Exhibit 10.1
(AVANADE) [c05895c0589500.gif]
Avanade Inc. Long-Term Incentive Plan

Plan Document
 
Effective as of June 19, 2006

 

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Avanade Inc.
Long-Term Incentive Plan

1.   Purpose

The Avanade Inc. Long-Term Incentive Plan (the “Plan”) was created to attract
and retain the best available employees over the long-term and to provide
incentives that will align those employees’ interests with the continued growth
and success of the Company.

2.   Definitions

In addition to the other definitions contained herein, the following definitions
shall apply:

  •   “Agreement” means the document setting forth the terms and conditions of
an award under the Plan.     •   “Avanade Valuation Unit” means a right granted
to a Participant pursuant to Section 4.     •   “Base Value” means, with respect
to an Avanade Valuation Unit, the dollar value per unit determined by the Plan
Administrator on the Grant Date, which, in the case of the initial awards of
Avanade Valuation Units made under the Plan in June, 2006 shall be an amount not
less than the Fair Market Value per Share as of November 11, 2005 and, for all
subsequent awards, not less than the Fair Market Value per Share as of the
applicable Grant Date.     •   “Board” means the Company’s Board of Directors.  
  •   “Change in Control Event” means an Ownership Change Event (defined below)
or a series of related Ownership Change Events (collectively, a “Transaction”)
in which the shareholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company’s voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting securities of the Company or the entity to which the assets
of the Company were transferred (the “Transferee”), as the case may be. The
Board shall have the right to determine whether multiple sales or exchanges of
the voting securities of the Company or multiple Ownership Change Events are
related, and its determination shall be final, binding and conclusive.     •  
“Code” means the United States Internal Revenue Code of 1986, as amended from
time to time.

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  •   “Common Stock” means the Company’s Common Stock, par value $0.0001 per
share.     •   “Company” means Avanade Inc., a United States corporation
incorporated in the state of Washington.     •   “Compensation Committee” has
the meaning set forth in Section 3.     •   “Disability” means any medically
determinable mental or physical impairment of the Participant that is expected
to result in death or that has lasted or is expected to last for a continuous
period of at least 12 months and that causes the Participant to be unable, in
the opinion of the Company and an independent physician chosen by the Company,
to engage in any substantial gainful activity.     •   “Effective Date” means
June 19, 2006.     •   “Employee” means any person employed by the Company or
any Subsidiary.     •   “Exchange Act” means the United States Securities
Exchange Act of 1934, as amended.     •   “Fair Market Value” means, as of the
applicable date, the fair market value of the Common Stock as determined in good
faith by the Board or, if authorized, the Compensation Committee, on the basis
of such considerations as the Board or the Compensation Committee determines to
be appropriate. Such determination of the Fair Market Value is conclusive and
binding on all parties.     •   “GAAP” means generally accepted accounting
principles in effect from time to time in the United States.     •   “Grant
Date” with respect to an award of Avanade Valuation Units means the date as
instructed by the Board, or the Plan Administrator, when approving the award.  
  •   “Operating Income” means, for any period being tested, income from
operations before other income/loss and tax expenses as determined in accordance
with GAAP; provided, however, that solely for purposes of calculating Operating
Income hereunder, no deduction should be considered for any Payment Amounts.    
•   “Ownership Change Event” means (i) the direct or indirect sale or exchange
by the shareholders of the Company of more than fifty percent (50%) of the
voting stock of the Company; (ii) a merger or consolidation to which the Company
is a party; or (iii) the sale, exchange, or transfer of all or substantially
all, as determined by the Board in its discretion, of the assets of the Company.
    •   “Participant” means any person who is eligible for and who is granted
one or more Avanade Value Units pursuant to the terms of the Plan.

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  •   “Payment Cap” means with respect to aggregate Payment Amounts relating to
Avanade Valuation Units with a Vesting Date in a calendar year, an amount that
equals 12% of the Operating Income for the fiscal year ending within such
calendar year.     •   “Payment Date” means, with respect to the vested portion
of an award of Avanade Valuation Units, the date determined by the Plan
Administrator for payment of a Payment Amount, which date will be no later than
March 15 of the calendar year following the year in which the Vesting Date
occurs.     •   “Plan Administrator” has the meaning set forth in Section 3.    
•   “Shares” means shares of Common Stock of the Company.     •   “Subsidiary”
means a current or future “subsidiary corporation” as defined in Section 424 of
the Code and a limited liability company, partnership, or other entity in which
the Company controls 60% or more of the voting power or equity interests.     •
  “Termination Date” means the date on which a Participant’s employment with the
Company and the Subsidiaries terminates for any reason. A Participant’s transfer
of employment between or among the Company and its Subsidiaries will not be
considered a termination of employment for purposes of the Plan.     •  
“Vesting Date” means the date on which an Avanade Valuation Unit becomes vested.
The Vesting Date will also be the date on which the Payment Amount is determined
for the vested Avanade Valuation Units in accordance with Section 4(b) of the
Plan.     •   “Vesting Date FMV” as of any Vesting Date means the Fair Market
Value of a Share as determined for such Vesting Date.

3.   Administration of Plan

The Plan will be administered by the Compensation Committee of the Board (the
“Compensation Committee”), or such other committee comprised of non-employee
members of the Board as the Board designates (as applicable, the “Plan
Administrator”).
The Plan Administrator shall have the power to grant Avanade Valuation Units
under the Plan (subject to the terms and conditions herein), establish the terms
and conditions of such awards, interpret the Plan, establish any rules and
regulations necessary or appropriate for administration of the Plan, and make
such other determinations and take such actions as it deems necessary or
advisable. This includes changing the terms and conditions of any outstanding
award, except as otherwise expressly prohibited by the terms of the Plan or
applicable law. The Plan Administrator may rely upon the advice and assistance
of any individual it deems appropriate in administering the Plan

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and, as may be permitted by governing state law, delegate authority to an
officer(s) of the Company to grant Avanade Valuation Units to certain Employees.
However, no such officer shall have or obtain authority to grant awards to
himself or herself or to any person subject to the reporting requirements of
Section 16 of the Exchange Act.
Any determination or action made or taken by the Plan Administrator will be
final and binding on all parties. No member of a Plan Administrator will be
liable for any action or determination taken or made in good faith.

4.   Avanade Valuation Units

     (a) Eligibility. Avanade Valuation Units may be awarded to Employees as
determined by the Plan Administrator. Members of the Board are eligible only if
they are full-time Employees.
     (b) Grants and Payment Amounts.
     (i) Each grant of an Avanade Valuation Unit to a Participant will be
documented in an Agreement designating, among other things, the number of
Avanade Valuation Units subject to the award, the Grant Date, the Base Value,
and the Vesting Dates. Participants may be granted more than one Avanade
Valuation Unit, and, subject to the terms and conditions of the Plan, the terms
and timing of Avanade Valuation Units can vary among Participants and from
Avanade Valuation Units previously granted. Receipt of an Avanade Valuation Unit
does not entitle a Participant to future grants of Avanade Valuation Units.
     (ii) The grant of an Avanade Valuation Unit gives a Participant the right,
after vesting of such Avanade Valuation Unit, to receive a one-time cash payment
on the applicable Payment Date equal to the “Payment Amount.” The Payment Amount
on any Payment Date shall be the amount (not less than zero) equal to the
difference between: (i) the Vesting Date FMV (determined as of the Vesting Date
immediately prior to or coincident with such Payment Date) and (ii) the Base
Value. Notwithstanding the foregoing, the payment of Payment Amounts to
Participants is subject to the Payment Cap and the Plan Administrator shall
reduce the Payment Amount of all applicable Participants (but not below $0) in
the event the Payment Cap would otherwise be exceeded. Any Participant’s Payment
Amount may be further reduced (but not below zero) by the Plan Administrator in
its sole discretion, without notice or consideration, for any reason.
     (c) Vesting and Settlement of Avanade Valuation Units. The Agreement
evidencing the grant of Avanade Valuation Units will specify the times at which
and the conditions under which the Avanade Valuation Units granted to a
Participant will become vested and, subject to the provisions of paragraph
(b) above, will be paid. Payment for vested Avanade Valuation Units will be made
one time only and once settled by payment and/or reduction of such Payment
Amount pursuant to Section 4(b) above, vested Avanade Valuation Units will
expire and will be cancelled and a

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Participant will have no further rights with respect to such Avanade Valuation
Units. Unless otherwise provided by the Plan Administrator at the time of grant
(i) if a Participant’s Termination Date occurs by reason of death or Disability,
then that number of Avanade Valuation Units that would have vested within twelve
(12) months following such Participant’s Termination Date (which Termination
Date will be a Vesting Date), shall automatically vest, and (ii) if a Change in
Control Event occurs prior to the Participant’s Termination Date, vesting and
settlement of the Participant's outstanding Avanade Valuation Units is as set
forth in Section 4(d) below.
     (d) Effect of a Change in Control Event.

  i.   Accelerated Vesting. Upon the occurrence of a Change in Control Event and
subject to the requirements of Section 409A of the Code (if applicable), (1) the
effective date of such Change in Control Event will be a Vesting Date and
(2) for all Participants, that number of Avanade Valuation Units that would have
vested within twelve (12) months following such effective date shall
automatically vest. Notwithstanding the foregoing, payment of any Payment
Amounts for vested Avanade Valuation Units accelerated pursuant to this
Section 4(d)(i) remains subject to the Payment Cap and the requirements of
Section 409A of the Code (if applicable).     ii.   Assumption or Substitution.
Upon the occurrence of a Change in Control Event, the surviving, continuing,
successor, or purchasing corporation or other business entity or parent thereof,
as the case may be (the “Acquiring Corporation”), may, without the consent of
any Participant, either assume the Company’s rights and obligations under the
outstanding Avanade Valuation Units or substitute for the outstanding Avanade
Valuation Units substantially equivalent rights. Unless otherwise provided in an
Agreement or by the Plan Administrator pursuant to Section 4(d)(i) above, any
Avanade Valuation Units which are neither assumed nor substituted for by the
Acquiring Corporation in connection with the Change in Control Event shall
terminate and cease to be outstanding upon the effective date of the Change in
Control Event. Further, all Avanade Valuation Units for which the Acquiring
Corporation provides a substitute shall terminate and cease to be outstanding
upon the effective date of a Change in Control Event.

5.   No Acquired Rights

Neither the Plan nor receipt of an award of Avanade Valuation Units under the
Plan confers upon any Participant the right to continued employment at the
Company or any Subsidiary or affects in any way the right of the Company or any
Subsidiary to terminate the employment of a Participant.

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6.   Restrictions on Transferability

Avanade Valuation Units may not be sold, given, transferred, assigned, pledged
or otherwise hypothecated in any manner or by will, and any attempted transfer
in violation of these prohibitions will be void ab initio. Avanade Valuation
Units are not transferable and any payments due to a Participant pursuant to an
Avanade Valuation Unit which have not been completed upon his or her death will
be paid to his estate.

7.   Conditions Upon Issuance of Avanade Valuation Units

The granting of Avanade Valuation Units under the Plan will be subject to all
applicable laws, rules, and regulations. Any purported grant of Avanade
Valuation Units is void and shall have no effect if such grant would constitute
a violation of law in the applicable local jurisdiction or if the Company
determines, in its sole discretion, that it would be impracticable to obtain the
requisite legal or regulatory approvals.

8.   Taxes

The Company will have the power and the right to deduct or withhold from any
Payment Amount, or require a Participant to remit to the Company, such amount
the Company deems necessary or desirable to satisfy all tax obligations with
respect to any taxable event arising as a result of the Plan.

9.   Adjustments Upon Changes in Capitalization

     (a) In the event of a stock dividend, stock split, spin-off, combination or
exchange of shares, recapitalization, consolidation, or other change in the
Company’s capital structure, the Plan Administrator may make such proportional
adjustments in the number of outstanding Avanade Valuation Units and, if
applicable, the Base Value, that the Plan Administrator deems necessary or
desirable in its sole discretion. Notwithstanding the foregoing, a dissolution
or liquidation of the Company is not governed by this Section 9(a) but is
governed by Section 9(b) below and Section 4(d) shall apply in the event of a
Change in Control Event.
     (b) In the event of the proposed dissolution or liquidation of the Company,
outstanding Avanade Valuation Units will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Plan
Administrator.

10.   Termination of Employment

Except as otherwise specifically provided herein or in the applicable Agreement,
any Avanade Valuation Units that are not vested on the Participant’s Termination
Date will expire on such date. The terms of Avanade Valuation Units upon a
Participant’s Termination Date are solely governed by the provisions of
Section 4.

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11.   Amendment and Termination

The Plan shall continue until the earliest to occur of the following:
(a) termination of the Plan by the Board or (b) the tenth anniversary of the
Effective Date. The Board may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would impair a
Participant’s rights under any then-outstanding Avanade Valuation Unit
theretofore granted to such Participant under the Plan, without the consent of
such Participant; provided, however, that the Board may amend the Plan in such
manner as it deems necessary to permit the granting of Avanade Valuation Units
meeting the requirements of the Code or other applicable laws, including,
without limitation, Section 409A of the Code, any amendment thereto, and
applicable guidance issued thereunder if it is determined that the Plan would be
subject to Section 409A of the Code. Notwithstanding the foregoing, the Plan
Administrator may, without the consent of a Participant, reduce any Payment
Amount (but not below $0) pursuant to Section 4(b) above.

12.   Awards to Employees outside the United States

To comply with the laws in other countries in which the Company or any of its
Subsidiaries operates or has Employees, the Plan Administrator, in its sole
discretion, will have the power and authority to:
     (a) Determine which Subsidiaries will be covered by the Plan;
     (b) Determine which Employees outside the United States are eligible to
participate in the Plan;
     (c) Modify the terms and conditions of any award granted to Employees
outside the United States to comply with applicable foreign laws;
     (d) Establish sub-plans and modify exercise procedures and other terms and
procedures, to the extent such actions may be necessary or advisable. Any
sub-plans and modifications to Plan terms and procedures established under this
Section 12 by the Plan Administrator will be attached to this Plan document as
appendices; and
     (e) Take any action, before or after an award is made, that it deems
advisable to obtain approval or comply with any necessary local government
regulatory exemptions or approvals.

13.   Choice of Law

The Plan and all determinations made and actions taken pursuant to the Plan, to
the extent not otherwise governed by the laws of the United States, will be
governed by the laws of the State of Washington without giving effect to
principles of conflicts of laws.

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