Document:

Exhibit103

Exhibit 10.3

EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”), is made effective as of December 29, 2014 (the “Effective Date”), by and between KENNEDY-WILSON, INC., a Delaware corporation (the “Company”), and Justin Enbody, an individual (“Employee”) with respect to the following facts and circumstances: 
RECITALS
WHEREAS, the Company has been employing Employee as Chief Financial Officer; and 
WHEREAS, during the Term (as defined below), the Company desires to continue to engage Employee as Chief Financial Officer and Employee desires to continue to be employed by the Company, on the terms and conditions and for the consideration set forth herein.   
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which the Company and Employee hereby acknowledge, the Company and Employee hereby agree as follows:

1.    Term of Employment.  Employee shall be employed by the Company pursuant to this Agreement for a term of five (5) years from the Effective Date (the “Term”), unless earlier terminated pursuant to Section 4.

2.     Terms of Employment.  

(a)Position and Duties.     

i.Subject to the policy guidelines and directives of the Company which are provided to him by the Company from time to time during the Term (as defined below), Employee shall serve as Chief Financial Officer, and shall advance the business and welfare of the Company as determined by the Company from time to time, and have such powers and duties as may from time to time be prescribed by the Chairman and Chief Executive Officer of the Company, which duties, in the Company’s reasonable discretion, may be changed in any legal manner from time to time. Employee shall have no authority to bind or obligate the Company to the purchase or sale of any real property or to any other financial commitment, including without limitation the borrowing of any monies on a secured or unsecured basis, without obtaining the prior authorization of the Company as to the specific transaction. Employee’s duties shall include such other matters or responsibilities as the Company and Employee may jointly agree upon from time to time during the term of this Agreement.
 

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ii.Employee’s employment is on a full-time and “best-efforts” basis meaning that during the term of this Agreement, Employee shall not accept any full or part-time employment, including without limitation as an independent consultant, after working hours or otherwise, without the prior written consent of the Company, which may be given, withheld or conditioned in the Company’s sole and absolute discretion. Employee shall devote his full energies, interests, abilities and productive time to the performance of his duties and responsibilities under this Agreement. During the Term, Employee shall not, directly or indirectly, whether as a partner, employee, creditor, shareholder or otherwise promote, participate or engage in any activity or other business competitive with the Company’s business. Notwithstanding the foregoing, the Company acknowledges that Employee has made and will continue to make personal investments that will require Employee’s periodic attention. Employee may participate in such personal investments to the full extent desired by Employee so long as such personal investment activity does not detract from Employee’s ability to devote his full energies and productive interests to the performance of his duties and responsibilities under this Agreement.

iii.Employee shall devote substantially all of his working hours to Company business, provided, however, that Employee may (i) serve on corporate, civic or charitable boards or committees; and (ii) manage personal investments, so long as such activities do not significantly interfere with the performance of Employee’s duties and obligations to the Company under this Agreement.  For the avoidance of doubt, Employee’s continued conduct with respect to activities prior to the Effective Date shall not be deemed to interfere with his duties and responsibilities under this Agreement.

(b)Compensation and Benefits.  During the Term of this Agreement, the Company shall pay to Employee compensation (the “Compensation”) consisting of:

i.    Salary. The Company shall pay a salary equal to six hundred thousand dollars ($600,000.00) per annum, payable on such basis as is the normal payment pattern of the Company, not to be less frequently than monthly (“Base Salary”). Employee’s Base Salary shall be reviewed on a bi-annual basis and adjusted upwards as appropriate;

ii.    Performance Bonus. In addition to the Base Salary provided for above, Employee shall receive, with respect to each fiscal year (or portion thereof) during the Term of this Agreement, a bonus in an amount that is approved by the Company’s Compensation Committee, and, if required, approved by the Company’s Board of Directors (“Performance Bonus”); and

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iii.    Restricted Stock Award; Equity Based Compensation. In addition to the Base Salary and Performance Bonus provided for above, Employee shall, with respect to each fiscal year (or portion thereof) during the Term of this Agreement, participate in all equity participation plans as approved by the Company’s Compensation Committee, and, if required, approved by the Company’s Board of Directors (“Restricted Stock Award”).

(c)Insurance Coverage and Other Benefits. During the Term of this Agreement, the Company will provide Employee, at the Company’s expense, with coverage under the major medical, hospitalization and other insurance programs maintained by the Company for its officers generally. In addition, Employee will receive during the Term of this Agreement, all other Company-provided benefits to which Employee was entitled in the ordinary course immediately prior to the date hereof as an employee of the Company, and all other Company-provided benefits, which are, from time to time, made available by the Company to its officers including without limitation medical, dental, disability, life insurance and 401(k) plan.

(d)Expenses. The Company shall pay for any out-of-pocket expenses, including travel expenses, incurred by Employee in the ordinary course of providing his services, consistent with the Company’s current practice. 

3.    Non-Competition.  For all periods that Employee is employed pursuant to this Agreement and for a period of twelve (12) months thereafter, unless the Company terminated Employee without cause or Employee resigned for Good Reason, Employee may not, without the prior written consent of the Company:

(a)Engage in any business in the State of California which engages in the same business or similar businesses engaged in by the Company during the Term without the consent of the Board of Directors of the Company, or which would result in using or revealing any trade secrets or confidential information of the Company, including but not limited to activities, whether direct or indirect, as proprietor, partner, shareholder, principal, agent, or employee; and

(b)In any manner induce, attempt to induce, or assist others to induce or attempt to induce any employee, partner, joint venture, independent contractor, agent or customer of the Company to terminate its, his or her association with the Company or do anything to interfere with the relationship between the Company and such person or entity or other persons or entities dealing with the Company. 

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(c)The parties hereto intend that the covenants and agreement contained in this Section 3 shall be deemed to be a series of separate covenants and agreements, one (1) for each and every country, county, state, city and other jurisdiction in the world with respect to which the Company’s business has been or is hereafter carried on. If any of the foregoing is determined by any court of competent jurisdiction to be invalid or unenforceable by reason of such agreement extending for too great a period or over too great a geographical area, or by reason of its being too extensive in any other respect, such agreement shall be interpreted to extend only over the maximum period of time and geographical area and to the maximum extent enforceable, all determined by such court in such action. Any determination that any provision hereof is invalid or unenforceable, in whole or in part, shall have no effect on the validity or enforceability of any remaining provision hereof.  

(d)Notwithstanding the foregoing, nothing herein shall prevent Employee, following termination of his employment or the end of the Term, whichever is later, from being associated with any person or entity engaged in any real estate activities or matters other than real estate auction activities or other activities which constitute a primary line of business of the Company at the time of such termination. Employee represents and warrants that he is not restricted or prohibited in any way from entering into this Agreement or performing services hereunder at any time, whether by non-competition, covenant or otherwise, and shall indemnify, defend and hold the Company harmless from and against any damages, claims, costs (including attorneys’ fees) or liabilities as a result of the incorrectness of such representation and warranty.  
 
4.    Termination.

(a)Termination for Cause. The Company may terminate Employee’s employment at any time during the Term, for Cause (as defined below). The term “Cause” shall mean: (1) Employee is convicted of, after the exhaustion of all appeals, or pleads guilty or nolo contendere to a charge of the commission of a felony involving moral turpitude; (2) Employee has engaged in gross neglect or willful misconduct in carrying out his duties, which is reasonably expected to result in material economic or material reputational harm to the Company; or (3) Employee materially breaches any material provision of this Agreement which is reasonably expected to result in a material economic or material reputational harm to the Company.

i.No act or failure to act, on the part of Employee, shall be considered “willful” unless it is done, or omitted to be done, by Employee in bad faith or without reasonable belief that Employee’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution adopted by the Board of Directors of the 

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Company or upon the instructions of the Board of Directors of the Company, or based upon the advice of counsel for the Company, shall be conclusively presumed to be done, or omitted to be done, by Employee in good faith and in the best interests of the Company. 

ii.In order to invoke a termination for Cause on any of the grounds enumerated above, the Company must provide written notice to Employee of the existence of such grounds within thirty (30) days following the Company’s knowledge of the existence of such grounds, specifying in reasonable detail the grounds constituting Cause, and Employee shall have thirty (30) days following receipt of such written notice during which she may remedy the ground if such ground is reasonably subject to cure (the “Cure Period”). Notwithstanding the foregoing, in the event that Employee commences to cure the breach within the Cure Period, and the breach can be cured but cannot reasonably be cured within the Cure Period, the Cure Period shall continue for so long as the Employee diligently prosecutes the cure to completion, and Employee shall not be considered in breach. 

(b)Death or Disability. The Company may terminate Employee’s employment upon the date of the Employee’s disability. The term “Disability” shall mean physical or mental disability to the extent that Employee becomes disabled for more than one hundred twenty (120) consecutive days or one hundred eighty (180) days in the aggregate in any twelve (12) month period, provided however, that: (i) if Employee disputes that Disability has occurred, the Company and Employee shall jointly select a doctor to examine Employee, and if the Company and Employee cannot agree on a doctor, each party shall select one (1) doctor who shall jointly select a third (3rd) doctor to examine Employee; and (ii) the Company shall continue to pay Employee all Section 2 Compensation (as defined below), until a final determination has been made. For purposes of this Agreement, “Section 2 Compensation” shall mean Employee’s annual Base Salary, annual Performance Bonus and annual Restricted Stock Award. In addition, upon Employee’s death or a final determination of Disability, the unvested portion of any Restricted Stock Award granted to Employee pursuant to the Company’s Amended and Restated 2009 Equity Participation Plan (the “Plan”) as same may be amended from time to time during the Term, or any similar equity participation plan, shall immediately vest. Upon Employee’s death or final determination of Disability, Employee’s employment shall automatically terminate (the period of time between the date of Employee’s death or final determination of Disability, as applicable, and the date that the Term would have otherwise expired if death or final determination of Disability, as applicable, had not occurred shall be referred to as the “Covered Term”); provided, however, that upon such termination the Company shall pay to Employee (or Employee’s estate) an amount equal to the greater of: (1) the sum of (A) the Base Salary that otherwise would have been paid during the 

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Covered Term, plus (B) the amount of the Performance Bonus paid to Employee for the most recent calendar year preceding Employee’s death; or (2) such other amount that the Compensation Committee of the Company may determine in its sole discretion from time to time during the Term (such greater amount of (1) and (2) shall be referred to as the “Final Payment”).  The Company shall pay for or facilitate the Final Payment to be made either: (i) in cash, in a single lump sum, within ten (10) days of the date of termination; or (ii) at the sole discretion of the Compensation Committee of the Company, as proceeds from one (1) or more insurance policies, the premiums of which shall be paid by the Company. Employee acknowledges that in furtherance of the foregoing and in discharge of its obligation to make the Final Payment, the Company may purchase and pay the premiums for one (1) or more insurance policies (disability, life or otherwise), with the beneficiary being the Employee, and Employee hereby consents to such insurance and Employee agrees to submit to any medical examination and release of medical records required to obtain such insurance. 

(c)Resignation for Good Reason. Employee may terminate his employment at any time during the Term, by resigning for Good Reason (as defined below). Any of the following shall be deemed “Good Reason:” (i) the Company instructs Employee to work full-time or substantially full-time at any location that is not acceptable to Employee (other than the Company’s current headquarters or, any other Company headquarters within twenty (20) miles of Beverly Hills, California; (ii) the Company eliminates or materially reduces Employee’s responsibilities, authorities or duties as Chief Financial Officer; (iii) a Change in Control (as defined below) occurs; (iv) a material reduction in Employee’s base compensation; or (v) any other material breach of this Agreement by the Company. Notwithstanding the foregoing, a resignation under clauses (i), (ii) and (iv) of this Section 4(c) shall only be for Good Reason if Employee provides the Company with written notice within ninety (90) days after the initial occurrence of an event allegedly constituting Good Reason and the Company fails to cure within thirty (30) days of receipt of such notice and Employee’s resignation occurs within one (1) year of such occurrence.    

For purposes of this Section 4(c), a “Change in Control” shall be deemed to occur upon the first (1st) to occur of any of the following events: (i) any person becomes the beneficial owner of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities; (ii) a merger, consolidation or other business combination as a result of which beneficial ownership of shares or securities representing more than fifty percent (50%) of the total fair market value or total voting power of the Company is acquired by any person; (iii) the sale or disposition of all or substantially all of the Company’s assets to any person; or (iv) within any twelve (12) month period, the incumbent directors of the Board 

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of Directors shall cease to constitute at least a majority of the Board of Directors of the Company, or of any successor to the Company; provided, however, that any director elected to the Board of Directors, or nominated for election by a majority of the Board of Directors then still in office, shall be deemed to be an incumbent director for purposes of this Section 4(c), but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either 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 any person other than the Board of Directors (including, but not limited to, any such assumption that results from subsections (i), (ii) or (iii) of this definition). For purposes of this definition, “person” means any individual, entity (including any employee benefit plan or any trust for an employee benefit plan) or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, or any successor provision). The unvested portion of any Restricted Stock Award granted to Employee pursuant to the Plan or any similar equity participation plan, shall immediately vest upon a Change in Control. 

(d)Payment upon Termination without Cause / Resignation for Good Reason.    In the event that Employee’s employment is terminated by the Company prior to the end of the Term without Cause, or if Employee resigns for Good Reason:

i.    The Company shall (A) continue to pay to Employee the Base Salary (not taking into account any reduction in Base Salary that constituted Good Reason) on the Company’s regular payroll dates applicable to similarly situated employees of the Company; and (B) continue to provide or make available to Employee all other employee benefits (other than continued participation in the Company’s 401(k) plan) to which Employee was entitled as of the employment termination date throughout the remainder of the Term, provided such benefits can be provided or made available at no additional cost to the Company, unless Employee agrees to pay any excess cost;

ii.    The Company shall pay to Employee an amount equal to the Severance Amount (as defined below), payable in one (1) lump sum cash payment within forty-five (45) days after the date of termination, provided that if such forty-five (45) day period begins in one (1) calendar year and ends in a second (2nd) calendar year, the Severance Amount shall be paid in the second (2nd) calendar year; and 

iii.    The unvested portion of any Restricted Stock Award granted to Employee pursuant to the Plan or any similar equity participation plan, shall immediately vest. 

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For the avoidance of doubt, Employee shall have no duty to mitigate damages and any compensation earned after the date of termination shall not reduce the Company’s obligations. The benefits described in clause (i)(B) of this Section 4(d) shall be provided or made available in accordance with the underlying plans, programs and policies, and subject to Section 6; provided that, with respect to group health insurance premiums, to the extent that the Company would be prohibited from or penalized for providing or making available such benefits under then-applicable law, the Company shall pay to Employee an amount in cash and/or reimburse to Employee, upon submission of proof of payment by Employee, an equivalent dollar amount.

For purposes of this Section 4(d), “Severance Amount” shall mean an amount equal to (A) two (2) times the average sum of: (i) Base Salary (not taking into account any reduction in Base Salary that constituted Good Reason); (ii) Performance Bonus; and (iii) the value of the annual Restricted Stock Award granted to Employee, with (i), (ii), and (iii) based on the actual amounts of each of the foregoing, for the three (3) fiscal years prior to the fiscal year in which termination without Cause or resignation for Good Reason (as applicable) occurs, less (B) (x) an amount equal to Employee’s monthly Base Salary in effect as of the time of such termination (not taking into account any reduction in Base Salary that constituted Good Reason) multiplied by (y) the number of months remaining in the Term as of such date. For purposes of calculating the Severance Amount, the value of the annual Restricted Stock Award shall be, with respect to each fiscal year, the greater of: (1) the grant date fair value of the award for such fiscal year, or (2) One Million Five Hundred Thousand Dollars ($1,500,000).

(e)Termination for Cause / Resignation without Good Reason. If the Company terminates Employee’s employment for Cause, or if Employee resigns without Good Reason, the Company shall pay to Employee all Compensation pursuant to Section 2 through the date of termination or resignation, provided however, that if Employee disputes the existence of Cause or if the Company disputes the existence of Good Reason, Employee shall receive Section 2 Compensation until the date of final determination.  

5.    Section 280G.

(a)Notwithstanding anything in this Agreement to the contrary, in the event that the Company’s independent public accountants (the “Accountants”) shall determine in good faith that receipt of all payments or benefits made or provided by the Company or its affiliated companies in the nature of compensation to or for Employee’s benefit (each, a “Payment”), whether payable or 

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to be provided pursuant to this Agreement or otherwise, and including, without limitation, the post-termination payments and benefits provided pursuant to Section 4(d) and the Restricted Stock Award provided pursuant to Section 2, would, but for this sentence, subject Employee to the excise tax under Section 4999 (the “Excise Tax”) of the Internal Revenue Code of 1986, as amended (the “Code”), then the Company shall cause to be determined by the Accountants in good faith, before any Payments are made, which of the following two (2) alternative forms of payment would result in Employee’s receipt, on an after-tax basis, of the greater aggregate amount of Payments, notwithstanding that all or some portion of the Payments may be subject to the Excise Tax, and shall pay to Employee such greater amount: (1) payment in full of the entire amount of the Payments (a “Full Payment”), or (2) payment of only a part of the Payments so that Employee receives the largest amount of the Payments possible without the imposition of the Excise Tax (a “Reduced Payment”).

(b)For purposes of determining whether to make a Full Payment or a Reduced Payment, the Company shall cause to be taken into account by the Accountants all applicable federal, state and local income and employment taxes and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes). If the Accountants determine that aggregate Payments should be reduced to the Reduced Payment, the Company shall promptly give Employee notice to that effect and a copy of the detailed calculation thereof. If a Reduced Payment is made, (x) Employee shall have no rights to any additional payments and/or benefits constituting the Payment, and (y) any reduction of the Payments shall be made in accordance with Section 5(d) below.

(c)As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accountants hereunder, it is possible that Payments will have been made by the Company to or for the benefit of Employee which should not have been so made (“Overpayment”), or that additional amounts which will have not been paid or distributed by the Company to or for the benefit of Employee could have been so paid or distributed (“Underpayment”), in each case, consistent with the calculation of the Full Payment or the Reduced Payment hereunder, as the case may be. In the event that the Accountants, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or Employee which the Accountants believe has a high probability of success, determine that an Overpayment has been made, Employee shall pay any such Overpayment to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by Employee to the Company if and to the extent such payment would not either reduce the amount on which Employee is subject to tax under Section 1 and Section 4999 of 

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the Code or generate a refund of such taxes. In the event that the Accountants determine that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of Employee together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code.

(d)Any reduction of Payments to the Reduced Payment shall occur in the following order: (i) any cash severance payable by reference to the Employee's Base Salary or Performance Bonus; (ii) any other cash amount payable to the Employee; (iii) any benefit valued as a "parachute payment" (within the meaning of Section 280G of the Code); and (iv) acceleration of vesting of any Restricted Stock Award.

(e)Subject to the last sentence of this subsection (e), all determinations made by the Accountants under this Section 5 shall be conclusive and binding upon the Company and Employee for all purposes. All fees and expenses of the Accountants shall be borne solely by the
Company. For purposes of making the calculations required by this Section 5, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Employee will furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make determinations under this Section 5. In the event that Employee or the Company disagrees with the determination of the Accountants under this Section 5, either the Company or Employee can have such determination reviewed through the mechanism set forth in Section 8(e). If such mechanism is used, review shall be de novo and no presumption of correctness shall attach to the Accountants’ determination.

6.    Section 409A.

(a)The Company intends that the reimbursements, payments and benefits to which Employee could become entitled under this Agreement be exempt from or comply with Section 409A of the Code and the regulations and other guidance promulgated thereunder (“Section 409A”). The provisions of Section 6 shall qualify and supersede all other provisions of this Agreement as necessary to fulfill the foregoing intention. If the Company believes, at any time, that any of such reimbursement, payment or benefit is not exempt or does not so comply, the Company will promptly advise the Employee and will reasonably and in good faith amend the terms of such arrangement such that it is exempt or complies (with the most limited possible economic effect on the Employee and on the Company) or to minimize any additional tax, interest and/or penalties that may apply under Section 409A if such exemption or compliance is not practicable. The Company 

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agrees that it will not, without Employee’s prior written consent, knowingly take any action, or knowingly refrain from taking any action, other than as required by law, that would result in the imposition of tax, interest and/or penalties upon the Employee under Section 409A, unless such action or omission is pursuant to the Employee’s written request.  

(b)To the extent applicable, each and every payment to be made pursuant to this Agreement shall be treated as a separate payment and not as one (1) of a series of payments treated as a single payment for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii).

(c)If Employee is a “specified employee” (determined by the Company in accordance with Section 409A and Treasury Regulation Section 1.409A-3(i)(2)) as of the date that the Employee experiences a separation from service, as defined in Treasury Regulations Section 1.409A-1(h)(1), from the Company (a “Separation from Service”) and if any reimbursement, payment or benefit to be paid or provided under this Agreement or otherwise both (i) constitutes a “deferral of compensation” within the meaning of and subject to Section 409A (“Nonqualified Deferred Compensation”) and (ii) cannot be paid or provided in a manner otherwise provided herein without subjecting the Employee to additional tax, interest and/or penalties under Section 409A, then any such reimbursement, payment or benefit that is payable during the first six (6) months following the Employee’s date of termination shall be paid or provided to the Employee in a lump sum cash payment to be made, with interest at the applicable federal rate, on the earlier of (x) Employee’s death and (y) the first (1st) business day of the seventh (7th) month immediately following Employee’s Separation from Service. To the extent available, all the exceptions of Treasury Regulations Section 1.409A-1(b)(9) shall apply in implementing the rules of this section. To the extent that any payment or benefit described in this Agreement constitutes Nonqualified Deferred Compensation under Section 409A, and to the extent that such payment or benefit is payable upon Employee’s termination of employment, then such payments or benefits shall be payable only upon Employee’s Separation from Service.

(d)Except to the extent any reimbursement, payment or benefit to be paid or provided under this Agreement does not constitute Nonqualified Deferred Compensation, (i) the amount of expenses eligible for reimbursement or the provision of any in-kind benefit (as defined in Section 409A) to Employee during any calendar year will not affect the amount of expenses eligible for reimbursement or provided as in-kind benefits to the Employee in any other calendar year (subject to any lifetime and other annual limits provided under the Company’s health plans), (ii) the reimbursements for expenses for which Employee is entitled shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred 

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and (iii) the right to payment or reimbursement or in-kind benefits may not be liquidated or exchanged for any other benefit.

(e)Any reimbursement, payment or benefit to be paid or provided under this Agreement due to a Separation from Service that is exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)(v) will be paid or provided to Employee only to the extent the expenses are not incurred or the benefits are not provided beyond the last day of the Employee’s second (2nd) taxable year following the Employee’s taxable year in which the Separation from Service occurs; provided, however, that the Company shall reimburse such expenses no later than the last day of the third (3rd) taxable year following Employee’s taxable year in which Employee’s Separation from Service occurs.

(f)Any reimbursement, payment or benefit to be paid or provided under this Agreement that constitutes Nonqualified Deferred Compensation due upon a termination of employment shall be paid or provided to Employee only in the event of a Separation from Service.

(g)Any reimbursement payment or benefit to be paid or provided under this Agreement that constitutes Nonqualified Deferred Compensation due upon Change in Control shall be paid or provided to Employee only if such Change in Control constitutes a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the Company’s assets within the meaning of Section 409A.

7.    Confidential Information; Non-Disparagement

(a)Employee shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company its businesses, which shall have been obtained by Employee during Employee employment by the Company and which shall not be or become public knowledge (other than by acts by the Employee or representatives of the Employee in violation of this Agreement). After termination of the Employee’s employment with the Company, the Employee shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data, including but not limited to customer information and trade secrets of the Company, to anyone other than the Company and those designated by it; provided, that if the Employee receives actual notice that Employee is or may be required by law or legal process to communicate or divulge any such information, knowledge or data, Employee shall promptly so notify the Company; and provided, further, that the information, knowledge or data 

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subject to this Section 7(a) shall not include information, knowledge or data which becomes available to the Employee following the date of termination from a source other than the Company (provided, that such source is not known by the Employee to be subject to another confidentiality agreement with, or other obligation of confidentiality or secrecy to, the Company).

(b)Employee agrees that he will not make any statement, publicly or privately, which disparages or would reasonably be expected to disparage the Company or any of its employees, officers or directors. The Company agrees that it will cause its officers and directors not to make any statement, publicly or privately, which disparages or would reasonably be expected to disparage Employee. Notwithstanding the foregoing, this Section 7(b) shall not preclude Employee or the Company from making any statement to the extent required by law or legal process. 

(c)In no event shall an asserted violation of the provisions of this Section 7 constitute a basis for deferring or withholding any amounts otherwise payable to Employee under this Agreement. However, in recognition of the facts that irreparable injury will result to the Company in the event of a breach by Employee of his obligations under Sections 7(a) or (b) hereof, that monetary damages for such breach would not be readily calculable, and that the Company would not have an adequate remedy at law therefor, Employee acknowledges, consents and agrees that in the event of such breach, or the threat thereof, the Company shall be entitled, in addition to any other legal remedies and damages available, to specific performance thereof and to temporary and permanent injunctive relief (without the necessity of posting a bond) to restrain the violation or threatened violation of such obligations by Employee.

8.    General Provisions.

(a)Notices. Any notice to be given pursuant to this Agreement shall be in writing and, in the absence of receipted hand delivery, shall be deemed duly given when mailed, if the same shall be sent by certified or registered mail, return receipt requested, or by a nationally recognized overnight courier, and the mailing date shall be deemed the date from which all time periods pertaining to a date of notice shall run. Notices shall be addressed to the parties at the following addresses:  

If to the Company, to:        Kennedy-Wilson, Inc.
9701 Wilshire Boulevard, Suite 700
Beverly Hills, CA 90212
Attention:  Executive Vice President, General Counsel

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If to the Employee, to:    Justin Enbody 
Kennedy-Wilson, Inc. 
9701 Wilshire Boulevard, Suite 700
Beverly Hills, CA 90212
                    
(b)Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Company and any successors whether by merger, consolidation, transfer of substantially all assets or similar transaction, and it shall be binding upon and shall inure to the benefit of Employee and his heirs and legal representatives. This Agreement is personal to Employee and shall not be assignable by Employee. 

(c)Waiver of Breach. The waiver by the Company or Employee of a breach of any provision of this Agreement by the other shall not operate or be construed as a waiver of any subsequent breach by the other. 

(d)Entire Agreement/Modification. This Agreement shall constitute the entire agreement between the parties hereto with respect to the subject matter hereof, and shall supersede all previous and contemporaneous oral and written negotiations, commitments, agreements and understandings related hereto. Any modification of this Agreement shall be effective only if it is in writing and signed by the parties to this Agreement. 

(e)Applicable Law/ Jurisdiction. The Agreement shall be governed by and interpreted in accordance with the laws of the State of California, excluding any laws or principles regarding conflict or choice of laws. Each party irrevocably agrees that any legal action, suit or proceeding in any way arising out of or in connection with this Agreement shall be submitted to the sole and exclusive jurisdiction of the state or federal courts of the State of California, County of Los Angeles, Central District. Each party waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action, suit or proceeding and irrevocably waives any right to claim or assert forum non conveniens, and submits to the jurisdiction of such court in any action, suit or proceeding.

(f)Severability. Any provision of this Agreement which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this paragraph be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provisions 

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of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. If any covenant should been deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant shall be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable. 

(g)Counterparts. This Agreement may be executed in a number of identical counterparts, each of which shall be deemed an original for all purposes. 

(h)Interpretation. This Agreement has been jointly negotiated and prepared by the parties hereto, and any uncertainty or ambiguity in this Agreement shall not be interpreted against either party.

(i)Agreement Controlling. In the event of any conflict between a term or condition of this Agreement and a term or condition of any of the Company’s policies, policy guidelines, rules, procedures or directives, the term or condition of this Agreement shall control. 

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the date first above written.
	
	
	 

	 

15

	
		
	COMPANY:
KENNEDY-WILSON, INC.

	EMPLOYEE:
Justin Enbody

	By: /s/ Kent Mouton
Name: Kent Mouton
Title: Executive Vice President, General Counsel

	By: /s/ Justin Enbody
Name: Justin Enbody
Title: Chief Financial Officer

	 
	 

16ex101to8k09196001_12232014.htm

Exhibit 10.1

 

Remark Media, Inc.

2014 Incentive Plan

(as amended on December 23, 2014)

 

ARTICLE 1

 

Establishment, Purpose, and Duration

 

1.1           Establishment of the Plan.  Remark Media, Inc., a Delaware corporation (together with any successor thereto as provided in Article 18, hereinafter referred to as the “Company”), hereby establishes an incentive compensation plan to be known as the 2014 Incentive Plan (hereinafter referred to as the “Plan”), as set forth in this document.  The Plan permits the grant of Cash-Based Awards, Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and Other Stock-Based Awards (each as defined below).

 

The Plan is adopted and is effective as of February 17, 2014 (the “Effective Date”) and shall remain in effect as provided in Section 1.3; provided, however, no Option (as defined below) may be exercised and no other Award (as defined below) may be exercised or otherwise paid until the Plan has been approved by the Company’s stockholders at a meeting at which approval of the Plan is considered.

 

1.2           Purpose of the Plan.  The purpose of the Plan is to promote the interests of the Company and its stockholders by aligning the interests of the Participants, through the ownership of Shares (as defined below) and through other incentives, with the interests of the Company’s stockholders, and by providing flexibility to the Company to attract, motivate, and retain Employees (as defined below), Directors (as defined below), consultants and advisors upon whose judgment, initiative, and efforts the financial success and growth of the business of the Company largely depend.

 

1.3           Duration of the Plan.  Unless sooner terminated as provided herein, the Plan shall terminate 10 years from the Effective Date.  After the Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the Plan’s terms and conditions.

 

ARTICLE 2

 

Definitions

 

Whenever used in the Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.

 

2.1           “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 promulgated under the General Rules and Regulations of the Exchange Act.

 

2.2           “Annual Award Limit” or “Annual Award Limits” have the meaning set forth in Section 4.3.

 

2.3           “Award” means, individually or collectively, a grant under the Plan of Cash-Based Awards, Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units or Other Stock-Based Awards, in each case subject to the terms of the Plan.

 

2.4           “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 promulgated under the General Rules and Regulations under the Exchange Act.

 

  

  

  

 

2.5           “Board” or “Board of Directors” means the Board of Directors of the Company.

 

2.6           “Cash-Based Award” means an Award granted to a Participant as described in Article 10.

 

2.7           “Change in Control” means a Change in Control as defined in Article 15.

 

2.8           “Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

2.9           “Committee” means the Compensation Committee of the Board, or any other committee designated by the Board to administer the Plan.  The members of the Committee shall be appointed from time to time by and shall serve at the discretion of the Board.  The Committee shall consist solely of two or more directors who are “nonemployee directors” under Rule 16b-3 promulgated under the Exchange Act, “outside directors” as defined under Section 162(m) of the Code, and “independent directors” under the listing requirements of the Nasdaq Stock Market, or any similar rule or listing requirement that may be applicable to the Company from time to time.

 

2.10         “Company” has the meaning set forth in Section 1.1.

 

2.11         “Covered Employee” means a Participant who is a “covered employee,” as defined in Section 162(m) of the Code.

 

2.12         “Digipac” means Digipac, LLC, a Delaware limited liability company, and its Affiliates.

 

2.13         “Director” means a member of the Board of Directors of the Company, its Affiliates and/or Subsidiaries.

 

2.14         “Effective Date” has the meaning set forth in Section 1.1.

 

2.15         “Employee” means any employee of the Company, its Affiliates and/or Subsidiaries.

 

2.16         “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

2.17         “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

 

2.18         “Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Committee which sets forth the terms and conditions of an Award.  An Evidence of Award may be in any electronic medium, may be limited to a notation on the books and records of the Company and, with the approval of the Committee, need not be signed by a representative of the Company or a Participant.

 

2.19         “Fair Market Value” or “FMV” means the last sales price reported for the Shares on the applicable date as reported on the principal national securities exchange in the United States on which it is then traded, or, if such date is not a trading day, the last prior day on which the Shares were so traded; or if not so listed, the mean between the closing bid and asked prices of publicly traded Shares in the over-the-counter market, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by the Committee in a manner consistent with the provisions of the Code.  If, however, the required accounting standards used to account for equity Awards granted to Participants are substantially modified subsequent to the Effective Date such that fair value accounting for such Awards becomes required, the Committee shall have the ability to determine an Award’s FMV based on the relevant facts and circumstances, but with respect to any Options or SARs in a manner that would not subject an otherwise exempt award to the Section 409A Rules.

 

  

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2.20         “Full Value Award” means an Award other than in the form of an Option or SAR, and which is settled by the issuance of Shares.

 

2.21         “Freestanding SAR” means a SAR that is granted independently of any Options, as described in Article 7.

 

2.22         “Grant Price” means the price established at the time of grant of a SAR pursuant to Article 7, used to determine whether there is any payment due upon exercise of the SAR.

 

2.23         “Incentive Stock Option” means an Option that is intended to qualify as an “incentive stock option” under Section 422 of the Code.

 

2.24         “Nonqualified Stock Option” means an Option that is not intended to meet the requirements of Section 422 of the Code, or that otherwise does not meet such requirements.

 

2.25         “Option” means the right to purchase Shares granted to a Participant in accordance with Article 6.  Options granted under the Plan may be Nonqualified Stock Options, Incentive Stock Options or a combination thereof.

 

2.26         “Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option.

 

2.27         “Other Stock-Based Award” means an equity-based or equity-related Award not otherwise described by the terms of the Plan, granted pursuant to Article 10.

 

2.28         “Participant” means any eligible person as set forth in Section 5.1 to whom an Award is granted.

 

2.29         “Performance-Based Compensation” means compensation under an Award that satisfies the requirements of Section 162(m) of the Code for deductibility of remuneration paid to Covered Employees.

 

2.30         “Performance Measures” means measures as described in Article 11 on which the performance goals are based and which are approved by the Company’s stockholders pursuant to the Plan in order to qualify Awards as Performance-Based Compensation.

 

2.31         “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.

 

2.32         “Performance Share” means an Award granted to a Participant, as described in Article 9.

 

2.33         “Performance Unit” means an Award granted to a Participant, as described in Article 9.

 

2.34         “Period of Restriction” means the period when Restricted Stock or Restricted Stock Units are subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, in its discretion), as provided in Article 8.

 

  

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2.35         “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

 

2.36         “Plan” has the meaning set forth in Section 1.1.

 

2.37         “Plan Year” means the Company’s fiscal year that begins January 1 and ends December 31.

 

2.38         “Restricted Stock” means Shares granted or sold to a Participant pursuant to Article 8 as to which the Period of Restriction has not lapsed.

 

2.39         “Restricted Stock Unit” means a unit granted or sold to a Participant pursuant to Article 8 as to which the Period of Restriction has not lapsed.

 

2.40         “Section 409A Rules” means the rules promulgated pursuant to Section 409A of the Code.

 

2.41         “Securities Act” means the Securities Act of 1933, as amended from time to time, or any successor act thereto.

 

2.42         “Share” means a share of common stock of the Company, $0.001 par value per share.

 

2.43         “Stock Appreciation Right” or “SAR” means an Award, designated as a SAR and granted pursuant to the terms of Article 7 herein.

 

2.44         “Subsidiary” means a corporation, company or other entity (i) more than 50% of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but more than 50% of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company, except that for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary” means any corporation in which at the time the Company owns or controls, directly or indirectly, more than 50% of the total combined voting power represented by all classes of stock issued by such corporation.

 

ARTICLE 3

 

Administration

 

3.1           General.  The Committee shall be responsible for administering the Plan, subject to this Article 3 and the other provisions of the Plan.  The act or determination of a majority of the Committee shall be the act or determination of the Committee and any decision reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made by a majority at a meeting duly held.  The Committee may employ attorneys, consultants, accountants, agents, and other persons, any of whom may be an Employee, and the Committee, the Company, and its officers and Directors shall be entitled to rely upon the advice, opinions, or valuations of any such persons.  All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company, and all other interested persons.

 

  

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3.2           Authority of the Committee.  The Committee shall have full and exclusive discretionary power to interpret the terms and the intent of the Plan and any Evidence of Award or other agreement or document ancillary to or in connection with the Plan, to determine eligibility for Awards and to adopt such rules, regulations, forms, instruments, and guidelines for administering the Plan as the Committee may deem necessary or proper.  Such authority shall include, but not be limited to, selecting Award recipients, establishing all Award terms and conditions, including the terms and conditions set forth in an Evidence of Award, and, subject to Article 16, adopting modifications and amendments to the Plan or any Evidence of Award, including without limitation, any that are necessary to comply with the laws of the countries and other jurisdictions in which the Company, its Affiliates, and/or its Subsidiaries operate.  If the Committee does not exist or is unable to act for any reason, then the Plan shall be administered by the Board, and references herein to the Committee (except in the proviso to this sentence) shall be deemed to be references to the Board.

 

ARTICLE 4

 

Shares Subject to the Plan and Maximum Awards

 

4.1           Number of Shares Available for Awards.

 

(a)           Subject to adjustment as provided in Section 4.4 herein, the maximum number of Shares available for issuance to Participants under the Plan shall be 6,000,000 Shares, all of which can be Incentive Stock Options.

 

(b)           Of the Shares reserved for issuance under Section 4.1(a) of the Plan, all of the reserved Shares may be issued pursuant to Full Value Awards.

 

4.2           Share Usage.  Shares covered by an Award shall only be counted as used to the extent they are actually issued.  Any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares (other than SARs settled in cash), or are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under the Plan.  Moreover, if the Option Price of any Option granted under the Plan or the tax withholding requirements with respect to any Award granted under the Plan are satisfied by tendering Shares to the Company (by either actual delivery or by attestation), or if a SAR is exercised, only the number of Shares issued, net of the Shares tendered, if any, will be deemed delivered for purposes of determining the maximum number of Shares available for delivery under the Plan and any Shares so tendered shall again be available for issuance under the Plan.  To the extent any SAR is settled, in whole or in part, in cash, the number of Shares available for issuance under this Section shall not be reduced.  The maximum number of Shares available for issuance under the Plan shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional Shares or credited as additional Restricted Stock, Restricted Stock Units, Performance Shares, or Other Stock-Based Awards.  The Shares available for issuance under the Plan may be authorized and unissued Shares, treasury Shares or a combination thereof.

 

4.3           Annual Award Limits.  Subject to the terms of Section 4.1 hereof, the maximum number of Shares that may be subject to Awards granted in any Plan Year to any individual Participant shall be 650,000, all of which can be Options or SARs.  The maximum amount of any Cash-Based Award payable to a Covered Employee with respect to any fiscal year of the Company shall not exceed $300,000.

 

4.4           Adjustments in Authorized Shares.  In the event of any corporate event or transaction (including, but not limited to, a change in the shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, stock dividend, stock split, reverse stock split, split-up, spin-off, or other distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like change in capital structure or distribution (other than normal cash dividends) to stockholders of the Company, or any similar corporate event or transaction, the Committee, in its sole discretion, in order to prevent dilution or enlargement of Participants’ rights under the Plan, may substitute or adjust, as applicable, the number and kind of Shares that may be issued under the Plan or under particular forms of Awards, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to outstanding Awards, the Annual Award Limits, and/or other value determinations applicable to outstanding Awards.

 

  

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Except as otherwise provided by Section 162(m) of the Code, the Committee, in its sole discretion, may also make appropriate adjustments in the terms of any Awards under the Plan to reflect or related to such changes or distributions and to modify any other terms of outstanding Awards, including modifications of performance goals and changes in the length of Performance Periods.  The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under the Plan.

 

Subject to the provisions of Article 16, without affecting the number of Shares reserved or available hereunder, the Committee may authorize the issuance or assumption of benefits under the Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate, subject to compliance with the rules under Section 422 of the Code and the Section 409A Rules, where applicable.

 

ARTICLE 5

 

Eligibility and Participation

 

5.1           Eligibility.  Individuals eligible to participate in the Plan include all Employees and nonemployee Directors, and all consultants and advisors to the Company, its Affiliates and/or Subsidiaries.

 

5.2           Actual Participation.  Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible individuals, those to whom Awards shall be granted and shall determine, in its sole discretion, the nature of, any and all terms permissible by law, and the amount of each Award.  In making this determination, the Committee may consider any factors it deems relevant, including without limitation, the office or position held by a Participant or the Participant’s relationship to the Company, the Participant’s degree of responsibility for and contribution to the growth and success of the Company or any Subsidiary or Affiliate, the Participant’s length of service, promotions and potential.

 

ARTICLE 6

 

Options

 

6.1           Grant of Options.  Subject to the terms and provisions of the Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion; provided that Incentive Stock Options may be granted only to eligible Employees of the Company or of any parent or subsidiary corporation (as permitted under Sections 422 and 424 of the Code).

 

6.2           Evidence of Award.  Each Option grant shall be evidenced by an Evidence of Award that shall specify the Option Price, the maximum duration of the Option, the number of Shares to which the Option pertains, the conditions upon which an Option shall become vested and exercisable, and such other provisions as the Committee shall determine which are not inconsistent with the terms of the Plan.  The Evidence of Award also shall specify whether the Option is intended to be an Incentive Stock Option or a Nonqualified Stock Option.

 

  

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6.3           Option Price.  The Option Price for each grant of an Option under the Plan shall be as determined by the Committee and shall be specified in the Evidence of Award.  The Option Price may not be less than 100% of the Fair Market Value of the Shares on the date of grant.  With respect to a Participant who owns, directly or indirectly, more than 10% of the total combined voting power of all classes of the capital stock of the Company, or any parent or subsidiary corporation of the Company, as defined in Section 424 of the Code, the Option Price of Shares subject to an Incentive Stock Option may not be less than 110% of the Fair Market Value of a Share on the date of grant.

 

6.4           Duration of Options.  Except as otherwise provided in Section 422 of the Code with respect to any Incentive Stock Option, each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant and specify in the Evidence of Award; provided, however, that no Option shall be exercisable later than the 10th anniversary date of its grant.  In the case of an Incentive Stock Option, with respect to a Participant who owns, directly or indirectly, more than 10% of the total combined voting power of all classes of the capital stock of the Company, or any parent or subsidiary corporation of the Company, as defined in Section 424 of the Code, no Option shall be exercisable later than the 5th anniversary of its date of grant.

 

6.5           Exercise of Options.  Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve and specify in the Evidence of Award, which terms and restrictions need not be the same for each grant or for each Participant.  After an Option is granted, the Committee, in its sole discretion, may accelerate the exercisability of the Option.

 

6.6           Payment.  Options granted under this Article 6 shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures which may be authorized by the Committee, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.

 

A condition of the issuance of the Shares as to which an Option shall be exercised shall be the payment of the Option Price.  The Option Price of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price; (c) by a combination of (a) and (b); or (d) any other method approved or accepted by the Committee in its sole discretion, including, without limitation, if the Committee so determines, (i) a cashless (broker-assisted) exercise, or (ii) a reduction in the number of Shares that would otherwise be issued by such number of Shares having in the aggregate a Fair Market Value at the time of exercise equal to the portion of the Option Price being so paid.

 

Subject to any governing rules or regulations, as soon as practicable after receipt of written notification of exercise and full payment (including satisfaction of any applicable tax withholding), the Company shall deliver to the Participant evidence of book entry Shares, or upon the Participant’s request, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).

 

Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars.

 

  

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6.7           Restrictions on Share Transferability.  The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable and specify in the Evidence of Award, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares.

 

6.8           Termination of Employment.  To the extent consistent with the Section 409A Rules and Section 162(m) of the Code, each Evidence of Award shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be.  Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Evidence of Award entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination.

 

6.9           Notification of Disqualifying Disposition.  If any Participant shall make any disposition of Shares issued pursuant to the exercise of an Incentive Stock Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition prior to the end of the calendar year in which such disposition occurred.

 

6.10         Transferability of Options.  Except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, no Option granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or as otherwise required by law; provided that the Board or Committee may permit further transferability, on a general or a specific basis, and may impose conditions and limitations on any permitted transferability. Further, except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, or unless the Board or Committee decides to permit further transferability, all Options granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant.  With respect to those Options, if any, that are permitted to be transferred to another person, references in the Plan to exercise or payment of the Option Price by the Participant shall be deemed to include, as determined by the Committee, the Participant’s permitted transferee.

 

ARTICLE 7

 

Stock Appreciation Rights

 

7.1           Grant of SARs.  Subject to the terms and conditions of the Plan, SARs, including Freestanding SARs, may be granted to Participants at any time and from time to time as shall be determined by the Committee.  Subject to the terms and conditions of the Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Participant and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs.

 

The Grant Price for each grant of a Freestanding SAR shall be determined by the Committee and shall be specified in the Evidence of Award.  The Grant Price may include (but not be limited to) a Grant Price based on 100% of the FMV of the Shares on the date of grant, a Grant Price that is set at a premium to the FMV of the Shares on the date of grant, or is indexed to the FMV of the Shares on the date of grant, with the index determined by the Committee, in its discretion to the extent consistent with the Section 409A Rules.

 

  

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7.2           SAR Agreement.  Each SAR Award shall be evidenced by an Evidence of Award that shall specify the Grant Price, the term of the SAR, and such other provisions as the Committee shall determine.

 

7.3           Term of SAR.  The term of a SAR granted under the Plan shall be determined by the Committee, in its sole discretion, and except as determined otherwise by the Committee and specified in the SAR Evidence of Award, no SAR shall be exercisable later than the 10th anniversary date of its grant.

 

7.4           Exercise of Freestanding SARs.  Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes and specifies in the Evidence of Award.

 

7.5           Payment of SAR Amount.  Upon the exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:

 

(a)           the excess of the Fair Market Value of a Share on the date of exercise over the Grant Price; by

 

(b)           the number of Shares with respect to which the SAR is exercised.

 

At the discretion of the Committee, the payment upon SAR exercise may be in cash, Shares, or any combination thereof, or in any other manner approved by the Committee in its sole discretion.  The Committee’s determination regarding the form of SAR payout shall be set forth in the Evidence of Award pertaining to the grant of the SAR.

 

7.6           Termination of Employment.  To the extent consistent with the Section 409(A) Rules and Section 162(m) of the Code, each Evidence of Award shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be.  Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Evidence of Award entered into with Participants, need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

 

7.7           Nontransferability of SARs.  Except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or as otherwise required by law.  Further, except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant.  With respect to those SARs, if any, that are permitted to be transferred to another person, references in the Plan to exercise of the SAR by the Participant or payment of any amount to the Participant shall be deemed to include, as determined by the Committee, the Participant’s permitted transferee.

 

7.8           Other Restrictions.  The Committee shall impose such other conditions and/or restrictions on any Shares received upon exercise of a SAR granted pursuant to the Plan as it may deem advisable or desirable.  These restrictions may include, but shall not be limited to, a requirement that the Participant hold the Shares received upon exercise of a SAR for a specified period of time.

 

  

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ARTICLE 8

 

Restricted Stock and Restricted Stock Units

 

8.1           Grant of Restricted Stock or Restricted Stock Units.  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee shall determine.  Restricted Stock Units shall represent the right of a Participant to receive payment upon the lapse of the Period of Restriction.

 

8.2           Restricted Stock or Restricted Stock Unit Agreement.  Each Restricted Stock and/or Restricted Stock Unit grant shall be evidenced by an Evidence of Award that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock or the number of Restricted Stock Units granted, and such other provisions as the Committee shall determine.

 

8.3           Transferability.  Except as provided in the Plan or an Evidence of Award, the Shares of Restricted Stock and/or Restricted Stock Units granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Evidence of Award (and in the case of Restricted Stock Units until the date of delivery or other payment), or upon earlier satisfaction of any other conditions, as specified by the Committee, in its sole discretion, and set forth in the Evidence of Award or otherwise at any time by the Committee. All rights with respect to the Restricted Stock and/or Restricted Stock Units granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant, except as otherwise provided in an Evidence of Award or at any time by the Committee.

 

8.4           Other Restrictions.  The Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, time-based restrictions, and/or restrictions under applicable laws or under the requirements of any stock exchange or market upon which such Shares are listed or traded, or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock or Restricted Stock Units.

 

In the event that the vesting date occurs on a date which is not a trading day on the principal securities exchange on which the Shares are then traded, the Fair Market Value on the last prior trading date will be utilized for cost basis.

 

To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied or lapse.

 

Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock Award shall become freely transferable by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or lapse (including satisfaction of any applicable tax withholding obligations), and Restricted Stock Units shall be paid in cash, Shares, or a combination of cash and Shares as the Committee, in its sole discretion shall determine.

 

  

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8.5           Certificate Legend.  In addition to any legends placed on certificates pursuant to Section 8.4, each certificate representing Shares of Restricted Stock granted pursuant to the Plan may bear a legend as determined by the Committee in its sole discretion.

 

8.6           Voting Rights.  Unless otherwise determined by the Committee and set forth in a Participant’s Evidence of Award, to the extent permitted or required by law, as determined by the Committee, Participants holding Shares of Restricted Stock granted hereunder may be granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction.  A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.

 

8.7           Termination of Employment.  To the extent consistent with the Section 409A Rules and Section 162(m) of the Code, each Evidence of Award shall set forth the extent to which the Participant shall have the right to retain Restricted Stock and/or Restricted Stock Units following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be.  Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Evidence of Award entered into with each Participant, need not be uniform among all Shares of Restricted Stock or Restricted Stock Units issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

 

8.8           Section 83(b) Election.  The Board may provide in an Evidence of Award that the Award of Restricted Stock is conditioned upon the Participant making or refraining from making an election with respect to the Award under Section 83(b) of the Code. If a Participant makes an election pursuant to Section 83(b) of the Code concerning a Restricted Stock Award, the Participant shall be required to file promptly a copy of such election with the Company.

 

ARTICLE 9

 

Performance Units/Performance Shares

 

9.1           Grant of Performance Units/Performance Shares.  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Performance Units and/or Performance Shares to Participants in such amounts and upon such terms as the Committee shall determine.

 

9.2           Value of Performance Units/Performance Shares.  Each Performance Unit shall have an initial value that is established by the Committee at the time of grant.  Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date 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 Units/Performance Shares that will be paid out to the Participant.

 

9.3           Earning of Performance Units/Performance Shares.  Subject to the terms of the Plan, after the applicable Performance Period has ended, the holder of Performance Units/Performance Shares shall be entitled to receive payout on the value and number of Performance Units/Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.

 

9.4           Form and Timing of Payment of Performance Units/Performance Shares.  Payment of earned Performance Units/Performance Shares shall be as determined by the Committee and as evidenced in the Evidence of Award.  Subject to the terms of the Plan, the Committee, in its sole discretion, may pay earned Performance Units/Performance Shares in the form of cash or in Shares (or in a combination thereof) equal to the value of the earned Performance Units/Performance Shares at the close of the applicable Performance Period, or as soon as practicable after the end of the Performance Period, but not later than the expiration of the deferral period for such Award under the Section 409A Rules.  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 Evidence of Award pertaining to the grant of the Award.

 

  

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9.5           Termination of Employment.  To the extent consistent with the Section 409A Rules and Section 162(m) of the Code, each Evidence of Award shall set forth the extent to which the Participant shall have the right to retain Performance Units and/or Performance Shares following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be.  Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Evidence of Award entered into with each Participant, need not be uniform among all Awards of Performance Units or Performance Shares issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

 

9.6           Nontransferability.  Except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, Performance Units/Performance Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or as otherwise required by law.  Further, except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, a Participant’s rights under the Plan shall be exercisable during his or her lifetime only by such Participant.

 

ARTICLE 10

 

Cash-Based Awards and Other Stock-Based Awards

 

10.1           Grant of Cash-Based Awards.  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon such terms as the Committee may determine.

 

10.2           Other Stock-Based Awards.  The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of the Plan (including the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions, as the Committee shall determine.  Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

 

10.3           Value of Cash-Based and Other Stock-Based Awards.  Each Cash-Based Award shall specify a payment amount or payment range as determined by the Committee.  Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares, as determined by the Committee.  The Committee may design Cash-Based Awards and Other Stock-Based Awards to qualify as Performance-Based Compensation and may design Cash-Based Awards and Other Stock-Based Awards to not qualify as Performance-Based Compensation.  If the Committee exercises its discretion to establish Cash-Based Awards and Other Stock-Based Awards as Performance-Based Compensation, the number and/or value of Cash-Based Awards or Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the Performance Measures are met.

 

10.4           Payment of Cash-Based Awards and Other Stock-Based Awards.  Payment, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash, Shares or a combination thereof, as the Committee determines.

 

  

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10.5           Termination of Employment.  To the extent consistent with the Section 409A Rules and Section 162(m) of the Code, the Committee shall determine the extent to which the Participant shall have the right to receive Cash-Based Awards following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be.  Such provisions shall be determined in the sole discretion of the Committee, such provisions may be included in an agreement entered into with each Participant, but need not be uniform among all Awards of Cash-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

 

10.6           Nontransferability.  Except as otherwise determined by the Committee, neither Cash-Based Awards nor Other Stock-Based Awards may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.  Further, except as otherwise provided by the Committee, a Participant’s rights under the Plan, if exercisable, shall be exercisable during his or her lifetime only by such Participant.  With respect to those Cash-Based Awards or Other Stock-Based Awards, if any, that are permitted to be transferred to another person, references in the Plan to exercise or payment of such Awards by or to the Participant shall be deemed to include, as determined by the Committee, the Participant’s permitted transferee.

 

ARTICLE 11

 

Performance Measures

 

11.1           Performance Measures.  Unless and until the Committee proposes for stockholder vote and the stockholders approve a change in the general Performance Measures set forth in this Article 11, the performance goals upon which the payment or vesting of an Award to a Covered Employee that is intended to qualify as Performance-Based Compensation shall be limited to one or more of the following Performance Measures: (a) net earnings or net income (before or after taxes and interest/investments); (b) earnings per share; (c) earnings per share growth; (d) net sales growth; (e) net earnings or net income growth (before or after taxes and interest/investment); (f) net operating profit; (g) return measures (including return on assets, capital, equity, or sales); (h) cash flow (including operating cash flow, free cash flow, and cash flow return on capital); (i) earnings before or after taxes, interest, depreciation, and/or amortization; (j) gross or operating margins or growth thereof; (k) productivity ratios; (l) share price (including growth measures and total stockholder return); (m) expense targets; (n) operating efficiency; (o) customer satisfaction; (p) revenue growth; (q) operating profit growth; (r) working capital targets; (s) economic value added; (t) real estate management objectives; (u) sale or disposition of assets; and (v) acquisition of key assets.

 

Any Performance Measure(s) may be used to measure the performance of the Company, its Subsidiary, and/or its Affiliate as a whole or any business unit of the Company, its Subsidiary, and/or its Affiliate or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparable companies, or published or special index that the Committee, in its sole discretion, deems appropriate, or the Company may select Performance Measure (l) above as compared to various stock market indices. 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 Article 11.

 

11.2           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 occurs during a Performance Period: (a) asset 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) any reorganization and restructuring programs; (e) extraordinary nonrecurring items as described in Accounting Standards Codification Topic 225-20 (formerly, Accounting Principles Board Opinion No. 30) and/or 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) acquisitions or divestitures; and (g) foreign exchange gains and losses. To the extent such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that meets the requirements of Section 162(m) of the Code for deductibility.

 

  

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11.3           Adjustment of Performance-Based Compensation.  The terms of Awards that are designed to qualify as Performance-Based Compensation, and that are held by Covered Employees, may not be modified, except to the extent that after such modification the Award would continue to constitute Performance-Based Compensation.  The Committee shall retain the discretion to reduce the amount of any payment under an Award that is designed to qualify as Performance-Based Compensation that would otherwise be payable to a Covered Employee, either on a formula or discretionary basis or any combination, as the Committee determines.

 

11.4           Committee Discretion.  In the event that applicable tax and/or securities laws change to permit Committee 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.  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 Section 162(m) of the Code and may base vesting on Performance Measures other than those set forth in Section 11.1.

 

ARTICLE 12

 

Beneficiary Designation

 

Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit.  Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime.  In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

 

ARTICLE 13

 

Deferrals

 

To the extent permitted by the Section 409A Rules and Section 162(m) of the Code, the Committee may permit or require a Participant to defer such Participant’s receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option or SAR, the lapse or waiver of restrictions with respect to Restricted Stock or Restricted Stock Units, or the satisfaction of any requirements or performance goals with respect to Performance Shares, Performance Units, Cash-Based Awards or Other Stock-Based Awards. If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals, consistent with the Section 409A Rules.

 

  

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ARTICLE 14

 

Rights of Participants

 

14.1           Employment.  Nothing in the Plan or an Evidence of Award shall interfere with or limit in any way the right of the Company, its Affiliates, and/or its Subsidiaries, to terminate any Participant’s employment or service on the Board at any time or for any reason not prohibited by law, nor confer upon any Participant any right to continue his or her employment or service for any specified period of time.

 

Neither an Award nor any benefits arising under the Plan shall constitute an employment contract with the Company, its Affiliates, and/or its Subsidiaries and, accordingly, subject to Articles 3 and 16, the Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company, its Affiliates, and/or its Subsidiaries.

 

14.2           Participation.  No individual shall have the right to be selected to receive an Award under the Plan, or, having been so selected, to be selected to receive a future Award.

 

14.3           Rights as a Stockholder.  Except as otherwise provided herein, a Participant shall have none of the rights of a stockholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.

 

ARTICLE 15

 

Change in Control

 

15.1           Change in Control.  For purposes of the Plan, a “Change in Control” shall mean the occurrence during the term of any of the following events:

 

(a)           In connection with a sale or series of sales of securities of the Company, one Person (including an entity) or more than one Person acting as a group acquires securities of the Company that results in Beneficial Ownership of more than 50% of the outstanding securities entitled to vote generally in the election of directors of the Company;

 

(b)           All or substantially all (meaning having a total gross fair market value equal to more than 50% of the total gross fair market value of all of the Company’s assets immediately before such acquisition or acquisitions) of the assets of the Company are acquired by one Person (including an entity) or more than one Person acting as a group (during a 12-month period ending on the date of the most recent acquisition by such Person or Persons); or

 

(c)           The Company is merged, consolidated, or reorganized into or with another corporation or entity during a 12-month period with the result that upon the conclusion of the transaction less than 50% of the outstanding securities entitled to vote generally in the election of directors or other capital interests of the surviving, resulting or acquiring corporation are Beneficially Owned by the stockholders of the Company immediately prior to the completion of the transaction.

 

Notwithstanding the foregoing, a Change in Control will not be deemed to have occurred (i) as a result of the issuance of stock by the Company in connection with any public offering of its stock or (ii) due to Beneficial Ownership of securities of the Company by Digipac.

 

  

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15.2           Acceleration of Vesting and Exercisability.  Upon the occurrence of a Change in Control, the Committee may accelerate the vesting and exercisability (as applicable) of any outstanding Awards, in whole or in part, as determined by the Committee in its sole discretion.  In its sole discretion, the Committee may also determine that, upon the occurrence of a Change in Control, each outstanding Option or SAR shall terminate within a specified number of days after notice to the Participant, and each such Participant shall receive, with respect to each Share subject to such Option or SAR, an amount equal to the excess of the Fair Market Value of such Share immediately prior to such Change in Control over the applicable Option Price or Grant Price, which amount shall be payable in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or a combination thereof, as the Committee shall determine in its sole discretion.

 

ARTICLE 16

 

Amendment, Modification, Suspension, and Termination

 

16.1           Amendment, Modification, Suspension, and Termination.  Subject to Sections 16.3 and 16.4, the Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate the Plan and any Evidence of Award in whole or in part; provided, however, that, without the prior approval of the Company’s stockholders and except as provided in Section 4.4, Options or SARs issued under the Plan will not be repriced, replaced, or regranted through cancellation, or by lowering the Option Price of a previously granted Option or the Grant Price of a previously granted SAR, and no amendment of the Plan shall be made without stockholder approval if stockholder approval is required by law, regulation, or stock exchange rule.

 

16.2           Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.  The Committee may make adjustments, consistent with Section 162(m) of the Code and the Section 409A Rules, in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.4 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under the Plan.

 

16.3           Awards Previously Granted.  Notwithstanding any other provision of the Plan to the contrary (other than Section 16.4), no termination, amendment, suspension, or modification of the Plan or an Evidence of Award shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award.

 

16.4           Amendment to Conform to Law.  Notwithstanding any other provision of the Plan to the contrary, the Board may amend the Plan or an Evidence of Award, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or an Evidence of Award to any present or future law relating to plans of this or similar nature (including, but not limited to, the Section 409A Rules and Section 162(m) of the Code), and to the administrative regulations and rulings promulgated thereunder.

 

  

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ARTICLE 17

 

Withholding

 

17.1           Tax Withholding.  As determined by the Company in good faith, the Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, any foreign, federal, state, or local tax required by law to be withheld with respect to any taxable event arising as a result of the Plan.

 

17.2           Share Withholding.  With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock and Restricted Stock Units, or upon the achievement of performance goals related to Performance Shares, or any other taxable event arising as a result of an Award granted hereunder, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the amount of any foreign, federal, state, or local tax required by law to be withheld on the transaction as determined by the Company in good faith. All such elections shall be irrevocable, made in writing, and signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

 

ARTICLE 18

 

Successors

 

All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 

ARTICLE 19

 

General Provisions

 

19.1           Forfeiture Events.

 

  (a)           The Committee may specify in an Evidence of Award that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award.  Such events may include, but shall not be limited to, termination of employment for cause, termination of the Participant’s provision of services to the Company, its Affiliate, and/or its Subsidiary, violation of material Company, Affiliate, and/or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company, its Affiliates, and/or its Subsidiaries.

 

  (b)           If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, if the Participant knowingly or grossly negligently engaged in the misconduct, or knowingly or grossly negligently failed to prevent the misconduct, or if the Participant is one of the persons subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, the Participant shall reimburse the Company the amount of any payment in settlement of an Award earned or accrued during the 12-month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever just occurred) of the financial document embodying such financial reporting requirement.

 

  

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19.2           Legend.  The certificates for Shares may include any legend, which the Committee deems appropriate in its sole discretion to reflect any restrictions on transfer of such Shares.

 

19.3           Gender and Number.  Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.

 

19.4           Severability.  In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.  To the extent that any provision of the Plan would prevent any Option that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision shall be null and void with respect to such Option.  Such provision, however, shall remain in effect for other Options and there shall be no further effect on any provision of the Plan.

 

19.5           Requirements of Law.  The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

 

19.6           Delivery of Title.  The Company shall have no obligation to issue or deliver evidence of title for Shares issued under the Plan prior to:

 

  (a)           Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

 

  (b)           Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

 

19.7           Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

19.8           Investment Representations.  The Committee may require any person receiving Shares pursuant to an Award under the Plan to represent and warrant in writing that the person is acquiring the securities for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.

 

19.9           Uncertificated Shares.  To the extent that the Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.

 

19.10         Unfunded Plan.  Participants shall have no right, title, or interest whatsoever in or to any investments that the Company, and/or its Subsidiaries, and/or Affiliates may make to aid it in meeting its obligations under the Plan.  Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other person.  To the extent that any person acquires a right to receive payments from the Company, its Subsidiaries, and/or its Affiliates under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company, a Subsidiary, or an Affiliate, as the case may be.  The Plan is not subject to ERISA.

 

  

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19.11         No Fractional Shares.  No fractional Shares shall be issued or delivered pursuant to the Plan or any Award.  The Committee shall determine whether cash, Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

 

19.12         Retirement and Welfare Plans.  Neither Awards made under the Plan nor Shares or cash paid pursuant to such Awards will be included as “compensation” for purposes of computing the benefits payable to any Participant under the Company’s or any of its Subsidiaries’ or Affiliates’ retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a Participant’s benefit.

 

19.13         Nonexclusivity of the Plan.  The adoption of the Plan shall not be construed as creating any limitations on the power of the Board or Committee to adopt such other compensation arrangements as it may deem desirable for any Participant.

 

19.14         No Constraint on Corporate Action.  Nothing in the Plan shall be construed to: (i) limit, impair, or otherwise affect the Company’s or any of its Subsidiaries’ or Affiliates’ right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or, (ii) limit the right or power of the Company or any of its Subsidiaries or Affiliates to take any action which such entity deems to be necessary or appropriate.

 

19.15         Governing Law.  The Plan and each Evidence of Award shall be governed by the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction.  Unless otherwise provided in the Evidence of Award, recipients of an Award under the Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of New York, to resolve any and all issues that may arise out of or relate to the Plan or any related Evidence of Award.

 

  

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