Exhibit 10.1
LIGHTPATH TECHNOLOGIES, INC.
2018 STOCK AND
INCENTIVE COMPENSATION PLAN
1. Purpose
of the Plan.
The
purpose of this Plan is to enhance shareholder value by linking the
compensation of officers, directors, key employees and consultants
of the Company to increases in the price of LightPath Technologies,
Inc. common stock and the achievement of other performance
objectives, and to encourage ownership in the Company by key
personnel whose long-term employment is considered essential to the
Company’s continued progress and success. The Plan is also
intended to assist the Company in the recruitment of new employees
and to motivate, retain and encourage such employees and directors
to act in the shareholders’ interest and share in the
Company’s success.
2. Definitions.
As used
herein, the following definitions shall apply:
(a)
“Administrator”
means the Board, any Committee or such delegates as shall be
administering the Plan in accordance with Section 4 of the
Plan.
(b)
“Affiliate”
means any Subsidiary or other entity that is directly or indirectly
controlled by the Company or any entity in which the Company has a
significant ownership interest as determined by the Administrator.
The Administrator shall, in its sole discretion, determine which
entities are classified as Affiliates and designated as eligible to
participate in this Plan.
(c)
“Applicable Law”
means the requirements relating to the administration of stock
option plans under U.S. federal and state laws, any stock exchange
or quotation system on which the Company has listed or submitted
for quotation the Common Shares to the extent provided under the
terms of the Company’s agreement with such exchange or
quotation system and, with respect to Awards subject to the laws of
any foreign jurisdiction where Awards are, or will be, granted
under the Plan, the laws of such jurisdiction.
(d)
“Award”
means a
Stock Award, Option, Stock Appreciation Right, Stock Unit, or Other
Stock-Based Award granted in accordance with the terms of the Plan,
or any other property (including cash) granted pursuant to the
provisions of the Plan.
(e)
“Awardee”
means
an Employee, Director or Consultant who has been granted an Award
under the Plan.
(f)
“Award
Agreement”
means a Stock Award Agreement, Option
Agreement, Stock Appreciation Right Agreement, Restricted Stock
Unit Agreement or Other Stock-Based Award Agreement, which may be
in written or electronic format, in such form and with such terms
as may be specified by the Administrator, evidencing the terms and
conditions of an individual Award. Each Award Agreement is subject
to the terms and conditions of the Plan. The Award Agreement shall
be delivered to the Participant receiving such Award upon, or as
promptly as is reasonably practicable following, the grant of such
Award. The effectiveness of an Award shall not be subject to the
Award Agreement’s being signed by the Company and/or the
Participant receiving the Award unless specifically so provided in
the Award Agreement.
(g)
“Board”
means
the Board of Directors of the Company.
(h)
“Change of
Control”
shall mean, except as otherwise provided in
an Award Agreement, one of the following shall have taken place
after the date of this Agreement:
(i) any
one person, or group of owners of another corporation who, acting
together through a merger, consolidation, purchase, acquisition of
stock or the like (a "Group"), acquires ownership of Shares of the
Company that, together with the Shares held by such person or
Group, constitutes more than fifty percent (50%) of the total fair
market value or total voting power of the Shares of the Company (or
other voting securities of the Company then outstanding). However,
if such person or Group is considered to own more than fifty
percent (50%) of the total fair market value or total voting power
of the Shares (or other voting securities of the Company then
outstanding) before this transfer of the Company's Shares (or other
voting securities of the Company then outstanding), the acquisition
of additional Shares (or other voting securities of the Company
then outstanding) by the same person or Group shall not be
considered to cause a Change of Control of the Company;
or
(ii)
any one person or Group acquires (or has acquired during the twelve
(12) month period ending on the date of the most recent acquisition
by such person or persons) ownership of Shares (or other voting
securities of the Company then outstanding) of the Company
possessing thirty percent (30%) or more of the total voting power
of the Shares (or other voting securities then outstanding) of the
Company where such person or Group is not merely acquiring
additional control of the Company; or
(iii) a
majority of members of the Company's Board is replaced during any
twelve (12) month period by directors whose appointment or election
is not endorsed by a majority of the members of the Company's Board
prior to the date of the appointment or election (the
“Incumbent Board”), but excluding, for purposes of
determining whether a majority of the Incumbent Board has endorsed
any candidate for election to the Board, any individual whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal
of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a person or Group other than the
Company’s Board; or
(iv)
any one person or Group acquires (or has acquired during the twelve
(12) month period ending on the date of the most recent acquisition
by such person or Group) all or substantially all of the assets
from the Company that have a total gross fair market value equal to
or more than forty percent (40%) of the total fair market value of
all assets of the Company immediately prior to 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. A transfer of assets by the Company
will not result in a Change of Control if the assets are
transferred to:
(1)
a stockholder of
the Company (immediately before the asset transfer) in exchange for
or with respect to its stock;
(2)
an entity, fifty
percent (50%) or more of the total value or voting power of which
is owned, directly or indirectly, by the Company immediately after
the transfer of assets;
(3)
a person or Group
that owns, directly or indirectly, fifty percent (50%) or more of
the total value or voting power of all the outstanding stock of the
Company; or
(4)
an entity, at least
fifty percent (50%) of the total value or voting power of which is
owned directly or indirectly, by a person described in subparagraph
(h)(i), above; or
(v)
Shareholders of the Company approve a plan of complete liquidation
or dissolution of the Company.
Notwithstanding the
foregoing, if any payment or distribution event applicable to an
Award is subject to the requirements of Section 409A(a)(2)(A) of
the Code, the determination of the occurrence of a Change of
Control shall be governed by applicable provisions of Section
409A(a)(2)(A) of the Code and regulations and rulings issued
thereunder for purposes of determining whether such payment or
distribution may then occur.
(i)
“Code”
means the
United States Internal Revenue Code of 1986, as amended, and any
successor thereto, the Treasury Regulations thereunder and other
relevant interpretive guidance issued by the Internal Revenue
Service or the Treasury Department. Reference to any specific
section of the Code shall be deemed to include such regulations and
guidance, as well as any successor provision of the
Code.
(j)
“Committee”
means a committee of Directors appointed by the Board in accordance
with Section 4 of the Plan or, in the absence of any such special
appointment, the Compensation Committee of the Board.
(k)
“Common Shares”
means the Class A Common Stock of the Company, or any security of
the Company issued in substitution, exchange or lieu
thereof.
(l)
“Company”
means
LightPath Technologies, Inc., a Delaware corporation, or, except as
utilized in the definition of Change of Control, its
successor.
(m)
“Consultant”
means an individual providing services to the Company or any of its
Affiliates as an independent contractor, and includes prospective
consultants who have accepted offers of consultancy for the Company
or any of its Affiliates, so long as such person (i) renders bona
fide services that are not in connection with the offer and sale of
the Company’s securities in a capital-raising transaction,
(ii) does not directly or indirectly promote or maintain a market
for the Company’s securities, and (iii) otherwise qualifies
as a consultant under the applicable rules of the SEC for
registration of shares of stock on a Form S-8 registration
statement.
(n)
“
Conversion
Award
” has the meaning set forth in Section 4(b)(xii)
of the Plan.
(o)
“Director”
means
a member of the Board. Any Director who does not serve as an
employee of the Company is referred to herein as a
“
Non-employee
Director
.”
(p)
“Disability”
means (i) “Disability” as defined in any employment,
consulting or similar agreement to which the Participant is a
party, or (ii) if there is no such agreement or it does not define
“Disability,” (A) permanent and total disability as
determined under the Company’s long-term disability plan
applicable to the Participant, or (B) if there is no such plan
applicable to the Participant or the Committee determines otherwise
in an applicable Award Agreement, “Disability” shall
mean the Participant is 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 which has
lasted or can be expected to last for a continuous period of not
less than 12 months, as determined by the Committee.
Notwithstanding the above, with respect to an Incentive Stock
Option, Disability shall mean permanent and total disability as
defined in Section 22(e)(3) of the Code and, with respect to any
Award that constitutes “nonqualified deferred
compensation” within the meaning of Section 409A of the Code,
the foregoing definition shall apply for purposes of vesting of
such Award, provided that such Award shall not be settled until the
earliest of: (x) the Participant’s “disability”
within the meaning of Section 409A of the Code, (y) the
Participant’s “separation from service” within
the meaning of Section 409A of the Code and (z) the date such Award
would otherwise be settled pursuant to the terms of the Award
Agreement.
(q)
“Disaffiliation”
means a Subsidiary’s or Affiliate’s ceasing to be a
Subsidiary or Affiliate for any reason (including, without
limitation, as a result of a public offering, or a spin-off or sale
by the Company, of the stock of the Subsidiary or Affiliate) or a
sale of a division of the Company and its Affiliates.
(r)
“Employee”
means
a regular, active employee of the Company or any Affiliate,
including an Officer or Director who is also a regular, active
employee of the Company or any Affiliate. The Administrator shall
determine whether the Chairman of the Board qualifies as an
“Employee.” For any and all purposes under the Plan,
the term “Employee” shall not include a person hired as
a leased employee, Consultant or a person otherwise designated by
the Administrator, the Company or an Affiliate at the time of hire
as not eligible to participate in or receive benefits under the
Plan or not on the payroll, even if such ineligible person is
subsequently determined to be a common law employee of the Company
or an Affiliate or otherwise an employee by any governmental or
judicial authority. Unless otherwise determined by the
Administrator in its sole discretion, for purposes of the Plan, an
Employee shall be considered to have terminated employment and to
have ceased to be an Employee if his or her employer ceases to be
an Affiliate, even if he or she continues to be employed by such
employer.
(s)
“Exchange Act”
means the United States Securities Exchange Act of 1934, as amended
and any successor thereto.
(t)
“Fair Market
Value”
means the closing price for the Common Shares
reported on a consolidated basis on the primary national securities
exchange on which such Common Shares are traded on the date of
measurement, or if the Common Shares were not traded on such
measurement date, then on the next preceding date on which Common
Shares were traded, all as reported by such source as the Committee
may select. If the Common Shares are not listed on a national
securities exchange, Fair Market Value shall be determined by the
Committee in its good faith discretion, taking into account, to the
extent appropriate, the requirements of Section 409A of the
Code.
(u)
“Grant Date”
means, with respect to each Award, the date upon which the Award is
granted to an Awardee pursuant to this Plan, which may be a
designated future date as of which such Award will be effective, as
determined by the Committee.
(v)
“Incentive Stock
Option”
means an Option that is identified in the
Option Agreement as intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder, and that actually does so
qualify.
(w)
“Nonqualified Stock
Option”
means an Option that is not an Incentive Stock
Option.
(x)
“Officer”
means
a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(y)
“Option”
means a
right granted under Section 8 of the Plan to purchase a number of
Shares at such exercise price, at such times, and on such other
terms and conditions as are specified in the agreement or other
documents evidencing the Award (the “Option
Agreement”). Both Incentive Stock Options and Nonqualified
Stock Options may be granted under the Plan.
(z)
“Other Stock-Based
Award”
means an Award granted pursuant to Section 12
of the Plan on such terms and conditions as are specified in the
agreement or other documents evidencing the Award (the “Other
Stock-Based Award Agreement”).
(aa)
“Participant”
means the Awardee or any person (including any estate) to whom an
Award has been assigned or transferred as permitted
hereunder.
(bb)
“Performance
Criteria”
shall have the meaning set forth in Section
13(b) of the Plan.
(cc)
“Plan”
means
this 2018 Stock and Incentive Compensation Plan, as set forth
herein and as hereafter amended from time to time.
(dd)
“Retirement”
means, unless the Administrator determines otherwise, voluntary
Termination of Employment by a Participant from the Company and its
Affiliates after attaining age 60 and having completed at least 10
years of service for the Company and its Affiliates, excluding
service with an Affiliate of the Company prior to the time that
such Affiliate became an Affiliate of the Company.
(ee)
“Securities Act”
means the United States Securities Act of 1933, as
amended.
(ff)
“Share”
means a
Common Share, as adjusted in accordance with Section 15 of the
Plan.
(gg)
“Stock Appreciation
Right”
means a right granted under Section 10 of the
Plan on such terms and conditions as are specified in the agreement
or other documents evidencing the Award (the “Stock
Appreciation Right Agreement”).
(hh)
“Stock Award”
means an award or issuance of Shares made under Section 11 of the
Plan, the grant, issuance, retention, vesting and/or
transferability of which is subject during specified periods of
time to such conditions (including, without limitation, continued
employment or performance conditions) and terms as are expressed in
the agreement or other documents evidencing the Award (the
“Stock Award Agreement”).
(ii)
“Stock Unit”
means a bookkeeping entry representing an amount equivalent to the
Fair Market Value of one Share, payable in cash, property or
Shares. Stock Units represent an unfunded and unsecured obligation
of the Company, except as otherwise provided for by the
Administrator.
(jj)
“Stock Unit
Award”
means an award or issuance of Stock Units made
under Section 12 of the Plan, the grant, issuance, retention,
vesting and/or transferability of which is subject during specified
periods of time to such conditions (including, without limitation,
continued employment or performance conditions) and terms as are
expressed in the agreement or other documents evidencing the Award
(the “Stock Unit Award Agreement”).
(kk)
“Subsidiary”
means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company, provided each company
in the unbroken chain (other than the Company) owns, at the time of
determination, stock possessing 50% or more of the total combined
voting power of all classes of stock, in one of the other
corporations in such chain.
(ll)
“Termination for
Cause”
means, unless otherwise provided in an Award
Agreement, Termination of Employment on account of any act of fraud
or intentional misrepresentation or embezzlement, misappropriation
or conversion of assets of the Company or any Affiliate, or the
intentional and repeated violation of the written policies or
procedures of the Company, provided that, for an Employee who is
party to an individual severance or employment agreement defining
Cause, “Cause” shall have the meaning set forth in such
agreement except as may be otherwise provided in such agreement.
For purposes of this Plan, a Participant’s Termination of
Employment shall be deemed to be a Termination for Cause if, after
the Participant’s employment has terminated, facts and
circumstances are discovered that would have justified, in the
opinion of the Committee, a Termination for Cause.
(mm)
“Termination of
Employment”
means, for purposes of this Plan, unless
otherwise determined by the Administrator, ceasing to be an
Employee (as determined in accordance with Section 3401(c) of the
Code and the regulations promulgated thereunder) of the Company and
any of its Subsidiaries or Affiliates. Unless otherwise determined
by the Committee in the terms of an Award Agreement or otherwise,
if a Participant’s employment with the Company and its
Affiliates terminates but such Participant continues to provide
services to the Company and its Affiliates in a Non-employee
Director capacity, such change in status shall not be deemed a
Termination of Employment. A Participant employed by, or performing
services for, a Subsidiary or an Affiliate or a division of the
Company and its Affiliates shall be deemed to incur a Termination
of Employment if, as a result of a Disaffiliation, such Subsidiary,
Affiliate, or division ceases to be a Subsidiary, Affiliate or
division, as the case may be, and the Participant does not
immediately thereafter become an Employee of (or service provider
for), or member of the board of directors of, the Company or
another Subsidiary or Affiliate. Temporary absences from employment
because of illness, vacation or leave of absence and transfers
among the Company and its Subsidiaries and Affiliates shall not be
considered Terminations of Employment. In addition, Termination of
Employment shall mean a “separation from service” as
defined in regulations issued under Code Section 409A whenever
necessary to ensure compliance therewith for any payment or
settlement of a benefit conferred under this Plan that is subject
to such Code section, and, for such purposes, shall be determined
based upon a reduction in the bona fide level of services performed
to a level equal to twenty percent (20%) or less of the average
level of services performed by the Employee during the immediately
preceding 36-month period.
3. Stock
Subject to the Plan.
(a)
Aggregate Limit.
Subject to
the provisions of Section 15(a) of the Plan, the maximum aggregate
number of Shares which may be subject to or delivered under Awards
granted under the Plan is 1,650,870 Shares, less one Share for
every one Share granted under any prior plan after June 30, 2018.
After the Effective Date of the Plan (as provided in Section 6), no
awards may be granted under any prior plan. Shares subject to or
delivered under Conversion Awards shall not reduce the aggregate
number of Shares which may be subject to or delivered under Awards
granted under this Plan. The Shares issued under the Plan may be
either Shares reacquired by the Company, including Shares purchased
in the open market, or authorized but unissued Shares. Prior plans
include the Amended and Restated LightPath Technologies, Inc.
Omnibus Incentive Plan.
(b)
Code Section 422
Limits; Limit on Awards to
Directors.
Subject to the provisions of Section 15(a) of the
Plan, the aggregate number of Shares that may be subject to all
Incentive Stock Options granted under the Plan shall not exceed the
total aggregate number of Shares that may be subject to or
delivered under Awards under the Plan, as the same may be amended
from time to time. Notwithstanding any other provision of the Plan
to the contrary, the aggregate grant date fair value (computed as
of the date of grant in accordance with applicable financial
accounting rules) of all Awards granted to any Non-employee
Director during any single calendar year shall not exceed one
hundred thousand (100,000) Shares.
(c)
Share Counting
Rules
.
(i) For
purposes of this Section 3 of the Plan, Shares subject to Awards
that have been canceled, expired, settled in cash, or not issued or
forfeited for any reason (in whole or in part) shall not reduce the
aggregate number of Shares which may be subject to or delivered
under Awards granted under this Plan and shall be available for
future Awards granted under this Plan. In addition, if any Shares
subject to an award under any prior plan are canceled, expired,
settled in cash, or not issued or forfeited for any reason (in
whole or in part) after June 30, 2018, then such Shares subject to
an award under any prior plan shall, to the extent of such
cancellation, expiration, settlement in cash, non-issuance or
forfeiture, again be available for grant under this Plan on a
one-for-one basis.
(ii)
Shares subject to Awards that have been retained by the Company in
payment or satisfaction of the purchase price of an Award or the
tax withholding obligation of an Awardee, and Shares that have been
delivered (either actually or constructively by attestation) to the
Company in payment or satisfaction of the purchase price of an
Award or the tax withholding obligation of an Awardee, shall be
available for grant under the Plan on a one-for-one basis.
Similarly, if any Shares subject to an award under any prior plan
are, after December 31, 2017, either retained by the Company in
payment or satisfaction of the purchase price of an award or the
tax withholding obligation of an awardee, or if Shares are
delivered (either actually or constructively by attestation) to the
Company in payment or satisfaction of the purchase price of an
award or the tax withholding obligation of an awardee under a prior
plan, then such Shares subject to an award under any prior plan
shall, to the extent of such tendering or withholding, again be
available for grant under this Plan on a one-for-one
basis.
(iii)
Conversion Awards shall not reduce the Shares authorized for grant
under the Plan or the limitations on Awards to a Participant under
subsection (b), above, nor shall Shares subject to a Conversion
Award again be available for an Award under the Plan as provided in
this subsection (c).
4. Administration
of the Plan.
(a)
Procedure
.
(i)
Multiple Administrative
Bodies.
The Plan shall be administered by the Board, a
Committee designated by the Board to so administer this Plan and/or
their respective delegates.
(ii)
Rule 16b-3
. To the extent
desirable to qualify transactions hereunder as exempt under Rule
16b-3 promulgated under the Exchange Act (“Rule
16b-3”), Awards to Officers and Directors shall be made by
the entire Board or a Committee of two or more “non-employee
directors” within the meaning of Rule 16b-3.
(iii)
Other Administration.
To
the extent required by the rules of the principal U.S. national
securities exchange on which the Shares are traded, the members of
the Committee shall also qualify as “independent
directors” as set forth in such rules. Except to the extent
prohibited by Applicable Law, the Board or a Committee may delegate
to a Committee of one or more Directors or to authorized officers
of the Company the power to approve Awards to persons eligible to
receive Awards under the Plan who are not subject to Section 16 of
the Exchange Act.
(iv)
Awards to Directors
. The
Board shall have the power and authority to grant Awards to
Non-employee Directors, including the authority to determine the
number and type of awards to be granted; determine the terms and
conditions, not inconsistent with the terms of this Plan, of any
award; and to take any other actions the Board considers
appropriate in connection with the administration of the
Plan.
(v)
Delegation of Authority for the
Day-to-Day Administration of the Plan.
Except to the extent
prohibited by Applicable Law, the Administrator may delegate to one
or more individuals the day-to-day administration of the Plan and
any of the functions assigned to it in this Plan. Such delegation
may be revoked at any time.
(b)
Powers of the
Administrator.
Subject to the provisions of the Plan and, in
the case of a Committee or delegates acting as the Administrator,
subject to the specific duties delegated to such Committee or
delegates, the Administrator shall have the authority, in its
discretion:
(i) to
select the Non-employee Directors, Consultants and Employees of the
Company or its Affiliates to whom Awards are to be granted
hereunder;
(ii) to
determine the number of Common Shares to be covered by each Award
granted hereunder;
(iii)
to determine the type of Award to be granted to the selected
Employees,
Consultants
and Non-employee Directors;
(iv) to
approve forms of Award Agreements;
(v) to
determine the terms and conditions, not inconsistent with the terms
of the Plan, of any Award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise and/or
purchase price, the time or times when an Award may be exercised
(which may or may not be based on Performance Criteria), the
vesting schedule, any vesting and/or exercisability provisions,
terms regarding acceleration of Awards or waiver of forfeiture
restrictions, the acceptable forms of consideration for payment for
an Award, the term, and any restriction or limitation regarding any
Award or the Shares relating thereto, based in each case on such
factors as the Administrator, in its sole discretion, shall
determine and may be established at the time an Award is granted or
thereafter;
(vi) to
correct administrative errors;
(vii)
to construe and interpret the terms of the Plan (including
sub-plans and Plan addenda) and Awards granted pursuant to the
Plan;
(viii)
to adopt rules and procedures relating to the operation and
administration of the Plan to accommodate the specific requirements
of local laws and procedures. Without limiting the generality of
the foregoing, the Administrator is specifically authorized (A) to
adopt rules and procedures regarding the conversion of local
currency, the shift of tax liability from employer to employee
(where legally permitted) and withholding procedures and handling
of stock certificates which vary with local requirements, and (B)
to adopt sub-plans and Plan addenda as the Administrator deems
desirable, to accommodate foreign laws, regulations and
practice;
(ix) to
prescribe, amend and rescind rules and regulations relating to the
Plan, including rules and regulations relating to sub-plans and
Plan addenda;
(x) to
modify or amend each Award, including, but not limited to, the
acceleration of vesting and/or exercisability, provided, however,
that any such modification or amendment (A) is subject to the
minimum vesting provisions under the Plan, if any, and the plan
amendment provisions set forth in Section 16 of the Plan, and (B)
may not materially impair any outstanding Award unless agreed to in
writing by the Participant, except that such agreement shall not be
required if the Administrator determines in its sole discretion
that such modification or amendment either (Y) is required or
advisable in order for the Company, the Plan or the Award to
satisfy any Applicable Law or to meet the requirements of any
accounting standard, or (Z) is not reasonably likely to
significantly diminish the benefits provided under such Award, or
that adequate compensation has been provided for any such
diminishment, except following a Change of Control;
(xi) to
allow or require Participants to satisfy withholding tax amounts by
electing to have the Company withhold from the Shares to be issued
upon exercise of a Nonqualified Stock Option or vesting of a Stock
Award or Stock Unit Award that number of Shares having a Fair
Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined in
such manner and on such date that the Administrator shall determine
or, in the absence of provision otherwise, on the date that the
amount of tax to be withheld is to be determined. All elections by
a Participant to have Shares withheld for this purpose shall be
made in such form and under such conditions as the Administrator
may provide;
(xii)
to authorize conversion or substitution under the Plan of any or
all stock options, stock appreciation rights or other stock awards
held by awardees of an entity acquired by the Company (the
“Conversion Awards”). Any conversion or substitution
shall be effective as of the close of the merger or acquisition.
The Conversion Awards may be Nonqualified Stock Options or
Incentive Stock Options, as determined by the Administrator, with
respect to options granted by the acquired entity;
(xiii)
to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Award previously
granted by the Administrator;
(xiv)
to impose such restrictions, conditions or limitations as it
determines appropriate as to the timing and manner of any resale by
a Participant or of other subsequent transfers by the Participant
of any Shares issued as a result of or under an Award or upon the
exercise of an Award, including, without limitation, (A)
restrictions under an insider trading policy, (B) restrictions as
to the use of a specified brokerage firm for such resale or other
transfers, and (C) institution of “blackout” periods on
exercises of Awards;
(xv) to
provide, either at the time an Award is granted or by subsequent
action, that an Award shall contain as a term thereof, a right,
either in tandem with the other rights under the Award or as an
alternative thereto, of the Participant to receive, without payment
to the Company, a number of Shares, cash or a combination thereof,
the amount of which is determined by reference to the value of the
Award; and
(xvi)
to make all other determinations deemed necessary or advisable for
administering the Plan and any Award granted
hereunder.
(c)
Effect of Administrator’s
Decision.
All questions arising under the Plan or under any
Award shall be decided by the Administrator in its total and
absolute discretion. All decisions, determinations and
interpretations by the Administrator regarding the Plan, any rules
and regulations under the Plan and the terms and conditions of any
Award granted hereunder, shall be final and binding on all
Participants. The Administrator shall consider such factors as it
deems relevant, in its sole and absolute discretion, to making such
decisions, determinations and interpretations, including, without
limitation, the recommendations or advice of any officer or other
employee of the Company and such attorneys, consultants and
accountants as it may select.
(d)
Indemnity.
To the extent
allowable under Applicable Law, each member of the Committee or of
the Board and any person to whom the Committee has delegated any of
its authority under the Plan shall be indemnified and held harmless
by the Company from any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by such person in connection
with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be
involved by reason of any action or failure to act pursuant to the
Plan, and against and from any and all amounts paid by him or her
in satisfaction of judgment in such action, suit, or proceeding
against him or her; provided he or she gives the Company an
opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her
own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such
persons may be entitled pursuant to the Company’s Articles of
Incorporation or By-laws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them
harmless.
5. Eligibility.
Awards
may be granted only to Directors, Employees and Consultants of the
Company or any of its Affiliates; provided, however, that Incentive
Stock Options may be granted only to Employees of the Company and
its Subsidiaries (within the meaning of Section 424(f) of the
Code).
6. Term
of Plan.
The
Plan shall become effective upon its approval by shareholders of
the Company. It shall continue in effect from the date the Plan is
approved by the shareholders of the Company (the “Effective
Date”) until terminated under Section 16 of the
Plan.
7. Term
of Award.
Subject
to the provisions of the Plan, the term of each Award shall be
determined by the Administrator and stated in the Award Agreement,
and may extend beyond the termination of the Plan. In the case of
an Option or a Stock Appreciation Right, the term shall be ten (10)
years from the Grant Date or such shorter term as may be provided
in the Award Agreement. Notwithstanding the foregoing, the term of
Awards other than Awards that are structured to qualify as
Incentive Stock Options under Section 9 shall be extended
automatically if the Award would expire at a time when trading in
Common Shares is prohibited by law or the Company’s insider
trading policy to the 30
th
day after the
expiration of the prohibition.
8. Options.
The
Administrator may grant an Option or provide for the grant of an
Option, either from time to time in the discretion of the
Administrator or automatically upon the occurrence of specified
events, including, without limitation, the achievement of
performance goals.
(a)
Option Agreement.
Each
Option Agreement shall contain provisions regarding (i) the number
of Shares that may be issued upon exercise of the Option, (ii) the
type of Option, (iii) the exercise price of the Option and the
means of payment of such exercise price, (iv) the term of the
Option, (v) such terms and conditions regarding the vesting and/or
exercisability of an Option as may be determined from time to time
by the Administrator, (vi) restrictions on the transfer of the
Option and forfeiture provisions, and (vii) such further terms and
conditions, in each case not inconsistent with this Plan, as may be
determined from time to time by the Administrator.
(b)
Exercise Price
. The per
share exercise price for the Shares to be issued upon exercise of
an Option shall be determined by the Administrator, except that the
per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the Grant Date, except with respect to
Conversion Awards.
(c)
No Option Repricings.
Subject to Section 15(a) of the Plan, the exercise price of an
Option may not be reduced without shareholder approval, nor may
outstanding Options be cancelled in exchange for cash, other Awards
or Options with an exercise price that is less than the exercise
price of the original Option without shareholder
approval.
(d)
No Reload Grants.
Options
shall not be granted under the Plan in consideration for and shall
not be conditioned upon the delivery of Shares to the Company in
payment of the exercise price and/or tax withholding obligation
under any other employee stock option.
(e)
Vesting Period and Exercise
Dates.
Options granted under this Plan shall vest and/or be
exercisable at such time and in such installments during the period
prior to the expiration of the Option’s term as determined by
the Administrator and as specified in the Option Agreement. The
Administrator shall have the right to make the timing of the
ability to exercise any Option granted under this Plan subject to
continued active employment, the passage of time and/or such
performance requirements as deemed appropriate by the
Administrator. Unless otherwise provided in the Award Agreement, no
Option shall vest and be exercisable sooner than one year after its
Grant Date. At any time after the grant of an Option, the
Administrator may reduce or eliminate any restrictions surrounding
any Participant’s right to exercise all or part of the
Option.
(f)
Form of Consideration.
The
Administrator shall determine the acceptable form of consideration
for exercising an Option, including the method of payment, either
through the terms of the Option Agreement or at the time of
exercise of an Option. Acceptable forms of consideration may
include:
(i)
cash;
(ii)
check or wire transfer (denominated in U.S. Dollars);
(iii)
subject to any conditions or limitations established by the
Administrator, other Shares which were held for a period of more
than six (6) months on the date of surrender and which have a Fair
Market Value on the date of surrender equal to or greater than the
aggregate exercise price of the Shares as to which said Option
shall be exercised (it being agreed that the excess of the Fair
Market Value over the aggregate exercise price, if any, shall be
refunded to the Awardee in cash);
(iv)
subject to any conditions or limitations established by the
Administrator, the Company withholding Shares otherwise issuable
upon exercise of an Option;
(v)
consideration received by the Company under a broker-assisted sale
and remittance program acceptable to the Administrator and in
compliance with Applicable Law;
(vi)
such other consideration and method of payment for the issuance of
Shares to the extent permitted by Applicable Law; or
(vii)
any combination of the foregoing
methods of payment.
(g)
Procedure for Exercise; Rights as
a Shareholder
.
(i) Any
Option granted hereunder shall be exercisable according to the
terms of the Plan and at such times and under such conditions as
determined by the Administrator and set forth in the applicable
Option Agreement.
(ii) An
Option shall be deemed exercised when (A) the Company receives (1)
written or electronic notice of exercise (in accordance with the
Option Agreement or procedures established by the Administrator)
from the person entitled to exercise the Option and (2) full
payment for the Shares with respect to which the related Option is
exercised, and (B) with respect to Nonqualified Stock Options,
provisions acceptable to the Administrator have been made for
payment of all applicable withholding taxes.
(iii)
Unless provided otherwise by the Administrator or pursuant to this
Plan, until the Shares are issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the
Shares subject to an Option, notwithstanding the exercise of the
Option.
(iv)
The Company shall issue (or cause to be issued) such Shares as soon
as administratively practicable after the Option is exercised. An
Option may not be exercised for a fraction of a Share.
9. Incentive
Stock Option Limitations/Terms.
(a)
Eligibility.
Only Employees
(who qualify as employees under Section 3401(c) of the Code and the
regulations promulgated thereunder) of the Company or any of its
Subsidiaries may be granted Incentive Stock Options. No Incentive
Stock Option shall be granted to any such Employee who as of the
Grant Date owns stock possessing more than 10% of the total
combined voting power of the Company.
(b)
$100,000 Limitation.
Notwithstanding the designation “Incentive Stock
Option” in an Option Agreement, if and to the extent that the
aggregate Fair Market Value of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by the
Awardee during any calendar year (under all plans of the Company
and any of its Subsidiaries) exceeds U.S. $100,000, such Options
shall be treated as Nonqualified Stock Options. For purposes of
this Section 9(b) of the Plan, Incentive Stock Options shall be
taken into account in the order in which they were granted. The
Fair Market Value of the Shares shall be determined as of the Grant
Date.
(c)
Transferability.
The Option
Agreement must provide that an Incentive Stock Option is not
transferable by the Awardee otherwise than by will or the laws of
descent and distribution, and, during the lifetime of such Awardee,
must not be exercisable by any other person. If the terms of an
Incentive Stock Option are amended to permit transferability, the
Option will be treated for tax purposes as a Nonqualified Stock
Option.
(d)
Exercise Price.
The per
Share exercise price of an Incentive Stock Option shall in no event
be inconsistent with the requirements for qualification of the
Incentive Stock Option under Section 422 of the Code.
(e)
Other Terms.
Option
Agreements evidencing Incentive Stock Options shall contain such
other terms and conditions as may be necessary to qualify, to the
extent determined desirable by the Administrator, with the
applicable provisions of Section 422 of the Code. If any such terms
and conditions, as of the Grant Date or any later date, do not so
comply, the Option will be treated thereafter for tax purposes as a
Nonqualified Stock Option.
10. Stock
Appreciation Rights.
A
“Stock Appreciation Right” or “SAR” is a
right that entitles the Awardee to receive, in cash or Shares (as
determined by the Administrator), value equal to or otherwise based
on the excess of (i) the Fair Market Value of a specified number of
Shares at the time of exercise over (ii) the aggregate exercise
price of the right, as established by the Administrator on the
Grant Date. All Stock Appreciation Rights under the Plan shall be
granted subject to the same terms and conditions applicable to
Options as set forth in Section 8 of the Plan. Stock Appreciation
Rights may be granted to Awardees either alone
(“freestanding”) or in addition to or in tandem with
other Awards granted under the Plan and may, but need not, relate
to a specific Option granted under Section 8 of the Plan. However,
any Stock Appreciation Right granted in tandem with an Option may
be granted at the same time such Option is granted or at any time
thereafter before exercise or expiration of such Option, and shall
be based on the Fair Market Value of one Share on the Grant Date
or, if applicable, on the Grant Date of the Option with respect to
a Stock Appreciation Right granted in exchange for or in tandem
with, but subsequent to, the Option (subject to the requirements of
Section 409A of the Code). Subject to the provisions of Section 8
of the Plan, the Administrator may impose such other conditions or
restrictions on any Stock Appreciation Right as it shall deem
appropriate.
11. Stock
Awards.
(a)
Stock Award Agreement.
Each
Stock Award Agreement shall contain provisions regarding (i) the
number of Shares subject to such Stock Award or a formula for
determining such number, (ii) the purchase price of the Shares, if
any, and the means of payment for the Shares, (iii) the Performance
Criteria, if any, and level of achievement versus these criteria
that shall determine the number of Shares granted, issued,
retainable and/or vested, (iv) such terms and conditions on the
grant, issuance, vesting and/or forfeiture of the Shares as may be
determined from time to time by the Administrator, (v) restrictions
on the transferability of the Stock Award, and (vi) such further
terms and conditions, in each case not inconsistent with this Plan,
as may be determined from time to time by the Administrator. Unless
otherwise provided in the Award Agreement, no Stock Award shall
vest sooner than one year after its Grant Date. The Committee may,
in its sole discretion, waive the vesting restrictions and any
other conditions set forth in any Award Agreement under such terms
and conditions as the Committee shall deem
appropriate.
(b)
Restrictions and Performance
Criteria.
The grant, issuance, retention and/or vesting of
Stock Awards issued to Employees may be subject to such Performance
Criteria and level of achievement versus these criteria as the
Administrator shall determine, which criteria may be based on
financial performance, personal performance evaluations and/or
completion of service by the Awardee. Awards with vesting
conditions that are based upon Performance Criteria and level of
achievement versus such criteria are referred to as
“Performance Stock Awards” and Awards with vesting
conditions that are based upon continued employment or the passage
of time are referred to as “Restricted Stock
Awards.”
(c)
Rights as a Shareholder.
Unless otherwise provided for by the Administrator, the Participant
shall have the rights equivalent to those of a shareholder and
shall be a shareholder only after Shares are issued (as evidenced
by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) to the Participant. Any
certificate issued in respect of a Restricted Stock Award shall be
registered in the name of the applicable Participant and shall bear
an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award. The Committee may require
that the certificates evidencing such Shares be held in custody by
the Company until the restrictions thereon shall have lapsed and
that, as a condition of any Award of Restricted Stock, the
applicable Participant shall have delivered a stock power, endorsed
in blank, relating to the Common Shares covered by such Award. The
Participant shall not be permitted to sell, assign, transfer,
pledge or otherwise encumber a Stock Award.
12. Stock
Unit Awards and Other Stock-Based Awards.
(a)
Stock Unit Awards
. Each
Stock Unit Award Agreement shall contain provisions regarding (i)
the number of Shares subject to such Stock Unit Award or a formula
for determining such number, (ii) the Performance Criteria, if any,
and level of achievement versus these criteria that shall determine
the number of Shares granted, issued, and/or vested, (iii) such
terms and conditions on the grant, issuance, vesting and/or
forfeiture of the Shares as may be determined from time to time by
the Administrator, (iv) restrictions on the transferability of the
Stock Unit Award, and (v) such further terms and conditions, in
each case not inconsistent with this Plan, as may be determined
from time to time by the Administrator. Unless otherwise provided
in the Award Agreement, no Stock Unit Award shall vest sooner than
one year after its Grant Date. The Committee may, in its sole
discretion, waive the vesting restrictions and any other conditions
set forth in any Award Agreement under such terms and conditions as
the Committee shall deem appropriate.
(b)
Restrictions and Performance
Criteria.
The grant, issuance, retention and/or vesting of
Stock Unit Awards issued to Employees may be subject to such
Performance Criteria and level of achievement versus these criteria
as the Administrator shall determine, which criteria may be based
on financial performance, personal performance evaluations and/or
completion of service by the Awardee. Awards with vesting
conditions that are based upon Performance Criteria and level of
achievement versus such criteria are referred to as
“Performance Stock Unit Awards” and Awards with vesting
conditions that are based upon continued employment or the passage
of time are referred to as “Restricted Stock Unit
Awards.”
(c)
Rights as a Shareholder.
Unless otherwise provided for by the Administrator, the Participant
shall have the rights equivalent to those of a shareholder and
shall be a shareholder only after Shares are issued (as evidenced
by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) to the
Participant.
(d)
Other Stock-Based Award.
An
“Other Stock-Based Award” means any other type of
equity-based or equity-related Award not otherwise described by the
terms of this Plan (including the grant or offer for sale of
unrestricted Shares), as well as any cash based bonus based on the
attainment of Performance Criteria as described in Section 13(b),
in such amount and subject to such terms and conditions as the
Administrator shall determine. Such Awards may involve the transfer
of actual Shares to Participants, or payment in cash or otherwise
of amounts based on the value of Shares or pursuant to attainment
of a performance goal. Each Other Stock-Based Award will be
evidenced by an Award Agreement containing such terms and
conditions as may be determined by the Administrator.
(e)
Value of Other Stock-Based
Awards
. Each Other Stock-Based Award shall be expressed in
terms of Shares or units based on Shares or a target amount of
cash, as determined by the Administrator. The Administrator may
establish Performance Criteria in its discretion. If the
Administrator exercises its discretion to establish Performance
Criteria, the number and/or value of Other Stock-Based Awards that
will be paid out to the Participant will depend on the extent to
which the performance goals are met.
(f)
Payment of Other Stock-Based
Awards
. Payment, if any, with respect to Other Stock-Based
Awards shall be made in accordance with the terms of the Award, in
cash or Shares as the Administrator determines.
13. Other
Provisions Applicable to Awards.
(a)
Non-Transferability of
Awards.
Unless determined otherwise by the Administrator, an
Award may not be sold, pledged, assigned, hypothecated, transferred
or disposed of in any manner other than by beneficiary designation,
will or by the laws of descent or distribution, including but not
limited to any attempted assignment or transfer in connection with
the settlement of marital property or other rights incident to a
divorce or dissolution, and any such attempted sale, assignment or
transfer shall be of no effect prior to the date an Award is vested
and settled. The Administrator may only make an Award transferable
to an Awardee’s family member or any other person or entity
provided the Awardee does not receive consideration for such
transfer. If the Administrator makes an Award transferable, either
as of the Grant Date or thereafter, such Award shall contain such
additional terms and conditions as the Administrator deems
appropriate, and any transferee shall be deemed to be bound by such
terms upon acceptance of such transfer.
(b)
Performance Criteria.
For
purposes of this Plan, the term “Performance Criteria”
shall mean any one or more criteria based on financial performance,
personal performance evaluations and/or completion of service,
either individually, alternatively or in any combination, applied,
as applicable, to either the Company as a whole or to a Subsidiary,
business unit, Affiliate or business segment, either individually,
alternatively or in any combination, and measured either annually
or cumulatively over a period of years, on an absolute basis or
relative to a pre-established target, to previous years’
results or to a designated comparison group, in each case as
specified by the Committee in the Award or by duly adopted
resolution. The Administrator may establish specific performance
targets (including thresholds and whether to exclude certain
extraordinary, non-recurring, or similar items) and Award amounts,
subject to the right of the Administrator to exercise discretion to
adjust payment amounts, either up or down, following the conclusion
of the performance period on the basis of such further
considerations as the Administrator in its sole discretion shall
determine. Extraordinary, non-recurring items that may be the basis
of adjustment include, but are not limited to, acquisitions or
divestitures, restructurings, discontinued operations,
extraordinary items, and other unusual or non-recurring charges, an
event either not directly related to the operations of the Company,
Subsidiary, division, business segment or business unit or not
within the reasonable control of management, the cumulative effects
of tax or accounting changes in accordance with U.S. generally
accepted accounting principles, and foreign exchange gains or
losses.
(c)
Termination of Employment or Board
Membership.
The Administrator shall determine as of the
Grant Date (subject to modification subsequent to the Grant Date)
the effect a termination from membership on the Board by a
Non-employee Director for any reason or a Termination of Employment
due to Disability, Retirement, death, or otherwise (including
Termination for Cause) shall have on any Award. Unless otherwise
provided in the Award Agreement:
(i)
Upon termination from membership on the Board by a Non-employee
Director for any reason other than Disability or death, any Option
or SAR held by such Director that (1) has not vested and is not
exercisable as of the effective date of such termination from
membership on the Board shall be subject to immediate cancellation
and forfeiture, or (2) is vested and exercisable as of the
effective date of such termination shall remain exercisable for one
year thereafter, or the remaining term of the Option or SAR, if
less. Any unvested Stock Award, Stock Unit Award or Other Stock
Based Award held by a Non-employee Director at the time of
termination from membership on the Board for a reason other than
Disability or death shall be immediately cancelled and
forfeited.
(ii)
Termination from membership on the Board by a Non-employee Director
due to Disability or death shall result in full vesting of any
outstanding Options or SARs and vesting of a prorated portion of
any Stock Award, Stock Unit Award or Other Stock Based Award based
upon the full months of the applicable performance period, vesting
period or other period of restriction elapsed as of the end of the
month in which the termination from membership on the Board by a
Non-employee Director due to Disability or death occurs over the
total number of months in such period. Any Options or SARs that
vest upon Disability or death shall remain exercisable for one year
thereafter, or the remaining term of the Option or SAR, if less. In
the case of any Stock Award, Stock Unit Award or Other Stock Based
Award that vests on the basis of attainment of Performance
Criteria, the pro-rata vested amount shall be based upon the target
award.
(iii)
Upon Termination of Employment due to Disability or death, any
Option or SAR held by an Employee shall, if not already fully
vested, become fully vested and exercisable as of the effective
date of such Termination of Employment and shall remain exercisable
for one year after such Termination of Employment due to Disability
or death, or, in either case, the remaining term of the Option or
SAR, if less. Termination of Employment due to Disability or death
shall result in vesting of a prorated portion of any Stock Award,
Stock Unit Award or Other Stock Based Award based upon the full
months of the applicable performance period, vesting period or
other period of restriction elapsed as of the end of the month in
which the Termination of Employment due to Disability or death
occurs over the total number of months in such period. In the case
of any Stock Award, Stock Unit Award or Other Stock Based Award
that vests on the basis of attainment of Performance Criteria, the
pro-rata vested amount shall be based upon the target
award.
(iv)
Any Option or SAR held by an Awardee at Retirement that occurs at
least one year after the Grant Date of the Option or SAR will
remain outstanding for the remaining term of the Option or SAR and
continue to vest; any Stock Award, Stock Unit Award or Other Stock
Based Award held by an Awardee at Retirement that occurs at least
one year after the Grant Date of the Award shall also continue to
vest and remain outstanding for the remainder of the term of the
Award.
(v) Any
other Termination of Employment shall result in immediate
cancellation and forfeiture of all outstanding Awards that have not
vested as of the effective date of such Termination of Employment,
and any vested and exercisable Options and SARs held at the time of
such Termination of Employment shall remain exercisable for ninety
(90) days thereafter, or the remaining term of the Option or SAR,
if less. Notwithstanding the foregoing, all outstanding and
unexercised Options and SARs shall be immediately cancelled in the
event of a Termination for Cause.
14.
Dividends and Dividend Equivalents.
Awards
other than Options and Stock Appreciation Rights may provide the
Awardee with the right to receive dividend payments or dividend
equivalent payments on the Shares subject to the Award, whether or
not such Award is vested. Notwithstanding the foregoing, dividends
or dividend equivalents shall not be paid with respect to Stock
Awards, Stock Unit Awards or Other Stock-Based Awards that vest
based on the achievement of performance goals prior to the date the
performance goals are satisfied and the Award is earned, and then
shall be payable only with respect to the number of Shares or Stock
Units actually earned under the Award. Such payments may be made in
cash, Shares or Stock Units or may be credited as cash or Stock
Units to an Awardee’s account and later settled in cash or
Shares or a combination thereof, as determined by the
Administrator. Such payments and credits may be subject to such
conditions and contingencies as the Administrator may
establish.
15. Adjustments
upon Changes in Capitalization, Organic Change or Change of
Control.
(a)
Adjustment Clause.
In the
event of (i) a stock dividend, extraordinary cash dividend, stock
split, reverse stock split, share combination, or recapitalization
or similar event affecting the capital structure of the Company
(each, a “Share Change”), or (ii) a merger,
consolidation, acquisition of property or shares, separation,
spin-off, reorganization, stock rights offering, liquidation,
Disaffiliation, or similar event affecting the Company or any of
its Subsidiaries (each, an “Organic Change”), the
Administrator or the Board shall make such substitutions or
adjustments as it deems appropriate and equitable to (i) the Share
limitations set forth in Section 3 of the Plan, (ii) the number and
kind of Shares covered by each outstanding Award, and (iii) the
price per Share subject to each such outstanding Award. In the case
of Organic Changes, such adjustments may include, without
limitation, (x) the cancellation of outstanding Awards in exchange
for payments of cash, property or a combination thereof having an
aggregate value equal to the value of such Awards, as determined by
the Administrator or the Board in its sole discretion (it being
understood that in the case of an Organic Change with respect to
which shareholders receive consideration other than publicly traded
equity securities of the ultimate surviving entity, any such
determination by the Administrator that the value of an Option or
Stock Appreciation Right shall for this purpose be deemed to equal
the excess, if any, of the value of the consideration being paid
for each Share pursuant to such Organic Change over the exercise
price of such Option or Stock Appreciation Right shall conclusively
be deemed valid); (y) the substitution of other property
(including, without limitation, cash or other securities of the
Company and securities of entities other than the Company) for the
Shares subject to outstanding Awards; and (z) in connection with
any Disaffiliation, arranging for the assumption of Awards, or
replacement of Awards with new awards based on other property or
other securities (including, without limitation, other securities
of the Company and securities of entities other than the Company),
by the affected Subsidiary, Affiliate, or division or by the entity
that controls such Subsidiary, Affiliate, or division following
such Disaffiliation (as well as any corresponding adjustments to
Awards that remain based upon Company securities). The Committee
may adjust in its sole discretion the Performance Criteria
applicable to any Awards to reflect any Share Change and any
Organic Change and any unusual or non-recurring events and other
extraordinary items, impact of charges for restructurings,
discontinued operations, and the cumulative effects of accounting
or tax changes, each as defined by generally accepted accounting
principles or as identified in the Company’s financial
statements, notes to the financial statements, management’s
discussion and analysis or the Company’s other SEC filings.
Any adjustment under this Section 15(a) need not be the same for
all Participants.
(b)
Change of Control.
In the
event of a Change of Control, unless otherwise determined by the
Administrator as of the Grant Date of a particular Award (or
subsequent to the Grant Date), the following acceleration,
exercisability and valuation provisions shall apply:
(i) On
the date that such Change of Control occurs, any or all Options and
Stock Appreciation Rights awarded under this Plan not previously
exercisable and vested shall, if not assumed, or substituted with a
new award, by the successor to the Company, become fully
exercisable and vested, and if the successor to the Company assumes
such Options or Stock Appreciation Rights or substitutes other
awards for such Awards, such Awards (or their substitutes) shall
become fully exercisable and vested if the Participant’s
employment is terminated (other than a Termination for Cause)
within two years following the Change of Control.
(ii)
Except as may be provided in an individual severance or employment
agreement (or severance plan) to which an Awardee is a party, in
the event of an Awardee’s Termination of Employment within
two years after a Change of Control for any reason other than
because of the Awardee’s death, Retirement, Disability or
Termination for Cause, each Option and Stock Appreciation Right
held by the Awardee (or a transferee) that is vested following such
Termination of Employment shall remain exercisable until the
earlier of the third anniversary of such Termination of Employment
(or any later date until which it would remain exercisable under
such circumstances by its terms) or the expiration of its original
term. In the event of an Awardee’s Termination of Employment
more than two years after a Change of Control, or within two years
after a Change of Control because of the Awardee’s death,
Retirement, Disability or Termination for Cause, the provisions of
Section 13(c) of the Plan shall govern (as
applicable).
(iii)
On the date that such Change of Control occurs, the restrictions
and conditions applicable to any or all Stock Awards, Stock Unit
Awards and Other Stock-Based Awards that are not assumed, or
substituted with a new award, by the successor to the Company shall
lapse and such Awards shall be fully vested. Unless otherwise
provided in an Award Agreement at the Grant Date, upon the
occurrence of a Change of Control without assumption or
substitution of the Awards by the successor, any performance based
Award shall be deemed fully earned at the target amount as of the
date on which the Change of Control occurs. All Stock Awards, Stock
Unit Awards and Other Stock-Based Awards shall be settled or paid
within thirty (30) days of vesting hereunder. Notwithstanding the
foregoing, if the Change of Control would not qualify as a
permissible date of distribution under Section 409A(a)(2)(A) of the
Code, and the regulations thereunder, the Awardee shall be entitled
to receive the Award from the Company on the date that would have
applied absent this provision. If the successor to the Company does
assume (or substitute with a new award) any Stock Awards, Stock
Unit Awards and Other Stock-Based Awards, all such Awards shall
become fully vested if the Participant’s employment is
terminated (other than a Termination for Cause) within two years
following the Change of Control, and any performance based Award
shall be deemed fully earned at the target amount effective as of
such Termination of Employment.
(iv)
The Committee, in its discretion, may determine that, upon the
occurrence of a Change of Control of the Company, each Option and
Stock Appreciation Right outstanding shall terminate within a
specified number of days after notice to the Participant, and/or
that each Participant shall receive, with respect to each Share
subject to such Option or Stock Appreciation Right, an amount equal
to the excess of the Fair Market Value of such Share immediately
prior to the occurrence of such Change of Control over the exercise
price per Share of such Option and/or Stock Appreciation Right;
such amount to be payable in cash, in one or more kinds of stock or
property (including the stock or property, if any, payable in the
transaction) or in a combination thereof, as the Committee, in its
discretion, shall determine, and if there is no excess value, the
Committee may, in its discretion, cancel such Awards.
(v) An
Option, Stock Appreciation Right, Stock Award, Stock Unit Award or
Other Stock-Based Award shall be considered assumed or substituted
for if following the Change of Control the Award confers the right
to purchase or receive, for each Share subject to the Option, Stock
Appreciation Right, Stock Award, Stock Unit Award or Other
Stock-Based Award immediately prior to the Change of Control, the
consideration (whether stock, cash or other securities or property)
received in the transaction constituting a Change of Control by
holders of Shares for each Share held on the effective date of such
transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such
consideration received in the transaction constituting a Change of
Control is not solely common stock of the successor company, the
Committee may, with the consent of the successor company, provide
that the consideration to be received upon the exercise or vesting
of an Option, Stock Appreciation Right, Stock Award, Stock Unit
Award or Other Stock-Based Award, for each Share subject thereto,
will be solely common stock of the successor company with a fair
market value substantially equal to the per Share consideration
received by holders of Shares in the transaction constituting a
Change of Control. The determination of whether fair market value
is substantially equal shall be made by the Committee in its sole
discretion and its determination shall be conclusive and
binding.
(c)
Section 409A
.
Notwithstanding the foregoing: (i) any adjustments made pursuant to
Section 15(a) of the Plan to Awards that are considered
“deferred compensation” within the meaning of Section
409A of the Code shall be made in compliance with the requirements
of Section 409A of the Code; (ii) any adjustments made pursuant to
Section 15(a) of the Plan to Awards that are not considered
“deferred compensation” subject to Section 409A of the
Code shall be made in such a manner as to ensure that, after such
adjustment, the Awards either continue not to be subject to Section
409A of the Code or comply with the requirements of Section 409A of
the Code; (iii) the Administrator shall not have the authority to
make any adjustments pursuant to Section 15(a) of the Plan to the
extent that the existence of such authority would cause an Award
that is not intended to be subject to Section 409A of the Code to
be subject thereto; and (iv) if any Award is subject to Section
409A of the Code, Section 15(b) of the Plan shall be applicable
only to the extent specifically provided in the Award Agreement and
permitted pursuant to Section 24 of the Plan in order to ensure
that such Award complies with Code Section 409A.
16. Amendment
and Termination of the Plan.
(a)
Amendment and Termination.
The Administrator may amend, alter or discontinue the Plan or any
Award Agreement, but any such amendment shall be subject to
approval of the shareholders of the Company in the manner and to
the extent required by Applicable Law. In addition, without
limiting the foregoing, unless approved by the shareholders of the
Company and subject to Section 16(b), no such amendment shall be
made that would:
(i)
increase the maximum aggregate number of Shares which may be
subject to Awards granted under the Plan;
(ii)
reduce the minimum exercise price for Options or Stock Appreciation
Rights granted under the Plan; or
(iii)
reduce the exercise price of outstanding Options or Stock
Appreciation Rights, as prohibited by Section 8(c) without
shareholder approval.
(b)
Effect of Amendment or
Termination.
No amendment, suspension or termination of the
Plan shall impair the rights of any Participant with respect to an
outstanding Award, unless mutually agreed otherwise between the
Participant and the Administrator, which agreement must be in
writing and signed by the Participant and the Company, except that
no such agreement shall be required if the Administrator determines
in its sole discretion that such amendment either (i) is required
or advisable in order for the Company, the Plan or the Award to
satisfy any Applicable Law or to meet the requirements of any
accounting standard, or (ii) is not reasonably likely to
significantly diminish the benefits provided under such Award, or
that any such diminishment has been adequately compensated, except
that this exception shall not apply following a Change of Control.
Termination of the Plan shall not affect the Administrator’s
ability to exercise the powers granted to it hereunder with respect
to Awards granted under the Plan prior to the date of such
termination.
(c)
Effect of the Plan on Other
Arrangements.
Neither the adoption of the Plan by the Board
or a Committee nor the submission of the Plan to the shareholders
of the Company for approval shall be construed as creating any
limitations on the power of the Board or any Committee to adopt
such other incentive arrangements as it or they may deem desirable,
including without limitation, the granting of restricted shares or
restricted share units or stock options otherwise than under the
Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.
17. Designation
of Beneficiary.
(a) An
Awardee may file a written designation of a beneficiary who is to
receive the Awardee’s rights pursuant to Awardee’s
Awards or the Awardee may include his or her Awards in an omnibus
beneficiary designation for all benefits under the Plan. To the
extent that Awardee has completed a designation of beneficiary
while employed with the Company or an Affiliate, such beneficiary
designation shall remain in effect with respect to any Award
hereunder until changed by the Awardee to the extent enforceable
under Applicable Law.
(b)
Such designation of beneficiary may be changed by the Awardee at
any time by written notice. In the event of the death of an Awardee
and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such Awardee’s death, the
Company shall allow the legal representative of the Awardee’s
estate to exercise the Award.
18. No
Right to Awards or to Employment.
No
person shall have any claim or right to be granted an Award and the
grant of any Award shall not be construed as giving an Awardee the
right to continue in the employ of the Company or its Affiliates.
Further, the Company and its Affiliates expressly reserve the
right, at any time, to dismiss any Employee or Awardee at any time
without liability or any claim under the Plan, except as provided
herein or in any Award Agreement entered into
hereunder.
19. Legal
Compliance.
Shares
shall not be issued pursuant to an Option, Stock Appreciation
Right, Stock Award, Stock Unit Award or Other Stock-Based Award
unless such Option, Stock Appreciation Right, Stock Award or Other
Stock-Based Award and the issuance and delivery of such Shares
shall comply with Applicable Law and shall be further subject to
the approval of counsel for the Company with respect to such
compliance. Unless the Awards and Shares covered by this Plan have
been registered under the Securities Act or the Company has
determined that such registration is unnecessary, each person
receiving an Award and/or Shares pursuant to any Award may be
required by the Company to give a representation in writing that
such person is acquiring such Shares for his or her own account for
investment and not with a view to, or for sale in connection with,
the distribution of any part thereof.
20. Inability
to Obtain Authority.
To the
extent the Company is unable to or the Administrator deems it
unfeasible to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s
counsel to be advisable or necessary to the lawful issuance and
sale of any Shares hereunder, the Company shall be relieved of any
liability with respect to the failure to issue or sell such Shares
as to which such requisite authority shall not have been
obtained.
21. Reservation
of Shares.
The
Company, during the term of this Plan, will at all times reserve
and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
22. Notice.
Any
written notice to the Company required by any provisions of this
Plan shall be addressed to the Secretary of the Company and shall
be effective when received. Any notice to a Participant hereunder
shall be addressed to the last address of record with the Company
and shall be effective when sent via first class mail, courier
service, or electronic mail to such last address of
record.
23. Governing
Law; Interpretation of Plan and Awards.
(a)
This Plan and all determinations made and actions taken pursuant
hereto shall be governed by the substantive laws, but not the
choice of law rules, of the state of Delaware, except as to matters
governed by U.S. federal law.
(b) In
the event that any provision of the Plan or any Award granted under
the Plan is declared to be illegal, invalid or otherwise
unenforceable by a court of competent jurisdiction, such provision
shall be reformed, if possible, to the extent necessary to render
it legal, valid and enforceable, or otherwise deleted, and the
remainder of the terms of the Plan and/or Award shall not be
affected except to the extent necessary to reform or delete such
illegal, invalid or unenforceable provision.
(c) The
headings preceding the text of each section hereof are inserted
solely for convenience of reference, and shall not constitute a
part of the Plan, nor shall they affect its meaning, construction
or effect.
(d) The
terms of the Plan and any Award shall inure to the benefit of and
be binding upon the parties hereto and their respective permitted
heirs, beneficiaries, successors and assigns.
24. Section
409A.
It is
the intention of the Company that no Award shall be “deferred
compensation” subject to Section 409A of the Code, unless and
to the extent that the Administrator specifically determines
otherwise, and the Plan and the terms and conditions of all Awards
shall be interpreted accordingly. The terms and conditions
governing any Awards that the Administrator determines will be
subject to Section 409A of the Code, including any rules for
elective or mandatory deferral of the delivery of cash or Shares
pursuant thereto and any rules regarding treatment of such Awards
in the event of a Change of Control, shall be set forth in the
applicable Award Agreement, deferral election forms and procedures,
and rules established by the Administrator, and shall comply in all
respects with Section 409A of the Code. The following rules will
apply to Awards intended to be subject to Section 409A of the Code
(“409A Awards”):
(a) If
a Participant is permitted to elect to defer an Award or any
payment under an Award, such election will be permitted only at
times in compliance with Code Section 409A.
(b) The
Company shall have no authority to accelerate distributions
relating to 409A Awards in excess of the authority permitted under
Section 409A.
(c) Any
distribution of a 409A Award following a Termination of Employment
that would be subject to Code Section 409A(a)(2)(A)(i) as a
distribution following a separation from service of a
“specified employee” as defined under Code Section
409A(a)(2)(B)(i), shall occur no earlier than the expiration of the
six-month period following such Termination of
Employment.
(d) In
the case of any distribution of a 409A Award, if the timing of such
distribution is not otherwise specified in the Plan or an Award
Agreement or other governing document, the distribution shall be
made not later than the end of the calendar year during which the
settlement of the 409A Award is specified to occur.
(e) In
the case of an Award providing for distribution or settlement upon
vesting or the lapse of a risk of forfeiture, if the time of such
distribution or settlement is not otherwise specified in the Plan
or an Award Agreement or other governing document, the distribution
or settlement shall be made not later than March 15 of the year
following the year in which the Award vested or the risk of
forfeiture lapsed.
(f)
Notwithstanding anything herein to the contrary, neither the
Company nor the Administrator makes any representation or guarantee
that the Plan or its administration shall comply with Code Section
409A, and in no event shall the Company or the Administrator be
liable for the payment of, or any gross up payment in connection
with, any taxes or penalties owed by the Participant pursuant to
Code Section 409A.
25. Limitation
on Liability.
The
Company and any Affiliate which is in existence or hereafter comes
into existence shall not be liable to a Participant, an Employee,
an Awardee or any other persons as to:
(a)
The Non-Issuance of Shares.
The non-issuance or sale of Shares as to which the Company has been
unable to obtain from any regulatory body having jurisdiction the
authority deemed by the Company’s counsel to be necessary to
the lawful issuance and sale of any shares hereunder;
and
(b)
Tax or Exchange Control
Consequences.
Any tax consequence expected, but not
realized, or any exchange control obligation owed, by any
Participant, Employee, Awardee or other person due to the receipt,
exercise or settlement of any Option or other Award granted
hereunder.
26. Unfunded
Plan.
Insofar
as it provides for Awards, the Plan shall be unfunded. Although
bookkeeping accounts may be established with respect to Awardees
who are granted Stock Awards, Stock Unit Awards or Other
Stock-Based Awards under this Plan, any such accounts will be used
merely as a bookkeeping convenience. The Company shall not be
required to segregate any assets which may at any time be
represented by Awards, nor shall this Plan be construed as
providing for such segregation. Neither the Company nor the
Administrator shall be deemed to be a trustee of Shares or cash to
be awarded under the Plan. Any liability of the Company to any
Participant with respect to an Award shall be based solely upon any
contractual obligations which may be created by the Plan; no such
obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. Neither
the Company nor the Administrator shall be required to give any
security or bond for the performance of any obligation which may be
created by this Plan.
27. Foreign
Employees and Consultants.
Awards
may be granted hereunder to Employees and Consultants who are
foreign nationals, who are located outside the United
States
or who are not
compensated from a payroll maintained in the United States, or who
are otherwise subject to (or could cause the Company to be subject
to) legal or regulatory provisions of countries or jurisdictions
outside the United States, on such terms and conditions different
from those specified in the Plan as may, in the judgment of the
Administrator, be necessary or desirable to foster and promote
achievement of the purposes of the Plan, and, in furtherance of
such purposes, the Administrator may make such modifications,
amendments, procedures, or subplans as may be necessary or
advisable to comply with such legal or regulatory
provisions.
28. Tax
Withholding.
Each
Participant shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any federal,
state, local or foreign taxes of any kind required by law to be
withheld with respect to any Award under the Plan no later than the
date as of which any amount under such Award first becomes
includible in the gross income of the Participant for any tax
purposes with respect to which the Company has a tax withholding
obligation. Unless otherwise determined by the Company, withholding
obligations may be settled with Shares, including Shares that are
part of the Award that gives rise to the withholding requirement;
provided, however, that not more than the maximum statutory
withholding requirement may be settled with Shares that are part of
the Award. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and
its Affiliates shall, to the extent permitted by law, have the
right to deduct any such taxes from any vested Shares or any other
payment due to the Participant at that time or at any future time.
The Administrator may establish such procedures as it deems
appropriate, including making irrevocable elections, for the
settlement of withholding obligations with Shares.
29
.
Cancellation of Award; Forfeiture of
Gain.
Notwithstanding
anything to the contrary contained herein, an Award Agreement may
provide that the Award will be cancelled and the Participant will
forfeit the Shares or cash received or payable on the vesting or
exercise of the Award, and that the amount of any proceeds of the
sale or gain realized on the vesting or exercise of the Award must
be repaid to the Company, under such conditions as may be required
by Applicable Law or established by the Committee in its sole
discretion.
Approved
by LightPath shareholders on November 15, 2018.