Document:

Exhibit 10.1

 

FARMLAND PARTNERS INC.

SECOND AMENDED AND RESTATED 2014 EQUITY INCENTIVE PLAN

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
1.
    	
PURPOSE
    	
A-1
    
	
2.
    	
DEFINITIONS
    	
A-1
    
	
3.
    	
ADMINISTRATION OF THE   PLAN
    	
A-6
    
	
 
    	
3.1
    	
Committee
    	
A-6
    
	
 
    	
3.2
    	
Terms of Awards
    	
A-6
    
	
 
    	
3.3
    	
Forfeiture; Recoupment
    	
A-7
    
	
 
    	
3.4
    	
No Repricing
    	
A-8
    
	
 
    	
3.5
    	
Deferral Arrangement
    	
A-8
    
	
 
    	
3.6
    	
No Liability
    	
A-8
    
	
 
    	
3.7
    	
Share   Issuance/Book-Entry
    	
A-8
    
	
4.
    	
SHARES SUBJECT TO THE   PLAN
    	
A-8
    
	
 
    	
4.1
    	
Number of Shares   Available for Awards
    	
A-8
    
	
 
    	
4.2
    	
Adjustments in   Authorized Shares
    	
A-8
    
	
 
    	
4.3
    	
Share Usage
    	
A-9
    
	
5.
    	
EFFECTIVE DATE, DURATION   AND AMENDMENTS
    	
A-9
    
	
 
    	
5.1
    	
Effective Date
    	
A-9
    
	
 
    	
5.2
    	
Term
    	
A-9
    
	
 
    	
5.3
    	
Amendment and   Termination of the Plan
    	
A-9
    
	
6.
    	
AWARD ELIGIBILITY AND   LIMITATIONS
    	
A-9
    
	
 
    	
6.1
    	
Service Providers and   Other Persons
    	
A-9
    
	
 
    	
6.2
    	
Limitation on Shares   Subject to Awards and Cash Awards
    	
A-9
    
	
 
    	
6.3
    	
Non-Employee Director   Limit
    	
A-10
    
	
 
    	
6.4
    	
Stand-Alone,   Additional, Tandem and Substitute Awards
    	
A-10
    
	
7.
    	
AWARD AGREEMENT
    	
A-10
    
	
8.
    	
TERMS AND CONDITIONS OF   OPTIONS
    	
A-11
    
	
 
    	
8.1
    	
Option Price
    	
A-11
    
	
 
    	
8.2
    	
Vesting
    	
A-11
    
	
 
    	
8.3
    	
Term
    	
A-11
    
	
 
    	
8.4
    	
Termination of Service
    	
A-11
    
	
 
    	
8.5
    	
Limitations on Exercise   of Option
    	
A-11
    
	
 
    	
8.6
    	
Method of Exercise
    	
A-11
    
	
 
    	
8.7
    	
Rights of Holders of   Options
    	
A-11
    
	
 
    	
8.8
    	
Delivery of Share   Certificates
    	
A-12
    
	
 
    	
8.9
    	
Transferability of   Options
    	
A-12
    
	
 
    	
8.10
    	
Family Transfers
    	
A-12
    
	
 
    	
8.11
    	
Limitations on   Incentive Stock Options
    	
A-12
    
	
 
    	
8.12
    	
Notice of Disqualifying   Disposition
    	
A-12
    
	
9.
    	
TERMS AND CONDITIONS OF   STOCK APPRECIATION RIGHTS
    	
A-13
    
	
 
    	
9.1
    	
Right to Payment and   Grant Price
    	
A-13
    
	
 
    	
9.2
    	
Other Terms
    	
A-13
    
	
 
    	
9.3
    	
Term
    	
A-13
    
	
 
    	
9.4
    	
Transferability of   SARS.
    	
A-13
    
	
 
    	
9.5
    	
Family Transfers
    	
A-13
    
	
10.
    	
TERMS AND CONDITIONS OF   RESTRICTED STOCK AND STOCK UNITS
    	
A-14
    
	
 
    	
10.1
    	
Grant of Restricted   Stock or Stock Units
    	
A-14
    
	
 
    	
10.2
    	
Restrictions
    	
A-14
    
	
 
    	
10.3
    	
Restricted Stock   Certificates
    	
A-14
    
	
 
    	
10.4
    	
Rights of Holders of   Restricted Stock
    	
A-14
    

 

A-i

 

	
 
    	
10.5
    	
Rights of Holders of   Stock Units
    	
A-15
    
	
 
    	
10.6
    	
Termination of Service
    	
A-15
    
	
 
    	
10.7
    	
Delivery of Shares
    	
A-15
    
	
11.
    	
TERMS AND CONDITIONS OF   UNRESTRICTED STOCK AWARDS AND OTHER EQUITY-BASED AWARDS
    	
A-15
    
	
12.
    	
FORM OF PAYMENT   FOR OPTIONS AND RESTRICTED STOCK
    	
A-16
    
	
 
    	
12.1
    	
General Rule
    	
A-16
    
	
 
    	
12.2
    	
Surrender of Shares
    	
A-16
    
	
 
    	
12.3
    	
Cashless Exercise
    	
A-16
    
	
 
    	
12.4
    	
Other Forms of Payment
    	
A-16
    
	
13.
    	
TERMS AND CONDITIONS OF   DIVIDEND EQUIVALENT RIGHTS
    	
A-16
    
	
 
    	
13.1
    	
Dividend Equivalent   Rights
    	
A-16
    
	
 
    	
13.2
    	
Termination of Service
    	
A-17
    
	
14.
    	
TERMS AND CONDITIONS OF   PERFORMANCE AWARDS AND ANNUAL INCENTIVE AWARDS
    	
A-17
    
	
 
    	
14.1
    	
Grant of Performance   Awards and Annual Incentive Awards
    	
A-17
    
	
 
    	
14.2
    	
Value of Performance   Awards and Annual Incentive Awards
    	
A-17
    
	
 
    	
14.3
    	
Earning of Performance   Awards and Annual Incentive Awards
    	
A-17
    
	
 
    	
14.4
    	
Form and Timing of   Payment of Performance Awards and Annual Incentive Awards
    	
A-17
    
	
 
    	
14.5
    	
Performance Conditions
    	
A-18
    
	
 
    	
14.6
    	
Performance Awards or   Annual Incentive Awards Granted to Designated Covered Employees
    	
A-18
    
	
 
    	
14.7
    	
Status of Awards Under   Code Section 162(m)
    	
A-20
    
	
15.
    	
TERMS AND CONDITIONS OF   LONG-TERM INCENTIVE UNITS
    	
A-20
    
	
 
    	
15.1
    	
Vesting
    	
A-21
    
	
16.
    	
PARACHUTE LIMITATIONS
    	
A-21
    
	
17.
    	
REQUIREMENTS OF LAW
    	
A-21
    
	
 
    	
17.1
    	
General
    	
A-21
    
	
 
    	
17.2
    	
Rule 16b-3
    	
A-22
    
	
18.
    	
EFFECT OF CHANGES IN   CAPITALIZATION
    	
A-22
    
	
 
    	
18.1
    	
Changes in Shares
    	
A-22
    
	
 
    	
18.2
    	
Reorganization in Which   the Company Is the Surviving Entity Which Does not Constitute a Change in   Control
    	
A-23
    
	
 
    	
18.3
    	
Change in Control in   which Awards are not Assumed
    	
A-23
    
	
 
    	
18.4
    	
Change in Control in   which Awards are Assumed
    	
A-24
    
	
 
    	
18.5
    	
Adjustments
    	
A-24
    
	
 
    	
18.6
    	
No Limitations on   Company
    	
A-25
    
	
19.
    	
GENERAL PROVISIONS
    	
A-25
    
	
 
    	
19.1
    	
Disclaimer of Rights
    	
A-25
    
	
 
    	
19.2
    	
Nonexclusivity of the   Plan
    	
A-25
    
	
 
    	
19.3
    	
Withholding Taxes
    	
A-25
    
	
 
    	
19.4
    	
Captions
    	
A-26
    
	
 
    	
19.5
    	
Other Provisions
    	
A-26
    
	
 
    	
19.6
    	
Number and Gender
    	
A-26
    
	
 
    	
19.7
    	
Severability
    	
A-26
    
	
 
    	
19.8
    	
Governing Law
    	
A-26
    
	
 
    	
19.9
    	
Code Section 409A
    	
A-26
    

 

A-ii

 

FARMLAND PARTNERS INC.

2014 EQUITY INCENTIVE PLAN

(as amended and restated effective May 3, 2017)

 

Farmland Partners Inc., a Maryland corporation (the “Company”), sets forth herein the terms of its 2014 Equity Incentive Plan (the “Plan”), as follows:

 

1.                                      PURPOSE

 

The Plan is intended to provide (a) incentive to officers, employees, directors, consultants and other eligible persons to stimulate their efforts towards the success of the Company and to operate and manage its business in a manner that will provide for the long term growth and profitability of the Company; and (b) a means of obtaining, rewarding and retaining key personnel. To this end, the Plan provides for the grant of stock options, stock appreciation rights, restricted stock, unrestricted stock, stock units (including deferred stock units), dividend equivalent rights, long-term incentive units, other equity-based awards and cash bonus awards. Any of these awards may, but need not, be made as performance incentives to reward attainment of annual or long-term performance goals in accordance with the terms hereof. Stock options granted under the Plan may be non-qualified stock options or incentive stock options, as provided herein.

 

2.                                      DEFINITIONS

 

For purposes of interpreting the Plan and related documents (including Award Agreements), the following definitions shall apply:

 

2.1          “Affiliate” means, with respect to the Company, any company or other trade or business that controls, is controlled by or is under common control with the Company within the meaning of Rule 405 of Regulation C under the Securities Act, including, without limitation, any Subsidiary. For purposes of granting Options or Stock Appreciation Rights, an entity may not be considered an Affiliate of the Company unless the Company holds a “controlling interest” in such entity, where the term “controlling interest” has the same meaning as provided in Treasury Regulation Section 1.414(c)-2(b)(2)(i), provided that the language “at least 50 percent” is used instead of “at least 80 percent” and, provided further, that where granting of Options or Stock Appreciation Rights is based upon a legitimate business criteria, the language “at least 20 percent” is used instead of “at least 80 percent” each place it appears in Treasury Regulation Section 1.414(c)-2(b)(2)(i).

 

2.2          “Annual Incentive Award” means an Award, denominated in cash, made subject to attainment of performance goals (as described in Section 14) over a Performance Period of up to one (1) year (which shall correspond to the Company’s fiscal year, unless otherwise specified by the Committee).

 

2.3          “Applicable Laws” means the legal requirements relating to the Plan and the Awards under applicable provisions of the corporate, securities, tax and other laws, rules, regulations and government orders, and the rules of any applicable stock exchange or national market system, of any jurisdiction applicable to Awards granted to residents therein.

 

2.4          “Award” means a grant of an Option, Stock Appreciation Right, Restricted Stock, Unrestricted Stock, Stock Unit, Dividend Equivalent Right, Performance Award, Annual Incentive Award, LTIP Unit, or Other Equity-Based Award under the Plan.

 

2.5          “Award Agreement” means the agreement between the Company and a Grantee that evidences and sets out the terms and conditions of an Award.

 

2.6          “Benefit Arrangement” shall have the meaning set forth in Section 16.

 

2.7          “Board” means the Board of Directors of the Company.

 

2.8          “Cause” means, unless defined otherwise in a Service Provider’s Award Agreement or employment, consulting or services agreement with the Company or an Affiliate (in which case such definition shall control), as determined by the Committee, the Service Provider’s (i) continued failure 

 

 

to substantially perform duties, or gross negligence or willful misconduct in connection with the performance of duties; (ii) conviction or plea of guilty or nolo contendere of a felony; (iii) conviction of any other criminal offense involving an act of dishonesty intended to result in substantial personal enrichment of such Grantee at the expense of the Company or an Affiliate; or (iv) material breach of any Company policy or term of any employment, consulting or other services, confidentiality, intellectual property or non-competition agreements, if any, between the Service Provider and the Company or an Affiliate.

 

2.9          “Change in Control” means:

 

(i)            Any “person” as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company or any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding voting securities;

 

(ii)           During any period of twelve consecutive months, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii) or (iv) hereof) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof, but excluding, for this purpose, any such 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 actual threatened solicitation of proxies or consents by or on behalf of a person other than the Board;

 

(iii)          The consummation of a merger or consolidation of the Company with any other entity or approve the issuance of voting securities in connection with a merger or consolidation of the Company (or any direct or indirect subsidiary thereof) pursuant to applicable exchange requirements, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or parent entity) at least 50.1% of the combined voting power of the voting securities of the Company or such surviving or parent entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no “person” (as defined above) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of either of the then outstanding shares of Common Stock or the combined voting power of the Company’s then outstanding voting securities; or

 

(iv)          The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction or series of transactions within a period of twelve months ending on the date of the last sale or disposition having a similar effect).

 

Notwithstanding the foregoing, if an Award constitutes deferred compensation within the meaning of Code Section 409A, no payment, settlement or vesting (if vesting would be deemed a distribution with respect to the Award under Section 409A) shall occur with respect to such Award on account of the Change in Control transaction or event unless the transaction or event also constitutes a change in 

 

A-2

 

the ownership or effective control of the Company or a change in the ownership of a substantial portion of the Company’s assets, as those terms are used in Code Section 409A(a)(2)(c)(v).

 

2.10        “Code” means the Internal Revenue Code of 1986, as now in effect or as hereafter amended.

 

2.11        “Committee” means the Committee constituted under Section 3 to administer the Plan.

 

2.12        “Common Stock” means the common stock of the Company, par value $0.01 per share.

 

2.13        “Company” means Farmland Partners Inc., a Maryland corporation.

 

2.14        “Covered Employee” means a Grantee who is a covered employee within the meaning of Code Section 162(m)(3).

 

2.15        “Determination Date” means the Grant Date or such other date as of which the Fair Market Value of a Share is required to be established for purposes of the Plan.

 

2.16        “Disability” means the Grantee is unable to perform each of the essential duties of such Grantee’s position by reason of a medically determinable physical or mental impairment which is potentially permanent in character or which can be expected to last for a continuous period of not less than 12 months; provided, however, that, with respect to rules regarding expiration of an Incentive Stock Option following termination of the Grantee’s Service, Disability shall mean the Grantee is unable to engage in any substantial gainful activity by reason of a 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.

 

2.17        “Dividend Equivalent Right” means a right, granted to a Grantee under Section 13, to receive cash, Shares, other Awards or other property equal in value to dividends paid with respect to a specified number of Shares, or other periodic payments.

 

2.18        “Effective Date” means March 24, 2014, the date the Plan was approved by the stockholders of the Company.

 

2.19        “Exchange Act” means the Securities Exchange Act of 1934, as now in effect or as hereafter amended.

 

2.20        “Fair Market Value” means the fair market value of a Share for purposes of the Plan, which shall be determined as of any Determination Date as follows:

 

(i)            If on such Determination Date the Shares are listed on a Stock Exchange, or are publicly traded on another established securities market (a “Securities Market”), the Fair Market Value of a Share shall be the closing price of a Share as reported on such Stock Exchange or such Securities Market (provided that, if there is more than one such Stock Exchange or Securities Market, the Committee shall designate the appropriate Stock Exchange or Securities Market for purposes of the Fair Market Value determination). If there is no such reported closing price on such Determination Date, the Fair Market Value of a Share shall be the closing price of a Share on the most recent date prior to such Determination Date on which any sale of Shares shall have been reported on such Stock Exchange or such Securities Market.

 

(ii)           If on such Determination Date the Shares are not listed on a Stock Exchange or publicly traded on a Securities Market, the Fair Market Value of a Share shall be the value of a Share as determined by the Committee in good faith; provided, however, that if such Fair Market Value is used to determine an Option Price or a SAR Exercise Price, the Committee shall use a reasonable application of a reasonable valuation method, in a manner consistent with Code Section 409A.

 

2.21        “Family Member” means a person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive relationships, of the 

 

A-3

 

Grantee, any person sharing the Grantee’s household (other than a tenant or employee), a trust in which any one or more of these persons have more than fifty percent (50%) of the beneficial interest, a foundation in which any one or more of these persons (or the Grantee) control the management of assets, and any other entity in which one or more of these persons (or the Grantee) own more than fifty percent (50%) of the voting interests.

 

2.22        “Good Reason” means, unless defined otherwise in a Service Provider’s Award Agreement or employment, consulting or services agreement with the Company or an Affiliate (in which case such definition shall control), as determined by the Committee (i) a material adverse change to the Service Provider’s title or responsibilities; (ii) a material reduction in the Service Provider’s annual base salary or annual target bonus opportunity; or (iii) the relocation of the Service Provider’s principal place of employment to a location more than 35 miles from the Service Provider’s principal place of employment or the Company’s requiring the Service Provider to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Service Provider’s business travel obligations as of immediately prior to the Change in Control; provided, however, that the Service Provider must provide written notice to the Company of the condition that could constitute a “Good Reason” event within ninety (90) days of the initial existence of such condition, such condition must not have been remedied by the Company within thirty (30) days of such written notice, and the termination must occur within ninety (90) days after such failure to remedy the event.

 

2.23        “Grant Date” means, as determined by the Committee, the latest to occur of (i) the date as of which the Company completes the action constituting the Award, (ii) the date on which the recipient of an Award first becomes eligible to receive an Award under Section 6, or (iii) such other date as may be specified by the Committee.

 

2.24        “Grantee” means a natural person who receives or holds an Award under the Plan.

 

2.25        “Incentive Stock Option” means an “incentive stock option” within the meaning of Code Section 422, or the corresponding provision of any subsequently enacted tax statute, as amended from time to time.

 

2.26        “Long-Term Incentive Unit” or “LTIP Unit” means an Award under Section 15 of an interest in the operating partnership affiliated with the Company.

 

2.27        “Non-Qualified Stock Option” means an Option that is not an Incentive Stock Option.

 

2.28        “Option” means an option to purchase one or more Shares pursuant to the Plan.

 

2.29        “Option Price” means the exercise price for each Share subject to an Option.

 

2.30        “Other Agreement” shall have the meaning set forth in Section 16.

 

2.31        “Other Equity-Based Award” means a right or other interest that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, other than an Option, Stock Appreciation Right, Restricted Stock, Unrestricted Stock, Stock Unit, Dividend Equivalent Right, Performance Award or Annual Incentive Award.

 

2.32        “Outside Director” means a member of the Board who is not an officer or employee of the Company.

 

2.33        “Performance Award” means an Award made subject to the attainment of performance goals (as described in Section 14) over a Performance Period of up to ten (10) years.

 

2.34        “Performance-Based Compensation” means compensation under an Award that is intended to satisfy the requirements of Code Section 162(m) for “qualified performance-based compensation” paid to Covered Employees. Notwithstanding the foregoing, nothing in the Plan shall be construed to mean 

 

A-4

 

that an Award which does not satisfy the requirements for “qualified performance-based compensation” under Code Section 162(m) does not constitute performance-based compensation for other purposes, including for purposes of Code Section 409A.

 

2.35        “Performance Measures” means measures as described in Section 14 on which the performance goals are based and which have been approved by the Company’s stockholders pursuant to the Plan in order to qualify Awards as Performance-Based Compensation.

 

2.36        “Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.

 

2.37        “Plan” means this Farmland Partners Inc. 2014 Equity Incentive Plan, as amended from time to time.

 

2.38        “Purchase Price” means the purchase price for each Share pursuant to a grant of Restricted Stock, Stock Units or Unrestricted Stock.

 

2.39        “Restatement Effective Date” means May 3, 2017, the date the second amendment and restatement of the Plan was approved by the stockholders of the Company.

 

2.40        “Restricted Stock” means Shares awarded to a Grantee pursuant to Section 10.

 

2.41        “SAR Exercise Price” means the per share exercise price of a SAR granted to a Grantee under Section 9.

 

2.42        “Securities Act” means the Securities Act of 1933, as now in effect or as hereafter amended.

 

2.43        “Service” means service as a Service Provider to the Company or any Affiliate. Unless otherwise stated in the applicable Award Agreement, a Grantee’s change in position or duties shall not result in interrupted or terminated Service, so long as such Grantee continues to be a Service Provider to the Company or any Affiliate. Subject to the preceding sentence, whether a termination of Service shall have occurred for purposes of the Plan shall be determined by the Committee, which determination shall be final, binding and conclusive. Notwithstanding any other provision to the contrary, for any individual providing services solely as a director, only service to the Company or any of its Subsidiaries constitutes Service. Except as may otherwise be required to comply with Code Section 409A, if the Service Provider’s employment or other service relationship is with an Affiliate and that entity ceases to be an Affiliate, a termination of Service shall be deemed to have occurred when the entity ceases to be an Affiliate unless the Service Provider transfers his or her employment or other service relationship to the Company or its remaining Affiliates.

 

2.44        “Service Provider” means an employee, officer, director, or a consultant or adviser (who is a natural person) providing services to the Company or any of its Affiliates.

 

2.45        “Share” means a share of Common Stock.

 

2.46        “Stock Appreciation Right” or “SAR” means a right granted to a Grantee under Section 9.

 

2.47        “Stock Units” means a bookkeeping entry representing the equivalent of one Share awarded to a Grantee pursuant to Section 10.

 

2.48        “Stock Exchange” means the New York Stock Exchange or another established national or regional stock exchange.

 

2.49        “Subsidiary” means any “subsidiary corporation” of the Company within the meaning of Code Section 424(f).

 

2.50        “Substitute Award” means an Award granted upon assumption of, or in substitution for, outstanding awards previously granted by a company or other entity acquired by the Company or an Affiliate or with which the Company or an Affiliate combines.

 

A-5

 

2.51        “Ten Percent Stockholder” means an individual who owns more than ten percent (10%) of the total combined voting power of all classes of outstanding voting securities of the Company, its parent or any of its Subsidiaries. In determining Share ownership, the attribution rules of Code Section 424(d) shall be applied.

 

2.52        “Unrestricted Stock” shall have the meaning set forth in Section 11.

 

Unless the context otherwise requires, all references in the Plan to “including” shall mean “including without limitation.”

 

References in the Plan to any Code Section shall be deemed to include, as applicable, regulations promulgated under such Code Section.

 

3.                                      ADMINISTRATION OF THE PLAN

 

3.1          Committee.

 

The Plan shall be administered by the Committee, constituted as follows:

 

(i)            The Committee will consist of the Compensation Committee of the Board or, in the absence of a Compensation Committee, the Board or such committee as the Board shall select. Once appointed, the Committee will serve in its designated capacity until otherwise directed by the Board. The Board may increase the size of the Committee and appoint additional members, remove members (with or without cause) and substitute new members, fill vacancies (however caused), or remove all members of the Committee and thereafter directly administer the Plan. Notwithstanding the foregoing, unless the Board determines otherwise, at any time that the Company Shares are registered pursuant to Section 12 of the Exchange Act, the Plan will be administered only by a committee consisting of no fewer than two directors of the Company, each of whom is (A) a “non-employee director” within the meaning of Rule 16b-3 (or any successor rule) of the Exchange Act, (B) an “outside director” within the meaning of Section 162(m)(4)(C)(i) of the Code, and (C) an “independent director” for purpose of the rules and regulations of the Stock Exchange or quotation system on which the Shares are principally traded; provided, however, the failure of the Committee to be composed solely of individuals who are “non-employee directors,” “outside directors,” and “independent directors” shall not render ineffective or void any Awards made by, or other actions taken by, such Committee.

 

(ii)           The Plan may be administered by different bodies with respect to different Grantees.

 

(iii)          Decisions of the Committee shall be final, conclusive and binding on all persons or entities, including the Company, any Grantee, any stockholder and any employee or any Affiliate. A majority of the members of the Committee may determine its actions and fix the time and place of its meetings.

 

(iv)          The Committee may delegate to a committee of one or more Directors of the Company or, to the extent permitted by Applicable Law, to one or more officers or a committee of officers, the authority to grant Awards to employees and officers of the Company and its Affiliates who are not directors, Covered Employees, or “officers,” as such term is defined by Rule 16a-1(f) of the Exchange Act.

 

3.2          Terms of Awards.

 

Subject to the other terms and conditions of the Plan, the Committee shall have full and final authority to:

 

(i)            designate Grantees;

 

(ii)           determine the type or types of Awards to be made to a Grantee;

 

A-6

 

(iii)          determine the number of Shares to be subject to an Award;

 

(iv)          establish the terms and conditions of each Award (including, but not limited to, the exercise price of any Option, the nature and duration of any restriction or condition (or provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award or the Shares subject thereto, the treatment of an Award in the event of a Change in Control, and any terms or conditions that may be necessary to qualify Options as Incentive Stock Options);

 

(v)           prescribe the form of each Award Agreement evidencing an Award;

 

(vi)          interpret and administer the Plan and any instrument or agreement entered into under or in connection with the Plan, including any Award Agreement;

 

(vii)         correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent that the Committee shall deem desirable to carry it into effect;

 

(viii)        establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan;

 

(ix)          amend, modify, or reprice (except as such practice is prohibited by Section 3.4 herein) the terms of any outstanding Award; and

 

(x)           make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan.

 

Such authority specifically includes the authority, in order to effectuate the purposes of the Plan but without amending the Plan, to make or modify Awards to eligible individuals who are foreign nationals or are individuals who are employed outside the United States to recognize differences in local law, tax policy, or custom. Notwithstanding the foregoing, no amendment, modification or supplement of any Award shall, without the consent of the Grantee, impair the Grantee’s rights under such Award.

 

3.3          Forfeiture; Recoupment.

 

The Company may reserve the right in an Award Agreement to cause a forfeiture of the gain realized by a Grantee with respect to an Award thereunder on account of actions taken by, or failed to be taken by, such Grantee in violation or breach of or in conflict with any (a) employment agreement, (b) non-competition agreement, (c) agreement prohibiting solicitation of employees or clients of the Company or any Affiliate, (d) confidentiality obligation with respect to the Company or any Affiliate, or (e) other agreement, as and to the extent specified in such Award Agreement. The Company may annul an outstanding Award if the Grantee thereof is an employee and is terminated for Cause as defined in the Plan or the applicable Award Agreement or for “cause” as defined in any other agreement between the Company or any Affiliate and such Grantee, as applicable.

 

If the Company adopts a “clawback” or recoupment policy, any Award will be subject to repayment to the Company to the extent so provided under the terms of such policy. Such policy may authorize the Company to recover from a Grantee incentive-based compensation (including Options awarded as compensation) awarded to or received by such Grantee during a period of up to three (3) years, as determined by the Committee, preceding the date on which the Company is required to prepare an accounting restatement due to material noncompliance by the Company, as a result of misconduct, with any financial reporting requirement under the federal securities laws. In addition, notwithstanding the foregoing, such policy may otherwise authorize the Company to recover from a Grantee any amounts or awards as may in the future be prescribed by the rules and regulations of the Securities and Exchange Commission and/or the primary stock exchange on which the Shares are listed, if any.

 

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3.4          No Repricing.

 

Except for adjustments to Options or SARs contemplated by Section 18, the Company may not, without obtaining stockholder approval: (a) amend the terms of outstanding Options or SARs to reduce the Option Price or SAR Exercise Price of such outstanding Options or SARs; (b) cancel outstanding Options or SARs in exchange for or substitution of Options or SARs with an Option Price or SAR Exercise Price that is less than the exercise price of the original Options or SARs; (c) cancel outstanding Options or SARs with an Option Price or SAR Exercise Price above the current Fair Market Value of a Share in exchange for cash or other securities; or (d) take any other action with respect to Options or SARS that would be treated as a repricing under the Stock Exchange or quotation system on which the Shares are principally traded.

 

3.5          Deferral Arrangement.

 

The Committee may permit or require the deferral of any award payment into a deferred compensation arrangement, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest or Dividend Equivalent Rights and, in connection therewith, provisions for converting such credits into Stock Units and for restricting deferrals to comply with hardship distribution rules affecting tax-qualified retirement plans subject to Code Section 401(k)(2)(B)(IV), provided that no Dividend Equivalent Rights may be granted in connection with, or related to, an Award of Options or SARs. Any such deferrals shall be made in a manner that complies with Code Section 409A.

 

3.6          No Liability.

 

No member of the Board or the Committee (or any other person to whom administrative authority has been delegated hereunder) shall be liable for any action or determination made in good faith with respect to the Plan or any Award or Award Agreement.

 

3.7          Share Issuance/Book-Entry.

 

Notwithstanding any provision of the Plan to the contrary, the issuance of the Shares under the Plan may be evidenced in such a manner as the Committee, in its discretion, deems appropriate, including, without limitation, book-entry or direct registration or issuance of one or more share certificates.

 

4.                                      SHARES SUBJECT TO THE PLAN

 

4.1          Number of Shares Available for Awards.

 

Subject to adjustment as provided in Section 18, the aggregate number of Shares available for issuance under this Plan (including pursuant to Incentive Stock Options) shall be 1,265,851. Shares issued or to be issued under the Plan shall be authorized but unissued shares or treasury Shares or any combination of the foregoing, as may be determined from time to time by the Board or by the Committee.

 

4.2          Adjustments in Authorized Shares.

 

The Committee shall have the right to substitute or assume Awards in connection with mergers, reorganizations, separations, or other transactions to which Code Section 424(a) applies. The number of Shares reserved pursuant to Section 4 shall be increased by the corresponding number of awards assumed and, in the case of a substitution, by the net increase in the number of Shares subject to awards before and after the substitution. Available shares under a stockholder approved plan of an acquired company (as appropriately adjusted to reflect the transaction) may be used for Awards under the Plan and do not reduce the number of Shares available under the Plan, subject to requirements of the Stock Exchange on which the Shares are listed.

 

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4.3          Share Usage.

 

Shares covered by an Award shall be counted as used as of the Grant Date. Any Shares that are subject to Awards shall be counted against the limit set forth in Section 4.1 as one (1) Share for every one (1) Share subject to an Award. With respect to SARs, the number of Shares subject to an award of SARs will be counted against the aggregate number of Shares available for issuance under the Plan regardless of the number of Shares actually issued to settle the SAR upon exercise. If any Shares covered by an Award granted under the Plan are not purchased or are forfeited or expire, or if an Award otherwise terminates without delivery of any Shares subject thereto, then the number of Shares counted against the aggregate number of Shares available under the Plan with respect to such Award shall, to the extent of any such forfeiture, termination or expiration, again be available for making Awards under the Plan in the same amount as such Shares were counted against the limit set forth in Section 4.1. The number of Shares available for issuance under the Plan shall not be increased by (i) any Shares tendered or withheld or Award surrendered in connection with the purchase of Shares upon exercise of an Option as described in Section 12.2, (ii) any Shares deducted or delivered from an Award payment in connection with the Company’s tax withholding obligations as described in Section 19.3 or (iii) any Shares purchased by the Company with proceeds from option exercises.

 

5.                                      EFFECTIVE DATE, DURATION AND AMENDMENTS

 

5.1          Effective Date.

 

The Plan shall be effective as of the Effective Date.

 

5.2          Term.

 

The Plan first became effective on the Effective Date and was subsequently amended and restated effective as of May 5, 2015.The Plan was subsequently further amended and restated, subject to approval by the stockholders of the Company effective as of the Restatement Effective Date. The Plan shall continue in effect until the day immediately prior to the 10-year anniversary of the Restatement Effective Date, unless sooner terminated on any date as provided in Section 5.3 or extended with approval by the stockholders of the Company.

 

5.3          Amendment and Termination of the Plan.

 

The Board may, at any time and from time to time, amend, suspend, or terminate the Plan as to any Shares as to which Awards have not been made. An amendment shall be contingent on approval of the Company’s stockholders to the extent stated by the Board, required by Applicable Laws or required by the Stock Exchange on which the Shares are listed. No amendment will be made to the no-repricing provisions of Section 3.4 or the option pricing provisions of Section 8.1 without the approval of the Company’s stockholders. No amendment, suspension, or termination of the Plan shall, without the consent of the Grantee, impair rights or obligations under any Award theretofore awarded under the Plan.

 

6.                                      AWARD ELIGIBILITY AND LIMITATIONS

 

6.1          Service Providers and Other Persons.

 

Subject to this Section 6, Awards may be made under the Plan to: (i) any Service Provider, as the Committee shall determine and designate from time to time and (ii) any other individual whose participation in the Plan is determined to be in the best interests of the Company by the Committee.

 

6.2          Limitation on Shares Subject to Awards and Cash Awards.

 

During any time when the Company has a class of equity security registered under Section 12 of the Exchange Act and the transition period under Treasury Regulation Section 1.162-27(f)(2) has lapsed 

 

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or does not apply, Awards intended to qualify as Performance-Based Compensation shall be subject to the following limitations:

 

(i)            the maximum number of Shares subject to Options or SARs that can be granted under the Plan to any person eligible for an Award under Section 6 is One Million (1,000,000) Shares in a calendar year (for this purpose, tandem SARs/Options shall be treated as one Award);

 

(ii)           the maximum number of Shares that can be granted under the Plan, other than pursuant to Options or SARs, to any person eligible for an Award under Section 6 is One Million (1,000,000) Shares in a calendar year; and

 

(iii)          the maximum amount that may be paid as an Annual Incentive Award in a calendar year to any person eligible for an Award shall be Five Million Dollars ($5,000,000) and the maximum amount that may be paid pursuant to cash-settled Performance Award granted in a calendar year to any person eligible for an Award shall be Five Million Dollars ($5,000,000).

 

The preceding limitations in this Section 6.2 are subject to adjustment as provided in Section 18.

 

6.3          Non-Employee Director Limit

 

The combined maximum number of Shares and LTIP Units subject to Awards granted during a single calendar year to any non-employee Director, taken together with any cash fees paid during the calendar year in respect of the non-employee Director’s service as a member of the Board (including service as a member or chair of any regular committees of the Board), shall not exceed $500,000 in total value (calculating the value of any such Awards based on the grant date fair value of such Awards for financial reporting purposes). The Committee may make exceptions to this limit for a non-executive chair of the Board or, in extraordinary circumstances, for other individual directors, as the Committee may determine in its discretion, provided that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation.

 

6.4          Stand-Alone, Additional, Tandem and Substitute Awards.

 

Subject to Section 3.4, Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any award granted under another plan of the Company, any Affiliate, or any business entity to be acquired by the Company or an Affiliate, or any other right of a Grantee to receive payment from the Company or any Affiliate. Such additional, tandem, and substitute or exchange Awards may be granted at any time. Subject to Section 3.4, if an Award is granted in substitution or exchange for another Award, the Committee shall require the surrender of such other Award in consideration for the grant of the new Award. In addition, Awards may be granted in lieu of cash compensation, including in lieu of cash amounts payable under other plans of the Company or any Affiliate. Notwithstanding Section 8.1 and Section 9.1 but subject to Section 3.4, the Option Price of an Option or the SAR Exercise Price of an SAR that is a Substitute Award may be less than 100% of the Fair Market Value of a Share on the original date of grant; provided, that, the Option Price or grant price is determined in accordance with the principles of Code Section 424 and the regulations thereunder for any Incentive Stock Option and consistent with Code Section 409A for any other Option or SAR.

 

7.                                      AWARD AGREEMENT

 

Each Award granted pursuant to the Plan shall be evidenced by an Award Agreement, in such form or forms as the Committee shall from time to time determine. Award Agreements granted from time to time or at the same time need not contain similar provisions but shall be consistent with the terms of the Plan. Each Award Agreement evidencing an Award of Options shall specify whether such Options are intended to be Non-Qualified Stock Options or Incentive Stock Options, and in the absence of such specification such options shall be deemed Non-Qualified Stock Options.

 

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8.                                      TERMS AND CONDITIONS OF OPTIONS

 

8.1          Option Price.

 

The Option Price of each Option shall be fixed by the Committee and stated in the Award Agreement evidencing such Option. Except in the case of Substitute Awards, the Option Price of each Option shall be at least the Fair Market Value of a Share on the Grant Date; provided, however, that in the event that a Grantee is a Ten Percent Stockholder, the Option Price of an Option granted to such Grantee that is intended to be an Incentive Stock Option shall be not less than one hundred ten percent (110%) of the Fair Market Value of a Share on the Grant Date. In no case shall the Option Price of any Option be less than the par value of a Share.

 

8.2          Vesting.

 

Subject to Sections 8.3 and 18.3, each Option granted under the Plan shall become exercisable at such times and under such conditions as shall be determined by the Committee and stated in the Award Agreement. For purposes of this Section 8.2, fractional numbers of Shares subject to an Option shall be rounded down to the next nearest whole number.

 

8.3          Term.

 

Each Option granted under the Plan shall terminate, and all rights to purchase Shares thereunder shall cease, upon the expiration of ten (10) years from the date such Option is granted, or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Committee and stated in the Award Agreement relating to such Option; provided, however, that in the event that the Grantee is a Ten Percent Stockholder, an Option granted to such Grantee that is intended to be an Incentive Stock Option shall not be exercisable after the expiration of five (5) years from its Grant Date.

 

8.4          Termination of Service.

 

Each Award Agreement shall set forth the extent to which the Grantee shall have the right to exercise the Option following termination of the Grantee’s Service. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.

 

8.5          Limitations on Exercise of Option.

 

Notwithstanding any other provision of the Plan, in no event may any Option be exercised, in whole or in part, prior to the date the Plan is approved by the stockholders of the Company as provided herein or after the occurrence of an event referred to in Section 18 which results in termination of the Option.

 

8.6          Method of Exercise.

 

Subject to the terms of Section 12 and Section 19.3, an Option that is exercisable may be exercised by the Grantee’s delivery to the Company of notice of exercise on any business day, at the Company’s principal office, on the form specified by the Company and in accordance with any additional procedures specified by the Committee. Subject to the terms of Section 12 and Section 19.3, such notice shall specify the number of Shares with respect to which the Option is being exercised and shall be accompanied by payment in full of the Option Price of the Shares for which the Option is being exercised plus the amount (if any) of federal and/or other taxes which the Company may, in its judgment, be required to withhold with respect to an Award.

 

8.7          Rights of Holders of Options.

 

Unless otherwise stated in the applicable Award Agreement, an individual or entity holding or exercising an Option shall have none of the rights of a stockholder (for example, the right to receive 

 

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cash or dividend payments or distributions attributable to the subject Shares or to direct the voting of the subject Shares or to receive notice of any meeting of the Company’s stockholders) until the Shares covered thereby are fully paid and issued to him. Except as provided in Section 18, no adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date of such issuance.

 

8.8          Delivery of Share Certificates.

 

Promptly after the exercise of an Option by a Grantee and the payment in full of the Option Price with respect thereto, such Grantee shall be entitled to receive such evidence of such Grantee’s ownership of the Shares subject to such Option as shall be consistent with Section 3.7.

 

8.9          Transferability of Options.

 

Except as provided in Section 8.10, during the lifetime of a Grantee, only the Grantee (or, in the event of legal incapacity or incompetency, the Grantee’s guardian or legal representative) may exercise an Option. Except as provided in Section 8.10, no Option shall be assignable or transferable by the Grantee to whom it is granted, other than by will or the laws of descent and distribution.

 

8.10        Family Transfers.

 

If authorized in the applicable Award Agreement or by the Committee, in its sole discretion, a Grantee may transfer, not for value, all or part of an Option which is not an Incentive Stock Option to any Family Member. For the purpose of this Section 8.10, a “not for value” transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic relations order in settlement of marital property rights; or (iii) unless Applicable Law does not permit such transfers, a transfer to an entity in which more than fifty percent (50%) of the voting interests are owned by Family Members (or the Grantee) in exchange for an interest in that entity. Following a transfer under this Section 8.10, any such Option shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, and Shares acquired pursuant to the Option shall be subject to the same restrictions on transfer of shares as would have applied to the Grantee. Subsequent transfers of transferred Options are prohibited except to Family Members of the original Grantee in accordance with this Section 8.10 or by will or the laws of descent and distribution. The events of termination of Service of Section 8.4 shall continue to be applied with respect to the original Grantee, following which the Option shall be exercisable by the transferee only to the extent, and for the periods specified, in Section 8.4.

 

8.11        Limitations on Incentive Stock Options.

 

An Option shall constitute an Incentive Stock Option only (i) if the Grantee of such Option is an employee of the Company or any Subsidiary of the Company; (ii) to the extent specifically provided in the related Award Agreement; and (iii) to the extent that the aggregate Fair Market Value (determined at the time the Option is granted) of the Shares with respect to which all Incentive Stock Options held by such Grantee become exercisable for the first time during any calendar year (under the Plan and all other plans of the Grantee’s employer and its Affiliates) does not exceed $100,000. Except to the extent provided in the regulations under Code Section 422, this limitation shall be applied by taking Options into account in the order in which they were granted.

 

8.12        Notice of Disqualifying Disposition.

 

If any Grantee shall make any disposition of Shares issued pursuant to the exercise of an Incentive Stock Option under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), such Grantee shall notify the Company of such disposition within ten (10) days thereof.

 

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9.                                      TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

 

9.1          Right to Payment and Grant Price.

 

A SAR shall confer on the Grantee to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one Share on the date of exercise over (B) the SAR Exercise Price as determined by the Committee. The Award Agreement for a SAR shall specify the SAR Exercise Price, which shall be at least the Fair Market Value of one (1) Share on the Grant Date. SARs may be granted in conjunction with all or part of an Option granted under the Plan or at any subsequent time during the term of such Option, in conjunction with all or part of any other Award or without regard to any Option or other Award; provided that a SAR that is granted subsequent to the Grant Date of a related Option must have a SAR Exercise Price that is no less than the Fair Market Value of one Share on the SAR Grant Date; and provided further that a Grantee may only exercise either the SAR or the Option with which it is granted in tandem and not both.

 

9.2          Other Terms.

 

The Committee shall determine on the Grant Date or thereafter, the time or times at which and the circumstances under which a SAR may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the time or times at which SARs shall cease to be or become exercisable following termination of Service or upon other conditions, the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which Shares will be delivered or deemed to be delivered to Grantees, whether or not a SAR shall be in tandem or in combination with any other Award, and any other terms and conditions of any SAR.

 

9.3          Term.

 

Each SAR granted under the Plan shall terminate, and all rights thereunder shall cease, upon the expiration of ten (10) years from the date such SAR is granted, or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Committee and stated in the Award Agreement relating to such SAR.

 

9.4          Transferability of SARS.

 

Except as provided in Section 9.5, during the lifetime of a Grantee, only the Grantee (or, in the event of legal incapacity or incompetency, the Grantee’s guardian or legal representative) may exercise a SAR. Except as provided in Section 9.5, no SAR shall be assignable or transferable by the Grantee to whom it is granted, other than by will or the laws of descent and distribution.

 

9.5          Family Transfers.

 

If authorized in the applicable Award Agreement and by the Committee, in its sole discretion, a Grantee may transfer, not for value, all or part of a SAR to any Family Member. For the purpose of this Section 9.5, a “not for value” transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic relations order in settlement of marital property rights; or (iii) unless Applicable Law does not permit such transfers, a transfer to an entity in which more than fifty percent (50%) of the voting interests are owned by Family Members (or the Grantee) in exchange for an interest in that entity. Following a transfer under this Section 9.5, any such SAR shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, and Shares acquired pursuant to a SAR shall be subject to the same restrictions on transfer or shares as would have applied to the Grantee. Subsequent transfers of transferred SARs are prohibited except to Family Members of the original Grantee in accordance with this Section 9.5 or by will or the laws of descent and distribution.

 

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10.                               TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS

 

10.1        Grant of Restricted Stock or Stock Units.

 

Awards of Restricted Stock or Stock Units may be made for consideration or no consideration. To the extent required by Applicable Law, Grantees will be required to pay the par value of the Shares; provided, however, that, to the extent permitted by Applicable Law, par value shall be deemed paid by past Service or, if so provided in the related Award Agreement or a separate agreement, the promise by the Grantee to perform future Service to the Company or an Affiliate of the Company).

 

10.2        Restrictions.

 

At the time a grant of Restricted Stock or Stock Units is made, the Committee may, in its sole discretion, establish a period of time (a “restricted period”) applicable to such Restricted Stock or Stock Units. Each Award of Restricted Stock or Stock Units may be subject to a different restricted period. The Committee may in its sole discretion, at the time a grant of Restricted Stock or Stock Units is made, prescribe restrictions in addition to or other than the expiration of the restricted period, including the satisfaction of corporate or individual performance objectives, which may be applicable to all or any portion of the Restricted Stock or Stock Units as described in Section 14, and which shall be set forth in the Award Agreement relating to such grant. Except as authorized by the Committee in writing, neither Restricted Stock nor Stock Units may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the restricted period or prior to the satisfaction of any other restrictions prescribed by the Committee with respect to such Restricted Stock or Stock Units.

 

10.3        Restricted Stock Certificates.

 

Pursuant to Section 3.7, to the extent that ownership of Restricted Stock is evidenced by a book-entry registration or direct registration, such registration shall be notated to evidence the restrictions imposed on such Award of Restricted Stock under the Plan and the applicable Award Agreement. Subject to Section 3.7 and the immediately following sentence, the Company may issue, in the name of each Grantee to whom Restricted Stock have been granted, share certificates representing the total number of Restricted Stock granted to the Grantee, as soon as reasonably practicable after the Grant Date. The Committee may provide in an Award Agreement that either (i) the Secretary of the Company shall hold such certificates for the Grantee’s benefit until such time as the shares of Restricted Stock are forfeited to the Company or the restrictions applicable thereto lapse and such Grantee shall deliver a stock power to the Company with respect to each certificate, or (ii) such certificates shall be delivered to the Grantee, provided, however, that such certificates shall bear a legend or legends that comply with the applicable securities laws and regulations and make appropriate reference to the restrictions imposed under the Plan and the Award Agreement.

 

10.4        Rights of Holders of Restricted Stock.

 

Unless the Committee otherwise provides in an Award Agreement, holders of Restricted Stock shall have the right to vote such Shares. Awards of Restricted Stock may provide for the right to receive any dividends declared or paid with respect to such Shares; provided, however, that to the extent such dividend rights are provided with respect to Restricted Stock that vests or is earned based upon the achievement of performance goals, dividends shall not be paid currently, but shall, instead, be paid (or, to the extent deemed reinvested into additional Shares of Restricted Stock, vest) only to the extent (and when) such Restricted Stock vests. The Award Agreement may provide that dividends are payable in cash or deemed reinvested in additional Shares of Restricted Stock at a price per Share equal to the Fair Market Value of a Share on the date that such dividend is paid. All distributions, if any, received by a Grantee with respect to Restricted Stock as a result of any stock split, extraordinary dividend, share dividend, combination of shares, or other similar transaction shall be subject to the restrictions applicable to the original Grant. Absent advance written consent by the Committee, holders of Restricted Stock may not make an election under Code Section 83(b) with regard to the grant of 

 

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Restricted Stock, and any holder who attempts to make such an election without first obtaining such consent shall forfeit the Restricted Stock.

 

10.5        Rights of Holders of Stock Units.

 

10.5.1     Voting and Dividend Equivalent Rights.

 

Holders of Stock Units shall have no rights as stockholders of the Company (for example, the right to receive cash or dividend payments or distributions attributable to the Shares subject to such Stock Units, to direct the voting of the Shares subject to such Stock Units, or to receive notice of any meeting of the Company’s stockholders); provided, however, that the Committee may provide in an Award Agreement evidencing a grant of Stock Units that the holder of such Stock Units shall be entitled to receive Dividend Equivalent Rights.

 

10.5.2     Creditor’s Rights.

 

A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Award Agreement.

 

10.6        Termination of Service.

 

Unless the Committee otherwise provides in an Award Agreement or in writing after the Award Agreement is issued, upon the termination of a Grantee’s Service, any Restricted Stock or Stock Units held by such Grantee that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed forfeited. Upon forfeiture of Restricted Stock or Stock Units, the Grantee shall have no further rights with respect to such Award, including but not limited to any right to vote Restricted Stock or any right to receive dividends with respect to Restricted Stock or Stock Units.

 

10.7        Delivery of Shares.

 

Upon the expiration or termination of any restricted period and the satisfaction of any other conditions prescribed by the Committee and set forth in the Award Agreement relating to such Restricted Stock or Stock Units, the restrictions applicable to Restricted Stock or Stock Units settled in Shares shall lapse, and, unless otherwise provided in the applicable Award Agreement, a book-entry or direct registration or a share certificate evidencing ownership of such Shares shall, consistent with Section 3.7, be issued, free of all such restrictions, to the Grantee or the Grantee’s beneficiary or estate, as the case may be. Neither the Grantee, nor the Grantee’s beneficiary or estate, shall have any further rights with regard to a Stock Unit once the Shares represented by the Stock Unit has been delivered.

 

11.                               TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS AND OTHER EQUITY-BASED AWARDS

 

The Committee may, in its sole discretion, grant (or sell) an Unrestricted Stock Award to any Grantee pursuant to which such Grantee may receive Shares free of any restrictions (“Unrestricted Stock”) under the Plan. Unrestricted Stock Awards may be granted or sold to any Grantee as provided in the immediately preceding sentence in respect of past or, if so provided in the related Award Agreement or a separate agreement, the promise by the Grantee to perform future Service to the Company or an Affiliate or other valid consideration, or in lieu of, or in addition to, any cash compensation due to such Grantee. To the extent required by Applicable Law, Grantees will be required to pay the par value of any Shares received pursuant to an Award; provided, however, that, to the extent permitted by Applicable Law, par value shall be deemed paid by past Service or, if so provided in the related Award Agreement or a separate agreement, the promise by the Grantee to perform future Service to the Company or an Affiliate of the Company).

 

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The Committee may, in its sole discretion, grant Awards to Grantees in the form of Other Equity-Based Awards, as deemed by the Committee to be consistent with the purposes of the Plan. Awards granted pursuant to this Section 11 may be granted with vesting, value and/or payment contingent upon the attainment of one or more performance goals. The Committee shall determine the terms and conditions of such Awards at the date of grant or thereafter. Unless the Committee otherwise provides in an Award Agreement or in writing after the Award Agreement is issued, upon the termination of a Grantee’s Service, any Other Equity-Based Awards held by such Grantee that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed forfeited. Upon forfeiture of Other Equity-Based Awards, the Grantee shall have no further rights with respect to such Award.

 

12.                               FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK

 

12.1        General Rule.

 

Payment of the Option Price for the Shares purchased pursuant to the exercise of an Option or the Purchase Price for Restricted Stock shall be made in cash or in cash equivalents acceptable to the Company.

 

12.2        Surrender of Shares.

 

To the extent the Award Agreement so provides, payment of the Option Price for Shares purchased pursuant to the exercise of an Option or the Purchase Price for Restricted Stock may be made all or in part through the tender or attestation to the Company of Shares, which shall be valued, for purposes of determining the extent to which the Option Price or Purchase Price has been paid thereby, at their Fair Market Value on the date of exercise or surrender, as applicable.

 

12.3        Cashless Exercise.

 

With respect to an Option only (and not with respect to Restricted Stock), to the extent permitted by law and to the extent the Award Agreement so provides, payment of the Option Price for Shares purchased pursuant to the exercise of an Option may be made all or in part (i) by delivery (on a form acceptable to the Committee) by the Grantee of an irrevocable direction to a licensed securities broker acceptable to the Company to sell Shares and to deliver all or part of the sales proceeds to the Company in payment of the Option Price and any withholding taxes described in Section 19.3, or, (ii) with the consent of the Company, by the Grantee electing to have the Company issue to Grantee only that the number of Shares equal in value to the difference between the Option Price and the Fair Market Value of the Shares subject to the portion of the Option being exercised.

 

12.4        Other Forms of Payment.

 

To the extent the Award Agreement so provides and/or unless otherwise specified in an Award Agreement, payment of the Option Price for Shares purchased pursuant to exercise of an Option or the Purchase Price for Restricted Stock may be made in any other form that is consistent with Applicable Laws, regulations and rules, including, without limitation, Service to the Company or an Affiliate or net exercise.

 

13.                               TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS

 

13.1        Dividend Equivalent Rights.

 

A Dividend Equivalent Right is an Award entitling the recipient to receive credits based on cash distributions that would have been paid on the Shares specified in the Dividend Equivalent Right (or other award to which it relates) if such Shares had been issued to and held by the recipient. A Dividend Equivalent Right may be granted hereunder to any Grantee, provided that no Dividend Equivalent Rights may be granted in connection with, or related to, an Award of Options or SARs, 

 

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and, provided, further, that to the extent such Dividend Equivalent Rights are provided with respect to an Award that vests or is earned based upon the achievement of performance goals, any dividend equivalent amounts shall not be paid currently, but shall, instead, be paid (or, to the extent deemed reinvested into additional Shares or Share-based Awards, issued) only to the extent such Award vest (with the Dividend Equivalent amount paid or issued, as the case may be, at the same time the cash is paid or Shares are issued at or after vesting of the Award). The terms and conditions of Dividend Equivalent Rights shall be specified in the Award Agreement. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid in cash or may be deemed to be reinvested in additional Shares or Share-based Awards, which may thereafter accrue additional dividend equivalents. Any such reinvestment shall be based on the Fair Market Value of a Share on the date the dividend was paid.

 

13.2        Termination of Service.

 

Except as may otherwise be provided by the Committee either in the Award Agreement or in writing after the Award Agreement is issued, a Grantee’s rights in all Dividend Equivalent Rights or interest equivalents shall automatically terminate upon the Grantee’s termination of Service for any reason.

 

14.                               TERMS AND CONDITIONS OF PERFORMANCE AWARDS AND ANNUAL INCENTIVE AWARDS

 

14.1        Grant of Performance Awards and Annual Incentive Awards.

 

Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Performance Awards and/or Annual Incentive Awards to a Plan participant in such amounts and upon such terms as the Committee shall determine.

 

14.2        Value of Performance Awards and Annual Incentive Awards.

 

Each Performance Award and Annual Incentive Award shall have an initial value that is established by the Committee at the time of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the value and/or number of Performance Awards that will be paid out to the Plan participant.

 

14.3        Earning of Performance Awards and Annual Incentive Awards.

 

Subject to the terms of the Plan, after the applicable Performance Period has ended, the holder of Performance Awards or Annual Incentive Awards shall be entitled to receive payout on the value and number of the Performance Awards or Annual Incentive Awards earned by the Plan participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.

 

14.4        Form and Timing of Payment of Performance Awards and Annual Incentive Awards.

 

Payment of earned Performance Awards and Annual Incentive Awards shall be as determined by the Committee and as evidenced in the Award Agreement. Subject to the terms of the Plan, the Committee, in its sole discretion, may pay earned Performance Awards in the form of cash or in Shares (or in a combination thereof) equal to the value of the earned Performance Awards at the close of the applicable Performance Period, or as soon as practicable after the end of the Performance Period; provided that, unless specifically provided in the Award Agreement pertaining to the grant of the Award, such payment shall occur no later than the 15th day of the third month following the end of the calendar year in which the Performance Period ends. Any Shares may be granted subject to any restrictions deemed appropriate by the Committee. The determination of the Committee with respect to the form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.

 

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14.5        Performance Conditions.

 

The right of a Grantee to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such performance conditions as may be specified by the Committee. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions.

 

14.6        Performance Awards or Annual Incentive Awards Granted to Designated Covered Employees.

 

If and to the extent that the Committee determines that a Performance or Annual Incentive Award to be granted to a Grantee who is designated by the Committee as likely to be a Covered Employee should qualify as “qualified performance-based compensation” for purposes of Code Section 162(m), the grant, exercise and/or settlement of such Award shall be contingent upon achievement of pre-established performance goals and other terms set forth in this Section 14.6.

 

14.6.1     Performance Goals Generally.

 

The performance goals for Performance or Annual Incentive Awards shall consist of one or more business criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with this Section 14.6. Performance goals applicable to Awards intended to qualify as Performance-Based Compensation shall be objective and shall otherwise meet the requirements of Code Section 162(m) and regulations thereunder including the requirement that the level or levels of performance targeted by the Committee result in the achievement of performance goals being “substantially uncertain.” The Committee may determine that such Awards shall be granted, exercised and/or settled upon achievement of any one performance goal or that two or more of the performance goals must be achieved as a condition to the grant, exercise and/or settlement of such Awards. Performance goals may differ for Awards granted to any one Grantee or to different Grantees.

 

14.6.2     Timing For Establishing Performance Goals.

 

Performance goals applicable to Awards intended to qualify as Performance-Based Compensation shall be established not later than the earlier of (i) 90 days after the beginning of any performance period applicable to such Awards and (ii) the day on which twenty-five percent (25%) of any performance period applicable to such Awards has expired, or at such other date as may be required or permitted for “qualified performance-based compensation” under Code Section 162(m).

 

14.6.3     Settlement of Awards; Other Terms.

 

Settlement of such Awards shall be in cash, Shares, other Awards or other property, in the discretion of the Committee. The Committee may, in its discretion, reduce the amount of a settlement otherwise to be made in connection with such Awards. The Committee shall specify the circumstances in which such Performance or Annual Incentive Awards shall be paid or forfeited in the event of termination of Service by the Grantee prior to the end of a performance period or settlement of Awards.

 

14.6.4     Performance Measures.

 

The performance goals upon which the payment or vesting of a Performance or Annual Incentive Award to a Covered Employee that is intended to qualify as Performance-Based Compensation shall be limited to the following Performance Measures, with or without adjustment:

 

(a)           funds from operations;

 

(b)           adjusted funds from operations;

 

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(c)           earnings before any one or more of the following: interest, taxes, depreciation, amortization and/or stock compensation;

 

(d)           operating (or gross) income or profit;

 

(e)           pretax income before allocation of corporate overhead and/or bonus;

 

(f)            operating efficiencies;

 

(g)           operating income as a percentage of net revenue;

 

(h)           return on equity, assets, capital, capital employed or investment;

 

(i)            after tax operating income;

 

(j)            net income;

 

(k)           earnings or book value per share;

 

(l)            financial ratios;

 

(m)          cash flow(s);

 

(n)           total rental income or revenues;

 

(o)           capital expenditures as a percentage of rental income;

 

(p)           total operating expenses, or some component or combination of components of total operating expenses, as a percentage of rental income;

 

(q)           stock price or total stockholder return, including any comparisons with stock market indices;

 

(r)            appreciation in or maintenance of the price of the common stock or any of our publicly-traded securities;

 

(s)            dividends;

 

(t)            debt or cost reduction;

 

(u)           comparisons with performance metrics of peer companies;

 

(v)           comparisons of our stock price performance to the stock price performance of peer companies;

 

(w)          strategic business objectives, consisting of one or more objectives based on meeting specified cost, acquisition or leasing targets, meeting or reducing budgeted expenditures, attaining division, group or corporate financial goals, meeting business expansion goals and meeting goals relating to leasing, acquisitions, joint ventures or collaborations or dispositions; economic value-added models; or

 

(x)           any combination of any of the foregoing.

 

Business criteria may be (but are not required to be) measured on a basis consistent with U.S. Generally Accepted Accounting Principles.

 

Any Performance Measure(s) may be expressed on an absolute and/or relative basis, may be based on or otherwise employ comparisons based on internal targets, the performance of the Company, Subsidiary, and/or Affiliate or past performance or the past performance of any of the Company, Subsidiary, and/or Affiliate, operating units, business segments or divisions and/or the past or current performance of other companies, and in the case of earnings based measures, may use or employ comparisons relating to capital, stockholders’ equity and/or shares outstanding, or to assets or net 

 

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assets, as the Committee may deem appropriate. The Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of performance goals pursuant to the Performance Measures specified in this Section 14.

 

14.6.5     Evaluation of Performance.

 

The Committee may provide in any such Award that any evaluation of performance may include or exclude any of the following events that occur during a Performance Period: (a) asset impairments or write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; (d) accruals for reorganization and restructuring programs; (e) any item that is either unusual or infrequent in nature, as determined in accordance with Accounting Standards Codification Topic 225-20 “Extraordinary and Unusual Items,” and/or as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing in the Company’s annual report to stockholders for the applicable year; (f) foreign exchange gains and losses, (g) the effect of adverse federal, governmental or regulatory action, or delays in federal, governmental or regulatory action; and (h) any other event either not directly related to operations or not within the reasonable control of management. To the extent such inclusions or exclusions affect Awards to Covered Employees that are intended to qualify as Performance-Based Compensation, they shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility.

 

14.6.6     Adjustment of Performance-Based Compensation.

 

Awards that are intended to qualify as Performance-Based Compensation may not be adjusted upward. The Committee shall retain the discretion to adjust such Awards downward, either on a formula or discretionary basis, or any combination as the Committee determines.

 

14.6.7     Board Discretion.

 

In the event that applicable tax and/or securities laws change to permit Board discretion to alter the governing Performance Measures without obtaining stockholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining stockholder approval provided the exercise of such discretion does not violate Code Sections 162(m) or 409A. In addition, in the event that the Committee determines that it is advisable to grant Awards that shall not qualify as Performance-Based Compensation, the Committee may make such grants without satisfying the requirements of Code Section 162(m) and base vesting on Performance Measures other than those set forth in Section 14.6.4.

 

14.7        Status of Awards Under Code Section 162(m).

 

It is the intent of the Company that Awards under Section 14.6 granted to persons who are designated by the Committee as likely to be Covered Employees within the meaning of Code Section 162(m) and regulations thereunder shall, if so designated by the Committee, constitute “qualified performance-based compensation” within the meaning of Code Section 162(m) and regulations thereunder. Accordingly, the terms of Section 14.6, including the definitions of Covered Employee and other terms used therein, shall be interpreted in a manner consistent with Code Section 162(m) and regulations thereunder. If any provision of the Plan or any agreement relating to such Awards does not comply or is inconsistent with the requirements of Code Section 162(m) or regulations thereunder, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements.

 

15.                               TERMS AND CONDITIONS OF LONG-TERM INCENTIVE UNITS

 

LTIP Units are intended to be profits interests in the operating partnership affiliated with the Company, if any (such operating partnership, if any, the “Operating Partnership”), the rights and 

 

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features of which, if applicable, will be set forth in the agreement of limited partnership for the Operating Partnership (the “Operating Partnership Agreement”). Subject to the terms and provisions of the Plan and the Operating Partnership Agreement, the Committee, at any time and from time to time, may grant LTIP Units to Plan participants in such amounts and upon such terms as the Committee shall determine. LTIP Units must be granted for service to the Operating Partnership. Each LTIP Unit awarded will be equivalent to an award of one Share for purposes of reducing the number of Shares available under the Plan on a one-for-one basis pursuant to Section 4.3.

 

15.1        Vesting.

 

Subject to Section 18, each LTIP Unit granted under the Plan shall vest at such times and under such conditions as shall be determined by the Committee and stated in the Award Agreement.

 

16.                               PARACHUTE LIMITATIONS

 

Unless the Grantee is party to a written agreement or other legally enforceable contract that expressly addresses Code Section 280G or Code Section 4999 (in which case, the provisions in such agreement or contract relating to Code Section 280G and Code Section 4999 shall control and the provisions in this Section 16 shall not be applicable to the Grantee), if the Grantee is a “disqualified individual,” as defined in Code Section 280G(c), then, notwithstanding any other provision of the Plan or of any other agreement, contract, or understanding heretofore or hereafter entered into by a Grantee with the Company or an Affiliate (an “Other Agreement”) providing any right to exercise, vesting, payment or benefit, and notwithstanding any formal or informal plan or other arrangement for the direct or indirect provision of compensation to the Grantee (including groups or classes of Grantees or beneficiaries of which the Grantee is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Grantee (a “Benefit Arrangement”), any right to exercise, vesting, payment or benefit to the Grantee under the Plan shall be reduced or eliminated:

 

(i)            to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for the Grantee under the Plan, all Other Agreements, and all Benefit Arrangements, would cause any exercise, vesting, payment or benefit to the Grantee under the Plan to be considered a “parachute payment” within the meaning of Code Section 280G(b)(2) as then in effect (a “Parachute Payment”) and

 

(ii)           if, as a result of receiving such Parachute Payment, the aggregate after-tax amounts received by the Grantee from the Company under the Plan, all Other Agreements, and all Benefit Arrangements would be less than the maximum after-tax amount that could be received by the Grantee without causing any such payment or benefit to be considered a Parachute Payment.

 

The Company shall accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of Performance Awards, then by reducing or eliminating any accelerated vesting of Options or SARs, then by reducing or eliminating any accelerated vesting of Restricted Stock or Stock Units, then by reducing or eliminating any other remaining Parachute Payments.

 

17.                               REQUIREMENTS OF LAW

 

17.1        General.

 

No participant in the Plan will be permitted to acquire, or will have any right to acquire, Shares thereunder if such acquisition would be prohibited by any share ownership limits contained in charter or bylaws or would impair the Company’s status as a REIT. The Company shall not be required to offer, sell or issue any Shares under any Award if the offer, sale or issuance of such Shares would 

 

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constitute a violation by the Grantee, any other individual or entity exercising an Option, or the Company or an Affiliate of any provision of any law or regulation of any governmental authority, including without limitation any federal or state securities laws or regulations. If at any time the Company shall determine, in its discretion, that the offering, listing, registration or qualification of any Shares subject to an Award upon any securities exchange or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance or purchase of Shares hereunder, no Shares may be offered, issued or sold to the Grantee or any other individual or entity exercising an Option pursuant to such Award unless such offering, listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the date of termination of the Award. Without limiting the generality of the foregoing, in connection with the Securities Act, upon the exercise of any Option or any SAR that may be settled in Shares or the delivery of any Shares underlying an Award, unless a registration statement under such Act is in effect with respect to the Shares covered by such Award, the Company shall not be required to offer, sell or issue such Shares unless the Committee has received evidence satisfactory to it that the Grantee or any other individual or entity exercising an Option or SAR or accepting delivery of such Shares may acquire such Shares pursuant to an exemption from registration under the Securities Act. Any determination in this connection by the Committee shall be final, binding, and conclusive. The Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the Securities Act. The Company shall not be obligated to take any affirmative action in order to cause the exercise of an Option or a SAR or the issuance of Shares pursuant to the Plan to comply with any Applicable Laws. As to any jurisdiction that expressly imposes the requirement that an Option (or SAR that may be settled in Shares) shall not be exercisable until the Shares covered by such Option (or SAR) are registered under the securities laws thereof or are exempt from such registration, the exercise of such Option (or SAR) under circumstances in which the laws of such jurisdiction apply shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption.

 

17.2        Rule 16b-3.

 

During any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, it is the intent of the Company that Awards pursuant to the Plan and the exercise of Options and SARs granted hereunder that would otherwise be subject to Section 16(b) of the Exchange Act will qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the extent that any provision of the Plan or action by the Committee does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative with respect to such Awards to the extent permitted by Applicable Law and deemed advisable by the Committee, and shall not affect the validity of the Plan. In the event that Rule 16b-3 is revised or replaced, the Board may exercise its discretion to modify the Plan in any respect necessary to satisfy the requirements of, or to take advantage of any features of, the revised exemption or its replacement.

 

18.                               EFFECT OF CHANGES IN CAPITALIZATION

 

18.1        Changes in Shares.

 

If the number of outstanding Shares is increased or decreased or the Shares are changed into or exchanged for a different number or kind of Shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse stock split, spin-off, combination of share, exchange of shares, share dividend or other distribution payable in capital shares, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Effective Date, the number and kinds of shares for which grants of Options and other Awards may be made under the Plan, including, without limitation, the limits set forth in Section 6.2, shall be adjusted proportionately and accordingly by the Company in a manner deemed equitable by the Committee. In addition, the number and kind of shares for which Awards are outstanding shall be adjusted 

 

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proportionately and accordingly so that the proportionate interest of the Grantee immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment in outstanding Options or SARs shall not change the aggregate Option Price or SAR Exercise Price payable with respect to shares that are subject to the unexercised portion of an outstanding Option or SAR, as applicable, but shall include a corresponding proportionate adjustment in the Option Price or SAR Exercise Price per share. The conversion of any convertible securities of the Company shall not be treated as an increase in shares effected without receipt of consideration. Notwithstanding the foregoing, in the event of any distribution to the Company’s stockholders of securities of any other entity or other assets (including an extraordinary dividend but excluding a non-extraordinary dividend of the Company) without receipt of consideration by the Company, the Company shall, in such manner as the Company deems appropriate, adjust (i) the number and kind of shares subject to outstanding Awards and/or (ii) the exercise price of outstanding Options and Stock Appreciation Rights to reflect such distribution.

 

18.2        Reorganization in Which the Company Is the Surviving Entity Which Does not Constitute a Change in Control.

 

Subject to Section 18.3, if the Company shall be the surviving entity in any reorganization, merger, or consolidation of the Company with one or more other entities which does not constitute a Change in Control, any Option or SAR theretofore granted pursuant to the Plan shall pertain to and apply to the securities to which a holder of the number of Shares subject to such Option or SAR would have been entitled immediately following such reorganization, merger, or consolidation, with a corresponding proportionate adjustment of the Option Price or SAR Exercise Price per share so that the aggregate Option Price or SAR Exercise Price thereafter shall be the same as the aggregate Option Price or SAR Exercise Price of the Shares remaining subject to the Option or SAR immediately prior to such reorganization, merger, or consolidation. Subject to any contrary language in an Award Agreement evidencing an Award, or in another agreement with the Grantee, or otherwise set forth in writing, any restrictions applicable to such Award shall apply as well to any replacement shares received by the Grantee as a result of the reorganization, merger or consolidation. In the event of a transaction described in this Section 18.2, Performance Awards shall be adjusted (including any adjustment to the Performance Measures applicable to such Awards deemed appropriate by the Committee) so as to apply to the securities that a holder of the number of Shares subject to the Performance Awards would have been entitled to receive immediately following such transaction.

 

18.3        Change in Control in which Awards are not Assumed.

 

Except as otherwise provided in the applicable Award Agreement or in another agreement with the Grantee, or as otherwise set forth in writing, upon the occurrence of a Change in Control in which outstanding Options, SARs, Stock Units, Dividend Equivalent Rights, Restricted Stock, LTIP Units or other Equity-Based Awards are not being assumed or continued:

 

(i)            in each case with the exception of any Performance Award, all outstanding Restricted Stock and LTIP Units shall be deemed to have vested, all Stock Units shall be deemed to have vested and the Shares subject thereto shall be delivered, and all Dividend Equivalent Rights shall be deemed to have vested and the Shares subject thereto shall be delivered, immediately prior to the occurrence of such Change in Control, and

 

(ii)           either of the following two actions shall be taken:

 

(A)          fifteen (15) days prior to the scheduled consummation of a Change in Control, all Options and SARs outstanding hereunder shall become immediately exercisable and shall remain exercisable for a period of fifteen (15) days, or

 

(B)          the Committee may elect, in its sole discretion, to cancel any outstanding Awards of Options, Restricted Stock, Stock Units, and/or SARs and pay or deliver, or cause to be paid 

 

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or delivered, to the holder thereof an amount in cash or securities having a value (as determined by the Committee acting in good faith), in the case of Restricted Stock or Stock Units, equal to the formula or fixed price per share paid to holders of Shares and, in the case of Options or SARs, equal to the product of the number of Shares subject to the Option or SAR (the “Award Shares”) multiplied by the amount, if any, by which (I) the formula or fixed price per share paid to holders of Shares pursuant to such transaction exceeds (II) the Option Price or SAR Exercise Price applicable to such Award Shares.

 

(iii)          for Performance Awards denominated in Shares, Stock Units or LTIP Units, if less than half of the Performance Period has lapsed, the Awards shall be converted into Restricted Stock or Stock Units assuming target performance has been achieved (or Unrestricted Stock if no further restrictions apply). If more than half the Performance Period has lapsed, the Awards shall be converted into Restricted Stock or Stock Units based on actual performance to date (or Unrestricted Stock if no further restrictions apply). If actual performance is not determinable, then Performance Awards shall be converted into Restricted Stock or Stock Units assuming target performance has been achieved, based on the discretion of the Committee (or Unrestricted Stock if no further restrictions apply).

 

(iv)          Other-Equity Based Awards shall be governed by the terms of the applicable Award Agreement.

 

With respect to the Company’s establishment of an exercise window, (i) any exercise of an Option or SAR during such fifteen (15)-day period shall be conditioned upon the consummation of the event and shall be effective only immediately before the consummation of the event, and (ii) upon consummation of any Change in Control, the Plan and all outstanding but unexercised Options and SARs shall terminate. The Committee shall send notice of an event that will result in such a termination to all individuals and entities that hold Options and SARs not later than the time at which the Company gives notice thereof to its stockholders.

 

18.4        Change in Control in which Awards are Assumed.

 

Except as otherwise provided in the applicable Award Agreement or in another agreement with the Grantee, or as otherwise set forth in writing, upon the occurrence of a Change in Control in which outstanding Awards are being assumed or continued, the following provisions shall apply to such Award, to the extent assumed or continued:

 

The Plan, Options, SARs, Stock Units, Restricted Stock and Other Equity-Based Awards theretofore granted shall continue in the manner and under the terms so provided in the event of any Change in Control to the extent that provision is made in writing in connection with such Change in Control for the assumption or continuation of the Options, SARs, Stock Units, Restricted Stock and Other Equity-Based Awards theretofore granted, or for the substitution for such Options, SARs, Stock Units, Restricted Stock and Other Equity-Based Awards for new common stock options and stock appreciation rights and new common stock units, restricted stock and other equity-based awards relating to the stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number of shares (disregarding any consideration that is not common stock) and option and stock appreciation rights exercise prices.

 

18.5        Adjustments

 

Adjustments under this Section 18 related to Shares or securities of the Company shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share. The Committee shall determine the effect of a Change in Control upon Awards other than Options, SARs, Stock Units and Restricted Stock, and such effect shall be set forth in the 

 

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appropriate Award Agreement. The Committee may provide in the Award Agreements at the time of grant, or any time thereafter with the consent of the Grantee, for different provisions to apply to an Award in place of those described in Sections 18.1, 18.2, 18.3 and 18.4. This Section 18 does not limit the Company’s ability to provide for alternative treatment of Awards outstanding under the Plan in the event of change in control events that do not constitute a Change in Control.

 

18.6        No Limitations on Company.

 

The making of Awards pursuant to the Plan shall not affect or limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all or any part of its business or assets (including all or any part of the business or assets of any Subsidiary or other Affiliate) or engage in any other transaction or activity.

 

19.                               GENERAL PROVISIONS

 

19.1        Disclaimer of Rights.

 

No provision in the Plan or in any Award or Award Agreement shall be construed to confer upon any individual or entity the right to remain in the employ or Service of the Company or an Affiliate, or to interfere in any way with any contractual or other right or authority of the Company or an Affiliate either to increase or decrease the compensation or other payments to any individual or entity at any time, or to terminate any employment or other relationship between any individual or entity and the Company or an Affiliate. In addition, notwithstanding anything contained in the Plan to the contrary, unless otherwise stated in the applicable Award Agreement, in another agreement with the Grantee, or otherwise in writing, no Award granted under the Plan shall be affected by any change of duties or position of the Grantee, so long as such Grantee continues to provide Service. The obligation of the Company to pay any benefits pursuant to the Plan shall be interpreted as a contractual obligation to pay only those amounts described herein, in the manner and under the conditions prescribed herein. The Plan and Awards shall in no way be interpreted to require the Company to transfer any amounts to a third party trustee or otherwise hold any amounts in trust or escrow for payment to any Grantee or beneficiary under the terms of the Plan.

 

19.2        Nonexclusivity of the Plan.

 

Neither the adoption of the Plan nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations upon the right and authority of the Company to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or specifically to a particular individual or particular individuals) as it may determine to be desirable.

 

19.3        Withholding Taxes.

 

The Company or an Affiliate, as the case may be, shall have the right to deduct from payments of any kind otherwise due to a Grantee any federal, state, or local taxes of any kind required by law to be withheld with respect to the vesting of or other lapse of restrictions applicable to an Award or upon the issuance of any Shares upon the exercise of an Option or pursuant to an Award. At the time of such vesting, lapse, or exercise, the Grantee shall pay in cash to the Company or an Affiliate, as the case may be, any amount that the Company or an Affiliate may reasonably determine to be necessary to satisfy such withholding obligation; provided, that if there is a same-day sale of Shares subject to an Award, the Grantee shall pay such withholding obligation on the day on which such same-day sale is completed. Subject to the prior approval of the Company or an Affiliate, which may be withheld by the Company or an Affiliate, as the case may be, in its sole discretion, the Grantee may elect to satisfy such obligations, in whole or in part, (i) by causing the Company or an Affiliate to withhold Shares otherwise issuable to the Grantee or (ii) by delivering to the Company or an Affiliate Shares already 

 

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owned by the Grantee. The Shares so delivered or withheld shall have an aggregate Fair Market Value equal to such withholding obligations. The Fair Market Value of the Shares used to satisfy such withholding obligation shall be determined by the Company or an Affiliate as of the date that the amount of tax to be withheld is to be determined. A Grantee who has made an election pursuant to this Section 19.3 may satisfy his or her withholding obligation only with Shares that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements. The maximum number of Shares that may be withheld from any Award to satisfy any federal, state or local tax withholding requirements upon the exercise, vesting, lapse of restrictions applicable to such Award or payment of Shares pursuant to such Award, as applicable, cannot exceed such number of Shares having a Fair Market Value equal to the maximum statutory amount required by the Company or an Affiliate to be withheld and paid to any such federal, state or local taxing authority with respect to such exercise, vesting, lapse of restrictions or payment of Shares, or such lesser amount as the Company may specify or as may be necessary to avoid adverse accounting treatment. Notwithstanding Section 2.20 or this Section 19.3, for purposes of determining taxable income and the amount of the related tax withholding obligation pursuant to this Section 19.3, for any Shares subject to an Award that are sold by or on behalf of a Grantee on the same date on which such shares may first be sold pursuant to the terms of the related Award Agreement, the Fair Market Value of such shares shall be the sale price of such shares on such date (or if sales of such shares are effectuated at more than one sale price, the weighted average sale price of such shares on such date), so long as such Grantee has provided the Company or an Affiliate, or its designee or agent, with advance written notice of such sale.

 

19.4        Captions.

 

The use of captions in the Plan or any Award Agreement is for the convenience of reference only and shall not affect the meaning of any provision of the Plan or such Award Agreement.

 

19.5        Other Provisions.

 

Each Award granted under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion.

 

19.6        Number and Gender.

 

With respect to words used in the Plan, the singular form shall include the plural form, the masculine gender shall include the feminine gender, etc., as the context requires.

 

19.7        Severability.

 

If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.

 

19.8        Governing Law.

 

The validity and construction of the Plan and the instruments evidencing the Awards hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of Maryland, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan and the instruments evidencing the Awards granted hereunder to the substantive laws of any other jurisdiction.

 

19.9        Code Section 409A.

 

The Company intends to comply with Code Section 409A, or an exemption to Code Section 409A, with regard to Awards hereunder that constitute deferred compensation within the meaning of Code Section 409A, and the Plan and all Award Agreements shall be interpreted accordingly. To the extent that the Company determines that a Grantee would be subject to the additional twenty percent (20%) 

 

A-26

 

tax imposed on certain nonqualified deferred compensation plans pursuant to Code Section 409A as a result of any provision of any Award granted under the Plan, such provision shall be deemed amended to the minimum extent necessary to avoid application of such additional tax. The nature of any such amendment shall be determined by the Board. Notwithstanding anything to the contrary in this Plan or any Award Agreement, if a Grantee is deemed on the date of the Grantee’s termination of employment to be a “specified employee” within the meaning of Code Section 409A(a)(2)(B), then, to the extent required by Code Section 409A, any payment or the provision of any benefit pursuant to an Award that is considered deferred compensation under Code Section 409A and that is payable on account of such Grantee’s “separation from service” shall not be made or provided until the date which is the earlier of (i) the expiration of the six (6)-month period measured from the date of such “separation from service,” and (ii) the date of the Grantee’s death. Upon the expiration of the foregoing delay period, all payments and benefits delayed pursuant to this Section 19.9 (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Grantee in a lump sum, and any remaining payments and benefits due under this this Plan and any Award Agreement shall be paid or provided in accordance with the normal payment dates specified for them therein.

 

* * *

 

A-27ex10-1.htm

Exhibit 10.1

 

Final Version

 

COMMERCIAL COOPERATION AGREEMENT

 

This Commercial Cooperation Agreement (this “Agreement”), dated as of May 4, 2017, is entered into by and between ORIX Corporation, a Japanese corporation (“ORIX”) and Ormat Technologies, Inc., a Delaware corporation (“Ormat”). ORIX and Ormat are referred to individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, on or about the date of this Agreement, ORIX will enter into a stock purchase agreement (“SPA”) among ORIX; FIMI ENRG, Limited Partnership, an Israeli limited partnership; FIMI ENRG, L.P., a Delaware limited partnership; Mr. Isaac Angel; Mr. Doron Blachar; and Bronicki Investments Ltd., an Israeli company, pursuant to which ORIX will purchase 10,988,577 shares of the common stock of Ormat and have the right to purchase additional shares of common stock of Ormat on the terms and subject to the limitations set forth in the SPA, and the definitive agreement between the Parties providing for certain governance rights and standstill limitations applicable to ORIX (or its Affiliate) (the “Governance Agreement”) and the registration rights agreement between the parties (the “RRA”) (each entered into on or about the date hereof and together, the “Additional Agreements”);

 

WHEREAS, the transactions contemplated in the SPA are subject to the recommendation and approval of such transactions by a special committee of independent, disinterested directors of the Ormat Board of Directors (the “Special Committee”);

 

WHEREAS, it is a material inducement to the Special Committee’s recommendation and approval of the transactions contemplated in the SPA and the Additional Agreements that the Parties enter into this Agreement; and

 

NOW, THEREFORE, in consideration of the promises and mutual agreements contained herein and other consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

 

ARTICLE I 

INTERPRETATIONS; DEFINITIONS

 

In this Agreement, unless the context otherwise requires:

 

(a)     headings are for convenience only and do not affect the interpretation of this Agreement;

 

(b)     words importing the singular include the plural and vice versa;

 

(c)     a reference to a Section, Article or Schedule is a reference to that Section or Article of, or that Schedule to, this Agreement;

 

 

 

 

 

(d)     the words “include,” “includes” or “including” shall mean “including, but not limited to” or words to similar effect;

 

(e)     a reference to a document includes any amendment or supplement to, or replacement or novation of, that document but disregarding any amendment, supplement, replacement or novation made in breach of this Agreement; and

 

(f)     a reference to a party to any document includes that party’s successors and permitted assigns.

 

The following terms, when used herein, shall have the meanings set forth below unless a different meaning shall be expressly stated or shall be apparent from the context.

 

1.1     “Additional Agreements” shall have the meaning ascribed to such term in the Recitals.

 

1.2     “Affiliate” shall mean, with respect to any Person, any other Person which is a direct or indirect parent or subsidiary of such Person or which directly or indirectly (a) owns or controls such Person; (b) is owned or controlled by such Person; or (c) is under common ownership or control with such Person. For purposes of this definition, “control” shall mean, when used with respect to any specified Person, possession of the power to direct the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise. Notwithstanding anything to the contrary, in no event shall any ORIX Party be deemed to be an Affiliate of any Ormat Party. 

 

1.3     “Agreement” shall have the meaning ascribed to such term in the preamble to this Agreement.

 

1.4     “Approved Ex-Territory NBO” shall have the meaning ascribed to such term in Section 3.1(b).

 

1.5     “Approved Territory NBO Package” shall have the meaning ascribed to such term in Section 3.5(a).

 

1.6   “Business” shall mean the development of Geothermal Projects, including without limitation (a) the evaluation, development, exploration, drilling, acquisition, financing, construction, maintenance, operation, ownership and sale of Geothermal Projects and (b) the sale, acquisition and trading of certain technical products and services utilized in the development and operation of Geothermal Projects.

 

1.7     “Commercially Competitive” shall mean, in respect of steam and combined geothermal system electric power generation facilities, that Ormat or its Affiliates (a) owns and/or operates such type of facilities with a combined nameplate generating capacity of at least 250 MW or (b) manufactures equipment for use in such type of facilities and is able to offer pricing and material service terms (including warranty coverage and technical advisory support services) for such equipment that is materially consistent with the pricing and service terms generally prevailing in the market in which the given New Business Opportunity arises or, if there are no pricing and service terms generally prevailing in such market, in the most comparable market.

 

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1.8     “Confidential Information” shall have the meaning ascribed to such term in Section 8.16.

 

1.9     “Development Notice” shall have the meaning ascribed to such term in Section 3.4(a).

 

1.10     “Disclosing Party” shall have the meaning ascribed to such term in Section 8.16.

 

1.11     “Dispute” shall have the meaning ascribed to such term in Section 8.10(a).

 

1.12     “Effective Date” shall have the meaning ascribed to such term in Article II.

 

1.13     “Event of Default” shall have the meaning ascribed to such term in Section 8.7(c).

 

1.14     “Ex-Territory NBO” shall mean any New Business Opportunity described in, and subject to the provisions of Section 3.1.

 

1.15     “FCPA” shall have the meaning ascribed to such term in Section 6.2.

 

1.16     “Force Majeure” means an event or circumstance, such as natural catastrophes, terrorism, war, riots, or acts of God, that (i) prevents one Party from performing its obligations under this Agreement; (ii) is not within the reasonable control of, or the result of the negligence of, the Party claiming Force Majeure; and (iii) by the exercise of due diligence, the Party claiming such Force Majeure is unable to overcome or avoid (or cause to be avoided); provided, however, notwithstanding the foregoing, an occurrence or an event that merely increases the costs of, or causes an economic hardship to, a Party shall not constitute Force Majeure.

 

1.17     “Geothermal Projects” shall mean, collectively, (a) binary geothermal system electric power generation facilities and (b) so long as Ormat is then-capable of, and Commercially Competitive in, providing such solutions, steam and combined geothermal system electric power generation facilities.

 

1.18     “Governance Agreement” shall have the meaning ascribed to such term in the Recitals.

 

1.19     “MW” shall mean megawatt.

 

1.20     “New Business Opportunity” shall mean any new commercial proposal, solicitation, deal, transaction, development project or business opportunity relating to the Business pursued by, or presented to, an ORIX Party after the Effective Date.

 

1.21     “Non-Disclosing Party” shall have the meaning ascribed to such term in Section 8.16.

 

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1.22     “ORIX” shall have the meaning ascribed to such term in the preamble to this Agreement.

 

1.23     “ORIX Party” shall mean (i) ORIX and (ii) any Affiliate of ORIX, until such time as such Person is no longer an Affiliate of ORIX. 

 

1.24     “Ormat” shall have the meaning ascribed to such term in the preamble to this Agreement.

 

1.25     “Ormat Party” shall mean (i) Ormat and (ii) any Affiliate of Ormat, until such time as such Person is no longer an Affiliate of Ormat.

 

1.26     “Party” or “Parties” shall have the respective meanings ascribed to such terms in the preamble to this Agreement.

 

1.27     “Person” shall mean an individual, partnership, corporation, business trust, joint stock company, limited liability company, trust, unincorporated association, joint venture, governmental entity or authority or agency.

 

1.28     “Receiving Party” shall have the meaning ascribed to such term in Section 8.16.

 

1.29     “Representatives” shall mean, for any Person, such Person’s Affiliates, directors, officers, managers, employees, agents, counsel, advisors and representatives.

 

1.30     “RRA” shall have the meaning ascribed to such term in the Recitals.

 

1.31     “SIAC” shall have the meaning ascribed to such term in Section 8.10(b).

 

1.32     “SIAC Rules” shall have the meaning ascribed to such term in Section 8.10(b).

 

1.33     “Settlement Period” shall have the meaning ascribed to such term in Section 8.10(a).

 

1.34     “SPA” shall have the meaning ascribed to such term in the Recitals.

 

1.35     “Special Committee” shall have the meaning ascribed to such term in the Recitals.

 

1.36     “Sponsor” shall have the meaning ascribed to such term in Section 3.1.

 

1.37     “Suspension Period” shall have the meaning ascribed to such term in Section 8.7(a).

 

1.38     “Technical Partner” shall mean that relationship of an Ormat Party in respect of a given New Business Opportunity that may take the form of some or all of the following, based on the unique circumstances of such Geothermal Project, as determined by the applicable ORIX Party in its commercially reasonable discretion: (a) providing certain geological, engineering, procurement, construction, operational, maintenance or management services to the Geothermal Project represented by such New Business Opportunity; and (b) providing certain binary geothermal electric generation systems and related products and services for use in the Geothermal Project represented by such New Business Opportunity.

 

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1.39     “Territory” shall mean the State of Japan.

 

1.40     “Territory NBO” shall mean any New Business Opportunity described in, and subject to the provisions of, Section 3.2 or Section 3.3.

 

1.41     “Territory NBO Agreements” shall have the meaning ascribed to such term in Section 3.5(d).

 

1.42     “Territory NBO Package” shall have the meaning ascribed to such term in Section 3.5(a).

 

1.43     “Territory NBO Package Notice” shall have the meaning ascribed to such term in Section 3.5(a).

 

1.44     “UK Bribery Act” shall have the meaning ascribed to such term in Section 6.2.

 

ARTICLE II

EFFECTIVE DATE

 

The “Effective Date” of this Agreement shall not occur until the following conditions precedent have been satisfied or waived in writing by the applicable Party:

 

(a)     “Closing” shall have occurred under, and as defined in, the SPA;

 

(b)     the execution and delivery by the parties thereto of the Governance Agreement;

 

(c)     the execution and delivery by the parties thereto of the RRA; and

 

(d)     all other conditions precedent to the parties’ obligations under the SPA and the Additional Agreements shall have been satisfied or waived by the applicable party.

 

Other than its respective obligations under Sections 3.6 and 8.16, and the obligation of each Party to use good faith efforts to satisfy any conditions precedent within such Party’s control within a reasonable period of time after execution of this Agreement, neither Party shall have any obligations under this Agreement prior to the Effective Date.

 

ARTICLE III

AGREEMENTS CONCERNING NEW BUSINESS OPPORTUNITIES

 

3.1     New Business Opportunities outside the Territory. The Ormat Parties shall have the exclusive right of first refusal to own, invest in, develop, and operate any New Business Opportunity outside of the Territory; provided, however, that if, at the time a given New Business Opportunity is pursued by, or presented to ORIX, (i) the third party (“Sponsor”) that owns or is controlling the development of such New Business Opportunity objects to any Ormat Party being the owner, developer or operator of the Geothermal Project represented by such New Business Opportunity and (ii) ORIX determines in its reasonable discretion that the reasons for the Sponsor’s objections are commercially reasonable (such determination to occur only after ORIX provides Ormat with a reasonably detailed summary of the Sponsor’s reasons for objection and a reasonable period of time, not to exceed twenty (20) days from the delivery of the summary, to address such objection, including by using commercially reasonable efforts to convene a meeting within such period among Ormat, ORIX and the Sponsor so that Ormat can directly respond to the Sponsor’s concerns), then the ORIX Parties, and not Ormat, shall have the right to invest in, develop and operate such Geothermal Project, and ORIX shall (and shall cause the applicable ORIX Party to) use its commercially reasonable efforts to secure Sponsor agreement (x) to permit ORIX to engage an Ormat Party to serve as its Technical Partner on such Geothermal Project and (y) to grant an Ormat Party the option to become ORIX’s co-shareholder in the Geothermal Project (provided that, ORIX will provide Ormat with a reasonably detailed summary of its efforts to secure Sponsor agreement to the terms set forth in clauses (x) and (y) and, in the event ORIX fails to secure such agreement, provide Ormat with a reasonable period of time, not to exceed twenty (20) days from the delivery of the summary, to address such objection, including by using commercially reasonable efforts to convene a meeting within such period to address such objection, including by using commercially reasonable efforts to convene a meeting among Ormat, ORIX and the Sponsor so that Ormat can directly respond to the Sponsor’s concerns). 

 

5

 

 

3.2     New Business Opportunities for Large Geothermal Projects within the Territory. The Ormat Parties shall have the exclusive right to serve as the Technical Partner to the applicable ORIX Party with respect to, and be granted the option to acquire up to 49% ownership of, all Geothermal Projects within the Territory (a) that represent New Business Opportunities, (b) that have an expected generating capacity of greater than 15 MW and (c) (i) that are 100% owned by an ORIX Party or (ii) with respect to which an ORIX Party has the ability to control all relevant decisions without being required to obtain any third party consents (which, for the avoidance of doubt, shall not include any necessary approvals, consents and waivers of local or federal regulatory or governmental bodies that are required to effect the transactions contemplated by this Agreement or to otherwise comply with applicable law) with respect thereto. For all Geothermal Projects within the Territory that have an expected generating capacity of greater than 15 MW and in which an ORIX Party has a non-controlling ownership interest, ORIX shall (and shall cause the applicable ORIX Party to) use commercially reasonable efforts to introduce Ormat to the controlling parties of such Geothermal Projects to serve as the Technical Partner thereof.

 

3.3     New Business Opportunities for Small Geothermal Projects within the Territory. ORIX shall (and shall cause the applicable ORIX Party to) use its commercially reasonable efforts to engage an Ormat Party to serve as the Technical Partner to the ORIX Party with respect to all Geothermal Projects within the Territory (a) that represent New Business Opportunities, (b) that have an expected generating capacity of 15 MW or less and (c) (i) that are 100% owned by an ORIX Party or (ii) with respect to which an ORIX Party has the ability to control all relevant decisions without being required to obtain any third party consents (which, for the avoidance of doubt, shall not include any necessary approvals, consents and waivers of local or federal regulatory or governmental bodies that are required to effect the transactions contemplated by this Agreement or to otherwise comply with applicable law) with respect thereto (provided that, ORIX will provide Ormat with a reasonably detailed summary of its efforts to engage Ormat as its Technical Partner for such a Geothermal Project and, if applicable, if the other partners or counterparties to the ORIX Party in the Geothermal Project object to the ORIX Party engaging Ormat as its Technical Partner, provide Ormat with a reasonable period of time, not to exceed twenty (20) days from the delivery of the summary, to address such objection, including by using commercially reasonable efforts to convene a meeting within such period to address such objection, including by using its reasonable best efforts to convene a meeting among Ormat, ORIX and the other relevant parties so that Ormat can directly respond to the concerns).

 

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3.4     Procedures with respect to Ex-Territory NBOs. Subject in all cases to Section 3.1: 

 

(a)     If any ORIX Party shall be presented with, or otherwise made aware of an Ex-Territory NBO, ORIX shall (or shall cause the applicable ORIX Party to) promptly notify and present the terms and conditions of such Ex-Territory NBO in writing to Ormat (and only to Ormat). Ormat shall have thirty (30) days to (i) make a principal determination as to whether it (or any other Ormat Party) intends to (x) own, invest in, develop, and operate, or otherwise pursue, such Ex-Territory NBO and (ii) deliver written notice to ORIX of such intent (each such notice, an “Development Notice” and any Ex-Territory NBO that any Ormat Party intends to own, invest in, develop, and operate or otherwise pursue, an “Approved Ex-Territory NBO”). 

 

(b)     Prior to presenting the Ex-Territory NBO to Ormat and during the thirty (30) day period specified above, no ORIX Party shall solicit or engage in negotiations with any other Person regarding such Ex-Territory NBO. If Ormat delivers written notice of its rejection of such Ex-Territory NBO, or does not deliver a Development Notice within such thirty (30) day period, then the applicable ORIX Party shall be entitled to pursue the Ex-Territory NBO on its own and/or may solicit or commence negotiations with third party investors. 

 

(c)     During such thirty (30) day period, ORIX shall (or shall cause the applicable ORIX Party to) use commercially reasonable efforts to allow the applicable Ormat Party to conduct diligence activities in respect of such Ex-Territory NBO as such Ormat Party may reasonably request, and ORIX shall (or shall cause the applicable ORIX Party to) use commercially reasonable efforts to make available to such Ormat Party all materials, information, projections, budgets and documentation reasonably necessary to allow such Ormat Party to make an informed decision regarding such Ex-Territory NBO, to the extent such materials have been made available to the applicable ORIX Party. 

 

(d)     If Ormat delivers a Development Notice, the applicable Ormat Party shall have the right to pursue such Approved Ex-Territory NBO, and the applicable ORIX Party shall turn over to Ormat all materials, information, projections, budgets and documentation in its possession with respect to such Approved Ex-Territory NBO. 

 

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3.5     Procedures with respect to Territory NBOs. Subject in all cases to Sections 3.2 and 3.3:

 

(a)     If any ORIX Party shall be presented with, or otherwise made aware of a Territory NBO, ORIX shall (or shall cause the applicable ORIX Party to) promptly notify and present the particulars of such Territory NBO in writing to Ormat and the nature of the Technical Partner relationship and equity option, if applicable, available in respect thereof (such terms and conditions, the “Territory NBO Package”). Ormat shall have thirty (30) days to (i) make a principal determination as to whether it (or any other Ormat Party) intends to (x) pursue negotiations with the applicable ORIX Party regarding such Territory NBO Package and (ii) deliver written notice to ORIX of such intent (each such notice, a “Territory NBO Package Notice” and any Territory NBO Package that any Ormat Party intends to pursue, an “Approved Territory NBO Package”). 

 

(b)     If Ormat delivers written notice of its rejection of such Territory NBO Package, or does not deliver a Territory NBO Package Notice within such thirty (30) day period, then the applicable ORIX Party shall be entitled to pursue the Territory NBO on its own and/or with third party investors or technical partners.

 

(c)     During such thirty (30) day period, ORIX shall (or shall cause the applicable ORIX Party to) use commercially reasonable efforts to allow the applicable Ormat Party to conduct diligence activities in respect of such Territory NBO as such Ormat Party may reasonably request, and ORIX shall (or shall cause the applicable ORIX Party to) use commercially reasonable efforts to make available to such Ormat Party all materials, information, projections, budgets and documentation reasonably necessary to allow such Ormat Party to make an informed decision regarding such Territory NBO, to the extent such materials have been made available to the applicable ORIX Party. 

 

(d)     If Ormat delivers a Territory NBO Package Notice, the applicable Ormat Party and the applicable ORIX Party shall negotiate in good faith for a period of 60 days the terms and conditions governing the Technical Partner relationship and, if applicable, the equity option comprising the Approved Territory NBO Package (collectively, the “Territory NBO Agreements”). The Parties agree that the particular contractual arrangements in respect of each Approved Territory NBO Package shall be mutually determined by the applicable Ormat Party and the applicable ORIX Party on a project-by-project basis but shall fairly and equitably reflect the applicable Ormat Party’s anticipated contribution to the success of the applicable Territory NBO as well as any applicable external factors including local and/or federal regulatory, local content or other issues relevant to project award decisions. If, despite the applicable ORIX Party’s good faith efforts to come to agreement on the Territory NBO Agreements within such 60-day period, the applicable parties to such Territory NBO Agreements are unable to agree on the material terms thereof, ORIX shall be relieved of any further obligations under this Agreement in respect of the Territory NBO to which such Territory NBO Agreements relate.

 

(e)     Any Territory NBO Agreement proposed to be entered into between any ORIX Party, on the one hand, and any Ormat Party, on the other hand, must be negotiated in good faith on an arm’s-length basis, must have terms that are reasonably competitive with those available in the market from unaffiliated third parties, and must be sufficient to satisfy the requirements of the construction and permanent financing as well as the return objectives of the relevant project investors.

 

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3.6     No Press Releases. Each Party agrees that, to the fullest extent possible in light of legal requirements, neither it nor its Affiliates will, without the consent of the other Party (which consent shall not be unreasonably withheld, conditioned or delayed), issue a press release, contact the news media or respond to any communication from the news media with any sensitive or confidential information with respect to this Agreement or any New Business Opportunity; provided, however, that nothing contained in this Section 3.6 shall limit, restrict or prohibit any public disclosure by either Party that is deemed by such Party, in its sole discretion, as necessary or required under applicable securities laws or stock exchange rules and regulations or to otherwise comply with applicable law.

 

3.7     Financing Sources. During the Term, ORIX shall use commercially reasonable efforts to assist the Ormat Parties in obtaining project financing for Geothermal Projects on the most advantageous terms possible from certain providers of debt financing (including but not limited to Japan Bank for International Cooperation, Japan International Cooperation Agency, Development Bank of Japan, Inc., Asian Development Bank and Japanese commercial banks operating in the project financing field) with which any ORIX Party has a commercial relationship at the relevant time; provided, however, that in no event shall this Section 3.7 impose any financial obligation on any ORIX Party and, provided further, that ORIX will provide Ormat with a reasonably detailed summary of its efforts to assist the Ormat Parties in obtaining such project financing for Geothermal Projects from such providers of debt financing. 

 

3.8     Further Assurances. Each Party will from time to time and at all times hereafter make, do, execute, or cause or procure to be made, done and executed such further acts, deeds, conveyances, consents and assurances without further consideration, which may reasonably be required to carry out the intent and effect the transactions contemplated by this Agreement, including providing such information and support to the other Party as is reasonably requested by the other Party.

 

ARTICLE IV

LIMITATION OF LIABILITY

 

4.1     Waiver of Consequential Damages. Notwithstanding any provision of this Agreement or otherwise to the contrary, neither Party or any of its Affiliates shall be liable (whether in contract, tort, misrepresentation, warranty, negligence, strict liability or otherwise) to the other Party or its Affiliates for any special, indirect, incidental or consequential damages arising out of or in connection with this Agreement, or the performance, non-performance or breach hereunder, except to the extent that such damages are reasonably foreseeable and reasonably quantifiable.

 

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ARTICLE V

INDEMNIFICATION

 

Each Party shall indemnify, defend and hold harmless the other Party and its Affiliates, agents, servants, officers, directors and employees from and against any loss, cost, liability, claim, damage, expense (including reasonable attorneys’ fees and disbursements), penalty or fine arising from, or in connection with, any New Business Opportunity or this Agreement to the extent caused by the gross negligence, misrepresentation or fraud of such Party or its Affiliates.

 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES; COVENANTS

 

6.1     Representations and Warranties. Each Party represents and warrants to the other Party on the Effective Date that:

 

(a)     it is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and it has the corporate power and authority to transact the business in which it engages, including the transactions contemplated hereby;

 

(b)     it has obtained all requisite corporate approvals necessary for the execution, delivery and performance of this Agreement, and when duly executed by it, this Agreement shall constitute a legal, valid and binding obligation of it enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to the enforcement of creditor rights generally and by general equitable principles;

 

(c)     the execution, delivery and performance by it of this Agreement and the consummation of the transactions contemplated hereby do not and will not (with the giving of notice or the passage of time or both) (i) conflict with its organizational and governance documents; (ii) violate any provision of any applicable law; (iii) conflict with, or result in a breach of, or default under, any agreement or other instrument to which it is a party or by which it or its assets may be bound; or (iv) result in the creation of any lien, charge or encumbrance upon its assets or properties, except, in the case of the foregoing clause (ii), violations, and in the case of the foregoing clause (iii) and (iv), conflicts, breaches or defaults, or liens, charges or encumbrances, that in the aggregate would not materially hinder or impair the transactions contemplated hereby or have a material adverse effect on the business, assets or financial condition of it;

 

(d)     to the best of its knowledge, there is no action, suit, proceeding or official investigation by or before any governmental authority or political subdivision thereof, arbitral tribunal or other body pending or threatened against or affecting it or its properties or assets, which could reasonably be expected to result in a material adverse effect on its ability to perform its obligations under this Agreement or on the validity or enforceability of this Agreement;

 

(e)     it has not, directly or indirectly, corruptly offered, promised, paid, authorized or given money or anything of value, directly or indirectly, to any government or similar official, political party or official, or candidate for political office for the purpose of: (i) influencing any act or decision of the official, candidate or party; (ii) inducing the official, candidate or party to do or omit to do an act in violation of a lawful duty; (iii) securing any improper advantage; or (iv) inducing the official, candidate or party to influence the act or decision of a government or government instrumentality, in order to obtain or retain business, or direct business to, any person or entity, in any way related to this Agreement or the pursuit of New Business Opportunities; and

 

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(f)     it and its Affiliates have conducted their affairs and activities in respect of any New Business Opportunity in accordance with all laws, rules, regulations and decrees of any governmental authority applicable to it, their businesses or any New Business Opportunity, as applicable.     

 

6.2     Covenant. Neither Party shall take any action, nor shall either Party permit its Affiliate to take any action, that would subject either Party or its Affiliates to liability or penalty under any laws, rules, regulations or decrees of any governmental authority, including any applicable anti-bribery or anti-corruption law including, but not limited to, the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), and the U.K. Bribery Act 2010 (the “UK Bribery Act”). Among other things, neither Party shall directly or indirectly offer, pay, promise to pay, or authorize the offer, payment or promise of any advantage, financial or otherwise, or thing of value to any representative or agent of a governmental authority while knowing or having reason to know that all or a portion of such advantage or thing of value would be offered, given, or promised to such representative or agent of a governmental authority for the purposes of (a)(i) influencing any act or decision of such any representative or agent of a governmental authority in his or her official capacity or (ii) rewarding the improper performance by any Person of its business or official activities; or (b) assisting either Party or its Affiliates in obtaining or retaining business or a business advantage for any member of a either Party or its Affiliates. Furthermore, each Party and its respective Affiliates shall conduct its business in compliance with the UK Bribery Act, the FCPA and similar laws, rules or regulations and institute and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith. 

 

6.3     Certificates. Each Party agrees to execute certificates acknowledging its ongoing compliance with this Article VI from time to time at the request of any other Party.

 

6.4     Indemnity. In addition to any other remedies under this Agreement, either Party who makes a misrepresentation under Section 6.1 or breaches its obligations under Section 6.2 shall indemnify the other Party from and against any loss, cost, liability, claim, damage, expenses (including reasonable attorneys’ fees and disbursements), penalty or fine of whatever nature arising out of, or in connection with, such misrepresentation or breach.

 

ARTICLE VII

force majeure

 

7.1     Subject to the terms of Sections 7.2 and 7.3, no failure or omission to carry out or observe any of the terms, provisions, or conditions of this Agreement shall give rise to any claim by a Party against the other Party hereto, or be deemed to be a breach or default of this Agreement if the same shall be caused by or arise out of a Force Majeure; provided that an affected Party’s suspension of its obligations shall be of no greater scope and no longer duration than is reasonably required by such Force Majeure. The affected Party shall use its commercially reasonable efforts to continue to perform its obligations hereunder and to remedy its inability to perform. 

 

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7.2     The Parties shall use their commercially reasonable efforts to mitigate the potential impact of any delay caused by Force Majeure. If a Party’s ability to perform its obligations under this Agreement is affected by a Force Majeure, such Party shall promptly (but in any event within five (5) business days) upon learning of such event and ascertaining that it will affect its performance hereunder, give written notice to the other Party stating the nature of the event, its anticipated duration and effect upon the performance of such Party’s obligations, and all action being taken to avoid or minimize its effect. The burden of proof to substantiate an event of Force Majeure shall be on the Party claiming Force Majeure pursuant to this Section 7.2.

 

7.3     No obligations of any Party that arose before the occurrence of a Force Majeure causing the suspension of performance shall be excused as a result of such occurrence. The obligation to pay money in a timely manner for liabilities that matured prior to the occurrence of a Force Majeure shall not be subject to the Force Majeure provisions of this Article VII.

 

ARTICLE VIII

MISCELLANEOUS

 

8.1     Governing Law. This Agreement shall be interpreted in accordance with, and governed by, the laws of New York, without regard to the conflicts of law principles thereof (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law).

 

8.2     Relationship of Parties. Except as expressly set forth in this Agreement, (a) neither Party is an agent, employee, contractor, vendor, representative or partner of the other Party, (b) neither Party shall hold itself out as such to third parties, and (c) neither Party is capable of binding the other Party to any obligation or liability, in each case, without the prior written consent of the other Party.

 

8.3     Remedies. In the event of any breach or threatened breach of this Agreement by any Party hereto, the Parties agree and acknowledge that recovery of monetary damages may not be an adequate remedy for the non-breaching Parties, and the non-breaching Parties shall be entitled to equitable relief through an injunction in addition to any other rights and remedies available to them.

 

8.4     Integration. The terms and provisions contained in this Agreement constitute the entire agreement between the Parties and their Affiliates with respect to the subject matter hereof. This Agreement supersedes and terminates all previous undertakings, representations and agreements, both oral and written between the Parties and their Affiliates with respect to the subject matter hereof.

 

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8.5     Non-Recourse. The obligations of the Parties under this Agreement are obligations of the Parties only and no recourse shall be available against any officer, director, stockholder or other owner of either Party.

 

8.6     No Oral Modifications. This Agreement may not be amended or modified except by written agreement executed by each of the Parties hereto.

 

8.7     Suspension; Term; Termination. 

 

(a)     Suspension. This Agreement shall be suspended during any period in which ORIX, together with any of its Affiliates, ceases to own voting securities representing at least thirteen percent (13%) of the ordinary voting power of all the outstanding common stock and any other securities of Ormat entitled to vote generally for the election of directors to the Ormat Board of Directors (any such period, a “Suspension Period”). Neither Party shall have (i) any obligations under this Agreement during any Suspension Period or (ii) liability for any claims under this Agreement that arise during, or relate to actions or omissions taken or not taken during, any Suspension Period. 

 

(b)     Term; Termination. This Agreement shall commence on the Effective Date and may not be terminated except (i) by mutual agreement of the Parties, (ii) on the effective date of a termination of the Governance Agreement (other than a termination for breach thereof by an ORIX Party), or (iii) in accordance with Section 8.7(c) or Section 8.7(d).

 

(c)     Events of Default. The following events shall be events of default (each, an “Event of Default”) under this Agreement regardless of the pendency of any bankruptcy, reorganization, receivership, insolvency or other proceeding which has or might have the effect of preventing such party from complying with the terms of this Agreement, unless caused by an event of Force Majeure Event or a default by the other party:

 

(i)     any failure by a party to make any payment required to be made hereunder, if such failure shall continue for ten (10) business days after written notice thereof has been given to the non-paying party; or

 

(ii)     any failure to comply in any material respect with any material term, provision or covenant of this Agreement (other than the payment of sums to be paid by a party hereunder), if such failure continues for thirty (30) days after written notice thereof has been given to the non-performing party; provided, however, if such failure cannot reasonably be cured within such thirty (30) days and the non-performing party has commenced, and is diligently pursuing in good faith, to cure such failure, such thirty (30) day period shall be extended for such longer period as shall be necessary for such party to cure the failure, but in no event shall be extended for more than sixty (60) days after the original notice without the prior written agreement of the parties.

 

(d)     Bankruptcy. This Agreement shall immediately terminate if (i) a Party (A) files a voluntary petition in bankruptcy, (B) is adjudicated bankrupt or insolvent, (C) files any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute or law relating to bankruptcy, insolvency, or other relief for debtors, whether federal or state, or (D) seeks, consents to, or acquiesces in the appointment of any trustee, receiver, conservator or liquidator of such party or of all or any substantial part of its properties, (ii) a court of competent jurisdiction enters an order, judgment or decree approving a petition filed against a Party seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute or law relating to bankruptcy, insolvency or other relief for debtors, whether federal or state, and such party consents to or acquiesces in the entry of such order, judgment or decree, or the same remains unvacated and unstayed for an aggregate of sixty (60) days from the date or entry thereof, or (ii) any trustee, receiver, conservator or liquidator of a Party or of all or any substantial part of its properties is appointed without the consent of or acquiescence of such Party and such appointment remains unvacated and unstayed for an aggregate of sixty (60) days. The terms “acquiesce” and “acquiescence”, as used herein, include, but are not limited to, the failure to file a petition or motion to vacate or discharge any order, judgment or decree providing for such appointment within the time specified by law.

 

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(e)     Remedies. If an Event of Default occurs and is continuing hereunder, then this Agreement may be terminated immediately by the non-defaulting Party, without obligation to or recourse by the defaulting Party. In addition to the termination rights provided in Section 8.7(b), the non-defaulting party shall have all rights and remedies allowed at law or in equity, subject however, to the specific limitations of liability in Article IV.

 

8.8     No Representation. Each Party recognizes that the development of New Business Opportunities is a high-risk activity in terms of likelihood of success and acknowledges that neither Party has made or is making (by its agreement to assist in the development of any Approved Ex-Territory NBO or by any other activity) any representation or warranty (whether express or implied) to the other Party that any such projects will achieve financial closing or otherwise be successful.

 

8.9     Survival. In the case of a termination of this Agreement, the obligations of the Parties under Article IV, Article V, Section 6.4, and this Article VIII shall survive such termination.

 

8.10     Dispute Resolution.

 

(a)     In the event that a dispute arises out of or in connection with this Agreement, including any question regarding its existence, validity or termination (a “Dispute”), the Party alleging the Dispute shall promptly notify the other Party of the Dispute in writing. If the commercial representatives designated by each of the Parties to resolve the Dispute shall have failed to resolve such Dispute within ten (10) days after delivery of such written notice, then within five (5) days after receipt of a written demand from the other Party to do so, Ormat and ORIX shall each direct a respective senior executive who has authority to settle the Dispute, to confer in good faith within a subsequent five (5) day period to resolve the Dispute. Should the Parties remain unable to resolve the Dispute to their mutual satisfaction within fifteen (15) days (the “Settlement Period”), each Party shall have the right to pursue the resolution of such Dispute in accordance with the provisions of Section 8.10(b). Unless stated otherwise in this Agreement, all Disputes shall be resolved in accordance with the Dispute resolution procedures set forth in this Section 8.10.

 

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(b)     After the Settlement Period set forth in Section 8.10(a) has terminated without a resolution, at the request of either Party to the Dispute, the Dispute shall be referred to and finally resolved by binding arbitration. In such case, either Party may refer the Dispute to arbitration under, and final resolution by, the Singapore International Arbitration Centre (“SIAC”) in accordance with the then-effective Arbitration Rules of the Singapore International Arbitration Centre (the “SIAC Rules”), which rules are deemed to be incorporated by reference in this clause, before a three (3) member panel, with each Party selecting one arbitrator and the third arbitrator, who shall be the chairperson of the panel, being selected by the two Party-appointed arbitrators. The seat of the arbitration will be Singapore. The language of the arbitration shall be English.

 

(c)     This agreement to arbitrate shall be binding upon the successors, assignees and any trustee or receiver of any Party.

 

8.11     Successors and Assigns; Assignment. This Agreement shall be binding upon, and inure to the benefit of, the Parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests and obligations hereunder shall be assigned by either Party, including by operation of law, without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that either Party may collaterally assign this Agreement, in whole or in part, in connection with any financing or refinancing of such Party’s business or operations (or any part thereof). Any assignment of this Agreement in violation of the foregoing shall be null and void ab inicio.

 

8.12     No Third Party Beneficiaries. This Agreement is intended solely for the benefit of the Parties hereto, and nothing in this Agreement shall be construed to create any duty to, standard of care with reference to, or any liability to, any Person not a party to this Agreement, other than any Person entitled to indemnification under Article V or Section 6.4.

 

8.13     Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any provision of this Agreement is invalid or unenforceable, the Parties shall negotiate in good faith to modify the provisions of this Agreement as far as permitted under applicable law so that this Agreement, as modified, most nearly reflects and effectuates the original intent of the Parties.

 

8.14     Notices. Any notice, demand, request, waiver, or other communication under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if personally served or sent by facsimile; on the business day after notice is delivered to a courier or mailed by express mail, if sent by courier delivery service or express mail for next day delivery; and on the third day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered, return receipt requested, postage prepaid and addressed as follows:

 

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To ORIX at:

 

ORIX Corporation

Hamamatsucho Building, 1-1-1 Shibaura

Minato-ku, Tokyo 105-0023, Japan

Attention: Todd Freeland, Hidetake Takahashi

Facsimile: 03-5730-0183

Email: todd.freeland@orix-ei.com; hidetake.takahashi.vk@orix.jp; nobuomi.iokamori.ud@orix.jp; daisuke.ueno.tu@orix.jp:

 

 

with a copy (which shall not constitute notice) to:

 

Latham & Watkins LLP

885 Third Avenue

New York, NY 10011

Attention: Thomas W. Christopher and Joshua G. Kiernan

Telecopy No.: (212) 751- 4864

Email: thomas.christopher@lw.com

 joshua.kiernan@lw.com

 

To Ormat at:

 

Ormat Technologies, Inc.

6225 Neil Road

Reno, NV 89511

Attention: Isaac Angel

Facsimile: (775) 356-9039

 

with a copy (which shall not constitute notice) to:

 

Chadbourne & Parke LLP

1200 New Hampshire Avenue N.W.

Washington, DC 20036

Attention: Noam Ayali

Facsimile: (202) 974-5602

Email: NAyali@chadbourne.com

 

Chadbourne & Parke LLP

1301 Avenue of the Americas

New York, NY 10019

Attention: Charles E. Hord

Facsimile: (212) 541-5369

Email: Chord@chadbourne.com 

 

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, NY 10017

Attention: William H. Aaronson

Telephone: (212) 450-4397

Facsimile: (212) 701-5397

Email: william.aaronson@davispolk.com

 

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8.15     Counterparts. This Agreement may be executed by the Parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.

 

8.16     Confidentiality. Each Party shall, and shall cause its Representatives to, (collectively, as to information received, the “Receiving Party”) (a) keep the terms and conditions of this Agreement confidential; and (b) keep any information (whether oral, written or electronic), including (i) all confidential information previously supplied by or on behalf of the other Party and (ii) all documents, reports, studies, manuals, data, plans, proposals and other materials, supplied by or on behalf of the other Party pursuant to this Agreement, confidential and use such information only in connection with this Agreement (the information described in items (a) and (b) collectively, the “Confidential Information”); provided, however, that either Party may disclose any Confidential Information to any of its Representatives with a need to know such Confidential Information in connection with this Agreement if such Representative is advised of the confidential nature of such Confidential Information and the relevant Party causes such Representative to comply with this Section 8.16; and provided, further, that “Confidential Information” shall not include any information that: (A) is or becomes generally available to the public other than from disclosure by the Receiving Party; (B) was known or was available to the Receiving Party on a non-confidential basis prior to the Effective Date; (C) is or becomes available to the Receiving Party on a non-confidential basis from a third party who is not, to the knowledge of the Receiving Party, bound by any confidentiality obligation to the other Party; (D) is independently developed by the Receiving Party without reference to the Confidential Information (as defined above); or (E) is in the possession of the Receiving Party prior to receipt from the other Party. In the event that a Party or any of its Representatives (collectively, a “Disclosing Party”) is required by applicable law (including, without limitation, securities laws or the rules and regulations of any stock exchange on which securities of a Party or its Affiliates are listed) to disclose any Confidential Information, the Disclosing Party shall use all reasonable efforts to provide the other Party (the “Non-Disclosing Party”) with prompt written notice before such Confidential Information is disclosed so that the Non-Disclosing Party may seek, at its own cost and expense, a protective order or other appropriate remedy. The Disclosing Party shall not oppose action by the Non-Disclosing Party to obtain a protective order or other appropriate remedy concerning a disclosure under this Section 8.16. In the event that such a protective order or other remedy is not obtained, the Disclosing Party shall furnish only that portion of the Confidential Information which, on the advice of the Disclosing Party’s legal counsel, is legally required, and the Disclosing Party shall exercise all reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such Confidential Information.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized officers as of the day and year first above written.

 

	
			 

				
			 

			ORIX Corporation

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			/s/ Yuichi Nishigori     

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			Title: 

				
			Director and Corporate Executive Vice President

				
			 

			

 

 

 

	
			 

				
			Ormat Technologies, Inc.

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			/s/ Isaac Angel & /s/ Doron Blachar

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			Title:

				CEO & CFO	
			 

			

 

 

[Signature Page to Commercial Cooperation Agreement]

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