Document:

MassingaleEAThirdAmendment

EXECUTION COPY 
THIRD AMENDMENT TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Third Amendment to Amended and Restated Employment Agreement (this “Amendment”) is made and entered into effective as of May 20, 2014, by and between Team Health, Inc., a Tennessee corporation (the “Company”), and H. Lynn Massingale, M.D. (the “Employee”).  Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Employment Agreement.

WITNESSETH:

WHEREAS, the Company and Employee entered into that certain Amended and Restated Employment Agreement, dated November 25, 2009, as amended August 1, 2011 and January 1, 2012, (the “Employment Agreement”) and the Employee and the Company hereby desire to amend the Employment Agreement;

WHEREAS, the parties previously had agreed that Employee would devote less than full time to the business of Company; and

WHEREAS, the Company desires, and Employee is agreeable, that Employee will devote additional time to the business of the Company specifically related to the Company’s search for a new CEO and additional personnel, and such other matters as the parties may agree upon from time to time.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.    The second sentence of Section 2 of the Employment Agreement is hereby deleted and replaced with the following:

Employee shall devote the amount of business time, attention and effort to the affairs of the Company as reasonably required to accomplish Employee’s duties, specifically including the Company’s search for a new CEO and additional personnel, and shall use his reasonable best efforts to promote the interests and success of the Company, and shall cooperate fully with the Board in the advancement of the best interests of the Company, consistent with the terms of this Agreement.

2.    Section 6.5(a) of the Employment Agreement is hereby deleted in its entirety and replaced with the following:

(a)    If Employee’s employment is terminated by the Company without Cause or by Employee for Good Reason, then, subject to Employee’s continued compliance with the provisions of Section 7 and 8 of this Agreement, the Company shall provide to Employee the following:

(i)    Employee will receive an amount equal to three (3) times Employee's Base Salary, payable in twelve (12) separate payments of equal amounts in monthly installments, beginning on the date of termination.

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(ii)    Employee will receive an amount equal to three (3) times the annual Bonus paid to Employee pursuant to Section 3.2 of this Agreement for the most recently completed Performance Period (as defined in Exhibit A), payable in twelve (12) separate payments of equal amounts in monthly installments, beginning on the date of termination.

(iii)    Notwithstanding the provision in Exhibit A that Employee’s Bonus shall not accrue until the last day of the Performance Period, upon Employee’s termination of employment for Good Reason or in the event Company terminates Employee’s employment without Cause, Employee shall be entitled to a Bonus for the Performance Period encompassing Employee’s termination date (even though the Performance Period may end after Employee’s termination of employment) but such Bonus shall be pro-rated through the Employee’s date of termination based upon the percentage of such Performance Period that shall have elapsed through the date of Employee’s termination of employment.  This Bonus shall not be considered as the “most recently completed Performance Period” under Section 6.5(a)(ii) of this Agreement unless it is greater than the most recently completed Performance Period, in which case it shall be considered as the most recently completed Performance Period for purposes of Section 6.5(a)(ii), and in such event Company shall pay all additional monies owed to Employee within 10 days after such amount is determined.

3    Section 6.5(b)(ii) of the Employment Agreement is hereby deleted and replaced with the following:

(ii)    Employee’s Trust will receive an amount equal to two (2) times the annual Bonus paid to Employee pursuant to Section 3.2 of this Agreement for the most recently completed Performance Period, payable in equal monthly installments for two years following the date of termination.  Notwithstanding the provision in Exhibit A that Employee’s Bonus shall not accrue until the last day of the Performance Period, upon Employee’s termination of employment due to Employee’s death, Employee shall be entitled to a Bonus for the Performance Period encompassing Employee’s termination date (even though the Performance Period may end after Employee’s termination of employment) but such Bonus shall be pro-rated through the Employee’s date of termination based upon the percentage of such Performance Period that shall have elapsed through the date of Employee’s termination of employment.  This Bonus shall not be considered as the “most recently completed Performance Period” under this Section 6.5(b)(ii) unless it is greater than the most recently completed Performance Period, in which case it shall be considered as the most recently completed Performance Period for purposes of this Section 6.5(b)(ii),  and in such event Company shall pay all additional monies owed to Employee within 10 days after such amount is determined.

4.    Section 6.5(c)(ii) of the Employment Agreement is hereby deleted and replaced with the following:

(ii)    Employee will receive an amount equal to two (2) times the annual Bonus paid to Employee pursuant to Section 3.2 of this Agreement for the most recently completed Performance Period, payable in twelve (12) separate payments of equal 

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amounts in monthly installments, beginning on the date of termination.  Notwithstanding the provision in Exhibit A that Employee’s Bonus shall not accrue until the last day of the Performance Period, upon Employee’s termination of employment by the Company due to Employee’s Disability, Employee shall be entitled to a Bonus for the Performance Period encompassing Employee’s termination date (even though the Performance Period may end after Employee’s termination of employment) but such Bonus shall be pro-rated through the Employee’s date of termination based upon the percentage of such Performance Period that shall have elapsed through the date of Employee’s termination of employment.  This Bonus shall not be considered as the “most recently completed Performance Period” under this Section 6.5(c)(ii) unless it is greater than the most recently completed Performance Period, in which case it shall be considered as the most recently completed Performance Period for purposes of this Section 6.5(c)(ii), and in such event Company shall pay all additional monies owed to Employee within 10 days after such amount is determined.

5.    If the Employment Agreement is terminated (i) by the Company without Cause, (ii) due to Employee’s death or Disability, (iii) by Employee for Good Reason, or (iv) by Employee due to Employee’s retirement from Company, then all previously unvested equity, including stock options and restricted stock, held by Employee shall be deemed to automatically vest on the date of termination and, notwithstanding anything to the contrary in any other document (including any stock option or stock grant agreement), may be exercised by Employee (or his estate or representatives) at any time prior to the earliest to occur of: (i) two years from the effective date of termination (but in no event beyond the expiration of the normal full term of the stock options), or (ii) the first date on which Employee breaches the Covenants set forth in Section 7 of the Employment Agreement.

6.    Section 7.3(d) of the Employment Agreement is hereby amended by adding new clauses (iii) and (iv) at the end of such section:

(iii) being employed by facility healthcare providers such as hospitals, surgery centers, information technology or revenue cycle services providers and the like, and (iv) engaging in any activity except (A) emergency medicine staffing services, (B) hospitalist staffing services, (C)  anesthesia staffing services, (D) locum tenens staffing services, and (E) staffing services in any other line of business of the Company or any Related Company where the net revenues from such line of business exceed 5% of the total combined net revenues of the Company and the Related Companies during the twelve (12) months immediately preceding the date of Employee’s termination of employment.  

7.    The Company agrees that no event shall constitute a breach by Employee of any Covenant unless and until the Company shall have notified Employee in writing describing the event which it alleges constitutes a breach of a Covenant and then only if Employee shall fail to cure such event within ten (10) days following his receipt of such written notice.

8.    The parties desire to consolidate their understanding and agreement with respect to restrictive covenants applicable to Employee.  Accordingly, the parties agree that Section 7 of the Employment Agreement is the complete understanding and agreement among the Company and Employee with respect to any restrictive covenants applicable to Employee.  Except as set forth in Section 7 of the Employment Agreement, the Company agrees that Employee is not bound by any restrictive covenant in any other document or agreement, including but not limited to, any nonqualified stock option agreement, restricted stock award agreement, nonsolicitation agreement, or otherwise.  To the extent any 

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other document or agreement between the Company and Employee purports to impose any restrictive covenant against Employee, other than as set forth in Section 7 of the Employment Agreement, the Company agrees that any such provision in any such document or agreement is null and void.

9.    Each party represents and warrants to the other party that this Amendment has been duly authorized, executed and delivered by such party and constitutes the valid and binding obligation of such party, enforceable in accordance with its terms.  Without limiting the generality of the foregoing, the Company represents and warrants that this Amendment has been duly authorized by its Compensation Committee and will be duly ratified by its board of directors.

10.    Except as expressly amended or modified hereby, the Employment Agreement will and do remain in full force and effect in accordance with their respective terms.

11.    This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Signatures on next page]

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IN WITNESS WHEREOF, the parties have executed this Amendment on the date first written above.

COMPANY:

Team Health, Inc.

By:    /s/  HEIDI S. ALLEN         
Its:    Senior Vice President and General Counsel

EMPLOYEE:

/s/  H. LYNN MASSINGALE, M. D.           
H. Lynn Massingale, M.D.

5Exhibit 10.1

 

CTS CORPORATION

2014 PERFORMANCE AND INCENTIVE COMPENSATION PLAN

 

SECTION 1.  PURPOSE:  The purpose of the CTS Corporation 2014 Performance and Incentive Compensation Plan is to provide certain employees of CTS Corporation and its Affiliates and members of the Board with the opportunity to receive stock-based and other incentive grants in order to attract, motivate and retain qualified individuals and to align their interests with those of shareholders.

 

SECTION 2.  EFFECTIVE DATE:  The Plan will become effective as of May 21, 2014 (the “Effective Date”), subject to the approval of the shareholders in accordance with the Company’s Bylaws and the laws of the State of Indiana at the Annual Meeting to be held on May 21, 2014.  Unless sooner terminated as provided herein, the Plan shall terminate on May 20, 2024.  After the Plan is terminated, no future Awards may be granted under the Plan, but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions.  Furthermore, no grants will be made on or after May 21, 2014 under the Existing Plan, but outstanding awards granted under the Existing Plan will continue unaffected following May 21, 2014.

 

SECTION 3.  DEFINITIONS:  As used in this Plan, unless the context otherwise requires, each of the following terms shall have the meaning set forth below.

 

(a)                                 “Affiliate” shall mean any entity that, directly or indirectly, controls, is controlled by, or is under common control with, the Company.

 

(b)                                 “Award” shall mean a grant of an Option, SAR, Restricted Stock Award, Performance Award, Cash Incentive Award or Other Stock Award pursuant to the Plan, which may, as determined by the Committee, be in lieu of other compensation owed to a Participant.

 

(c)                                  “Award Agreement” shall mean an agreement, certification, resolution or other type or form of writing or other evidence approved by the Committee that evidences the terms and conditions of an Award granted under the Plan.  An Award Agreement may be in an electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the Committee, need not be signed by a representative of the Company or a Participant.

 

(d)                                 “Board of Directors” or “Board” shall mean the board of directors of the Company.

 

(e)                                  “Cash Incentive Award” shall mean a cash award granted pursuant to Section 11.

 

(f)                                   “Change in Control” shall have the meaning set forth in Section 15 of this Plan.

 

 

(g)                                  “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any references to a particular section of the Code shall be deemed to include any successor provision thereto.

 

(h)                                 “Committee” shall mean the Compensation Committee or such other committee of the Board of Directors, which shall consist solely of two or more members of the Board who are “outside directors” within the meaning of Section 162(m) of the Code, “non-employee directors” within the meaning of Securities and Exchange Commission Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934, as amended, and independent directors as defined by any applicable stock exchange rule or any such successor provision thereto.

 

(i)                                     “Company” shall mean CTS Corporation, an Indiana corporation.

 

(j)                                    “Covered Employee” shall mean a Participant who is, or is determined by the Committee to be likely to become, a “covered employee” within the meaning of Section 162(m) of the Code (or any successor provision).

 

(k)                                 “Date of Grant” shall mean the date specified by the Committee on which a grant of Options, SARs or Performance Awards, or a grant or sale of Restricted Stock Awards or Other Stock Awards pursuant to the Plan will become effective (which date will not be earlier than the date on which the Committee takes action with respect thereto).

 

(l)                                     “Employee” shall mean an employee of the Company or any Affiliate.

 

(m)                             “Exercise Price” shall mean an amount, as determined by the Committee, at which an Option or SAR can be exercised by a Participant, which amount shall not be less than the Fair Market Value of a Share on the Date of Grant, unless such Option or SAR is granted pursuant to an assumption or substitution of another Option or SAR in a manner that satisfies the requirements of Section 424(a) of the Code.

 

(n)                                 “Existing Plan” shall mean the CTS Corporation 2009 Omnibus Equity and Performance Incentive Plan.

 

(o)                                 “Fair Market Value” shall mean, as of a given date, unless otherwise determined by the Committee, the closing sale price for a Share as reported on a national securities exchange on such date if the Shares are then being traded on such an exchange.  If no closing sale price was reported for such date, the closing sale price on the last preceding day on which such a price was reported shall be used.  If there is no regular public trading market for the Shares, the Fair Market Value for a Share shall be the fair market value of a Share as determined in good faith by the Committee.  The Committee is authorized to adopt another fair market value pricing method, provided such method is stated in the Award Agreement

 

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and is in compliance with the fair market value pricing rules set forth in Section 409A of the Code.

 

(p)                                 “Incentive Stock Option” shall mean an Option which is intended to meet the requirements set forth in Section 422 of the Code or any successor provision.

 

(q)                                 “Nonqualified Stock Option” shall mean an Option not intended to qualify as an Incentive Stock Option.

 

(r)                                    “Option” shall mean the right to purchase Shares granted pursuant to Section 8, which may take the form of either an Incentive Stock Option or a Nonqualified Stock Option and which shall not have a term of more than 10 years.

 

(s)                                   “Other Stock Award” shall mean an Award of Shares or Awards that are valued in whole or in part, or that are otherwise based on, Shares, including but not limited to dividend equivalents or amounts which are equivalent to any federal, state, local, domestic, or foreign taxes relating to an Award, which may be payable in Shares, cash, other securities, or any other form of property as the Committee shall determine, subject to the terms and conditions set forth by the Committee and granted pursuant to Section 12.

 

(t)                                    “Participant” shall mean an Employee or non-employee member of the Board selected by the Committee to receive Awards under the Plan.

 

(u)                                 “Performance Awards” shall mean Awards of Performance Shares or Performance Units or Cash Incentive Awards.

 

(v)                                 “Performance Measures” shall mean any of the following performance criteria, either alone or in any combination, and may be expressed with respect to the Company or one or more operating units or groups, as the Committee may determine:  free cash flow; earnings per share, diluted or basic; earnings per share from continuing operations, diluted or basic; earnings before interest and taxes; earnings before interest, taxes, depreciation, and amortization; earnings from continuing operations; net asset turnover; order intake; debt ratios; operating expense; inventory turns; net earnings; operating earnings; gross or operating margin; gross margin percentage; return on equity; capital expenditures; cost of quality; on-time delivery; return on net assets; return on capital; return on investment; return on sales; net sales; sales growth; market share; economic value added; cost of capital; expense reduction levels; stock price; productivity; working capital; controllable working capital and total shareholder return.  The Committee may grant Awards subject to Performance Measures that are either Qualified Performance-Based Awards or are not Qualified Performance-Based Awards.  Performance Measures applicable to any Qualified Performance-Based Award to a Covered Employee must be based on one or more, or a combination, of the Performance Measures listed in this paragraph.  Performance Measures may be described in terms of Company-wide objectives or objectives that are

 

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related to the performance of the individual Participant or of one or more of the subsidiaries, divisions, departments, regions, functions or other organizational units within the Company or its subsidiaries.  The Performance Measures may be made relative to the performance of other companies or subsidiaries, divisions, departments, regions, functions or other organizational units within such other companies, and may be made relative to an index or one or more of the Performance Measures themselves.

 

Additionally, Performance Measures may be defined to exclude certain types or categories of extraordinary, unusual or non-recurring items; changes in applicable laws, regulations or accounting principles; currency fluctuations; discontinued operations; non-cash items, such as amortization, depreciation or reserves; or any recapitalization, restructuring, asset impairment, reorganization, merger, acquisition, divestiture, consolidation, spin-off, split-up, combination, liquidation, dissolution, sale of assets, gain or loss on asset sales, or other similar corporate transactions; provided, however, that such action shall not be taken in the case of a Qualified Performance-Based Award where such action would result in the loss of the otherwise available exemption of the Award under Section 162(m) of the Code.  The Committee shall provide how any Performance Measure shall be adjusted to the extent necessary to prevent dilution or enlargement of any Award as a result of extraordinary events or circumstances, as determined by the Committee, or to exclude the effects of extraordinary, unusual, or non-recurring items; changes in applicable laws, regulations, or accounting principles; currency fluctuations; discontinued operations; non-cash items, such as amortization, depreciation, or reserves; or any recapitalization, restructuring, asset impairment, reorganization, merger, acquisition, divestiture, consolidation, spin-off, split-up, combination, liquidation, dissolution, sale of assets, gain or loss on asset sales, or other similar corporate transactions; provided, however, that such action shall not be taken in the case of a Qualified Performance-Based Award where such action would result in the loss of the otherwise available exemption of the Award under Section 162(m) of the Code.

 

(w)                               “Performance Share” shall mean an Award denominated in Shares, which is earned during a Performance Period subject to the terms and conditions as determined by the Committee and granted pursuant to Section 11.

 

(x)                                 “Performance Period” shall mean, in respect of a Performance Award, a period of time established by the Committee pursuant to Section 7 at the end of which the achievement of one or more measurable performance objectives established for a Performance Measure and relating to such Performance Award are to be evaluated or measured.

 

(y)                                 “Performance Unit” shall mean an Award denominated in units having a value in dollars or such other currency, as determined by the Committee, which is earned during a Performance Period subject to the terms and conditions as determined by the Committee and granted pursuant to Section 11.

 

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(z)                                  “Plan” shall mean the Company’s 2014 Performance and Incentive Compensation Plan, as may be amended, or amended and restated, from time to time.

 

(aa)                          “Qualified Performance-Based Award” shall mean any Award or portion of an Award that is intended to satisfy the requirements for “qualified performance-based compensation” under Section 162(m) of the Code.

 

(bb)                          “Restricted Stock” shall mean an Award of Shares, subject to such terms and conditions as determined by the Committee and granted pursuant to Section 10, as to which neither the substantial risk of forfeiture nor any prohibition on transfer has expired.

 

(cc)                            “Restricted Stock Award” shall mean an Award consisting of Restricted Stock or Restricted Stock Units.

 

(dd)                          “Restricted Stock Unit” shall mean an Award consisting of a bookkeeping entry representing the right to receive one Share or an amount equivalent to the Fair Market Value of one Share, payable in cash or Shares, and representing an unfunded and unsecured obligation of the Company, except as otherwise provided by the Committee, subject to such terms and conditions as determined by the Committee and granted pursuant to Section 10.

 

(ee)                            “Shares” shall mean shares of common stock, without a par value, of the Company.

 

(ff)                              “Stock Appreciation Right” or “SAR” shall mean an Award which represents the right to receive the difference between the Fair Market Value of a Share on the date of exercise and an Exercise Price, payable in cash or Shares, subject to such terms and conditions as determined by the Committee and granted pursuant to Section 9 and which shall not have a term of more than 10 years.

 

(gg)                            “Voting Power” shall mean at any time, the combined voting power of the then-outstanding securities entitled to vote generally in the election of members of the Board in the case of the Company, or members of the board of directors or similar body in the case of another entity.

 

SECTION 4.   ADMINISTRATION:  Subject to the express provisions of this Plan, the Committee shall have authority to administer and interpret the Plan, to interpret any Award Agreement, to prescribe, amend, and rescind rules and regulations relating to the Plan and any Award Agreement, and to make all other determinations deemed necessary or advisable for the administration of the Plan.  Any determination by the Committee pursuant to any provision of the Plan or of any Award Agreement will be final and conclusive.  No member of the Committee will be liable for any such action or determination made in good faith.  In exercising its discretion, the Committee may use such objective or subjective factors as it determines to be appropriate in its sole discretion.  To the extent permitted by law, the Committee may from time

 

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to time delegate all or any part of its authority under this Plan to a subcommittee.  To the extent of any such delegation, references in this Plan to the Committee will be deemed to be references to such subcommittee.  To the extent permitted by law, the Committee may delegate to one or more of its members or one or more officers of the Company the authority, subject to terms and conditions as the Committee shall determine, to (a) designate Employees to be recipients of Awards under the Plan and (b) determine the size of any such Awards; provided, however, that:  (x) the Committee shall not delegate such responsibilities to any such officer for Awards granted to an employee who is an officer, member of the Board, or more than 10% beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, as determined by the Board in accordance with Section 16 of the Securities Exchange Act of 1934, as amended; (y) the resolution providing for such authorization sets forth the total number of Shares such officer(s) may grant; and (z) the officer(s) shall report periodically to the Committee regarding the nature and scope of the Awards granted pursuant to the authority delegated.

 

SECTION 5.  SHARES AVAILABLE FOR AWARDS

 

(a)                                 Subject to adjustment as provided in Section 5(g), the maximum number of Shares available for issuance under the Plan shall be 1,500,000.

 

(b)                                 If any Shares issued pursuant to an Award are forfeited, or an Award is forfeited, expires, or is otherwise terminated, the Shares issued pursuant to, or subject to, such Award (as applicable) shall, to the extent of such forfeiture, expiration, or termination, again be available for Awards under the Plan.  Notwithstanding anything to the contrary contained herein:  (i) if Shares are tendered or otherwise used in payment of the Exercise Price of an Option, the total number of Shares covered by the Option being exercised shall reduce the maximum number of Shares available under Section 5(a); (ii) Shares withheld by the Company to satisfy the tax withholding obligation shall count against the maximum number of Shares available under Section 5(a); and (iii) the number of Shares covered by an SAR, to the extent that it is exercised and settled in Shares, and whether or not all the Shares covered by the Award are actually issued to the Participant upon exercise of the SAR, shall be considered issued or transferred pursuant to the Plan.  In the event that the Company repurchases Shares with Option proceeds, those Shares will not be added to the maximum number of Shares available under Section 5(a).  If, under the Plan, a Participant has elected to give up the right to receive compensation in exchange for Shares based on Fair Market Value, such Shares will not count against the maximum number of Shares available under Section 5(a).

 

(c)                                  Unless otherwise determined by the Committee, Awards that are designed to operate in tandem with other Awards shall not be counted against the maximum number of Shares available under Section 5(a) in order to avoid double counting.

 

(d)                                 Notwithstanding the foregoing, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options shall equal the aggregate number of Shares stated in Section 5(a), subject to adjustment as provided in

 

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Section 5(g) to the extent that such adjustment does not affect the ability to grant or the qualification of Incentive Stock Options under the Plan.

 

(e)                                  To the extent any Award is settled in cash, the number of Shares available for issuance under the Plan pursuant to Section 5(a) shall be reduced by an amount equal to the quotient of: (i) the dollar amount of such cash payment, reduced by any amount tendered by the Participant or retained by the Company to satisfy tax withholding obligations in connection with the Award; divided by (ii) the Fair Market Value of a Share on the date of the cash payment.

 

(f)                                   Any Shares issued under the Plan shall consist, in whole or in part, of authorized and unissued Shares, Shares purchased in the open market or otherwise, Shares in treasury, or any combination thereof, as the Committee or, as appropriate, the Board may determine.

 

(g)                                  In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, reverse stock split, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, or corporate transaction or event having an effect similar to the foregoing, the Committee shall adjust the number and type of Shares available for Awards under the Plan and Plan limits, the number and type of Shares subject to outstanding Awards, and the Exercise Price with respect to any Award, and Cash Incentive Awards, as is equitably required to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.  In the case of any stock split, including a stock split effected by means of a stock dividend, and in the case of any other dividend paid in shares of the Company, such adjustments shall be made automatically without the necessity of Committee action, on the customary arithmetical basis. Any fractional Share resulting from an adjustment pursuant to this Section 5(g) shall be disregarded. Moreover, in the event of any such transaction or event or in the event of a Change in Control, the Committee may provide in substitution for any or all outstanding Awards under this Plan such alternative consideration (including cash) as it may determine to be equitable and may in connection therewith require the surrender of all or part of any Award to be replaced in a manner that complies with Section 409A of the Code.  In addition, for each Option or SAR with an Exercise Price greater than the consideration offered in connection with any such transaction or event or Change in Control, the Committee may in its sole discretion elect to cancel such Option or SAR without any payment to the person holding such Option or SAR.

 

(h)                                 Subject to adjustment as provided in Section 5(g), the number of Shares issued as Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units and Other Stock Awards (after taking into account any forfeitures and cancellations) will not during the life of the Plan in the aggregate exceed 1,500,000 Shares.

 

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SECTION 6.  ELIGIBILITY:  The Committee from time to time may designate which Employees and non-employee members of the Board shall become Participants under the Plan.

 

SECTION 7.  CODE SECTION 162(m) AND OTHER PROVISIONS

 

(a)                                 This Section 7 is applicable to any Qualified Performance-Based Award granted to a Covered Employee.  Performance Measures applicable to any Qualified Performance-Based Award to a Covered Employee must be based on one or more, or a combination, of the Performance Measures.

 

(b)                                 Notwithstanding any other provision of the Plan other than Section 5(g):

 

(i)                                     no Participant will be granted Options or SARs, in the aggregate, for more than 500,000 Shares during any calendar year;

 

(ii)                                  no Participant will be granted Qualified Performance-Based Awards of Performance Shares for more than [300,000] Shares during any calendar year; provided, however, that, if any other Qualified Performance-Based Awards of Performance Shares are outstanding for such Participant for a given calendar year, such Share limitation shall be reduced for each such given calendar year by the Shares that could be received by the Participant under all such Qualified Performance-Based Awards, divided, for each such Qualified Performance-Based Award, by the number of full calendar years of the Company applicable to each such outstanding Qualified Performance-Based Award;

 

(iii)                               in no event will any Participant in any calendar year receive a Qualified Performance-Based Award of Performance Units having an aggregate maximum value as of their respective Dates of Grant in excess of $3,000,000; provided, however, that, if any other Qualified Performance-Based Awards of Performance Units are outstanding for such Participant for a given calendar year, such dollar limitation shall be reduced for each such given calendar year by the amount that could be received by the Participant under all such Qualified Performance-Based Awards, divided, for each such Qualified Performance-Based Award, by the number of full calendar years of the Company applicable to each such outstanding Qualified Performance-Based Award; and

 

(iv)                              in no event will any Participant in any calendar year receive a Qualified Performance-Based Award that is a Cash Incentive Award having an aggregate maximum value in excess of $3,000,000.

 

The limitations set forth in this Section 7(b) shall be subject to adjustment under Section 5(g) of the Plan only to the extent that such adjustment does not affect the status of any Qualified Performance-Based Award intended to satisfy the requirements for “qualified performance-based compensation” under Section 162(m) of the Code.  If an Option is granted in tandem with a SAR such that

 

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exercise of the Option or SAR with respect to one Share cancels the tandem Option or SAR, respectively, with respect to such Share, the tandem Option and SAR with respect to such Share shall be counted as covering only one Share for purposes of applying the limitation set forth in this Section 7(b).

 

(c)                                  Notwithstanding the foregoing, in no event will any Participant who is a non-employee member of the Board receive in any calendar year (i) Share-based awards under this Plan for, in the aggregate, more than 30,000 Shares, and (ii) cash-based awards under this Plan having an aggregate maximum value in excess of $500,000.

 

(d)                                 The Committee shall have the authority to impose such other restrictions on Qualified Performance-Based Awards as it may deem necessary or appropriate to ensure that such Qualified Performance-Based Awards satisfy the requirements for “qualified performance-based compensation” under Section 162(m) of the Code.

 

SECTION 8.   OPTIONS:  Subject to the terms and conditions of the Plan, the Committee may grant Options to Participants on such terms and conditions as the Committee may prescribe in an Award Agreement, including, but not limited to, the Exercise Price; vesting schedule; method of payment of the Exercise Price; treatment upon termination of employment; treatment upon certain corporate transactions or events, including a Change in Control; and other terms and conditions that the Committee may deem appropriate.  Options granted under this Plan may not provide for any dividends or dividend equivalents thereon.  Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code.

 

SECTION 9.   STOCK APPRECIATION RIGHTS:  Subject to the terms and conditions of the Plan, the Committee may grant SARs to Participants on such terms and conditions as the Committee may prescribe in an Award Agreement, including, but not limited to, the Exercise Price; vesting schedule; form of payment; treatment upon termination of employment; treatment upon certain corporate transactions or events, including a Change in Control; and other terms and conditions that the Committee may deem appropriate.  SARs granted under this Plan may not provide for any dividends or dividend equivalents thereon.

 

SECTION 10.   RESTRICTED STOCK AWARDS:  Subject to the terms and conditions of the Plan, the Committee may grant Restricted Stock Awards to Participants on such terms and conditions as the Committee may prescribe in an Award Agreement, including, but not limited to, the vesting schedule; purchase price, if any; deferrals allowed or required; treatment upon termination of employment; treatment upon certain corporate transactions or events, including a Change in Control; and other terms and conditions that the Committee may deem appropriate.  Any dividends or other distributions on Restricted Stock Awards with restrictions that lapse as a result of the achievement of Performance Measures will be deferred until and paid contingent upon the achievement of the applicable Performance Measures.

 

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SECTION 11.   PERFORMANCE AWARDS:  Subject to the terms and conditions of the Plan, the Committee may grant Performance Awards to Participants on such terms and conditions as the Committee may prescribe in an Award Agreement, including, but not limited to, the performance period; performance criteria; treatment upon termination of employment; treatment upon certain corporate transactions or events, including a Change in Control; and other terms and conditions that the Committee may deem appropriate.  Any dividends or other distributions on Performance Shares or Performance Units with restrictions that lapse as a result of the achievement of Performance Measures will be deferred until and paid contingent upon the achievement of the applicable Performance Measures.  Notwithstanding anything in this Plan to the contrary, the Committee shall not adjust Performance Shares or Performance Units, or Cash Incentive Awards, that are Qualified Performance-Based Awards where such action would result in the loss of the otherwise available exemption of the Award under Section 162(m) of the Code.

 

SECTION 12.   OTHER STOCK AWARDS:  Subject to the terms and conditions of the Plan, the Committee may grant Other Stock Awards to Participants on such terms and conditions as the Committee may prescribe in an Award Agreement, including, but not limited to, the vesting schedule, if any; purchase price, if any; deferrals allowed or required; treatment upon termination of employment; treatment upon certain corporate transactions or events, including a Change in Control; and other terms and conditions that the Committee may deem appropriate.  Any dividends or other distributions on Other Stock Awards with restrictions that lapse as a result of the achievement of Performance Measures will be deferred until and paid contingent upon the achievement of the applicable Performance Measures.

 

SECTION 13.   PROHIBITION ON REPRICING:  Except in connection with a corporate transaction or event described in Section 5(g) of the Plan, the terms of outstanding Awards may not be amended to reduce the Exercise Price of outstanding Options or SARs, or cancel outstanding Options or SARs in exchange for cash, other Awards or Options or SARs with an Exercise Price that is less than the Exercise Price of the original Options or SARs without shareholder approval.

 

SECTION 14.   WITHHOLDING:  The Committee may make such provisions and take such steps as it may deem necessary and appropriate for the withholding of any taxes that the Company is required by law or regulation of any governmental authority, whether federal, state, local, domestic, or foreign, to withhold in connection with the grant, exercise, payment, or removal of restrictions of an Award, including, but not limited to, requiring or permitting the Participant to remit to the Company an amount sufficient to satisfy such withholding requirements in cash or Shares or withholding cash or Shares due or to become due with respect to the Award at issue.  In no event shall the Fair Market Value of Shares to be withheld pursuant to this Section 14 to satisfy applicable withholding taxes in connection with the benefit exceed the minimum amount of taxes required to be withheld.

 

SECTION 15.   CHANGE IN CONTROL:  For purposes of this Plan, except as may be otherwise prescribed by the Committee in an Award Agreement, a “Change in Control” will be deemed to have occurred upon the occurrence of any of the following events:

 

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(a)                                 the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of 25% or more of the then Voting Power; provided, however, that the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company that is approved by the Incumbent Board (as defined below); (ii) any acquisition by the Company or any Affiliate and any change in the percentage ownership of the Voting Power of the Company that results from such acquisition; (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate; or (iv) any acquisition by any Person pursuant to a transaction that complies with clauses (i), (ii) and (iii) of Section 15(c) below; or

 

(b)                                       individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a member of the Board subsequent to the Effective Date, whose election, or nomination for election by the Company’s stockholders, was approved by a vote of a majority of the directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be considered as though such individual was a member of the Incumbent Board, 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 other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

 

(c)                                        consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners of the Voting Power immediately prior to such Business Combination beneficially own, directly or indirectly, more than 75% of, respectively, the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions relative to each other as their ownership immediately prior to such Business Combination of the Voting Power, (ii) no Person (excluding the Company, any entity resulting from such Business Combination, or any employee benefit plan (or related trust) sponsored or maintained by the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 15% or more of, respectively, the then-outstanding shares of common stock of the entity resulting from such Business Combination, and (iii) at least a majority of the members of

 

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the board of directors of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board providing for such Business Combination; or

 

(d)                                       approval by the stockholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a Business Combination that complies with clauses (i), (ii) and (iii) of Section 15(c).

 

SECTION 16.   POSTPONEMENT OF ISSUANCE AND DELIVERY:  The issuance and delivery of any Shares under this Plan may be postponed by the Company for such period as may be required to comply with any applicable requirements under any applicable listing requirement of any national securities exchange or any law or regulation applicable to the issuance and delivery of Shares, and the Company shall not be obligated to issue or deliver any Shares if the issuance or delivery of such Shares shall constitute a violation of any provision of any law or regulation of any governmental authority or any national securities exchange.

 

SECTION 17.   NO RIGHT TO AWARDS:  No Employee or member of the Board shall have any claim to be granted any Award under the Plan, and there is no obligation for uniform treatment of Employees or members of the Board under the Plan. The terms and conditions of Awards need not be the same with respect to different Participants.

 

SECTION 18.   NO RIGHT TO EMPLOYMENT OR DIRECTORSHIP:  The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or an Affiliate or any right to remain as a member of the Board, as the case may be. Termination of the services of an Employee or a member of the Board shall not give rise to any liability or any claim under the Plan, unless otherwise provided in the Plan or an Award Agreement.

 

SECTION 19.   NO RIGHTS AS A SHAREHOLDER:  A Participant shall have no rights as a shareholder with respect to any Shares covered by an Award until the date of the issuance of such Shares.

 

SECTION 20.   SEVERABILITY:  If any provision of the Plan or any Award is, becomes, or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or such Award shall remain in full force and effect.

 

SECTION 21.   NO TRUST OR FUND CREATED:  Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other person. To the extent any person acquires a right to receive payments from the Company or an Affiliate pursuant to an

 

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Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.

 

SECTION 22.   HEADINGS:  Headings are given to the Sections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provisions thereof.

 

SECTION 23.   NONASSIGNABILITY:  Unless otherwise determined by the Committee, no Participant or beneficiary may sell, assign, transfer, discount, or pledge as collateral for a loan, or otherwise anticipate any right to payment under the Plan other than by will or by the applicable laws of descent and distribution, and in no event shall any Award granted under the Plan or such right to payment be transferred for value.

 

SECTION 24.   INDEMNIFICATION:  In addition to such other rights of indemnification as members of the Board or the Committee or officers or employees of the Company or an Affiliate to whom authority to act for the Board or Committee is delegated may have, such individuals shall be indemnified by the Company to the maximum extent permitted by law and the Company’s Bylaws.

 

SECTION 25.   FOREIGN JURISDICTIONS:  The Committee may adopt, amend, or terminate arrangements, not inconsistent with the intent of the Plan, to make available tax or other benefits under the laws of any foreign jurisdiction to Participants subject to such laws or to conform with the laws and regulations of any such foreign jurisdiction.

 

SECTION 26.   TERMINATION AND AMENDMENT:  Subject to the approval of the Board where required, the Committee may at any time and from time to time alter, amend, suspend, or terminate the Plan in whole or in part; provided, however, that no action shall be taken by the Board or the Committee without the approval of shareholders that would

 

(a)                                 Increase the maximum number of Shares that may be issued under the Plan, except as provided in Section 5(g);

 

(b)                                 Change the class of eligible Participants;

 

(c)                                  Permit the repricing of outstanding Options or SARs, as provided in Section 13; or

 

(d)                                 require approval of the Company’s shareholders under any applicable law, regulation, stock exchange listing rule, or other rule.

 

Notwithstanding the foregoing, no termination or amendment of the Plan may, without the consent of the applicable Participant, terminate or adversely affect any right or obligation under an Award previously granted under the Plan, except as necessary to comply with changes in law or accounting rules applicable to the Company.

 

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SECTION 27.   COMPLIANCE WITH SECTION 409A OF THE CODE

 

(a)                                 To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Participants.  This Plan and any grants made hereunder shall be administered in a manner consistent with this intent.  Any reference in this Plan to Section 409A of the Code will also include any regulations or any other formal guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

 

(b)                                 Neither a Participant nor any of a Participant’s creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment.  Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company or any of its Affiliates.

 

(c)                                  If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant shall be a specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the Company from time to time) and (ii) the Company shall make a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it, without interest, on the first business day of the seventh month after such six-month period.

 

(d)                                 Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Company reserves the right to make amendments to this Plan and grants hereunder as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code.  In any case, a Participant shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for a Participant’s account in connection with this Plan and grants hereunder (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its affiliates shall have any obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes or penalties.

 

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SECTION 28.   APPLICABLE LAW:  This Plan shall be governed by and construed in accordance with the laws of the State of Indiana, without regard to its principles of conflict of laws.

 

SECTION 29.   DETRIMENTAL ACTIVITY AND RECAPTURE PROVISIONS:  Any Award Agreement may provide for the cancellation or forfeiture of an Award or the forfeiture and repayment to the Company of any gain related to an Award, or other provisions intended to have a similar effect, upon such terms and conditions as may be determined by the Committee from time to time, if a Participant, either (a) during employment or other service with the Company or an Affiliate or (b) within a specified period after termination of such employment or service, shall engage in any detrimental activity.  In addition, notwithstanding anything in this Plan to the contrary, any Award Agreement may also provide for the cancellation or forfeiture of an Award or the forfeiture and repayment to the Company of any gain related to an Award, or other provisions intended to have a similar effect, upon such terms and conditions as may be required by the Committee or under Section 10D of the Securities Exchange Act of 1934, as amended, and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the Shares may be traded.

 

SECTION 30.   SHARE-BASED AWARDS IN SUBSTITUTION FOR AWARDS GRANTED BY OTHER COMPANY:  Notwithstanding anything in this Plan to the contrary:

 

(a)                                 Awards may be granted under this Plan in substitution for or in conversion of, or in connection with an assumption of, stock options, stock appreciation rights, restricted stock, restricted stock units or other stock or stock-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with the Company or any subsidiary.  Any conversion, substitution or assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner that complies with Section 409A of the Code. The Awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of this Plan, and may account for Shares substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the transaction.

 

(b)                                 In the event that a company acquired by the Company or any subsidiary or with which the Company or any subsidiary merges has shares available under a pre-existing plan previously approved by stockholders and not adopted in contemplation of such acquisition or merger, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) may be used for Awards made after such acquisition or merger under the Plan; provided, however, that Awards using such available shares may not be made after the date awards or grants could have been made under the terms of the pre-existing plan absent the acquisition or merger, and may

 

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only be made to individuals who were not employees or directors of the Company or any subsidiary prior to such acquisition or merger.

 

(c)                                  Any Shares that are issued by, or that are subject to any Awards that are granted by, or become obligations of, the Company under Sections 30(a) or 30(b) above will not reduce the Shares available for issuance or transfer under the Plan or otherwise count against the limits contained in the Plan.  In addition, no Shares that are issued by, or that are subject to any awards that are granted by, or become obligations of, the Company under Sections 30(a) or 30(b) above will be added to the maximum number of Shares available under Section 5(a).

 

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