Exhibit 10.1
HILLENBRAND, INC.
STOCK INCENTIVE PLAN
(As of February 24, 2010)
APPENDIX A
HILLENBRAND, INC.
STOCK INCENTIVE PLAN
(As of February 24, 2010)
R E C I T A L S
WHEREAS, in accordance with that certain Distribution Agreement (as defined
below), Hillenbrand Industries, Inc. (re-named Hill-Rom Holdings, Inc. and
hereinafter referred to in these recitals as “RemainCo” or “Hill-Rom Holdings,
Inc.”) has distributed its entire ownership interest in Batesville Holdings,
Inc. (re-named Hillenbrand, Inc. and hereinafter referred to in these recitals
as “SpinCo” or “Hillenbrand, Inc.”) through a pro-rata distribution of all of
the outstanding shares of SpinCo common stock then owned by RemainCo to the
holders of RemainCo common stock (“Distribution”); and
WHEREAS, RemainCo and SpinCo have entered into that certain Employee Matters
Agreement (as defined below) for the purpose of continuing benefits for the
pre-Distribution directors, employees and consultants of RemainCo and its
subsidiaries; and
WHEREAS, in accordance with Section 2.5 of the Employee Matters Agreement,
SpinCo did adopt and implement a Stock Incentive Plan with features that are
comparable to the Hillenbrand Industries, Inc. Stock Incentive Plan, as amended,
to be effective as of the date of the consummation of the transactions
contemplated by the Distribution Agreement; and
WHEREAS, the Board of Directors of Hillenbrand, Inc. (the “Company”) previously
determined that certain revisions to the Stock Incentive Plan as previously
adopted were desirable for the purpose of making the provisions of the Stock
Incentive Plan compliant with Section 409A of the Internal Revenue Code of 1986,
as amended, and did adopt the Stock Incentive Plan (As of December 19, 2008) to
amend, restate, supersede and replace the form of the Stock Incentive Plan
previously adopted; and
WHEREAS, the Board of Directors of the Company has determined that it is in the
best interest of the Company and its shareholders to increase the total number
of shares of the Common Stock of the Company that can potentially be issued
under the Stock Incentive Plan from 4,635,436 shares to 8,635,436 shares, an
increase of 4,000,000 shares; and
WHEREAS, the Board of Directors of the Company has, subject to shareholder
approval of the Stock Incentive Plan, re-adopted the Stock Incentive Plan (As of
February 24, 2010) in the form that follows to amend, restate, supersede, and
replace the form thereof previously adopted (when approved by the shareholders
of the Company), for purposes of increasing the total number of shares of Common
Stock of the Company that can be issued under the Plan as stated above and
making certain other amendments thereto.

 

 

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SECTION 1. Purpose and Types of Awards
1.1 The purposes of the Hillenbrand, Inc. Stock Incentive Plan (the “Plan”) are
to enable Hillenbrand, Inc. (the “Company”) to attract, retain and reward its
employees, officers and directors, and strengthen the mutuality of interests
between such persons and the Company’s shareholders by offering such persons an
equity interest in the Company and thereby enabling them to participate in the
long-term success and growth of the Company.
1.2 Awards under the Plan may be in the form of (i) Stock Options; (ii) Stock
Appreciation Rights; (iii) Restricted Stock; (iv) Deferred Stock; and/or
(v) Bonus Stock. Awards may be free-standing or granted in tandem. If two awards
are granted in tandem, the award holder may exercise (or otherwise receive the
benefit of) one award only to the extent he or she relinquishes the tandem
award.
SECTION 2. Definitions
“Board” shall mean the Board of Directors of the Company.
“Bonus Stock” shall mean an award described in Section 10 of the Plan.
“Code” shall mean the Internal Revenue Code of 1986, as amended from
time-to-time.
“Committee” shall mean the committee of independent (in accordance with Section
162(m) of the Code) directors of the Board designated by the Board to administer
the Plan, or if no committee is designated, and in any case with respect to
awards to non-employee directors, the entire Board.
“Common Stock” shall mean the common stock of the Company, without par value.
“Company” shall mean Hillenbrand, Inc. and its successors.
“Deferred Stock” shall mean an award described in Section 9 of the Plan and also
known as Restricted Stock Units.
“Distribution” shall have the meaning set forth in the recitals.
“Distribution Agreement” shall mean the Distribution Agreement by and between
Hillenbrand Industries, Inc. and Batesville Holdings, Inc. dated effective as of
March 14, 2008.
“Effective Date” shall mean the date of the consummation of the transactions
contemplated by the Distribution Agreement.
“Effective Time” shall mean the occurrence of the consummation of the
transaction contemplated by the Distribution Agreement.
“Employee” shall mean an employee of the Company or of any Subsidiary of the
Company.
“Employee Matters Agreement” shall mean the Employee Matters Agreement by and
between Hillenbrand Industries, Inc. and Batesville Holdings, Inc. dated
effective as of March 31, 2008.
“Fair Market Value” of the Common Stock on any date shall mean the value
determined in good faith by the Committee, by formula or other method consistent
with the determination of fair market value under Code Section 409A and its
interpretive regulations; provided, however, that unless the Committee
determines to use a different measure, the fair market value of the Common Stock
shall be the average of the high and the low sales prices of the Common Stock
(on such exchange or market as is determined by the Board to be the primary
market for the Common Stock) on the date in question (or if shares of Common
Stock were not traded on such date, then on the next preceding trading day on
which a sale of Common Stock occurred).

 

 

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“Hillenbrand Industries Common Stock” shall have the meaning set forth in
Section 5.3.
“Hillenbrand Industries Deferred Stock” shall have the meaning set forth in
Section 5.3.
“Hillenbrand Industries Options” shall have the meaning set forth in
Section 5.3.
“Hillenbrand Industries Stock Incentive Plan” shall mean the Hillenbrand
Industries, Inc. Stock Incentive Plan, as amended, which is in effect
immediately prior to the Effective Time.
“Incentive Option” shall mean a Stock Option granted under the Plan which both
is designated as an Incentive Option and qualifies as an incentive stock option
within the meaning of Section 422 of the Code.
“Non-Employee Director” shall mean a director of the Company who is not employed
by the Company or any of its Subsidiaries.
“Non-Qualified Option” shall mean a Stock Option granted under the Plan, which
either is designated as a Non-Qualified Option or does not qualify as an
incentive stock option within the meaning of Section 422 of the Code.
“Optionee” shall mean any person who has been granted a Stock Option under the
Plan or who is otherwise entitled to exercise a Stock Option.
“Option Period” shall mean, with respect to any portion of a Stock Option, the
period after such portion has become exercisable and before it has expired or
terminated.
“Plan” shall mean the Hillenbrand, Inc. Stock Incentive Plan.
“Prior Plans” shall mean the Hillenbrand Industries, Inc. 1996 Stock Option Plan
and the Hillenbrand Industries Stock Incentive Plan.
“Relationship” shall mean the status of employee, officer, or director of the
Company or any Subsidiary of the Company.
“Restricted Stock” shall mean an award described in Section 8 of the Plan.
“Spinoff Awards” shall have the meaning set forth in Section 5.5.
“Spinoff Deferred Stock” shall have the meaning set forth in Section 5.3.
“Spinoff Options” shall have the meaning set forth in Section 5.3.
“Stock Appreciation Right” shall mean an award described in Section 7 of the
Plan.
“Stock Option” shall mean an Incentive Option or a Non-Qualified Option, and,
unless the context requires otherwise, shall include Director Options.
“Subsidiary” shall mean any corporation, partnership, joint venture or other
entity in which the Company owns, directly or indirectly, more than 50% of the
ownership interests.

 

 

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SECTION 3. Administration
3.1 The Plan shall be administered by the Committee. Notwithstanding anything to
the contrary contained herein, only the Board shall have authority to grant
awards to Non-Employee Directors and to amend and interpret such awards.
3.2 The Committee shall have the authority and discretion with respect to awards
under the Plan to take the following actions, if consistent with Section 15.7 of
the Plan and subject to the conditions of Section 3.2A of the Plan: to grant and
amend (provided, however, that no amendment shall impair the rights of the award
holder without his or her written consent) awards to eligible persons under the
Plan; to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall deem advisable; to interpret the terms
and provisions of the Plan and any award granted under the Plan; and to make all
factual and other determinations necessary or advisable for the administration
of the Plan. In particular, and without limiting its authority and powers, the
Committee shall have the authority and discretion:
(a) to select the persons to whom awards will be granted from among those
eligible;
(b) to determine the number of shares of Common Stock to be covered by each
award granted hereunder subject to the limitations contained herein;
(c) to determine the terms and conditions of any award granted hereunder,
including, but not limited to, any vesting or other restrictions based on such
continued employment, performance objectives and such other factors as the
Committee may establish, and to determine whether the terms and conditions of
the award have been satisfied;
(d) to determine the treatment of awards upon an Employee’s retirement,
disability, death, termination for cause or other termination of employment, or
during a leave of absence or upon a Non-Employee Director’s termination of
Relationship as allowed by law;
(e) to determine, in establishing the terms of the award agreement, that the
award holder has no rights with respect to any dividends declared with respect
to any shares covered by an award or that amounts equal to the amount of any
dividends declared with respect to the number of shares covered by an award
(i) will be paid to the award holder currently, or (ii) will be deferred and
deemed to be reinvested, or (iii) will otherwise be credited to the award
holder;
(f) to amend the terms of any award, prospectively or retroactively; provided,
however, that no amendment shall impair the rights of the award holder without
his or her written consent;
(g) after considering any accounting impact to the Company, as well as any
applicable provisions of Code Sections 409A and 422, to substitute new Stock
Options for previously granted Stock Options, or for options granted under other
plans or agreements, in each case including previously granted options having
higher option prices;
(h) to determine the Fair Market Value of the Common Stock on a given date;
(i) after considering any accounting impact to the Company, to provide that the
shares of Common Stock received as a result of an award shall be subject to a
right of repurchase by the Company and/or a right of first refusal, in each case
subject to such terms and conditions as the Committee may specify;

 

 

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(j) to adopt one or more sub-plans, consistent with the Plan, containing such
provisions as may be necessary or desirable to enable awards under the Plan to
comply with the laws of other jurisdictions and/or qualify for preferred tax
treatment under such laws; and
(k) to delegate such administrative duties as it may deem advisable to one or
more of its members or to one or more Employees or agents.
3.2A Notwithstanding anything in this Plan to the contrary, no “underwater”
Stock Options or Stock Appreciation Rights shall be (a) directly repriced,
(b) exchanged for the grant of a new or different type of award, or (c) bought
out (cashed out), without in any such case first obtaining the approval of the
shareholders of the Company to the taking of such action. For purposes of this
Plan, a Stock Option or a Stock Appreciation Right is “underwater” at any time
when the then current Fair Market Value of a share of Common Stock is less than
the per share exercise price or grant price of the Stock Option or Stock
Appreciation Right.
3.3 The Committee shall have the right to designate awards as “Performance
Awards.” The grant or vesting of a Performance Award shall be subject to the
achievement of performance objectives established by the Committee based on one
or more of the following criteria, in each case applied to the Company on a
consolidated basis and/or to a business unit and which the Committee may use as
an absolute measure, as a measure of improvement relative to prior performance,
or as a measure of comparable performance relative to a peer group of companies:
sales, operating profits, operating profits before taxes, operating profits
before interest expense and taxes, net earnings, earnings per share, return on
equity, return on assets, return on invested capital, total shareholder return,
cash flow, debt to equity ratio, market share, stock price, economic value
added, and market value added.
3.4 All determinations and interpretations made by the Committee pursuant to the
provisions of the Plan shall be final and binding on all persons, including the
Company and award holders. Determinations by the Committee under the Plan
relating to the form, amount, and terms and conditions of awards need not be
uniform, and may be made selectively among persons who receive or are eligible
to receive awards under the Plan, whether or not such persons are similarly
situated.
3.5 The Committee shall act by a majority of its members at a meeting (present
in person or by conference telephone) or by majority written consent.
3.6 No member of the Board or the Committee, nor any officer or Employee of the
Company or its Subsidiaries acting on behalf of the Board or the Committee,
shall be personally liable for any action, determination or interpretation taken
or made with respect to the Plan or any award hereunder. The Company shall
indemnify all members of the Board and the Committee and all such officers and
Employees acting on their behalf, to the extent permitted by law, from and
against any and all liabilities, costs and expenses incurred by such persons as
a result of any act, or omission to act, in connection with the performance of
such persons’ duties, responsibilities and obligations under the Plan.
SECTION 4. Stock Subject to Plan
4.1 Subject to adjustment as provided in Section 4.4, the total number of shares
of Common Stock which may be issued under the Plan shall be 8,635,436, and the
total number of shares which may be issued as Incentive Options shall be
1,500,000. Such shares may consist of authorized but unissued shares or shares
that have been issued and reacquired by the Company. The exercise of a Stock
Appreciation Right for cash or the payment of any award in cash shall not count
against this share limit.
4.2 To the extent a Stock Option is surrendered for cash or terminates without
having been exercised, or an award terminates without the holder having received
payment of the award, or shares awarded are forfeited, the shares subject to
such award shall again be available for distribution in connection with future
awards under the Plan other than Incentive Options. Shares of Common Stock equal
in number to the shares surrendered in payment of the option price, and shares
of Common Stock which are withheld in order to satisfy federal, state or local
tax liability shall count against the share limit set forth in Section 4.1.

 

 

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4.3 No Employee shall be granted Stock Options and/or Stock Appreciation Rights
with respect to more than 400,000 shares of Common Stock in any fiscal year, and
no Employee shall be granted Restricted Stock, Deferred Stock and/or Bonus Stock
awards with respect to more than 200,000 shares of Common Stock in any fiscal
year, subject to adjustment as provided in Section 4.4. Notwithstanding the
foregoing, any Spinoff Awards (as defined in Section 5.3) shall not count
against the foregoing fiscal year award limits.
4.4 In the event of any merger, reorganization, consolidation, sale of
substantially all assets, recapitalization, stock dividend, stock split,
spin-off, split-up, split-off, distribution of assets or other change in
corporate structure affecting the Common Stock such that an adjustment is
determined by the Board in its discretion to be appropriate, after considering
any accounting impact to the Company, in order to prevent dilution or
enlargement of benefits under the Plan, then the Board shall, in such a manner
as it may in its discretion deem equitable, adjust any or all of (i) the
aggregate number and kind of shares reserved for issuance under the Plan, and
(ii) the number and kind of shares as to which awards may be granted to any
individual in any fiscal year. In the event of any merger, reorganization,
consolidation, sale of substantially all assets, recapitalization, stock
dividend, stock split, spin-off, split-up, split-off, distribution of assets or
other change in corporate structure affecting the Common Stock subject to an
outstanding award, the number and kind of shares of Common Stock or other
securities which are subject to this Plan or subject to any awards theretofore
granted, and the exercise prices, shall be appropriately and equitably adjusted
by the Board so as to maintain the proportionate number of shares or other
securities without changing the aggregate exercise price, if any.
In addition, upon the dissolution or liquidation of the Company or upon any
reorganization, merger, or consolidation as a result of which the Company is not
the surviving corporation (or survives as a wholly-owned subsidiary of another
corporation), or upon a sale of substantially all the assets of the Company, the
Board may, after considering any accounting impact to the Company, take such
action as it in its discretion deems appropriate to (i) accelerate the time when
awards vest and/or may be exercised and/or may be paid, (ii) cash out
outstanding Stock Options and/or other awards at or immediately prior to the
date of such event, (iii) provide for the assumption of outstanding Stock
Options or other awards by surviving, successor or transferee corporations, (iv)
provide that in lieu of shares of Common Stock of Company, the award recipient
shall be entitled to receive the consideration he would have received in such
transaction in exchange for such shares of Common Stock (or the Fair Market
Value thereof in cash), and/or (v) provide that Stock Options shall be
exercisable for a period of at least 10 business days from the date of receipt
of a notice from the Company of such proposed event, following the expiration of
which period any unexercised Stock Options shall terminate.
The Board shall exercise its discretion under this Section 4.4 only to the
extent consistent with Section 15.7 of the Plan. The Board’s determination as to
which adjustments shall be made under this Section 4.4 and the extent thereof
shall be final, binding and conclusive.
4.5 No fractional shares shall be issued or delivered under the Plan. The
Committee shall determine whether the value of fractional shares shall be paid
in cash or other property, or whether such fractional shares and any rights
thereto shall be cancelled without payment.
SECTION 5. Eligibility and Spinoff Awards
5.1 The persons who are eligible for awards under Sections 6, 7, 8, 9, and 10 of
the Plan are Employees, officers and directors of the Company or of any
Subsidiary of the Company. In addition, awards under such Sections may be
granted to prospective Employees, officers, or directors but such awards shall
not become effective until the recipient’s commencement of employment or service
with the Company or a Subsidiary. Incentive Options may be granted only to
Employees and prospective Employees. Award recipients under the Plan shall be
selected from time-to-time by the Committee, in its sole discretion, from among
those eligible.

 

 

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5.2 Non-Employee Directors shall be granted awards under Section 12 in addition
to any awards which may be granted to them under other Sections of the Plan.
5.3 In connection with the Distribution and except as provided below, Stock
Options to purchase Common Stock (“Spinoff Options”) are granted as of the
Effective Time in accordance with the terms of the Employee Matters Agreement to
holders of options (“Hillenbrand Industries Options”) to purchase shares of
common stock, no par value, of Hillenbrand Industries, Inc. (“Hillenbrand
Industries Common Stock”) under the Prior Plans. The Spinoff Options granted to
such holders shall be under the same terms as the corresponding options to
purchase Hillenbrand Industries Common Stock held by such holders, including the
rate at which the options vest and the expiration date of such options, provided
that the number of shares of Common Stock under the Spinoff Options and the
exercise prices of the Spinoff Options compared to their Hillenbrand Industries
Option counterparts will reflect the Distribution in the manner set forth in the
Employee Matters Agreement. In addition and except as provided below, Deferred
Stock awards (“Spinoff Deferred Stock”) are granted as of the Effective Time in
accordance with the terms of the Employee Matters Agreement to holders of
deferred stock relating to Hillenbrand Industries Common Stock (“Hillenbrand
Industries Deferred Stock”) under the Hillenbrand Industries Stock Incentive
Plan. The Spinoff Deferred Stock awards granted to such holders shall be under
the same terms as the corresponding deferred stock relating to Hillenbrand
Industries Common Stock held by such holders, including the rate at which the
awards vest, provided that the number of shares of Common Stock under the
Spinoff Deferred Stock awards compared to their Hillenbrand Industries Deferred
Stock counterparts will reflect the Distribution in the manner set forth in the
Employee Matters Agreement. It is intended that all grants of Spinoff Options
and Spinoff Deferred Stock described in this paragraph satisfy the requirements
of Section 424 of the Code, to the extent applicable, and avoid treatment as
nonqualified deferred compensation subject to Section 409A of the Code. For
purposes of this Section 5.3, a director of Hillenbrand Industries, Inc., who
will not be a director of the Company after the Effective Time, and an employee
of Hillenbrand Industries, Inc. or its Subsidiaries, who will not be an employee
of the Company or its Subsidiaries after the Effective Time, shall not be
treated as a holder of Hillenbrand Industries Options and/or Hillenbrand
Industries Deferred Stock, even though he or she may be such a holder prior to
the Effective Time and shall not be entitled to Spinoff Options and Spinoff
Deferred Stock hereunder as set forth above. Notwithstanding anything herein to
the contrary and except for Spinoff Option agreements and Spinoff Deferred Stock
agreements for the individuals who are receiving Spinoff Options and Spinoff
Deferred Stock pursuant to Section 7.1(c) and/or Sections 7.2(c) or (d),
respectively, of the Employee Matters Agreement, all other Spinoff Option
agreements and Deferred Stock agreements for the grants of Spinoff Options and
Spinoff Deferred Stock as set forth in this Section 5.3 shall provide that as of
the Effective Time, the corresponding Hillenbrand Industries Options and
Hillenbrand Industries Deferred Stock are cancelled and shall have no further
force or effect.
5.4 In connection with the Distribution, Spinoff Deferred Stock is granted as of
the Effective Time in accordance with Section 7.2(d) of the Employee Matters
Agreement to holders of Hillenbrand Industries Deferred Stock who have made an
election to defer payment of the Hillenbrand Industries Deferred Stock pursuant
to and under the Hillenbrand Industries Stock Incentive Plan. The Spinoff
Deferred Stock Awards granted to such holders shall be under the same terms as
the corresponding Hillenbrand Industries Deferred Stock held by such holders,
provided that the number of shares of Common Stock under the Spinoff Deferred
Stock awards compared to their Hillenbrand Industries Deferred Stock
counterparts will reflect the Distribution in the manner set forth in the
Employee Matters Agreement. It is intended that all grants of Spinoff Deferred
Stock described in this paragraph satisfy the requirements of Section 424 of the
Code, to the extent applicable, and avoid treatment as nonqualified deferred
compensation subject to Section 409A of the Code.

 

 

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5.5 Spinoff Options and Spinoff Deferred Stock granted pursuant to Sections 5.3
and 5.4 above shall be referred to collectively herein as “Spinoff Awards.”
SECTION 6. Stock Options
6.1 The Stock Options awarded to eligible persons under the Plan may be of two
types: (i) Incentive Options, and (ii) Non-Qualified Options. To the extent that
any Stock Option granted to an Employee does not qualify as an Incentive Option,
it shall constitute a Non-Qualified Option. All Stock Options awarded to persons
who are not Employees shall be Non-Qualified Options.
6.2 Subject to the following provisions, Stock Options awarded under Section 6
of the Plan shall be in such form and shall have such terms and conditions as
the Committee may determine.
(a) Option Price. The option price per share of Common Stock purchasable under a
Stock Option (other than a Spinoff Option) shall be determined by the Committee
and may not be less than the Fair Market Value of the Common Stock on the date
of the award of the Stock Option (or, with respect to awards to prospective
Employees, on the first date of employment).
(b) Option Term. The term of each Stock Option shall be fixed by the Committee.
(c) Exercisability. Stock Options shall be exercisable and shall vest at such
time or times and subject to such terms and conditions as shall be determined by
the Committee. The Committee may impose different schedules for exercisability
and vesting. After considering any accounting impact to the Company, the
Committee may waive any exercise or vesting provisions or accelerate the
exercisability or vesting of the Stock Option at any time in whole or in part.
(d) Method of Exercise. Stock Options may be exercised in whole or in part at
any time during the Option Period by giving the Company notice of exercise in
the form approved by the Committee (which may be written or electronic)
specifying the number of whole shares to be purchased, accompanied by payment of
the aggregate option price for such shares. Payment of the option price shall be
made in such manner as the Committee may provide in the award, which may include
(i) cash (including cash equivalents), (ii) delivery (either by actual delivery
of the shares or by providing an affidavit affirming ownership of the shares) of
shares of Common Stock already owned by the Optionee for at least six months,
(iii) broker-assisted “cashless exercise” in which the Optionee delivers a
notice of exercise together with irrevocable instructions to a broker acceptable
to the Company to sell shares of Common Stock (or a sufficient portion of such
shares) acquired upon exercise of the Stock Option and remit to the Company a
sufficient portion of the sale proceeds to pay the total option price and any
withholding tax obligation resulting from such exercise, (iv) any other manner
permitted by law, or (v) any combination of the foregoing.
(e) No Shareholder Rights. An Optionee shall have no rights to dividends or
other rights of a shareholder with respect to shares subject to a Stock Option
until the Optionee has duly exercised the Stock Option and a certificate for
such shares has been duly issued (or the Optionee has otherwise been duly
recorded as the owner of the shares on the books of the Company).
(f) Termination of Employment or Relationship. Following the termination of an
Optionee’s employment or other Relationship with the Company or its
Subsidiaries, the Stock Option shall be exercisable to the extent determined by
the Committee. The Committee may provide different post-termination exercise
provisions which may vary based on the nature of and reason for the termination.
The Committee may provide that, notwithstanding the option term fixed pursuant
to Section 6.2(b), a Non-Qualified Option which is outstanding on the date of an
Optionee’s death shall remain outstanding for an additional period after the
date of such death. The Committee shall have absolute discretion to determine
the date and circumstances of any termination of employment or other
Relationship.

 

 

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(g) Non-transferability. Unless otherwise provided by the Committee, (i) Stock
Options shall not be transferable by the Optionee other than by will or by the
laws of descent and distribution, and (ii) during the Optionee’s lifetime, all
Stock Options shall be exercisable only by such Optionee. The Committee, in its
sole discretion, may permit Stock Options to be transferred to such other
transferees and on such terms and conditions as may be determined by the
Committee.
(h) Surrender Rights. The Committee may, after considering any accounting impact
to the Company, provide that Stock Options may be surrendered for cash upon any
terms and conditions set by the Committee.
6.3 Notwithstanding the provisions of Section 6.2, Incentive Options shall be
subject to the following additional restrictions:
(a) Option Term. No Incentive Option shall be exercisable more than ten years
after the date such Incentive Stock Option is awarded.
(b) Additional Limitations for 10% Shareholders. No Incentive Option granted to
an Employee who owns more than 10% of the total combined voting power of all
classes of stock of the Company or any of its parent or subsidiary corporations,
as defined in Section 424 of the Code, shall (i) have an option price which is
less than 110% of the Fair Market Value of the Common Stock on the date of award
of the Incentive Option, or (ii) be exercisable more than five years after the
date such Incentive Option is awarded.
(c) Exercisability. The aggregate Fair Market Value (determined as of the time
the Incentive Option is granted) of the shares with respect to which Incentive
Options (granted under the Plan and any other plans of the Company, its parent
corporation or subsidiary corporations, as defined in Section 424 of the Code)
are exercisable for the first time by an Optionee in any calendar year shall not
exceed $100,000.
(d) Notice of Disqualifying Disposition. An Optionee’s right to exercise an
Incentive Option shall be subject to the Optionee’s agreement to notify the
Company of any “disqualifying disposition” (for purposes of Section 422 of the
Code) of the shares acquired upon such exercise.
(e) Non-transferability. Incentive Options shall not be transferable by the
Optionee, other than by will or by the laws of descent and distribution. During
the Optionee’s lifetime, all Incentive Options shall be exercisable only by such
Optionee.
(f) Last Grant Date. No Incentive Option shall be granted more than ten years
after the earlier of the date of adoption of the Plan by the Board or approval
of the Plan by the Company’s shareholders.
The Committee may, with the consent of the Optionee, amend an Incentive Option
in a manner that would cause loss of Incentive Option status, provided the Stock
Option as so amended satisfies the requirements of Section 6.2.
6.4 Substitute Options. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Committee may grant Stock Options in substitution for any
options or other stock awards or stock-based awards granted by such entity or an
affiliate thereof. Such substitute Stock Options may be granted on such terms,
consistent with Section 15.7, as the Committee deems appropriate in the
circumstances, notwithstanding any limitations on Stock Options contained in
other provisions of this Section 6.

 

 

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SECTION 7. Stock Appreciation Rights
7.1 A Stock Appreciation Right shall entitle the holder thereof to receive, for
each share as to which the award is granted, payment of an amount, in cash,
shares of Common Stock, or a combination thereof, as determined by the
Committee, equal in value to the excess of the Fair Market Value of a share of
Common Stock on the date of exercise over the Fair Market Value of a share of
Common Stock on the day such Stock Appreciation Right was granted. Any such
award shall be in such form and shall have such terms and conditions as the
Committee may determine. The grant shall specify the number of shares of Common
Stock as to which the Stock Appreciation Right is granted.
7.2 The Committee may provide that a Stock Appreciation Right may be exercised
only within the 60-day period following occurrence of a Change in Control (as
defined in Section 14.2) (such Stock Appreciation Right being referred to herein
as a “Limited Stock Appreciation Right”). The Committee may also provide that in
the event of a Change in Control the amount to be paid upon exercise of a Stock
Appreciation Right shall be based on the Change in Control Price (as defined in
Section 14.3).
SECTION 8. Restricted Stock
Subject to the following provisions, all awards of Restricted Stock shall be in
such form and shall have such terms and conditions as the Committee may
determine:
(a) The Restricted Stock award shall specify the number of shares of Restricted
Stock to be awarded, the price, if any, to be paid by the recipient of the
Restricted Stock and the date or dates on which, or the conditions upon the
satisfaction of which, the Restricted Stock will vest. The grant and/or the
vesting of Restricted Stock may be conditioned upon the completion of a
specified period of service with the Company and/or its Subsidiaries, upon the
attainment of specified performance objectives, or upon such other criteria as
the Committee may determine.
(b) Stock certificates representing the Restricted Stock awarded under the Plan
shall be registered in the award holder’s name, but the Committee may direct
that such certificates be held by the Company on behalf of the award holder.
Except as may be permitted by the Committee, no share of Restricted Stock may be
sold, transferred, assigned, pledged or otherwise encumbered by the award holder
until such share has vested in accordance with the terms of the Restricted Stock
award. At the time Restricted Stock vests, a certificate for such vested shares
shall be delivered to the award holder (or his or her designated beneficiary in
the event of death), free of all restrictions.
(c) The Committee may provide that the award holder shall have the right to vote
and/or receive dividends on Restricted Stock. Unless the Committee provides
otherwise, Common Stock received as a dividend on, or in connection with a stock
split of, Restricted Stock shall be subject to the same restrictions as the
Restricted Stock.
(d) Except as may be provided by the Committee, in the event of an award
holder’s termination of employment or other Relationship before all of his or
her Restricted Stock has vested, or in the event any conditions to the vesting
of Restricted Stock have not been satisfied prior to any deadline for the
satisfaction of such conditions set forth in the award, the shares of Restricted
Stock which have not vested shall be forfeited, and the Committee may provide
that (i) any purchase price paid by the award holder shall be returned to the
award holder, or (ii) a cash payment equal to the Restricted Stock’s Fair Market
Value on the date of forfeiture, if lower, shall be paid to the award holder.
(e) The Committee may waive, in whole or in part, any or all of the conditions
to receipt of, or restrictions with respect to, any or all of the award holder’s
Restricted Stock. The Committee may not, however, waive conditions or
restrictions with respect to awards intended to qualify under Section 162(m) of
the Code unless such waiver would not cause the award to fail to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the
Code, and the Committee may not accelerate the payment of any dividends subject
to restrictions under Section 8.6(c) unless such acceleration is consistent with
Section 15.7.

 

 

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SECTION 9. Deferred Stock Awards (also known as Restricted Stock Units)
Subject to the following provisions, all awards of Deferred Stock shall be in
such form and shall have such terms and conditions as the Committee may
determine:
(a) The Deferred Stock award shall specify the number of shares of Deferred
Stock to be awarded and the duration of the period (the “Deferral Period”)
during which, and the conditions under which, receipt of the Common Stock will
be deferred. The Committee may condition the grant or vesting of Deferred Stock,
or receipt of Common Stock or cash at the end of the Deferral Period, upon the
completion of a specified period of service with the Company and/or its
Subsidiaries, upon the attainment of specified performance objectives, or upon
such other criteria as the Committee may determine.
(b) Except as may be provided by the Committee, Deferred Stock awards may not be
sold, assigned, transferred, pledged or otherwise encumbered during the Deferral
Period.
(c) At the expiration of the Deferral Period, the award holder (or his or her
designated beneficiary in the event of death) shall receive (i) certificates for
the number of shares of Common Stock equal to the number of shares covered by
the Deferred Stock award, (ii) cash equal to the Fair Market Value of such
Common Stock, or (iii) a combination of shares and cash, as the Committee may
determine.
(d) Except as may be provided by the Committee, in the event of an award
holder’s termination of employment or other Relationship before the Deferred
Stock has vested, his or her Deferred Stock award shall be forfeited.
(e) The Committee may waive, in whole or in part, any or all of the conditions
to receipt of, or restrictions with respect to, Common Stock or cash under a
Deferred Stock award. The Committee may not, however, waive conditions or
restrictions with respect to awards intended to qualify under Section 162(m) of
the Code unless such waiver would not cause the award to fail to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the
Code, and the Committee may not accelerate the payment of any Deferred Stock
awards unless such acceleration is consistent with Section 15.7.
SECTION 10. Bonus Stock Awards
The Committee may award Bonus Stock to any eligible award recipient subject to
such terms and conditions as the Committee shall determine. The grant of Bonus
Stock may, but need not, be conditioned upon the attainment of specified
performance objectives or upon such other criteria as the Committee may
determine. The Committee may waive such conditions in whole or in part, except
that the Committee may not waive conditions or restrictions with respect to
awards intended to qualify under Section 162(m) of the Code unless such waiver
would not cause the award to fail to qualify as “performance-based compensation”
within the meaning of Section 162(m) of the Code, and the Committee may not
accelerate the payment of any Bonus Stock unless such acceleration is consistent
with Section 15.7. Unless otherwise specified by the Committee, no money shall
be paid by the recipient for the Bonus Stock. Alternatively, the Committee may,
after considering any accounting impact to the Company, offer eligible employees
the opportunity to purchase Bonus Stock at a discount from its Fair Market
Value. The Bonus Stock award shall be satisfied by the delivery of the
designated number of shares of Common Stock which are not subject to
restriction.

 

 

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SECTION 11. Election to Defer Deferred Stock Awards or Bonus Stock Awards
The Committee may permit an award recipient to elect to defer payment of an
award other than a Stock Option for a specified period or until a specified
event, upon such terms as are determined by the Committee. An award holder may
elect to defer the distribution date of a Deferred Stock Award or Bonus Stock
Award provided that such election is made and delivered to the Company in
compliance with Section 409A of the Code, when applicable.
SECTION 12. Non-Employee Director Awards
The Board shall have the discretion to determine the number and types of awards
to be granted to Non-Employee Directors and the terms of such awards, including
but not limited to the exercisability and the effect of a director’s termination
of service.
SECTION 13. Tax Withholding
13.1 Each award holder shall, no later than the date as of which an amount with
respect to an award first becomes includible in such person’s gross income for
applicable tax purposes, pay to the Company, or make arrangements satisfactory
to the Committee regarding payment of, any federal, state, local or other taxes
of any kind required by law to be withheld with respect to the award. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements. The Company (and, where applicable, its Subsidiaries), shall,
to the extent permitted by law, have the right to deduct the minimum amount of
any required tax withholdings from any such taxes from any payment of any kind
otherwise due to the award holder.
13.2 To the extent permitted by the Committee, and subject to such terms and
conditions as the Committee may provide, an Employee may elect to have the
minimum amount of any required tax withholdings with respect to any awards
hereunder, satisfied by (i) having the Company withhold shares of Common Stock
otherwise deliverable to such person with respect to the award or (ii)
delivering to the Company shares of unrestricted Common Stock already owned by
the Employee for at least six months. Alternatively, the Committee may require
that a portion of the shares of Common Stock otherwise deliverable be applied to
satisfy the withholding tax obligations with respect to the award.
SECTION 14. Change in Control
14.1 In the event of a Change in Control, unless otherwise determined by the
Committee at the time of grant or by amendment (with the award holder’s consent)
of such grant:
(a) all outstanding Stock Options (including Director Options) and all
outstanding Stock Appreciation Rights (including Limited Stock Appreciation
Rights) awarded under the Plan shall become fully exercisable and vested;
(b) the restrictions and vesting conditions applicable to any outstanding
Restricted Stock and Deferred Stock awards under the Plan shall lapse and such
shares and awards shall be deemed fully vested;
(c) the Committee may, in its sole discretion, accelerate the payment date of
all Restricted Stock and Deferred Stock awards; and
(d) to the extent the cash payment of any award is based on the Fair Market
Value of Common Stock, such Fair Market Value shall be the Change in Control
Price.

 

 

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14.2 A “Change in Control” shall be deemed to occur on:
(a) the date that any person, corporation, partnership, syndicate, trust, estate
or other group acting with a view to the acquisition, holding or disposition of
securities of the Company, becomes, directly or. indirectly, the beneficial
owner, as defined in Rule 13d-3 under the Securities Exchange Act of 1934
(“Beneficial Owner”), of securities of the Company representing 35% or more of
the voting power of all securities of the Company having the right under
ordinary circumstances to vote at an election of the Board (“Voting
Securities”), other than by reason of (x) the acquisition of securities of the
Company by the Company or any of its Subsidiaries or any employee benefit plan
of the Company or any of its Subsidiaries, (y) the acquisition of securities of
the Company directly from the Company, or (z) the acquisition of securities of
the Company by one or more members of the Hillenbrand Family (which term shall
mean descendants of John A. Hillenbrand and their spouses, trusts primarily for
their benefit or entities controlled by them);
(b) the consummation of a merger or consolidation of the Company with another
corporation unless
(i) the shareholders of the Company, immediately prior to the merger or
consolidation, beneficially own, immediately after the merger or consolidation,
shares entitling such shareholders to 50% or more of the voting power of all
securities of the corporation surviving the merger or consolidation having the
right under ordinary circumstances to vote at an election of directors in
substantially the same proportions as their ownership, immediately prior to such
merger or consolidation, of Voting Securities of the Company;
(ii) no person, corporation, partnership, syndicate, trust, estate or other
group beneficially owns, directly or indirectly, 35% or more of the voting power
of the outstanding voting securities of the corporation resulting from such
merger or consolidation except to the extent that such ownership existed prior
to such merger or consolidation; and
(iii) the members of the Company’s Board, immediately prior to the merger or
consolidation, constitute, immediately after the merger or consolidation, a
majority of the board of directors of the corporation issuing cash or securities
in the merger;
(c) the date on which a majority of the members of the Board are replaced during
any 12-month period by persons other than directors whose appointment or
election was approved by a majority of the members of the Board as constituted
immediately prior to such appointment or election;
(d) the consummation of a sale or other disposition of all or substantially all
of the assets of the Company; or
(e) the corporate dissolution of the Company if the corporate dissolution
results, within 12 months, in the complete termination and liquidation of the
Plan.
Notwithstanding any other provision of this Section to the contrary, an
occurrence shall not constitute a Change in Control if it does not constitute a
change in the ownership or effective control, or in the ownership of a
substantial portion of the assets of, the Company or another allowable
acceleration event under Section 409A of the Code and its interpretive
regulations.
14.3 “Change in Control Price” means the highest price per share of Common Stock
paid in any transaction reported on any national market or securities exchange
where the Common Stock is traded, or paid or offered in any transaction related
to a Change in Control at any time during the 90-day period ending with the
Change in Control. Notwithstanding the foregoing sentence, in the case of Stock
Appreciation Rights granted in tandem with Incentive Options, the Change in
Control Price shall be the highest price paid on the date on which the Stock
Appreciation Right is exercised.

 

 

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SECTION 15. General Provisions
15.1 Each award under the Plan shall be subject to the requirement that, if at
any time the Committee shall determine that (i) the listing, registration or
qualification of the Common Stock subject or related thereto upon any securities
exchange or market or under any state or federal law, or (ii) the consent or
approval of any government regulatory body, or (iii) an agreement by the
recipient of an award with respect to the disposition of Common Stock, is
necessary or desirable in order to satisfy any legal requirements, or (iv) the
issuance, sale or delivery of any shares of Common Stock is or may in the
circumstances be unlawful under the laws or regulations of any applicable
jurisdiction, the right to exercise such Stock Option shall be suspended, such
award shall not be granted and such shares will not be issued, sold or
delivered, in whole or in part, unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee, and the
Committee determines that the issuance, sale or delivery of the shares is
lawful. The application of this Section shall not extend the term of any Stock
Option or other award. The Company shall have no obligation to effect any
registration or qualification of the Common Stock under federal or state laws or
to compensate the award holder for any loss caused by the implementation of this
Section 15.1.
15.2 The Committee may provide, at the time of grant or by amendment with the
award holder’s consent, that an award and/or Common Stock acquired under the
Plan shall be forfeited, including after exercise or vesting, if within a
specified period of time the award holder engages in any of the conduct
described below (“Disqualifying Conduct”). Disqualifying Conduct shall mean
(i) the award holder’s performance of service for a competitor of the Company
and/or its Subsidiaries, including service as an employee, director, or
consultant, or the establishing by the award holder of a business which competes
with the Company and/or its Subsidiaries, (ii) the award holder’s solicitation
of employees or customers of the Company and/or its Subsidiaries, (iii) the
award holder’s improper use or disclosure of confidential information of the
Company and/or its Subsidiaries, or (iv) material misconduct by the award holder
in the performance of such award holder’s duties for the Company and/or its
Subsidiaries, as determined by the Committee.
15.3 Nothing set forth in this Plan shall prevent the Board from adopting other
or additional compensation arrangements.
15.4 Nothing in the Plan nor in any award hereunder shall confer upon any award
holder any right to continuation of his or her employment by or other
Relationship with the Company or its Subsidiaries, or interfere in any way with
the rights of any such company to terminate such employment or other
Relationship.
15.5 Neither the Plan nor any award shall create or be construed to create a
trust or separate fund of any kind or a fiduciary relationship between the
Company or Subsidiary and an award recipient, and no award recipient will, by
participation in the Plan, acquire any right in any specific Company property,
including any property the Company may set aside in connection with the Plan. To
the extent that any award recipient acquires a right to receive payments from
the Company or any Subsidiary pursuant to an award, such right shall not be
greater than the right of an unsecured general creditor of the Company or its
Subsidiaries.
15.6 The Plan and all awards hereunder shall be governed by the laws of the
State of Indiana without giving effect to conflict of laws principles.

 

 

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15.7 The Plan and all awards under the Plan shall be interpreted and applied in
a manner consistent with the applicable standards for nonqualified deferred
compensation plans established by Code Section 409A and its interpretive
regulations and other regulatory guidance. To the extent that any terms of the
Plan or an award would subject an Employee to gross income inclusion, interest,
or additional tax pursuant to Code Section 409A, those terms are to that extent
superseded by, and shall be adjusted to the minimum extent necessary to satisfy
or to be exempt from, the Code Section 409A standards. If as of the date
Employee’s employment terminates, an Employee is a “key employee,” within the
meaning of Code Section 416(i), without regard to paragraph 416(i)(5), and if
the Company has stock that is publicly traded on an established securities
market or otherwise, any payment of deferred compensation, within the meaning of
Code Section 409A, otherwise payable because of employment termination will be
suspended until, and will be paid to the Employee on, the first day of the
seventh month following the month in which the Employee’s last day of employment
occurs.
SECTION 16. Amendments and Termination
16.1 The Plan shall be of unlimited duration. The Board may discontinue the Plan
at any time and may amend it from time-to-time. No amendment or discontinuation
of the Plan shall adversely affect any award previously granted without the
award holder’s written consent. Amendments may be made without shareholder
approval except as required to satisfy applicable laws or regulations or the
requirements of any stock exchange or market on which the Common Stock is listed
or traded.
16.2 The Committee may amend the terms of any award prospectively or
retroactively; provided, however, that no amendment shall impair the rights of
the award holder without his or her written consent.
SECTION 17. Effective Date of Plan
17.1 The former version of the Plan was approved by the Board on December 19,
2008, and this revised version of the Plan was approved and adopted by the Board
on December 2, 2009. The Plan was effective as of the date of the consummation
of the transactions contemplated by the Distribution Agreement (“Effective
Date”). This February 24, 2010 version of the Plan is to be effective, and is to
amend, restate, supersede, and replace the version of the Plan adopted by the
Board on December 19, 2008, upon approval thereof by the shareholders of the
Company.