating to the claim regardless of
whether the information was submitted or considered in the initial
benefit determination.
17.5
Notice of Decision
on Appeal
. If the Committee denies the appeal, it must
provide to the Claimant, in writing or by electronic communication,
a notice which includes:
(a)
The specific
reasons for the denial;
(b)
Specific
references to the pertinent Plan provisions on which such denial is
based;
(c)
A statement that
the Claimant may receive on request all relevant records at no
charge;
(d)
A description of
the Plan’s voluntary procedures and deadlines, if
any;
(e)
A statement of the
Claimant’s right to sue under Section 502(a) of ERISA;
and
(f)
If an internal
rule was relied on to make the decision, either a copy of the
internal rule or a statement that this information is available at
no charge upon request.
17.6
Claims Procedures
Mandatory
. The internal claims procedures set forth in this
Section
17
are mandatory.
If a Claimant fails to follow these claims procedures or to timely
file a request for appeal in accordance with this
Section
17
, the denial of the Claim
shall become final and binding on all persons for all
purposes.
* * * *
* *
AMENDED AND RESTATED
ATRION CORPORATION 2006 EQUITY INCENTIVE PLAN
(As last amended on August 14, 2017)
AMENDED AND RESTATED
ATRION CORPORATION 2006 EQUITY INCENTIVE PLAN
Atrion Corporation, a Delaware corporation (the "Company"), has
established the Amended and Restated
Atrion Corporation 2006
Equity Incentive Plan
(the "Plan") for
the benefit of Employees, Non-Employee Directors and
Consultants.
The purposes of this Plan are (a) to recognize and compensate
selected Employees, Non-Employee Directors and Consultants who
contribute to the success of the Company and its Subsidiaries, (b)
to attract and retain Employees, Non-Employee Directors and
Consultants, and (c) to provide incentive compensation to
Employees, Non-Employee Directors and Consultants based upon the
performance of the Company and its Subsidiaries.
ARTICLE 1. DEFINITIONS
Whenever the following initially capitalized terms are used in the
Plan, they shall have the meanings specified below, unless the
context clearly indicates otherwise.
"Award Agreement" shall mean an agreement between the Company and a
Participant setting forth the terms and conditions of an Award
granted to a Participant.
"Board" shall mean the Board of Directors of the Company, as
comprised from time to time.
"Change in Control" shall mean the occurrence of any of the
following events: (a) any person, entity or affiliated group,
excluding the Company or any employee benefit plan of the Company,
acquiring more than twenty-five percent (25%) of the then
outstanding shares of voting stock of the Company, (b) the
consummation of any merger or consolidation of the Company into
another company, such that the holders of the shares of the voting
stock of the Company immediately before such merger or
consolidation own less than fifty percent (50%) of the voting power
of the securities of the surviving company or the parent of the
surviving company, (c) the adoption of a plan for complete
liquidation of the Company or the sale or disposition of all or
substantially all of the Company's assets of the Company, such that
after the transaction, the holders of the shares of the voting
stock of the Company immediately prior to the transaction own less
than fifty percent (50%) of the voting securities of the acquiror
or the parent of the acquiror, or (d) during any period of two (2)
consecutive years, individuals who at the beginning of such period
constituted the Board (including for this purpose any new director
whose election or nomination for election by the Company's
stockholders was approved by a vote of at least a majority of the
directors then still in office who were directors at the beginning
of such period) cease for any reason to constitute at least a
majority of the Board.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Committee" shall mean the Compensation Committee of the
Board.
"Common Stock " shall mean the common stock, par value ten cents
($0.10) per share, of the Company.
"Company" shall mean Atrion Corporation, a Delaware corporation, or
any business organization which succeeds to all or substantially
all of its business, whether by virtue of a purchase, merger,
consolidation, or otherwise. For purposes of this Plan, the term
Company shall include, where applicable, a Subsidiary that employs
an Employee or engages a Consultant.
"Consultant" shall mean a professional or technical expert,
consultant, advisor or independent contractor who provides services
to the Company or a Subsidiary, and who may be selected to
participate in the Plan.
"Deferred Stock Unit" shall mean a right to receive Common Stock
awarded under Article 6 of this Plan.
"Director" shall mean a member of the Board.
"Dividend Equivalent" shall mean a right granted to a Participant
under Article 9 of this Plan.
"Employee" shall mean any employee (as defined in accordance with
the regulations and revenue rulings then applicable under Section
3401(c) of the Code) of the Company or a Subsidiary of the Company,
whether such employee was so employed at the time this Plan was
initially adopted or becomes so employed subsequent to the adoption
of this Plan, who may be selected to participate in the
Plan.
"Employment Agreement" shall mean the employment, consulting or
similar contractual agreement entered into by an Employee or a
Consultant, as the case may be, and the Company governing the terms
of the Employee's or Consultant's employment or engagement with the
Company, if any.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" of a share of Common Stock, as of a given date,
means (i) with respect to an Award of an Incentive Stock Option and
an Award which is intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, the
average of the high and low sales price of shares of Common Stock
on such date as reported by any national securities exchange on
which the shares of Common Stock are traded or, if no shares of
Common Stock are traded on any such exchange on such date, then on
the next preceding date on which any shares of Common Stock were
traded on such exchange; and (ii) with respect to all other Awards,
the closing sales price of a share of Common Stock on such date as
reported by any national securities exchange on which the shares of
Common Stock are traded or, if no shares of Common Stock are traded
on any such exchange on such date, then on the next preceding date
on which any shares of Common Stock were traded on such exchange;
or (iii) if shares of Common Stock are not publicly traded on any
exchange, the fair market value of a share of Common Stock as
determined by the Committee acting in good faith and after
consultation with independent advisors.
"Incentive Stock Option" shall mean an option which conforms to the
applicable provisions of Section 422 of the Code and which is
designated as an Incentive Stock Option by the
Committee.
"Non-Employee Director" shall mean a Director who is not an
Employee.
"Non-Qualified Stock Option" shall mean an Option which the
Committee does not designate as an Incentive Stock
Option.
"Option" shall mean an option to purchase shares of Common Stock
that is granted under Article 4 of this Plan. An option granted
under this Plan shall, as determined by the Committee, be either a
Non-Qualified Stock Option or an Incentive Stock Option; provided,
however, that Options granted to consultants shall be Non-Qualified
Stock Options.
"Other Stock-Based Awards" shall mean a right granted to a
Participant under Article 10 of this Plan.
"Participant" shall mean an Employee, Non-Employee Director or
Consultant who has been granted an Award.
"Performance Units" shall mean performance units granted under
Article 8 of this Plan.
"Permanent Disability" or "Permanently Disabled" shall mean the
inability of a Participant, due to a physical or mental impairment,
to perform the material services of the Participant's position with
the Company for a period of six (6) months, whether or not
consecutive, during any 365-day period. A determination of
Permanent Disability shall be made by a physician satisfactory to
both the Participant and the Committee, provided that if the
Participant and the Committee do not agree on a physician, each of
them shall select a physician and those two physicians together
shall select a third physician, whose determination as to Permanent
Disability shall be binding on all parties.
"Plan" shall mean the Amended and Restated Atrion Corporation 2006
Equity Incentive Plan, as embodied herein and as amended from time
to time.
"Plan Year" shall mean the fiscal year of the Company.
"Restricted Common Stock" shall mean Common Stock awarded under
Article 6 of this Plan.
"Restricted Stock Unit" shall mean a right to receive Common Stock
awarded under Article 6 of this Plan.
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange
Act, as such rule may be amended from time to time.
"SAR" shall mean stock appreciation rights awarded under Article 7
of this Plan.
"Stock Award" shall mean an Award of Restricted Common Stock,
Restricted Stock Units or Deferred Stock Units under Article 6 of
this Plan.
"Stock Award Account" shall mean the bookkeeping account reflecting
Awards of Restricted Stock Units and Deferred Stock Units under
Article 6 of this Plan.
"Subsidiary" shall mean an entity in an unbroken chain beginning
with the Company if each of the entities other than the last entity
in the unbroken chain owns fifty percent (50%) or more of the total
combined voting power of all classes of equity in one of the other
entities in such chain.
"Termination of Employment" shall mean the date on which the
employee-employer, consulting, contractual, service or similar
relationship between a Participant and the Company is terminated
for any reason, with or without cause, including, but not by way of
limitation, a termination of employmentby resignation, discharge,
death, Permanent Disability or Retirement, but excluding (i)
termination of employment where there is a simultaneous
reemployment or continuing employment of a Participant by the
Company, and (ii) at the discretion of the Committee, termination
of employment which results in a temporary severance of the
employee-employer relationship. The Committee, in its absolute
discretion, shall determine the effect of all matters and questions
relating to a Termination of Employment (subjectto the provisions
of any Employment Agreement between a Participant and the Company),
including, but not limited to all questions of whether particular
leaves of absence constitute a Termination of Employment; provided,
however, that, unless otherwise determined by the Committee in its
discretion, a leave of absence, change in status from an employee
to an independent contractor or other change the employee-employer,
consulting, contractual, service or similar relationship shall
constitute a Termination of Employment if, and to the extent that,
such leave of absence, change in status or other change interrupts
employment for the purposes of Section 422(a)(2) of the Code and
the then applicable regulations and revenue rulings under said
Section.
ARTICLE 2. COMMON STOCK SUBJECT TO PLAN
2.1
Common
Stock Subject to Plan.
2.1.1
The
Common Stock subject to an Award shall be shares of the Company's
authorized but unissued, reacquired, or treasury Common Stock.
Subject to adjustment as described in Section 12.3, the aggregate
number of shares of Common Stock that may be issued under the Plan
is two hundred thousand (200,000) shares. The Company, during the
term of the Plan, will at all times reserve and keep available such
number of shares of Common Stock as shall be sufficient to satisfy
the requirements of the Plan.
2.1.2
The
maximum number of shares of Common Stock with respect to which
Options may be granted or other Awards made to any individual in
any calendar year shall not exceed thirty-five thousand (35,000)
shares.
2.2
Add-back
of Grants.
If any Option or SAR
expires or is canceled without having been fully exercised, is
exercised in whole or in part for cash as permitted by this Plan,
or is exercised prior to becoming vested as permitted under Section
4.6.3 and is forfeited prior to becoming vested, the number of
shares of Common Stock subject to such Option or SAR but as to
which such Option, SAR or other right was not exercised or vested
prior to its expiration, cancellation or exercise may again be
optioned, granted or awarded hereunder. Shares of Common Stock
which are delivered by the Participant or withheld by the Company
upon the exercise of any Option or other Award under this Plan, in
payment of the exercise price thereof, may again be optioned,
granted or awarded hereunder. If any shares of Common Stock awarded
as Restricted Common Stock, Restricted Stock Units, Dividend
Equivalents, Other Stock-Based Awards or other Award hereunder or
as payment for Performance Units are forfeited by the Participant,
such shares may again be optioned, granted or awarded hereunder.
Notwithstanding the provisions of this Section 2.2, no shares of
Common Stock may again be optioned, granted or awarded pursuant to
an Incentive Stock Option if such action would cause such Option to
fail to qualify as an Incentive Stock Option under Section 422 of
the Code.
ARTICLE 3. ELIGIBILITY; GRANTS; AWARD AGREEMENTS
3.1
Eligibility.
Any Employee, Non-Employee Director or
Consultant selected to participate pursuant to Section 3.2 shall be
eligible to participate in the Plan.
3.2
Awards.
The Committee shall determine which
Employees, Non-Employee Directors and Consultants shall receive
Awards, whether the Employee, Non-Employee Director or Consultant
will receive Options, Restricted Common Stock, Restricted Stock
Units, Deferred Stock Units, Dividend Equivalents, SARs,
Performance Units or
Other Stock-Based Awards, whether an Option grant shall be of
Incentive Stock Options or Non-Qualified Stock Options, and the
number of shares of Common Stock subject to such Award.
Notwithstanding the foregoing, the terms and conditions of an Award
intended to qualify as performance-based compensation as described
in Section 162(m)(4)(C) of the Code shall include, but not be
limited to, such terms and conditions as may be necessary to meet
the applicable provisions of Section 162(m) of the
Code.
3.3
Provisions
Applicable to Section 162(m).
3.3.1
Notwithstanding
anything in the Plan to the contrary, the Committee may grant
Options, Restricted Common Stock, Restricted Stock Units, SARs,
Dividend Equivalents, Performance Units or Other Stock Based Awards
to an Employee that vest upon the attainment of performance targets
for the Company which are related to one or more of the following
performance goals: (i) pre-tax income, (ii) operating income, (iii)
cash flow, (iv) earnings per share, (v) return on equity, (vi)
return on invested capital or assets, (vii) cost reductions or
savings, (viii) earnings from continuing operations, (ix) total
stockholder return, or (x) such other identifiable and measurable
performance objectives, as determined by the
Committee.
3.3.2
To
the extent necessary to comply with the performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, no
later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period (or
such other time as may be required or permitted by Section 162(m)
of the Code), the Committee shall, in writing, (i)select the
performance goal or goals applicable to the fiscal year or other
designated fiscal period, (ii) establish the various targets and
bonus amounts which may be earned for such fiscal year or other
designated fiscal period, (iii) specify the relationship between
performance goals and targets and the amounts to be earned by each
Employee for such fiscal year or other designated fiscal period and
(iv) take such other action as the Committee may deem appropriate
to comply with the performance-based compensation requirements of
Section 162(m)(4)(C) of the Code. Following the completion of each
fiscal year or other designated fiscal period, the Committee shall
certify in writing whether the applicable performance targets have
been achieved for such fiscalyear or other designated fiscal
period. In determining the amount earned by such Employee, the
Committee shall have the right to reduce (but not to increase) the
amount payable at a given level of performance to take into account
additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the fiscal
year or other designated fiscal period.
3.4
Award
Agreement.
Upon the selection
of an Employee, Non-Employee Director or Consultant to receive an
Award, the Committee shall cause a written Award Agreement to be
issued to such individual encompassing the terms and conditions of
such Award, as determined by the Committee in its sole discretion;
provided, however, that, if applicable, the terms of such Award
Agreement shall comply with the terms of such Employee’s or
Consultant’s Employment Agreement, if any. Such Award
Agreement shall provide for the exercise price for Options and
SARs; the purchase price, if any, for Restricted Common Stock,
Restricted Stock Units, Deferred Stock Units and Other Stock-Based
Awards; the performance criteria for Performance Units; and the
exercisability and vesting schedule, payment terms and such other
terms and conditions of such Award that are consistent with the
Plan, as determined by the Committee in its sole discretion. Each
Award Agreement shall be executed by the Participant and an officer
of the Company authorized to sign such Award Agreement. All Awards
shall be made conditional upon the Participant's acknowledgment, in
writing in the Award Agreement or otherwise by acceptance of the
Award, that all decisions and determinations of the Committee shall
be final and binding on the Participant, his beneficiaries and any
other person having or claiming an interest under such
Award.
ARTICLE 4. OPTIONS
4.1
Award
Agreement for Option Grant.
Option grants shall be evidenced by an Award
Agreement, pursuant to Section 3.4. All Award Agreements evidencing
Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable
provisions of Section 162(m) of the Code. All Award Agreements
evidencing Incentive Stock Options shall contain such terms and
conditions as may be necessary to meet the applicable provisions of
Section 422 of the Code.
4.2
Option
Price.
The price per share of
the Common Stock subject to each Option shall be set by the
Committee; provided, however, that (i) such price shall not be less
than the par value of a share of Common Stock and shall not be less
than one hundred percent (100%) of the Fair Market Value of a share
of Common Stock on the date the Option is granted, (ii) in the case
of Incentive Stock Options granted to an individual then owning
(within the meaning of Section 424(d) of the Code) more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Company or any Subsidiary or parent corporation
thereof (within the meaning of Section 422 of the Code), such price
shall not be less than one hundred and ten percent (110%) of the
Fair Market Value of a share of Common Stock on the date the Option
is granted.
4.3
Qualification
for Incentive Stock Options.
The Committee may grant an Incentive Stock Option
to an individual only if such person is an employee of the Company
or is an employee of a Subsidiary as permitted under Section
422(a)(2) of the Code.
4.4
Change
in Incentive Stock Option Grant.
Any Incentive Stock Option granted under this Plan
may be modified by the Committee to disqualify such Option from
treatment as an Incentive Stock Option under Section 422 of the
Code. To the extent that the aggregate Fair Market Value of shares
of Common Stock with respect to which Incentive Stock Options
(within the meaning of Section 422 of the Code, but without regard
to Section 422(d) of the Code) are exercisable for the first time
by a Participant during any calendar year (under the Plan and all
other Incentive Stock Option plans of the Company) exceeds one
hundred thousand dollars ($100,000), such Options shall be treated
as Non-Qualified Stock Options to the extent required or permitted
by Section 422 of the Code. The rule set forth in the preceding
sentence shall be applied by taking Options into account in the
order in which they were granted. For purposes of this Section 4.4,
the Fair Market Value of shares of Common Stock shall be determined
as of the time the Option with respect to such shares of Common
Stock is granted.
4.5
Option
Term.
The term of an Option
shall be set by the Committee in its discretion; provided, however,
in the case of Incentive Stock Options, the term shall not be more
than ten (10) years from the date the Incentive Stock Option is
granted, or five (5) years from such date if the Incentive Stock
Option is granted to an Employee then owning (within the meaning of
Section 424(d) of the Code) more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company
or any Subsidiary or parent corporation thereof (within the meaning
of Section 422 of the Code). Such Incentive Stock Options shall be
subject to Section 5.6, except as limited by the requirements of
Section 422 of the Code and regulations and rulings thereunder
applicable to Incentive Stock Options.
4.6
Option
Exercisability and Vesting.
4.6.1
The
period during which Options in whole or in part become exercisable
and vest in the Participant shall be set by the Committee and shall
be as provided for in the Award Agreement. At any time after the
grant of an Option, the Committee may, in its sole and absolute
discretion and subject to whatever terms and conditions it selects,
accelerate the period during which an Option becomes exercisable
and vests.
4.6.2
Each
Award Agreement shall set forth the extent to which, if any, the
Participant shall have the right to exercise the Options after the
Participant's Termination of Employment. Such provisions shall be
determined in the sole discretion of the Committee, need not be
uniform among the Options granted and may differentiate between the
reasons for the Participants’ Termination of
Employment.
4.6.3
At
any time on or after the grant of an Option, the Committee may
provide in an Award Agreement that the Participant may elect to
exercise part or all of an Option before it otherwise has become
exercisable. Any shares of Common Stock so purchased shall be
restricted Common Stock and shall be subject to a repurchase right
in favor of the Company during a specified restriction period, with
the repurchase price equal to the lesser of (i) the price per share
paid by the Participant for the Common Stock, or (ii) the Fair
Market Value of such Common Stock at the time of repurchase, or
such other restrictions as the Committee deems appropriate.
TheParticipant shall have, unless otherwise provided by the
Committee in the Award Agreement, all the rights of an owner of
Common Stock, subject to the restrictions and provisions of his
Award Agreement, including the right to vote such Common Stock and
to receive all dividends and other distributions paid or made with
respect to Common Stock.
4.6.4
Any
Options which are not exercisable and vested immediately prior to a
Change in Control, including shares of restricted Common Stock
received upon the exercise of an Option as described in Section
4.6.3 above, shall, upon a Change in Control, become one hundred
percent (100%) exercisable, if not previously exercised, and one
hundred percent (100%) vested, unless the Award Agreement or the
Participant's Employment Agreement provides
otherwise.
ARTICLE 5. EXERCISE OF OPTIONS
5.1
Exercise.
At any time and from time to time
prior to the time when any exercisable Option or portion thereof
becomes unexercisable under the Plan or the Award Agreement, such
Option or portion thereof may be exercised in whole or in part;
provided, however, that the Company shall not be required to issue
fractional shares of Common Stock and the Committee may, by the
terms of the Option, require any partial exercise to be with
respect to a minimum number of shares of Common
Stock.
5.2
Manner
of Exercise.
An exercisable
Option, or any exercisable portion thereof, may be exercised solely
by delivery to the Company of all of the following prior to the
time when such Option or such portion becomes unexercisable under
the Plan or the Award Agreement:
5.2.1
A
written notice signed by the Participant or other person then
entitled to exercise such Option or portion thereof, stating that
such Option or portion is being exercised, provided such notice
complies with all applicable rules established by the Committee
from time to time.
5.2.2
Such
representations and documents as the Committee, in its absolute
discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act of 1933, as
amended, and any other federal or state securities laws or
regulations. The Committee may, in its absolute discretion, also
take whatever additional actions it deems appropriate to effect
such compliance including, without limitation, causing legends to
be placed on certificates for shares of Common Stock and issuing
stop-transfer notices to agents and registrars.
5.2.3
In
the event that the Option shall be exercised pursuant to Section
12.1 by any person or persons other than the Participant,
appropriate proof of the right of such person or persons to
exercise the Option or portion thereof.
5.2.4
Unless
otherwise determined by the Committee, the exercise price of an
Option or portion thereof, including the amount of any withholding
tax due, may be paid as follows:
5.2.4.1
In
cash or by check;
5.2.4.2
Through
the delivery of shares of Common Stock owned by the Participant,
duly endorsed for transfer to the Company with a Fair Market Value
on the date of delivery equal to the aggregate exercise price of
the Option or exercised portion thereof, provided, that shares of
Common Stock used to exercise the Option have been held by the
Participant for the requisite period of time to avoid adverse
accounting consequences to the Company with respect to the
Option;
5.2.4.3
Through
the surrender of shares of Common Stock then issuable upon exercise
of the Option having a Fair Market Value on the date of Option
exercise equal to the aggregate exercise price of the Option or
exercised portion thereof;
5.2.4.4
Through
an exercise complying with Regulation T as promulgated from time to
time by the Board of Governors of the Federal Reserve System;
or
5.2.4.5
Through
any combination of the consideration provided for in this Section
5.2.4 or such other method approved by the Committee consistent
with applicable law.
5.3
Conditions
to Issuance of Common Stock.
The Company shall not be required to issue or
deliver any certificate or other indicia evidencing ownership of
shares of Common Stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following
conditions:
5.3.1
The
obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its sole
discretion, determine to be necessary or
advisable.
5.3.2
The
lapse of such reasonable period of time following the exercise of
the Option as the Committee may establish from time to time for
reasons of administrative convenience.
5.3.3
The
receipt by the Company of full payment for such Common Stock,
including payment of any applicable withholding
tax.
5.3.4
The
Participant agreeing to the terms and conditions of the Plan and
the Award Agreement.
5.4
Rights
as Stockholders.
The holders of
Options shall not be, nor have any of the rights or privileges of,
stockholders of the Company in respect of any shares of Common
Stock purchasable upon the exercise of any part of an Option unless
and until certificates or other indicia representing such shares of
Common Stock have been issued by the Company to such
holders.
5.5
Ownership
and Transfer Restrictions.
The
Committee, in its absolute discretion, may impose at the time of
grant such restrictions on the ownership and transferability of the
shares of Common Stock purchasable upon the exercise of an Option
as it deems appropriate. Any such restriction shall be set forth in
the Award Agreement and may be referred to on the certificates or
other indicia evidencing such shares of Common
Stock.
5.6
Limitations
on Exercise of Options.
5.6.1
Vested
Incentive Stock Options may not be exercised after the earliest of
(i) their expiration date, (ii) twelve (12) months from the date of
the Participant's Termination of Employment by reason of his death,
(iii) twelve (12) months from the date of the Participant's
Termination of Employment by reason of his Permanent Disability, or
(iv) the expiration of three (3) months from the date of the
Participant's Termination of Employment for any reason other than
such Participant's death or Permanent Disability, unless the
Participant dies within said three (3) month period and the Award
Agreement or the Committee permits later exercise. Leaves of
absence for less than ninety (90) days shall not cause a
Termination of Employment for purposes of Incentive Stock
Options.
5.6.2
Non-Qualified
Stock Options may be exercised up until their expiration date,
unless the Committee provides otherwise in the Award
Agreement.
ARTICLE 6. STOCK AWARDS
6.1
Award
Agreement.
Awards of Restricted
Common Stock, Restricted Stock Units and Deferred Stock Units shall
be evidenced by an Award Agreement, pursuant to Section 3.4. All
Award Agreements evidencing Restricted Common Stock, Restricted
Stock Units and Deferred Stock Units intended to qualify as
performancebased compensation as described in Section 162(m)(4)(C)
of the Code shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of
the Code.
6.2
Awards
of Restricted Common Stock, Restricted Stock Units and Deferred
Stock Units.
6.2.1
The
Committee may from time to time, in its absolute discretion,
consistent with this Plan:
6.2.1.1
determine
which Employees, Non-Employee Directors and Consultants shall
receive Stock Awards;
6.2.1.2
determine
the aggregate number of shares of Common Stock to be awarded as
Stock Awards to Employees, Non-Employee Directors and
Consultants;
6.2.1.3
determine
the terms and conditions applicable to such Stock Awards;
and
6.2.1.4
determine
when the restrictions, if any, lapse.
6.2.2
The
Committee may establish the purchase price, if any, and form of
payment for a Stock Award. If the Committee establishes a purchase
price, the purchase price shall be no less than the par value of
the Common Stock to be purchased, unless otherwise permitted by
applicable state law.
6.2.3
Upon
the selection of an Employee, Non-Employee Director or Consultant
to be awarded Restricted Common Stock, the Committee shall instruct
the Secretary of the Company to issue such Restricted Common Stock
and may impose such conditions on the issuance of such Restricted
Common Stock as it deems appropriate, subject to the provisions of
Article 11.
6.2.4
Upon
the selection of an Employee, Non-Employee Director or Consultant
to be awarded Restricted Stock Units or Deferred Stock Units, the
Committee shall instruct the Secretary of the Company to establish
a Stock Award Account on behalf of each such Participant. The
Committee may impose such conditions on the issuance of such
Restricted Stock Units or Deferred Stock Units as it deems
appropriate.
6.2.5
Awards
of Restricted Common Stock and Restricted Stock Units shall vest
pursuant to the Award Agreement.
6.2.6
Upon
the occurrence of a Change in Control, all Restricted Common Stock
and Restricted Stock Units shall become one hundred percent (100%)
vested, unless the Participant’s Award Agreement or the
Participant’s Employment Agreement provides
otherwise.
6.2.7
A
Participant shall be one hundred percent (100%) vested in the
number of Deferred Stock Units held in his or her Stock Award
Account at all times. The term for which the Deferred Stock Units
shall be deferred shall be provided for in the Award
Agreement.
6.3
Rights
as Stockholders.
6.3.1
Upon
delivery of the shares of Restricted Common Stock to the
Participant or the escrow holder pursuant to Section 6.7, the
Participant shall have, unless otherwise provided by the Committee
in the Award Agreement, all the rights of an owner of Common Stock,
subject to the restrictions and provisions of his Award Agreement;
provided, however, that in the discretion of the Committee, any
extraordinary distributions with respect to the Common Stock shall
be subject to the restrictions set forth in Section
6.4.
6.3.2
Nothing
in this Plan shall be construed as giving a Participant who
receives an Award of Restricted Stock Units or Deferred Stock Units
any of the rights of an owner of Common Stock unless and until
shares of Common Stock are issued and transferred to the
Participant in accordance with the terms of the Plan and the Award
Agreement. Notwithstanding the foregoing, in the event that any
dividend is paid by the Company with respect to the Common Stock
(whether in the form of cash, Common Stock or other property), then
the Committee shall, in the manner it deems equitable or
appropriate, adjust the number of Restricted Stock Units or
Deferred Stock Units allocated to each Participant's Stock Award
Account to reflect such dividend.
6.4
Restriction.
All shares of Restricted Common Stock
issued under this Plan (including any Common Stock received as a
result of stock dividends, stock splits or any other form of
recapitalization, if any) shall at the time of the Award, in the
terms of each individual Award Agreement, be subject to such
restrictions as the Committee shall, in its sole discretion,
determine, which restrictions may include, without limitation,
restrictions concerning voting rights, transferability, vesting,
Company performance and individual performance; provided, however,
that by action taken subsequent to the time shares of Restricted
Common Stock are issued, the Committee may, on such terms and
conditions as it may determine to be appropriate, remove any or all
of the restrictions imposed by the terms of the Award Agreement.
Restricted Common Stock may not be sold or encumbered until all
restrictions are terminated or expire.
6.5
Lapse
of Restrictions.
The
restrictions on Awards of Restricted Common Stock and Restricted
Stock Units shall lapse in accordance with the terms of the Award
Agreement. Each Award Agreement shall set forth whether shares of
Restricted Common Stock or Restricted Stock Units then subject to
restrictions are forfeited or if the restrictions shall lapse upon
the Participant's Termination of Employment. Such provisions shall
be determined in the sole discretion of the Committee, need not be
uniform among the Awards of Restricted Common Stock or Restricted
Stock Units and may differentiate between the reasons for the
Participant's Termination of Employment.
6.6
Repurchase
of Restricted Common Stock.
The
Committee may provide in the terms of the Award Agreement awarding
Restricted Common Stock that the Company shall have call rights, a
right of first offer or a right of refusal regarding shares of
Restricted Common Stock then subject to
restrictions.
6.7
Escrow.
The Company may appoint an escrow
holder to retain physical custody of each certificate or control of
each other indicia representing shares of Restricted Common Stock
until all of the restrictions imposed under the Award Agreement
with respect to the shares of Common Stock evidenced by such
certificate expire or shall have been removed.
6.8
Legend.
In order to enforce the restrictions
imposed upon shares of Restricted Common Stock hereunder, the
Committee shall cause a legend or restrictions to be placed on
certificates of Restricted Common Stock that are still subject to
restrictions under Award Agreements, which legend or restrictions
shall make appropriate reference to the conditions imposed
thereby.
6.9
Conversion.
Upon vesting in the case of Restricted
Stock Units, and upon the lapse of the deferral period in the case
of Deferred Stock Units, such Restricted Stock Units or Deferred
Stock Units shall be converted into an equivalent number of shares
of Common Stock that will be distributed to the Participant, or in
the case of the Participant's death, to the Participant's legal
representative. Such distribution shall be evidenced by a stock
certificate, appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company, or other appropriate
means as determined by the Company. All distributions shall be made
no later than March 15
th
of the calendar year following the
year, with respect to the Restricted Stock Units, in which such
Restricted Stock Units vest or, with respect to Deferred Stock
Units, in which the deferral period lapses. In the event ownership
or issuance of the Common Stock is not feasible due to applicable
exchangecontrols, securities regulations, tax laws or other
provisions of applicable law, as determined by the Company in its
sole discretion, the Participant, or, in the case of the
Participant's death, the Participant's legal representative, shall
receive cash proceeds in an amount equal to the value of the shares
of Common Stock otherwise distributable to the Participant, net of
tax withholding as provided in Section 12.5.
ARTICLE 7. STOCK
APPRECIATION
RIGHTS
7.1
Award
Agreement for SARs.
Awards of
SARs shall be evidenced by an Award Agreement, pursuant to Section
3.4. All Award Agreements evidencing SARs intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C)
of the Code shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of
the Code.
7.2
General
Requirements.
The Committee may
grant SARs separately or in tandem with any Option (for all or a
portion of the applicable Option). The Committee shall determine
which Employees, Non-Employee Directors and Consultants shall
receive Awards of SARs and the amount of such
Awards.
7.3
Base
Amount.
The Committee shall
establish the base amount of the SAR at the time the SAR is
granted. The base amount of each SAR shall be equal to the price
per share of the related Option or, if there is no related Option,
the Fair Market Value of a share of Common Stock as of the date of
grant of the SAR, unless the Committee determines a higher base
amount.
7.4
Tandem
SARs.
Tandem SARs may be
granted either at the time the Option is granted or at any time
thereafter while the Option remains outstanding; provided, however,
that, in the case of an Incentive Stock Option, SARs may be granted
only at the time of grant of the Incentive Stock Option. In the
case of tandem SARs, the number of SARs granted to an Employee or
Consultant that shall be exercisable during a specified period
shall not exceed the number of shares of Common Stock that the
Employee, Non-Employee Director or Consultantmay purchase upon the
exercise of the related Option during such period. Upon the
exercise of an Option, the SARs relating to the Common Stock
covered by such Option shall terminate. Upon the exercise of the
SARs, the related Option shall terminate to the extent of an equal
number of shares of Common Stock.
7.5
SAR
Exercisability.
7.5.1
The
period during which SARs in whole or in part become exercisable
shall be set by the Committee and shall be as provided for in the
Award Agreement. At any time after the grant of an SAR, the
Committee may, in its sole and absolute discretion and subject to
whatever terms and conditions its selects, accelerate the period
during which the SAR becomes exercisable.
7.5.2
In
each Award Agreement, the Committee shall indicate whether the
portion of the SAR, if any, that remains non-exercisable upon the
Participant’s Termination of Employment with the Company is
forfeited. In so specifying, the Committee may differentiate
between the reason for the Participant’s Termination of
Employment.
7.6
Value
of SARs.
When a Participant
exercises an SAR, the Participant shall receive in settlement of
such SAR an amount equal to the value of the stock appreciation for
the number of SARs exercised payable in cash,
Common Stock or a combination thereof. The stock appreciation for
an SAR is the amount by which the Fair Market Value of the
underlying Common Stock on the date of exercise of the SAR exceeds
the base amount of the SAR.
7.7
Form
of Payment.
The Committee shall
determine whether the appreciation in an SAR shall be paid in the
form of cash, Common Stock or a combination of the two, in such
proportion as the Committee deems appropriate. For purposes of
calculating the number of shares of Common Stock to be received,
shares of Common Stock shall be valued at their Fair Market Value
on the date of exercise of the SAR. If shares of Common Stock are
received upon exercise of a SAR, cash shall be delivered in lieu of
any fractional shares of Common Stock.
ARTICLE 8. PERFORMANCE UNITS
8.1
Award
Agreement for Performance Units.
Awards of Performance Units shall be evidenced by
an Award Agreement, pursuant to Section 3.4. All Award Agreements
evidencing Performance Units intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C)
of the Code shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of
the Code.
8.2
General
Requirements.
Each Performance
Unit shall represent the right of the Participant to receive an
amount based on the value of the Performance Unit, if performance
goals established by the Committee are met. A Performance Unit
shall be based on the Fair Market Value of a share of Common Stock
or such other measurement base as theCommittee deems appropriate.
The Committee shall determine and set forth in the Award Agreement
the number of Performance Units to be granted and the requirements
applicable to such Performance Units. The Committee shall determine
which Employees and Consultants shall receive Awards of a
Performance Unit and the amount of such Awards.
8.3
Performance
Period and Performance Goals.
When Performance Units are granted, the Committee
shall establish the performance period during which performance
shall be measured (the "Performance Period"), performance goals
applicable to the Performance Units ("Performance Goals") and such
other conditions of the Award as the Committee deems appropriate.
Performance Goals may relate to the financial performance of the
Company or its Subsidiaries, the performance of Common Stock,
individual performance or such other criteria as the Committee
deems appropriate.
8.4
Payment
With Respect to Performance Units.
At the end of each Performance Period, the
Committee shall determine to what extent the Performance Goals and
other conditions of the Performance Units are met, the value of the
Performance Units (if applicable), and the amount, if any, to be
paid with respect to the Performance Units. Payments with respect
to Performance Units shall be made in cash, in Common Stock or in a
combination of the two, as determined by the Committee. All
payments shall be made no later than March 15 of the calendar year
following the year in which the Performance Period
ends.
ARTICLE 9. DIVIDEND EQUIVALENTS
9.1
Grant
of Dividend Equivalents.
The
Committee is hereby authorized, in its sole discretion, to grant
Dividend Equivalents to Employees, Non-Employee Directors and
Consultants subject to such terms and conditions as may be selected
by the Committee. Dividend Equivalents shall entitle the
Participant to receive payments (in cash, Common Stock, other
Awards or other property as determined in the discretion of the
Committee) equivalent to the amount of cash dividends paid by the
Company to holders of Common Stock. Dividend Equivalents may be
granted on a free-standing basis or in connection with another
Award. Dividend Equivalents granted in connection with another
Award may be granted with respect to all or a portion of the number
of shares of Common Stock subject to such Award. The Committee may
provide that the Dividend Equivalents be paid or distributed when
accrued or be deemed to have been reinvested in additional shares
of Common Stock or otherwise reinvested; provided, however, that
the terms of any reinvestment of Dividend Equivalents must comply
with all applicable laws, rules and regulations, including, without
limitation, Section 409A of the Code, and Dividend Equivalents
(other than free-standing Dividend Equivalents) shall be subject to
all conditions and restrictions of the underlying Awards to which
they relate, unless otherwise provided by the Committee.
Notwithstanding the foregoing, the Committee may not grant Dividend
Equivalents to Participants in connection with grants of Options or
SARs to such Participants.
ARTICLE 10. OTHER STOCK-BASED AWARDS
10.1
Grant
of Other Stock-Based Awards
.
The Committee is authorized, subject to limitations under
applicable law, to grant to Employees, Non-Employee Directors and
Consultants such other Awards that are payable in, valued in whole
or in part by reference to, or otherwise based on or related to,
shares of Common Stock, as deemed by the Committee to be consistent
with the purposes of the Plan, including, without limitation,
shares of Common Stock awarded purely as a "bonus" and not subject
to any restrictions or conditions, convertible or exchangeable debt
securities, other rights convertible or exchangeable into shares of
Common Stock and other Awards valued by reference to book value of
shares of Common Stock or the value of securities of or the
performance of specified Subsidiaries. The Committee shall
determine the terms and conditions of such Awards, which shall be
evidenced an Award Agreement, pursuant to Section
3.4.
ARTICLE 11. ADMINISTRATION
11.1
Committee.
The Plan shall be administered by the
Compensation Committee of the Board. The Board may remove members,
add members, and fill vacancies on the Committee from time to time,
all in accordance with the Company's Certificate of Incorporation,
Bylaws, and with applicable law. The majority vote of the
Committee, or for acts taken in writing without a meeting by the
unanimous written consent of the members of the Committee, shall be
valid acts of the Committee. Committee members may resign at any
time by delivering written notice to the Board.
11.2
Duties
and Powers of Committee.
It
shall be the duty of the Committee to conduct the general
administration of this Plan in accordance with its provisions. The
Committee shall have the power to designate the Employees,
Non-Employee Directors and Consultants who shall participate in the
Plan and to construe and interpret this Plan and the agreements
pursuant to which Options, Restricted Common Stock, Restricted
Stock Units, Deferred Stock Units, SARs, Dividend Equivalents,
Performance Units or Other Stock-Based Awards are granted or
awarded, and to adopt such rules for the administration,
interpretation, and application of this Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Any
such Award under this Plan need not be the same with respect to
each Participant. Any such interpretations and rules with respect
to Incentive Stock Options shall be consistent with the provisions
of Section 422 of the Code. All determinations and decisions made
by the Committee pursuant to the provisions of the Plan shall be
final, conclusive and binding.
11.3
Compensation;
Professional Assistance; Good Faith Actions.
Unless otherwise determined by the Board, members
of the Committee shall receive no compensation for their services
pursuant to this Plan. All expenses and liabilities which members
of the Committee incur in connection with the administration of
this Plan shall be borne by the Company. The Committeemay, with the
approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers, or other persons. The Committee, the Company
and the Company's officers and directors shall be entitled to rely
upon the advice, opinions or valuations of any such persons. All
actions taken and all interpretations and determinations made by
the Committee or the Board in good faith shall be final and binding
upon all Participants, the Company and all other interested
persons. No members of the Committee or Board shall be personally
liable for any action, determination or interpretation made in good
faith with respect to this Plan or any Awards made hereunder, and
all members of the Committee and the Board shall be fully protected
by the Company in respect of any such action, determination or
interpretation.
ARTICLE 12. MISCELLANEOUS PROVISIONS
12.1
Transferability.
12.1.1
No
Award or any right therein or part thereof, shall be liable for the
debts, contracts or engagements of the Participant or his
successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment
or any other means, whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including
bankruptcy), and any attempted disposition thereof shall be null
and void and of no effect; provided, however, that nothing in this
Section 12.1.1 shall prevent transfers by will or by the applicable
laws of descent and distribution or as permitted in Section 12.1.2
below. The Committee shall not be required to accelerate the
exercisabilty of an Award or otherwise take any action pursuant to
a divorce or similar proceeding in the event Participant's spouse
is determined to have acquired a community property interest in all
or any portion of an Award. Except as provided below, during the
lifetime of the Participant, only he may exercise an Award (or any
portion thereof) granted to him under thePlan. After the death of
the Participant, any exercisable portion of an Award, prior to the
time when such portion becomes unexercisable under the Plan or the
applicable Award Agreement or other agreement, may be exercised by
his personal representative or by any person empowered to do so
under the deceased Participant's will or under the then applicable
laws of descent and distribution.
12.1.2
Notwithstanding
the foregoing, the Committee may provide in an Award Agreement, or
amend an otherwise outstanding Award Agreement to provide, that a
Participant may transfer an Award that is not an Incentive Stock
Option or an SAR that is granted in relation to an Incentive Stock
Option to family members, or one or more trusts or other entities
for the benefit of orowned by family members, consistent with
applicable securities laws, according to such terms as the
Committee may determine; provided that the Participant receives no
consideration for the transfer of such an Award and the transferred
Award shall continue to be subject to the same terms and conditions
as were applicable to the Award immediately before the transfer and
shall be exercisable by the transferee according to the same terms
as applied to the Participant.
12.2
Amendment,
Suspension or Termination of this Plan.
12.2.1
Except
as otherwise provided in this Section 12.2, this Plan may be wholly
or partially amended or otherwise modified, suspended or terminated
at any time or from time to time by the Board; provided, however,
no action of the Board may be taken that would otherwise require
stockholder approval as a matter of applicable law, regulation or
rule, without the consent of the stockholders. In no event may any
Option or SAR be amended, other than pursuant to Section 12.3, to
decrease theexercise or grant price thereof, be cancelled in
conjunction with the grant of any new Option or SAR with a lower
exercise or grant price, or otherwise be subject to any action that
would be treated, under generally accepted accounting principles,
as a "repricing" of such Option or SAR, unless the stockholders of
the Company provide prior approval. No amendment, suspension or
termination of this Plan shall impair any rights or obligations
under any Award theretofore made to a Participant, unless such
right has been reserved in the Plan or the Award Agreement, without
the consent of the Participant holding such Award. No Award may be
made during any period of suspension or after termination of this
Plan. In no event may any Award be made under this Plan after
December 31, 2019.
12.2.2
Notwithstanding
the foregoing, the Board or the Committee may take any action
necessary to comply with a change in applicable law, irrespective
of the status of any Award as vested or unvested, exercisable or
unexercisable, at the time of such change in applicable
law.
12.3
Changes
in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate
Events.
12.3.1
In
the event that any dividend (other than an ordinary cash dividend)
or other distribution (whether in the form of cash, Common Stock,
other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization,
merger, consolidation, split up, spin-off, combination, repurchase
or other similar transaction or event affects the Common Stock such
that an adjustment is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such
manner as it may deem equitable, adjust any or all of the
following:
12.3.1.1
the
maximum number of shares of Common Stock available for
Awards;
12.3.1.2
the
maximum number of shares of Common Stock subject to the
Plan;
12.3.1.3
the
number and kind of Company stock with respect to which an Award may
be made under the Plan;
12.3.1.4
the
number and kind of Company stock subject to an outstanding Award;
and
12.3.1.5
the
exercise price or purchase price with respect to any
Award.
12.3.2
In
addition, in the event of any merger, consolidation, split-up,
spin-off, combination, repurchase, liquidation, dissolution, or
sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company or any unusual or
nonrecurring transactions or events affecting the Company or the
financial statements of the Company, or of changes in applicable
laws, regulations, or accounting principles, the Committee in its
discretion is hereby authorized to take any one or more of the
following actions whenever the Committee determines, in its sole
discretion, that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan or with respect to any
Award or right under this Plan, to facilitate such transactions or
events or to give effect to such changes in laws, regulations or
principles:
12.3.2.1
the
Committee may provide, by the terms of the Award Agreement or by
action taken prior to the occurrence of such transaction or event
and either automatically or upon the Participant's request, for (i)
the purchase of any such Award for the payment of an amount of cash
equal to the amount that could have been attained upon the exercise
of such Award or realization of the Participant's rights had such
Award been currently exercisable, payable, fully vested or the
restrictions lapsed, or (ii) the replacement of such Award with
other rights or property selected by the
Committee;
12.3.2.2
the
Committee may provide, by the terms of such Award Agreement or by
action taken prior to the occurrence of such transaction or event,
that the Award cannot be exercised after such
event;
12.3.2.3
the
Committee may provide, by the terms of such Award or by action
taken prior to the occurrence of such transaction or event, that
for a specified period of time prior to such transaction or event
such Award shall be exercisable, notwithstanding anything to the
contrary in Section 4.6 or the provisions of such
Award;
12.3.2.4
the
Committee may provide, by the terms of such Award or by action
taken prior to the occurrence of such transaction or event, that
upon such event, such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be
substituted for by similar Awards covering the stock of the
successor or survivor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of
shares and prices;
12.3.2.5
the
Committee may make adjustments in the number, type and kind of
shares of Common Stock subject to outstanding Options, Restricted
Common Stock, Restricted Stock Units, Deferred Stock Units, SARs
and Performance Units and in the terms and conditions of (including
the grant or exercise price), and the criteria included in,
outstanding Awards, and rights and awards which may be granted in
the future; and
12.3.2.6
the
Committee may provide, by the terms of an Award of Restricted
Common Stock or Restricted Stock Units or by action taken prior to
the occurrence of such event, that for a specified period of time
prior to such event, the restrictions imposed under an Award
Agreement upon some or all shares of the Restricted Common Stock or
the Restricted Stock Units may be terminated, and some or all
shares of such Restricted Common Stock or some or all of such
Restricted Stock Units may cease to be subject to forfeiture under
Section 6.5 or repurchase under Section 6.6 after such
event.
12.3.3
Subject
to Section 12.7, the Committee may, in its sole discretion, at the
time of grant, include such further provisions and limitations in
any Award Agreement or certificate, as it may deem appropriate and
in the best interests of the Company; provided, however, that no
such provisions or limitations shall be contrary to the terms of
the Participant's Employment Agreement or the terms of this
Plan.
12.3.4
Notwithstanding
the foregoing, no action pursuant to this Section 12.3 shall be
taken that is specifically prohibited under applicable law, the
rules and regulations of any governing governmental agency or
national securities exchange, or the terms of the Participant's
Employment Agreement, and no adjustment to an Option or SAR shall
be made to the extent the same constitutes a "modification" within
the meaning of Section 424(h)(3) of the Code, Regulation
§1.424-1(a) thereunder or Section 409(A) of the Code or the
regulations thereunder.
12.4
Continued
Employment.
Nothing in this
Plan or in any Award Agreement hereunder shall confer upon any
Participant any right to continue his employment, consulting or
similar relationship with the Company, whether as an employee or
consultant or otherwise, or shall interfere with or restrict in any
way the rights of the Company, which are hereby expressly reserved,
to discharge or terminate the relationship with any Participant at
any time for any reason whatsoever, subject to the terms of any
Employment Agreement entered into by the Participant and the
Company.
12.5
Tax
Withholding.
The Company shall
be entitled to require payment in cash or deduction from other
compensation payable to each Participant of any sums required by
federal, state or local tax law to be withheld with respect to the
issuance, vesting, exercise or lapse of any restriction of any
Option, Restricted Common Stock, Restricted Stock Unit, Deferred
Stock Unit, SAR or Performance Unit. The Committee shall be
authorized to establish procedures for election by Participants to
satisfy such obligation for the payment of such taxes (i) by
delivery of, or transfer of, shares of Common Stock to the Company
or (ii) by directing the Company to retain shares of Common Stock
otherwise deliverable under an Award. Shares of Common Stock
withheld or delivered in accordance with this Section 12.5 shall be
valued at Fair Market Value as of such date as may be specified in
procedures established by the Committee.
12.6
Forfeiture
Provisions.
Pursuant to its
general authority to determine the terms and conditions applicable
to Awards, the Committee shall have the right to provide, in the
terms of such Award, or to require the Participant to agree by
separate written instrument, that the Award shall terminate and any
unexercised portion of such Award (whether or not vested) shall be
forfeited if (i) a Termination of Employmentoccurs prior to a
specified date, or within a specified time period following receipt
or exercise of the Award, (ii) the Participant at any time, or
during a specified time period, engages in any activity in
competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the
Committee or as specified in the Participant's Employment
Agreement, or (iii) the Company terminates the Participant with or
without cause.
12.7
Limitations
Applicable
to
Section
16
Persons
and
Performance-Based
Compensation.
Notwithstanding any other provision of this Plan, any Option,
Restricted Common Stock, Restricted Stock Unit, Deferred Stock
Unit, SARs, Dividend Equivalents, Performance Units or Other
Stock-Based Awards granted or awarded to any individual who is then
subject to Section 16 of the Exchange Act shall be subject to any
additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3 under the Exchange Act). To the extent permitted by
applicable law, Options granted or awarded hereunder shall be
deemed amended to the extent necessary to conform to such
applicable exemptive rule. Furthermore, notwithstanding any other
provision of this Plan to the contrary, any Award that is intended
to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code shall be subject to any additional
limitations set forth in Section 162(m) of the Code (including any
amendment to Section 162(m) of the Code) or any regulations or
rulings issued thereunder that are requirements for qualification
as performance-based compensation as described in Section
162(m)(4)(C) of the Code, and this Plan shall be deemed amended to
the extent necessary to conform to such requirements.
12.8
Effect
of Plan Upon Option and Compensation Plans.
The adoption of this Plan shall not affect any
other compensation or incentive plans in effect for the Company.
Nothing in this Plan shall be construed to limit the right of the
Company (i) to establish any other forms of incentives or
compensation for Employees, Non-Employee Directors and Consultants,
or (ii) to grant or assume options or other rights otherwise than
under this Plan in connection with any proper corporate purpose
including but not by way of limitation, the grant or assumption of
options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or
assets of any corporation, partnership, limited liability company,
firm or association.
12.9
Compliance
with Laws.
This Plan, the
granting and vesting of Awards under this Plan and the issuance and
delivery of shares of Common Stock and the payment of money under
this Plan or under Awards awarded hereunder are subject to
compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal
securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as
may, in the opinion of counsel for the Company, be necessary or
advisable in connection therewith. Any securities delivered under
this Plan shall be subject to such restrictions, and the person
acquiring such securities shall, if requested by the Company,
provide such assurances and representations to the Company as the
Company may deem necessary or desirable to assure compliance with
all applicable legal requirements. To the extent permitted by
applicable law, the Plan shall be deemed amended to the extent
necessary to conform to such laws, rules and regulations. No Award
under this Plan (or modification thereof) shall provide for the
deferral of compensation that violates Section 409A of the Code. If
any provision of the Plan or an Award Agreement contravenes any
regulations or Treasury guidance promulgated under Section 409A of
the Code or could cause an Award to be subject to the interest and
penalties under Section 409A of the Code, such provision of the
Plan or any Award Agreement shall be modified to maintain, to the
maximum extent practicable, the original intent of the applicable
provision without violating the provisions of Section 409A of the
Code. Moreover, any discretionary authority that the Board or the
Committee may have pursuant to the Plan shall not be applicable to
an Award that is subject to Section 409A of the Code to the extent
such discretionary authority will contravene Section 409A of the
Code.
12.10
Titles.
Titles are provided herein for
convenience only and are not to serve as a basis for interpretation
or construction of this Plan.
12.11
Governing
Law.
This Plan and any
agreements hereunder shall be administered, interpreted and
enforced under the laws of the State of Texas, without regard to
that state’s conflicts of laws rules.
12.12
Effective
Date.
The Atrion Corporation
2006 Equity Incentive Plan first became effective on May 22, 2006.
This Amended and Restated Atrion Corporation 2006 Equity Incentive
Plan shall be effective on the date it is approved by the
stockholders of the Company.