Document:

wy-ex101_532.htm

 

EXHIBIT 10.1

2011 Fee Deferral Plan for Directors
of
Weyerhaeuser Company
(Amended and Restated Effective August 14, 2020)

1.Name and Purpose.  The name of this plan is the “2011 Fee Deferral Plan for Directors of Weyerhaeuser Company” (the “Plan”).  Its purpose is to provide non‐employee Directors of the Company with increased flexibility in timing the receipt of Fees earned as a Director and to assist the Company in attracting and retaining qualified individuals to serve as Directors.

2.Definitions.  Whenever used in the Plan, the following terms shall have the meanings set forth below:

(a)“Beneficiary” means the beneficiary or beneficiaries appointed by a Director to receive payment of the Director’s Deferred Fees after the Director’s death.  The appointment shall be made on a form to be supplied by the Company and may be revoked or superseded at any time.  In the absence of such appointment, or if the appointed beneficiary or beneficiaries fail to survive the Director, the Director’s beneficiary shall be the Director’s estate.

(b)“Board” means the Board of Directors of the Company, provided that no member of the Board shall participate in or cast a vote with respect to any matter which specifically relates to that individual, as opposed to relating to the Directors as a group.

(c)“Canadian Director” means a Director who is a resident of Canada for the purposes of the Income Tax Act (Canada).

(d)“Committee” means the Compensation Committee of the Board.  The Committee makes recommendations to the Board, when appropriate, with respect to matters arising under the Plan.

(e)“Commencement Date” means (i) a Director’s Separation from Service or (ii) a date that is one to five years following a Director’s Separation from Service, as elected by the Director.

(f)“Common Shares” means the shares of common stock, $1.25 par value, of the Company.

(g)“Company” means Weyerhaeuser Company.

(h)“Deferral Period” means that period of time from the end of the date on which Fees would have been paid but for deferral under the Plan (or, in the case of Fees paid in the form of RSUs, from the end of the date of grant of such RSUs) until the time when such Fees are paid.

 

 

(i)“Deferred Fees” means any Voluntarily Deferred Fees and Designated Stock Equivalents that have been deferred pursuant to the Plan, together with any earnings or other appreciation thereon.  All Deferred Fees are subject to the restrictions on transfer set forth in Subparagraph 7(d).

(j)“Designated Stock Equivalents” has the meaning set forth Subparagraph 4(c).

(k)“Director” for purposes of the Plan means a person serving on the Board who is not an Employee.

(l)“Effective Date” has the meaning set forth in Paragraph 10.

(m)“Election Agreement” has the meaning set forth in Paragraph 4(b).

(n)“Employee” means a person who is classified by the Company or any of its subsidiaries as actively employed by the Company or the subsidiary, as applicable, and who is compensated on a salaried basis as reflected on the Company’s or the subsidiary’s payroll records.

(o)“Fees” mean the fees payable to a Director by the Company, in cash or RSUs, upon the Director’s election or reelection to the Board and chairing the Board or a Committee of the Board, but not fees payable for extended travel at the request of the Board or a Committee of the Board or reimbursement for expenses.

(p)“Interest Rate Deferral” has the meaning set forth in Subparagraph 4(a)(i).

(q)“Plan Year” means the calendar year.

(r)“RSU” means a restricted stock unit granted to a Director, each of which is equivalent in value to one Common Share.

(s)“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and regulations and other guidance promulgated thereunder.

(t)“Separation from Service” means the failure to be reelected to, or the resignation or retirement from, the Board as a Director for any reason, provided, that if the Director continues to provide services for the Company or a subsidiary or affiliate in any capacity, the Director shall have a Separation from Service only if the Director has a “separation from service” within the meaning of Section 409A.

(u)“Specified Employee” means a Director who, as of the date of the Director’s Separation from Service for any reason, is a key employee of the Company.  The Director is a key employee if the Director meets the requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations thereunder and disregarding Code Section 416(i)(5)) at any time during the twelve‐month period ending on a Specified Employee identification date as determined under Code section 409A.  If the Director is a key employee as of December 31, the Director shall be treated as a Specified Employee for the entire twelve‐month period beginning on the following April 1st.

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(v)“Stock Equivalent” means a deferred unit of account, whether through Stock Equivalent Deferral or Designated Stock Equivalents, which is equal in value to one Common Share of the Company.

(w)“Stock Equivalent Deferral” means Fees deferred as Stock Equivalents pursuant to Subparagraph 4(a)(ii) or 4(c).

(x)“Trading Day” means a day that the New York Stock Exchange is open for business.

(y)“Voluntarily Deferred Fees” has the meaning set forth in Subparagraph 4(a).

3.Participation in the Plan.  Any individual who is a Director may participate in the Plan.

4.Deferral of Fees.  

(a)Voluntarily Deferred Fees.  Except as provided in Subparagraph (c) below for Fees paid in the form of RSUs, a Director may elect to defer receipt of all or a percentage of his or her cash Fees earned in any Plan Year in accordance with this Subparagraph (a).  The procedure for this election is set forth in Subparagraph (b) below.  Two forms of “Voluntarily Deferred Fees” are provided for.

(i)“Interest Rate Deferral” ‐ This form of deferral provides for the payment of the amount to be deferred with interest, commencing with the Commencement Date elected by the Director, in the form of a lump sum or annual installments over up to 10 years, as elected by the Director.  Details as to the amount and timing of payments are set forth in Paragraph 5.

(ii)“Stock Equivalent Deferral” ‐ This form of deferral provides for the payment of the amount to be deferred, increased or decreased by reference to the market price and dividend history of Common Shares, commencing with the Commencement Date elected by the Director, in the form of a lump sum or annual installments over up to 10 years, as elected by the Director.  Details as to the amount and timing of payments are set forth in Paragraph 6.

(b)Election Procedure.  A Director shall notify the Company, in writing and substantially in the form of Appendix A attached hereto (the “Election Agreement”), on or prior to the December 31 preceding each Plan Year of his or her election to defer the receipt of all or a percentage of any Fees described in Subparagraph 4(a) that are to be earned starting in the Plan Year about to commence; provided, however, that a Director who is newly elected or appointed to the Board after the commencement of a Plan Year may notify the Company of such deferral election at any time prior to the effective date of his or her election or appointment provided that the requirements of Treas. Reg. § 1.409A‐2(a)(7) (or any successor provision) are satisfied.  Each notice to defer shall:

(i)state the percentage of the Fees to be deferred;

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(ii)designate the percentage of the total amount to be deferred as an Interest Rate Deferral and the percentage of the total amount to be deferred as a Stock Equivalent Deferral; and

(iii)state the Commencement Date for payment of the Voluntarily Deferred Fees and the number of years (from one to 10) elected for payment.

An election to defer Fees is irrevocable.  If a Director fails to make a payment election in the Election Agreement for any Plan Year, any Voluntarily Deferred Fees for such Plan Year pursuant to this Subparagraph (b) shall be payable in a single lump sum payment following the Director’s Separation from Service as if the Director had elected Separation from Service as the Commencement Date.

(c)Designated Stock Equivalents. In the event that the Board designates that any Fee to be paid to a Director shall be paid in the form of RSUs, a Director may elect to defer the settlement of a percentage of his or her RSUs in accordance with the procedures set forth below.

(i)Any such deferrals shall be credited to the Director’s account under the Plan as of the date of grant of such RSUs in the form of an equal number of Stock Equivalents or fractions thereof (calculated to the third decimal place with conventional rounding or as otherwise determined by the Committee) (referred to herein as “Designated Stock Equivalents”), which Designated Stock Equivalents, along with any increments thereto pursuant to Subparagraph 6(b) or 6(d) below, shall thereafter be subject to the investment, forfeiture and payment provisions of Paragraphs 6 and 7 of the Plan as well as this Subparagraph (c).  Any RSUs or part thereof which the Director does not elect to defer shall be settled as provided in the instrument evidencing the award.

(ii)A Director shall notify the Company, in the Election Agreement, on or prior to the December 31 preceding each Plan Year of his or her election to defer the settlement of a percentage of the RSUs to be granted and starting to be earned in the Plan Year about to commence; provided, however, that a Director who is newly elected or appointed to the Board after the commencement of a Plan Year may notify the Company of such deferral election at any time prior to the effective date of his or her election or appointment provided that the requirements of Treas. Reg. § 1.409A‐2(a)(7) (or any successor provision) are satisfied.  Each notice to defer shall:

(I)state the percentage of the RSUs to be deferred as Designated Stock Equivalents; and

(II)state the Commencement Date for the payment of the Designated Stock Equivalents and the number of years (from one to 10) elected for payment.

(iii)An election to defer RSUs in the form of Designated Stock Equivalents shall be irrevocable.  Should a Director make a deferral election but fail to make a 

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payment election in the Election Agreement for any Designated Stock Equivalents, such Designated Stock Equivalents shall be payable in a single lump sum payment following the Director’s Separation from Service as if the Director had elected Separation from Service as the Commencement Date.

(iv)A Director shall be entitled to receive payments with respect to Designated Stock Equivalents as provided in Subparagraph 6(c).

(v)The provisions of the Plan, including those relating to Voluntarily Deferred Fees, shall apply to Designated Stock Equivalents to the extent they are not inconsistent with this Subparagraph (c).

5.Interest Rate Deferral.

(a)Accounts.  Any Voluntarily Deferred Fees designated as Interest Rate Deferrals shall be credited to a Director’s account as of the day it would otherwise have been paid in cash and shall thereafter accrue interest at a rate to be designated from time to time by the Board, with such interest to be compounded monthly.

(b)Payments.  A Director shall be entitled to receive cash payments with respect to Voluntarily Deferred Fees designated as Interest Rate Deferrals, together with interest accrued to the date of payment in each year of the applicable period as elected under Subparagraph 4(b).  Payment shall be made in accordance with Subparagraph 7(a); provided, however, that in the event payments commence based on the Director’s Separation from Service, no payment shall be made earlier than six months after the date of such Separation from Service if the Director is then a Specified Employee, in which case any suspended payment shall occur on the earliest date permitted by this Subparagraph (b) and Section 409A.  The amount of cash to be paid each year with respect to the amount of such Interest Rate Deferrals from any Plan Year shall be computed by multiplying a fraction, the numerator of which is one and the denominator of which is the number of years remaining in the applicable payment period for such Interest Rate Deferrals, by the remaining portion of such Interest Rate Deferrals plus accrued interest thereon (e.g., 1/10th is paid in the first year of a ten‐year payment period; 1/9th of the remaining balance in the second year, 1/8th of the remaining balance in the third year, etc., over the ten years).

6.Stock Equivalents.

(a)Accounts.  Any Voluntarily Deferred Fees designated as Stock Equivalent Deferrals shall be divided by the price per share (or other pricing methodology approved by the Committee) of the Common Shares on the date such Fees would otherwise have been paid (or, if such date is not a Trading Day, then on the first Trading Day immediately preceding such date) in cash to determine the number of Stock Equivalents or fractions thereof (calculated to the third decimal place with conventional rounding or as otherwise determined by the Committee) credited to a Director’s account.  Any Designated Stock Equivalents shall be equal in number to the number of RSUs a Director elects to defer, but shall, along with any increments thereto pursuant to Subparagraph (b) or (d) below, continue to be subject to the forfeiture provisions (but not the payment provisions) of the instrument evidencing the 

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award of the RSUs in the same manner as if no deferral election had been made.  All such Stock Equivalents shall be promptly credited to a Director’s account.

(b)Dividend Equivalents.  All Stock Equivalents credited to a Director’s account shall be further credited with an amount equivalent to each dividend declared on Common Shares.  The amount of such dividend equivalents shall be divided by the price per share of the Common Shares on the ex-dividend date for such dividend (or other pricing date determined by the Committee for such dividend; and, if any such date is not a Trading Day, then on the first Trading Day immediately preceding such date) to determine the number of additional Stock Equivalents or fractions thereof (calculated to the third decimal place with conventional rounding or as otherwise approved by the Committee) to be credited to a Director’s account.

(c)Payments.

(i)Payment with respect to any Stock Equivalents credited to a Director’s account shall be made as follows:

(I)in the form of Common Shares, equal in number to the number of Stock Equivalents with respect to which payment is being made, plus cash for any fractional shares  (determined based on the price per share of the Common Shares on the date of payment or, if such date is not a Trading Day, then on the first Trading  Day immediately preceding such date), or

(II)if the Director is a Canadian Director and elects to receive payment in the form of cash, by written notice delivered to the Company on or before the 10th business day after the Commencement Date or, if applicable, the relevant anniversary thereof (each a “Calculation Date”), in respect of one or more Designated Stock Equivalents of the Director, then a cash payment equal to the product obtained by multiplying the number of Common Shares that would otherwise be delivered to the Director in accordance with Section 6(c)(i)(I) in payment of those Designated Stock Equivalents, in respect of the Calculation Date by the price per share of the Common Shares on the Calculation Date shall be made;

provided, however, no payment shall be made earlier than six months after the date of the Director’s Separation from Service if the Director is then a Specified Employee, in which case any suspended payment shall occur on the earliest date permitted by this Subparagraph (c) and Section 409A.

(ii)In the event a Director has elected payment of Stock Equivalents over a number of years rather than as a lump sum, the number of Common Shares to be paid each year (or, if applicable, the amount of the cash payment to be made pursuant to section 6(c)(i)(II)) shall be computed by multiplying a fraction, the numerator of which is one and the denominator of which is the number of years remaining in the elected payment period, by the remaining number of Stock Equivalents credited to the Director’s account (calculated to the third decimal place 

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with conventional rounding or as otherwise determined by the Committee), to determine the number of Stock Equivalents for which payment is to be made.

(d)Change in Common Shares.  In the event, at any time or from time to time, of a stock dividend, stock split, reverse stock split, combination or exchange of shares, recapitalization, merger, consolidation, change in control or other change in the Company’s structure, the Committee shall make proportional adjustments in the number of Stock Equivalents credited to a Director’s account.  Any such adjustments made by the Committee shall be conclusive and binding for all purposes of the Plan.

(e)Price per Share.  The term “price per share” shall refer to the closing price of the Common Shares on the New York Stock Exchange on the Trading Day in question.

7.General Provisions Related to Deferred Fees.

(a)Date of Payments.  Payments with respect to Interest Rate Deferrals and Stock Equivalents credited to a Director’s account shall be made annually prior to March 15 based on the election made by a Director in the applicable Election Agreement.  Payments with respect to Interest Rate Deferrals generally shall be made in January following the Commencement Date.  Payments with respect to Stock Equivalents generally shall be made in February following the Commencement Date.  

(b)Segregation of Funds.  The Company shall be under no obligation to segregate any Deferred Fees during the Deferral Period.  Such unsegregated funds are subject to the claims of the Company’s general creditors during the Deferral Period.

(c)Payment on Death.  In the event of a Director’s death, all of the Director’s Interest Rate Deferrals and Stock Equivalents credited to the Director’s account, including any unpaid installments, shall be paid to the Director’s Beneficiary in a lump sum in the calendar year immediately following the year of the Director’s death.

(d)Restrictions on Deferred Fees.  No Director’s interest in any Deferred Fees is assignable, either by voluntary or involuntary assignment or by operation of law.  No part of any Deferred Fees, regardless of the form thereof, may be paid over, loaned, sold, assigned, transferred, discounted, pledged as collateral for a loan or in any other way encumbered until the end of the Deferral Period with respect to such Deferred Fees.

8.Administration and Amendment of the Plan.

(a)Powers of the Committee.  Full power and authority to construe and interpret the Plan shall be vested in the Committee as, from time to time, constituted by the Board.  The Committee shall have the authority to modify any of the terms, conditions, limitations and restrictions relating to any Deferred Fees under the Plan in any manner not inconsistent with the Plan.  Decisions hereunder by the Committee shall be final, conclusive and binding on all parties, including each Director and the Company.

(b)Expenses of the Plan.  The expenses of administering the Plan shall be borne by the Company.

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(c)Amendment and Termination.  The Board in its sole discretion may (i) amend, suspend or terminate the Plan, (ii) supplement or replace the Plan with other Deferred Fees plans, and (iii) modify any provisions of the Plan and the terms, conditions, limitations and restrictions relating to any Deferred Fees under the Plan in any manner not inconsistent with the Plan.

(d)Directors’ Rights.  No amendment, suspension or termination of the Plan shall affect any deferral already made, and in the event of any such change, any Deferred Fees credited to a Director’s account shall be paid as provided herein.  No Director shall have any right or interest in the Plan or its continuance or in his or her continued participation in the Plan, other than in the Deferred Fees credited to his or her account.  The existence of the Plan does not extend to any Director a right to continued Director status with the Company, and each Director is deemed to have agreed to the terms herein.

9.Notice to the Plan Recordkeeper.  Any notice required to be furnished by a Director to the Plan recordkeeper shall be deemed to be provided if sent via fax or other electronic delivery method or via first class mail, in accordance with information and instructions communicated by the Plan recordkeeper to the Directors from time to time.

10.Effective Date.  The Plan is originally effective as of November 1, 2010.  The Plan applies to Deferred Fees earned in 2011 and subsequent years that are subject to deferral elections made on or after November 1, 2010 or designated by the Board as Stock Equivalents.  The Plan is most recently amended and restated effective August 14, 2020 (the “Restated Plan”).  Notwithstanding the foregoing, the Restated Plan applies to Deferred Fees that are subject to deferral elections made on or after August 14, 2020 and subsequent years that are subject to deferral elections with respect to Plan Years beginning on or after January 1, 2021 (or the Plan Year beginning January 1, 2020 as to a Director who is newly elected or appointed to the Board during the period from the Restated Plan effective date through December 31, 2020 and who makes a deferral election with respect to such Plan Year in accordance with Section 4(b)).

11.No Acceleration.  The acceleration of the time or schedule of any payment due under the Plan is generally prohibited.  The Board may, however, accelerate certain distributions under the Plan to the extent permitted under Section 409A.

12.Miscellaneous.

(a)Rights Unsecured.  The rights of a Director or his or her Beneficiary to receive a payment hereunder shall be an unsecured claim against the general assets of the Company, and neither the Director nor his or her Beneficiary shall have any rights in or against any amount credited to his or her account or any other specific assets of the Company.  The Plan at all times shall be considered entirely unfunded for tax purposes.  Any funds set aside by the Company for the purpose of meeting its obligations under the Plan, including any amounts held by a trustee, shall continue for all purposes to be part of the general assets of the Company and shall be available to the Company’s general creditors in the event of the Company’s bankruptcy or insolvency.  The Company’s obligation under the Plan shall be that of an unfunded and unsecured promise to pay benefits in the future.  The Plan shall not be subject to any mistake of fact claim.

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(b)Taxes.  The Company or any other payer may, in such manner as the Company reasonably determines, withhold from a benefit payment under the Plan, or from or with respect to any other compensation payable by the Company or other payer under the Plan, to the Director any or all federal, state, local, or foreign taxes required by law to be withheld with respect to a deferral, payment or accrual under the Plan and shall report such payments and other Plan related information to the appropriate governmental agencies as required under applicable law.

(c)No Guarantee of Tax Consequences.  None of the Company, the Board, the Committee or any other person guarantees that any particular federal or state income, payroll, personal property or other tax consequence shall occur because of participation in the Plan.  A Director should consult with professional tax advisors regarding all questions relative to the tax consequences arising from participation in the Plan.

(d)Successors and Assigns.  The terms and conditions of the Plan, as amended and in effect from time to time, shall be binding on the Company’s successors and assigns, including, without limitation, any entity into which the Company may be merged or with which the Company may be consolidated.

(e)Applicable Law and Venue.  The Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the laws of the United States, shall be governed by the laws of the State of Washington without giving effect to the choice or conflicts of law provisions thereof.  The Company intends that the Plan constitutes, and shall be construed and administered as, an unfunded plan of deferred compensation.  In addition, the Plan is intended to comply with the requirements of Section 409A, including any official guidance issued thereunder.  Notwithstanding any other provision, the Plan shall be interpreted, operated and administered in a manner consistent with this intention to the extent the Board deems necessary to comply with such requirements of Section 409A and to avoid the imposition of any additional tax thereunder.  In addition, notwithstanding anything in Subparagraph 8(d) to the contrary, the Plan shall be deemed to be amended, and any deferrals and distributions hereunder shall be deemed to be modified, to the extent necessary to comply with such requirements of Section 409A.  If the Company or any Director or Beneficiary initiates litigation related to the Plan, the venue for such action shall be King County, Washington.

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Appendix A

 

 

Election Agreement for Fees Earned During 20__ Under the 

2011 Fee Deferral Plan for

Directors of Weyerhaeuser Company

 

 

Name:   

 

You must complete this form to direct the payment of fees earned during 20___.  The 2011 Fee Deferral Plan for Directors of Weyerhaeuser Company (“Plan”) is intended to meet the requirements for nonqualified deferred compensation plans under applicable U.S. tax law, including Section 409A of the Internal Revenue Code.  Deferral elections and payment options are subject to all of the terms and conditions of the Plan and applicable U.S. tax law.

 

IMPORTANT NOTICE FOR CANADIAN TAXPAYERS:

Directors who are resident in Canada for the purposes of the Income Tax Act (Canada) (“Canadian Directors”) may be subject to adverse Canadian income tax consequences in respect of an election to defer the receipt of cash fees or RSUs.  Canadian Directors should obtain their own Canadian income tax advice with respect to the Canadian income tax consequences of making such an election before deciding whether to elect.  Neither Weyerhaeuser nor the Board will be responsible for the Canadian income tax consequent to any Canadian Director of making such an election.

 

Please return this form no later than December 31, 20___

 

1.Election for Deferral of Restricted Stock Units Granted in 20___.  The Board has determined that a portion of fees earned for services as a Director during 20___ will be granted in the form of restricted stock units.

 

Instead of receiving payment with respect to your restricted stock units at the end of the applicable vesting period, you may choose to defer income on some or all of your units into a stock equivalent account under the Plan.  If you choose this option, the amount deferred will continue to track the value of Weyerhaeuser common stock and will be paid to you in shares of Weyerhaeuser common stock once you leave the Board in accordance with your payment election below.

 

 

 

Deferral Election for RSUs:

I hereby choose to:Percent (%)

 

 

	
 
	
☐
	
Receive vested 20___ RSUs after one year

 

	
 
	
☐
	
Defer payment of 20___ RSUs into stock equivalent account

 

Sum of Percentages must equal 100%

 

Payment Election for Deferred RSUs:

(Complete this section only if you have elected to defer some or all of your 20___ RSUs into a stock equivalent account.)

 

For deferred 20___ RSUs, I hereby choose the following payment options from the stock equivalent account:

 

	
 
	
•
	
Commencement Date:
	
 

Payment to begin:

 

	
 
	
☐
	
following my separation from Board service; or

	
 
	
☐
	
             years following my separation from Board service (Choose a number from 1 to 5).
	
 

 

	

	
Actual payment generally will begin in February of the year following the Commencement Date.  Special rules may apply if you continue to provide services to Weyerhaeuser Company after you leave the Board.  Notwithstanding your payment elections, your share equivalent account may be paid early in a lump sum in the event of your death.

 

	
 
	
•
	
Number of Installments:

Pay in               annual installments.

	

	
(The number of payments cannot exceed 10.  Choose 1 payment for a lump sum payment during the chosen year).

 

 

2.Election for Cash Fees Earned During 20___.  You may elect to defer all or a portion of the cash fees you earn for services as a Director during 20___.

 

Deferral Election for Cash Fees:

I hereby choose to:Percent (%)

 

	
 
	
☐
	
Receive 20___ fees earned immediately in cash

 

	
 
	
☐
	
Defer payment of 20___ fees earned

 

Sum of Percentages must equal 100%

 

2

 

 

Investment Election for Deferred Cash Fees:

(Complete this section only if you have elected to defer all or a portion of your remaining fees.)

 

For any cash fees that I have chosen to defer above, I designate the following deferral account (Sum of Percentages must equal 100%):

 

	
 
	
☐
	
Defer             % of the designated fee amount into an interest-bearing account.

The account will be credited with interest and paid to you in cash after you leave the Board in accordance with your payment election below.

 

	
 
	
☐
	
Defer             % of the designated amount into a stock equivalent account.

The account will track the value of Weyerhaeuser common stock and will be paid to you in shares of Weyerhaeuser common stock once you leave the Board in accordance with your payment election below.

 

Payment Election for Deferred Cash Fees:

(Complete this section only if you have elected to defer all or a portion of your cash fees.)

 

For any cash fees that I have chosen to defer above, I hereby choose the following payment options:

 

	
 
	
•
	
Commencement Date:

Payment to begin:

 

	
 
	
☐
	
following my separation from Board service; or

 

	
 
	
☐
	
               years following my separation from Board service (Choose a number from 1 to 5).
	
 

Actual payment for fees deferred into an interest-bearing account generally will begin in January of the year following the Commencement Date and payment for fees deferred into a stock equivalent account will begin in February of the year following the Commencement Date.  Special rules may apply if you continue to provide services to Weyerhaeuser Company after you leave the Board.  Notwithstanding your payment elections, your account may be paid early in a lump sum in the event of your death.

 

	
 
	
•
	
Number of Installments:

 

Pay inannual installments.

(The number of payments cannot exceed 10.  Choose 1 payment for a lump sum payment during the chosen year.  If you do not make an election, payment will be made in a lump sum.)

 

 

I have received and reviewed the terms of the Plan.  I understand that my election to defer and my choice of payment options for deferred fees are irrevocable for fees earned during 20___.

 

 

 

 

DateSignature

3wy-ex102_533.htm

EXHIBIT 10.2

 

WEYERHAEUSER COMPANY
2013 LONG-TERM INCENTIVE PLAN

(Amended and Restated Effective August 14, 2020)

 

 

 

WEYERHAEUSER COMPANY
2013 LONG-TERM INCENTIVE PLAN

(Amended and Restated Effective August 14, 2020)

section 1.  purpose and establishment3

1.1Purpose3

1.2Replacement Plan3

section 2.  definitions3

section 3.  administration8

3.1Administration of the Plan8

3.2Administration and Interpretation by Committee8

section 4.  shares subject to the plan9

4.1Authorized Number of Shares9

4.2Share Usage10

Section 5.  eligibility11

section 6.  awards11

6.1Form and Grant of Awards11

6.2Evidence of Awards11

6.3Deferrals11

6.4Dividends and Distributions11

section 7.  options12

7.1Grant of Options12

7.2Option Exercise Price12

7.3Terms of Options12

7.4Exercise of Options12

7.5Payment of Exercise Price12

7.6Post-Termination Exercise13

7.7Incentive Stock Option Limitations14

section 8.  stock appreciation rights14

8.1Grant of Stock Appreciation Rights14

8.2Payment of SAR Amount14

section 9.  STOCK AWARDS, restricted stock and stock units15

9.1Grant of Stock Awards, Restricted Stock and Stock Units15

9.2Vesting of Restricted Stock and Stock Units15

section 10.  performance shares and performance units15

10.1Grant of Performance Shares15

10.2Grant of Performance Units15

section 11.  other stock or cash based awards16

section 12.  withholding16

12.1Withholding for Taxes or Other Obligations16

12.2Payment of Withholding Obligations16

section 13.  assignability16

section 14.  ADJUSTMENTS17

14.1Adjustment of Shares17

 

14.2Dissolution or Liquidation17

14.3Change of Control17

14.4Further Adjustment of Awards19

14.5No Limitations19

14.6No Fractional Shares19

14.7Section 409A19

SECTION 15.  sECTION 162(m) PROVISIONS19

15.1Terms of Section 162(m) Awards Generally19

15.2Performance Criteria20

15.3Adjustment of Awards20

15.4Limitations21

SECTION 16.  amendment and termination21

16.1Amendment, Suspension or Termination of the Plan21

16.2Term of the Plan21

16.3Consent of Participant21

section 17.  general22

17.1No Individual Rights22

17.2Issuance of Shares22

17.3Indemnification23

17.4No Rights as a Shareholder23

17.5Compliance with Laws and Regulations23

17.6Participants in Other Countries24

17.7No Trust or Fund24

17.8Successors25

17.9Severability25

17.10Choice of Law25

17.11Legal Requirements25

section 18.  effective date25

 

 

ii

 

WEYERHAEUSER COMPANY
2013 LONG-TERM INCENTIVE PLAN

(Amended and Restated Effective August 14, 2020)

section 1.  purpose and establishment

1.1Purpose

The purposes of this 2013 Long-Term Incentive Plan (as amended from time to time, the “Plan”) is to promote the interests of Weyerhaeuser Company (the “Company”) and its shareholders by attracting, retaining and motivating employees, officers and directors key to the growth and success of the Company by providing them the opportunity to acquire a proprietary interest in the Company and to link their interests and efforts to the long-term interests of the Company’s shareholders.

1.2Replacement Plan

This Plan replaces the Company’s 2004 Long-Term Incentive Plan and 1998 Long-Term Incentive Compensation Plan (collectively, the “Prior Plans”).  No further awards may be made under the Prior Plans after the Effective Date (as defined in Section 18).  

section 2.  definitions

As used in the Plan, the following definitions apply to the terms indicated below:

“Acquired Entity” means any entity acquired by the Company or a Related Company or with which the Company or a Related Company merges or combines.

“Award” means any Option, Stock Appreciation Right, Stock Award, Restricted Stock, Stock Unit, Performance Share, Performance Unit, dividend equivalent, cash-based award or other incentive payable in cash or in shares of Common Stock as may be designated by the Committee from time to time.

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

“Business Combination” has the meaning set forth in the definition of “Change of Control.”

“Cause,” unless otherwise defined in the instrument evidencing an Award or, if not provided in such instrument, in a written employment, services or other agreement between the Participant and the Company or a Related Company, means dishonesty, fraud, serious or willful misconduct, unauthorized use or disclosure of confidential information or trade secrets, violation of a state or federal criminal law involving the commission of a crime against the Company or a felony, current use of illegal substances, or any act or omission that substantially impairs the Company’s business, good will or reputation, in each case as determined by the Company’s chief human resources officer or other person performing that function or, in the case of directors and executive officers, the Compensation Committee, whose determination shall be conclusive and binding.

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“Change in Control” or “CIC” unless otherwise defined in the instrument evidencing an Award or, if not provided in such instrument, in a written employment, services or other agreement between the Participant and the Company or a Related Company, means the occurrence of any of the following events: 

	
(a)
	
an acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (A) the number of then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege where the security being so converted was not acquired directly from the Company by the party exercising the conversion privilege, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Related Company, or (4) an acquisition by any Person pursuant to a transaction that meets the conditions of clauses (i), (ii) and (iii) set forth in subsection (d) of this definition of Change in Control; 

	
(b)
	
a change in the composition of the Board during any 24-consecutive month period such that the individuals who, as of the beginning of such period, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board during the period, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; and provided further, however, that any such individual whose initial assumption of office occurs as a result of or in connection with 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 an Entity other than the Board shall not be considered a member of the Incumbent Board; or 

(c)consummation of a complete liquidation or dissolution of the Company; or

	
(d)
	
consummation in one transaction or a series of transactions undertaken with a common purpose of a reorganization, merger or consolidation, sale of at least 60% of the Company’s outstanding securities, or sale or other disposition of all or substantially all of the assets of the Company ( a “Business Combination”); excluding however, such a Business Combination pursuant to which: 

(i)all or substantially all of the Persons who are the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, at least 60% of the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, of the Successor Company 

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(including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets or stock either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities; 

(ii)no Person (other than the Company, any employee benefit plan (or related trust) of the Company, a Related Company or such Successor Company) will beneficially own, directly or indirectly, 30% or more of, respectively, the outstanding shares of common stock of the Successor Company or the combined voting power of the outstanding voting securities of the Successor Company entitled to vote generally in the election of directors unless such ownership resulted solely from ownership of securities of the Company prior to the Business Combination; and 

(iii)individuals who were members of the Incumbent Board will immediately after the consummation of the Business Combination constitute at least a majority of the members of the board of directors of the Successor Company.

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

“Committee” has the meaning set forth in Section 3.1.

“Common Stock” means the common stock, par value $1.25 per share, of the Company.

“Company” means Weyerhaeuser Company, a Washington corporation.

 “Compensation Committee” means the Compensation Committee of the Board.

“Covered Employee” means a “covered employee” as that term is defined in Section 162(m)(3) of the Code or any successor provision.

“Disability” means “Disability” as defined in the instrument evidencing an Award or, if not provided in such instrument, by the Committee or the Company’s senior vice president of human resources for purposes of the Plan or an Award, or in a written employment or services agreement.  Notwithstanding the foregoing, with respect to Incentive Stock Options, 

“Disability” shall have the meaning attributed to that term for purposes of Section 422 of the Code.

“Effective Date” has the meaning set forth in Section 18.

“Eligible Person” means any person eligible to receive an Award as set forth in Section 5.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

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“Fair Market Value” means the closing price for the Common Stock on any given date during regular trading, or if not trading on that date, such price on the last preceding date on which the Common Stock was traded, unless determined otherwise by the Committee using such methods or procedures as it may establish.

“Grant Date” means the latter of (a) date on which the Committee completes the corporate action authorizing the grant of an Award or such later date specified by the Committee and (b) the date on which all conditions precedent to an Award have been satisfied, provided that conditions to the exercisability or vesting of Awards shall not defer the Grant Date.

“Incentive Stock Option” means an Option granted with the intention that it qualify as an “incentive stock option” as that term is defined in Section 422 of the Code or any successor provision.

“Incumbent Board” has the meaning set forth in the definition of “Change of Control.”

“Layoff” means “Layoff” as defined in the instrument evidencing an Award or, if not provided in such instrument, by the Committee or the Company’s senior vice president of human resources for purposes of the Plan or an Award, or in a written employment or services agreement.

“Non-qualified Stock Option” means an Option other than an Incentive Stock Option.

“Option” means a right to purchase Common Stock granted under Section 7.

“Option Expiration Date” means the last day of the maximum term of an Option.

“Outstanding Company Common Stock” has the meaning set forth in the definition of “Change of Control.”

“Outstanding Company Voting Securities” has the meaning set forth in the definition of “Change of Control.”

“Parent Company” means a company or other entity that, as a result of a Company Transaction, owns the Company or all or substantially all of the Company’s assets, either directly or through one or more subsidiaries.

“Participant” means any Eligible Person to whom an Award is granted.

“Performance Award” means an Award of Performance Shares or Performance Units granted under Section 10.

“Performance Criteria” has the meaning set forth in Section 15.2.

“Performance Share” means an Award of units denominated in shares of Common Stock granted under Section 10.1.

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“Performance Unit” means an Award of units denominated in cash or property other than shares of Common Stock granted under Section 10.2.

“Person” means any individual, entity or group (within the meaning of Section 13(d)(3) and 14(d)(2) of the Exchange Act.

“Plan” means the Weyerhaeuser Company 2013 Long-Term Incentive Plan.

“Prior Plans” has the meaning set forth in Section 1.2.

“Related Company” means any entity that is directly or indirectly controlled by or under common control with the Company.

“Restricted Stock” means an Award of shares of Common Stock granted under Section 9, the rights of ownership of which may be subject to restrictions prescribed by the Committee.

“Retirement,” shall mean Retirement as defined in the instrument evidencing the Award or, if not provided in such instrument, by the Committee or the Company’s senior vice president of human resources or other person performing that function or in a written employment, services or other agreement between the Participant and the Company or a Related Company.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Section 409A” means Section 409A of the Code.

“Stock Appreciation Right” or “SAR” means the right granted under Section 8.1 to receive the excess of the Fair Market Value of a specified number of shares of Common Stock over the grant price.

“Stock Award” means an Award of shares of Common Stock granted under Section 9, the rights of ownership of which are not subject to restrictions prescribed by the Committee.

“Stock Unit” means an Award granted under Section 9 denominated in units of Common Stock.

“Substitute Awards” means Awards granted or shares of Common Stock issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, by an Acquired Entity or with which the Company combines.

“Successor Company” means the surviving company, the successor company or Parent Company, as applicable, in connection with a Business Combination.

“Termination of Service,” means a termination of employment or service relationship with the Company or a Related Company for any reason, whether voluntary or involuntary, including by reason of death, Disability, Retirement, or Layoff.  Any question as to whether and when there has been a Termination of Service for the purposes of an Award and the cause of such Termination of Service shall be determined by the Company’s senior vice president of human 

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resources or other person performing that function or, with respect to directors and executive officers, by the Committee, whose determination shall be final and binding.  Transfer of a Participant’s employment or service relationship between the Company and any Related Company shall not be considered a Termination of Service for purposes of an Award.  Unless the Committee determines otherwise, a Termination of Service shall be deemed to occur if the Participant’s employment or service relationship is with an entity that has ceased to be a Related Company.  A Participant’s change in status from an employee of the Company or a Related Company to a nonemployee director, consultant, advisor or independent contractor of the Company or a Related Company or a change in status from a nonemployee director, consultant, advisor or independent contractor of the Company or a Related Company to an employee of the Company or a Related Company, shall not be considered a Termination of Service.

“Vesting Commencement Date” means the Grant Date or such other date selected by the Committee as the date from which an Award begins to vest.

section 3.  administration

3.1Administration of the Plan

The Plan shall be administered by the Compensation Committee, which shall be composed of two or more directors, each of whom shall qualify as a “non-employee director” within the meaning of Rule 16b-3(b)(3) promulgated under the Exchange Act (or any successor definition adopted by the Securities and Exchange Commission), an “outside director” within the meaning of Section 162(m), and an “independent director” as defined under the New York Stock Exchange listing standards.  Notwithstanding the foregoing, the Board or the Compensation Committee may delegate responsibility for administering the Plan with respect to designated classes of Eligible Persons to different committees consisting of two or more members of the Board, subject to such limitations as the Board or the Compensation Committee deems appropriate, except with respect to benefits to non-employee directors and to officers subject to Section 16 of the Exchange Act or awards subject to Section 15 of the Plan.  Members of any committee shall serve for such term as the Board may determine, subject to removal by the Board at any time.  To the extent consistent with applicable law, the Board or the Compensation Committee may authorize one or more officers of the Company to grant Awards to designated classes of Eligible Persons, within limits specifically prescribed by the Board or the committee; provided, however, that no such officer shall have or obtain authority to grant Awards to himself or herself or to any person subject to Section 16 of the Exchange Act.  All references in the Plan to the “Committee” shall be, as applicable, to the Compensation Committee, or any other committee or any officer to whom the Board or the Compensation Committee has delegated authority to administer the Plan.

3.2Administration and Interpretation by Committee

(a)Except for the terms and conditions explicitly set forth in the Plan, and to the extent permitted by applicable law, the Committee shall have full power and exclusive authority, subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board or a Committee composed of members of the Board, to (i) select the Eligible Persons to whom Awards may from time to time be granted under the Plan; (ii) determine the type or types of Award to be granted to each Participant under the Plan; (iii) determine the number of shares of Common Stock to be covered by each Award granted 

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under the Plan; (iv) determine the terms and conditions of any Award granted under the Plan; (v) approve the forms of notice or agreement for use under the Plan; (vi) determine whether, to what extent, and under what circumstances Awards may be settled in cash, shares of Common Stock or other property or canceled or suspended; (vii) determine whether, to what extent, and under what circumstances cash, shares of Common Stock, other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the Participant, subject to Section 409A and in accordance with Section 6.3 of the Plan; (viii) interpret and administer the Plan and any instrument evidencing an Award, notice or agreement executed or entered into under the Plan; (ix) establish such rules and regulations as it shall deem appropriate for the proper administration of the Plan; (x) delegate ministerial duties to such of the Company’s employees as it so determines; (xi) waive any terms, conditions or restrictions on any Award under such circumstances and subject to such terms and conditions as the Committee shall deem appropriate; and (xii) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan.  

 

(b)In no event, however, shall the Board or the Committee have the right, without shareholder approval, to (i) lower the exercise or grant price of an Option or SAR after it is granted, except in connection with adjustments provided in Section 14, (ii) cancel an Option or SAR at a time when its exercise or grant price exceeds the Fair Market Value of the underlying stock, in exchange for cash, another option or stock appreciation right, restricted stock or other equity award, unless the cancellation and exchange occurs in connection with a merger, acquisition, spin-off or other similar corporate transaction or (iii) take any other action that is treated as a repricing under generally accepted accounting principles. 

 

(c)Decisions of the Committee shall be final, conclusive and binding on all persons, including the Company, any Participant, any shareholder and any Eligible Person.  A majority of the members of the Committee may determine its actions.

section 4.  shares subject to the plan

4.1Authorized Number of Shares 

Subject to adjustment from time to time as provided in Section 14.1, the maximum number of shares of Common Stock available for issuance under the Plan shall be:

 

	
(a)
	
10,000,000 shares reduced by the aggregate number of shares of Common Stock that become subject to Awards and less one share for every one share that was subject to an award granted after February 28, 2013 under the Prior Plans; plus

 

(b)(i) any authorized shares not issued or subject to outstanding awards under the Company’s Prior Plan as of the Effective Date and (ii) any shares subject to outstanding awards under the Prior Plan as of the Effective Date that subsequently cease to be subject to such Awards (other than by reason of exercise or settlement of the Awards to the extent they are exercised for or settled in vested and non-forfeitable shares), which shares of Common Stock shall cease, as of such date, to be available for grant and issuance under the Prior Plan, but shall be available for issuance under the Plan.

 

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Shares issued under the Plan shall be drawn from authorized and unissued shares or shares now held or subsequently acquired by the Company as treasury shares.

4.2Share Usage

	
(a)
	
If (i) any Award based on shares lapses, expires, terminates or is canceled prior to the issuance of shares thereunder, or if shares of Common Stock are issued under the Plan to a Participant and thereafter are forfeited to the Company, or if an Award is settled for cash (in whole or in part) or otherwise does not result in the issuance of all or a portion of the shares of Common Stock subject to such Award, or (ii) after February 28, 2013 any award under the Prior Plans based on shares lapses, expires, terminates, or is canceled prior to the issuance of shares thereunder, or if shares of Common Stock issued under the Prior Plans to a Participant are thereafter forfeited to the Company, or if an award under the Prior Plans is settled for cash (in whole or in part), or otherwise does not result in the issuance of all or a portion of the shares of Common Stock subject to such award under the Prior Plans, then the shares subject to such Awards or awards under the Prior Plan shall again be available for issuance under the Plan.  

 

	
(b)
	
In the event that (i) any Option or, after February 28, 2013, an option under the Prior Plans, is exercised through the tendering of shares of Common Stock (either actually or by attestation) or by the withholding of shares of Common Stock by the Company or (ii) withholding tax liabilities arising from an Award or, after February 28, 2013, an award under the Prior Plans, are satisfied by the tendering of shares of Common Stock (either actually or by attestation) or by the withholding of shares of Common Stock by the Company, then in each such case the Shares so tendered or withheld shall again be available for issuance under the Plan on a one-for-one basis, provided, however, that only the number of shares withheld to satisfy withholding tax liabilities at the employee’s minimum required tax withholding rate will again be available for issuance under the Plan.

 

	
(c)
	
The number of shares of Common Stock available for issuance under the Plan shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional shares of Common Stock or credited as additional shares of Common Stock subject or paid with respect to an Award.  

	
(d)
	
The Committee shall also, without limitation, have the authority to grant Awards as an alternative to or as the form of payment for grants or rights earned or due under other compensation plans or arrangements of the Company.

	
(e)
	
Notwithstanding any other provision of the Plan to the contrary, the Committee may grant Substitute Awards under the Plan.  Substitute Awards shall not reduce the number of shares authorized for issuance under the Plan.  In the event that an Acquired Entity has shares available for awards or grants under one or more preexisting plans not adopted in contemplation of such acquisition or combination, then, to the extent determined by the Board or the Compensation Committee, the shares available for grant pursuant to the terms of such preexisting plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to holders of common stock of the entities that are parties to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the number of shares of Common Stock authorized for issuance under the Plan; provided, however, 

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that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of such preexisting plans, absent the acquisition or combination, and shall be made only to persons who were not employees or directors of the Company or a Related Company prior to such acquisition or combination. In the event that a written agreement between the Company and an Acquired Entity pursuant to which a merger or consolidation is completed is approved by the Board and that agreement sets forth the terms and conditions of the substitution for or assumption of outstanding awards of the Acquired Entity, those terms and conditions shall be deemed to be the action of the Committee without any further action by the Committee, except as may be required for compliance with Rule 16b-3 under the Exchange Act, and the persons holding such awards shall be deemed to be Participants. 

	
(f)
	
Notwithstanding the foregoing, the maximum number of shares that may be issued upon the exercise of Incentive Stock Options shall equal the share number stated in Section 4.1(a), subject to adjustment as provided in Section 14.1.

Section 5.  eligibility

 

An Award may be granted to any employee, officer or director of the Company or a Related Company whom the Committee from time to time selects.  The above are “Eligible Persons.”

section 6.  awards

6.1Form and Grant of Awards

The Committee shall have the authority, in its sole discretion, to determine the type or types of Awards to be granted under the Plan.  Such Awards may be granted either alone, in addition to or in tandem with any other type of Award.  Any Award settlement may be subject to such conditions, restrictions and contingencies as the Committee shall determine.

6.2Evidence of Awards

Awards granted under the Plan shall be evidenced by a written or electronic instrument that shall contain such terms, conditions, limitations and restrictions as the Committee shall deem advisable and that are not inconsistent with the Plan.

6.3Deferrals

The Committee may permit or require a Participant to defer receipt of the payment of any Award if and to the extent set forth in the instrument evidencing the Award at the time of grant.  If any such deferral election is permitted or required, the Committee, in its sole discretion, shall establish rules and procedures for such payment deferrals, which may include the grant of additional Awards or provisions for the payment or crediting of interest or dividend equivalents, including converting such credits to deferred stock unit equivalents; provided, however, that the terms of any deferrals under this Section 6.3 shall comply with all applicable law, rules and regulations, including, without limitation, Section 409A of the Code. 

6.4Dividends and Distributions

Participants may, if the Committee so determines, be credited with dividends paid with respect to shares of Common Stock underlying an Award in a manner determined by the Committee in its sole discretion.  The Committee may apply any restrictions to the dividends or dividend 

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equivalents that the Committee deems appropriate.  The Committee, in its sole discretion, may determine the form of payment of dividends or dividend equivalents, including cash, shares of Common Stock, Restricted Stock or Stock Units.  Notwithstanding the foregoing, if any Award for which dividends or dividend equivalents have been granted has its vesting, payment or grant dependent upon the achievement of one or more performance goals, then the dividends or dividend equivalents shall accrue and be paid only to the extent the Award becomes vested or payable.  Also notwithstanding the foregoing, the crediting of dividends or dividend equivalents must comply with or qualify for an exemption under Section 409A. 

section 7.  options

7.1Grant of Options

The Committee may grant Options designated as Incentive Stock Options or Non-qualified Stock Options.

7.2Option Exercise Price

The exercise price for shares purchased under an Option shall be the average of the high and low price of the Common Stock for the Grant Date (and not less than the minimum exercise price required by Section 422 of the Code with respect to Incentive Stock Options), except in the case of Substitute Awards.  

7.3Terms of Options

Subject to earlier termination in accordance with the terms of the Plan and the instrument evidencing the Option, the maximum term of an Option shall be 10 years from the Grant Date.  For Incentive Stock Options, the maximum term shall comply with Section 422 of the Code

7.4Exercise of Options

	
(a)
	
The Committee shall establish and set forth in each instrument that evidences an Option the time at which, or the installments in which, the Option shall vest and become exercisable.

	
(b)
	
To the extent an Option has vested and become exercisable, the Option may be exercised in whole or from time to time in part by delivery as directed by the Company to the Company or a brokerage firm designated or approved by the Company of a stock option exercise agreement or notice, in a form and in accordance with procedures established by the Committee, setting forth the number of shares with respect to which the Option is being exercised, the restrictions imposed on the shares purchased under such exercise agreement or notice, if any, and such representations and agreements as may be required by the Committee, accompanied by payment in full as described in Section 7.5.  An Option may be exercised only for whole shares and may not be exercised for less than a reasonable number of shares at any one time, as determined by the Committee.

7.5Payment of Exercise Price

The exercise price for shares purchased under an Option shall be paid in full as directed by the Company to the Company or a brokerage firm designated or approved by the Company by delivery of consideration equal to the product of the Option exercise price and the number of shares purchased.  Such consideration must be paid before the Company will issue the shares 

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being purchased and must be in a form or a combination of forms acceptable to the Committee for that purchase, which forms may include: 

(a) cash; 

(b) check or wire transfer; 

(c) having the Company withhold shares of Common Stock that otherwise would be issued on exercise of the Option that have an aggregate Fair Market Value equal to the aggregate exercise price of the shares being purchased under the Option; 

(d) tendering (either actually or, so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, by attestation) shares of Common Stock already owned by the Participant that on the day prior to the exercise date have a Fair Market Value equal to the aggregate exercise price of the shares being purchased under the Option; 

(e) so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, and to the extent permitted by applicable law, delivery of a properly executed exercise agreement or notice, together with irrevocable instructions to a brokerage firm designated or approved by the Company to deliver promptly to the Company the aggregate amount of sale or loan proceeds to pay the Option exercise price and any tax withholding obligations that may arise in connection with the exercise, all in accordance with the regulations of the Federal Reserve Board; or 

(f) such other consideration as the Committee may permit.  

7.6Post-Termination Exercise

(a)The Committee shall establish and set forth in each instrument that evidences an Option whether the Option shall continue to be exercisable, and the terms and conditions of such exercise, after a Termination of Service.

(b)Also notwithstanding the foregoing, in case a Participant’s Termination of Service occurs for Cause, all Options granted to the Participant shall automatically expire upon first notification to the Participant of such termination, unless the Committee determines otherwise.  If a Participant’s employment or service relationship with the Company is suspended pending an investigation of whether the Participant shall be terminated for Cause, all the Participant’s rights under any Option shall likewise be suspended during the period of investigation; provided, however, that any such suspension shall not extend the expiration date of any Option.  If any facts that would constitute termination for Cause are discovered after a Participant’s Termination of Service, any Option then held by the Participant may be immediately terminated by the Committee, in its sole discretion.

(c)If the exercise of the Option following a Participant’s Termination of Service, but while the Option is otherwise exercisable, would be prohibited solely because the issuance of Common Stock would violate either the registration requirements under the Securities Act or the Company’s insider trading policy, then the Option shall remain exercisable until the earlier of (i) the Option Expiration Date and (ii) the expiration of a period of three months (or such longer period of time as determined by the Committee in its sole discretion) after the Participant’s 

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Termination of Service during which the exercise of the Option would not be in violation of such Securities Act or insider trading policy requirements. 

7.7Incentive Stock Option Limitations

Notwithstanding any other provisions of the Plan, the terms of any Incentive Stock Options shall in addition comply in all respects with Section 422 of the Code, or any successor provision, and any applicable regulations thereunder.  Persons who are not employees of the Company or one of its parent or subsidiary corporations (as such terms are defined for purposes of Section 422 of the Code) may not be granted Incentive Stock Options.  To the extent that the aggregate Fair Market Value of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year exceeds $100,000 (or, if different, the maximum limitation in effect at the time of grant under the Code), such portion in excess of $100,000 shall be treated as Nonqualified Stock Options.  If any Participant shall make any disposition of shares of Common Stock issued pursuant to the exercise of an Incentive Stock Option under any circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition.

section 8.  stock appreciation rights

8.1Grant of Stock Appreciation Rights

The Committee may grant stock appreciation rights (“Stock Appreciation Rights” or “SARs”) to Participants at any time and on such terms and conditions as the Committee shall determine in its sole discretion.  A SAR may be granted in tandem with an Option (“tandem SAR”) or alone (“freestanding SAR”).  The grant price of a tandem SAR shall be equal to the exercise price of the related Option.  The grant price of a freestanding SAR shall be established in accordance with procedures for Options set out in Section 7.2.  A SAR may be exercised upon such terms and conditions and for the term as the Committee determines in its sole discretion; provided, however, that, subject to earlier termination in accordance with the terms of the Plan and the instrument evidencing the SAR, the maximum term of a freestanding SAR shall be 10 years, and in the case of a tandem SAR, (a) the term shall not exceed the term of the related Option and (b) the tandem SAR may be exercised for all or part of the shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option, except that the tandem SAR may be exercised only with respect to the shares for which its related Option is then exercisable.

8.2Payment 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 difference between the Fair Market Value of the Common Stock on the date of exercise over the grant price of the SAR by (b) the number of shares with respect to which the SAR is exercised.  At the discretion of the Committee as set out in the instrument evidencing the Award, the payment upon exercise of a SAR may be in cash, in shares of equivalent value, in some combination thereof or in any other manner approved by the Committee in its sole discretion.

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section 9.  STOCK AWARDS, restricted stock and stock units

9.1Grant of Stock Awards, Restricted Stock and Stock Units

The Committee may grant Stock Awards, Restricted Stock and Stock Units on such terms and conditions and subject to such repurchase or forfeiture restrictions, if any, which may be based on continuous service with the Company or a Related Company or the achievement of any performance goals, as the Committee shall determine in its sole discretion, which terms, conditions and restrictions shall be set forth in the instrument evidencing the Award.

9.2Vesting of Restricted Stock and Stock Units

Upon the satisfaction of any terms, conditions and restrictions prescribed with respect to Restricted Stock or Stock Units, or upon a Participant’s release from any terms, conditions and restrictions of Restricted Stock or Stock Units, as determined by the Committee, and subject to the provisions of Section 12, (a) the shares of Restricted Stock covered by each Award of Restricted Stock shall become freely transferable by the Participant, and (b) Stock Units shall be paid in shares of Common Stock or, if set out in the instrument evidencing the Awards, in cash or a combination of cash and shares of Common Stock.  Any fractional shares subject to such Awards shall be paid to the Participant in cash.

section 10.  performance shares and performance units

10.1Grant of Performance Shares

The Committee may grant Awards of performance shares (“Performance Shares”), designate the Participants to whom Performance Shares are to be awarded, and determine the number of Performance Shares and the terms and conditions of each such Award.  Performance Shares shall consist of a unit valued by reference to a designated number of shares of Common Stock, the value of which may be paid to the Participant by delivery of shares of Common Stock or, if set out in the instrument evidencing the Award, of such property as the Committee shall determine, including without limitation, cash, shares of Common Stock, or other property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee.  The amount to be paid under an Award of Performance Shares may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion.

10.2Grant of Performance Units

The Committee may grant Awards of performance units (“Performance Units”), designate the Participants to whom Performance Units are to be awarded, and determine the number of Performance Units and the terms and conditions of each such Award.  Performance Units shall consist of a unit valued by reference to a designated amount of cash or property other than shares of Common Stock, which value may be paid to the Participant by delivery of the cash or such property as the Committee shall determine, including, without limitation, cash, shares of Common Stock, other property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee.  The Amount to be paid under an Award of Performance Units may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion.  

15

 

section 11.  other stock or cash based awards

 

Subject to the terms of the Plan and such other terms and conditions as the Committee deems appropriate, the Committee may grant other incentives payable in cash or in shares of Common Stock under the Plan.

section 12.  withholding

12.1Withholding for Taxes or Other Obligations

The Company may require the Participant to pay to the Company the amount of (a) any taxes that the Company is required by applicable federal, state, local or foreign law to withhold with respect to the grant, vesting or exercise of an Award (“tax withholding obligations”) and (b) any amounts due from the Participant to the Company or to any Related Company (“other obligations”).  Notwithstanding any other provision of the Plan to the contrary, the Company shall not be required to issue any shares of Common Stock or otherwise settle an Award under the Plan until such tax withholding obligations and other obligations are satisfied and shall not be required to issue any shares of Common Stock or otherwise settle an Award under the Plan; provided, however, such payment or satisfaction of tax withholding or other obligations may not be delayed in such a way as to cause such issuance or settlement to not be in compliance with Section 409A of the Code.

12.2Payment of Withholding Obligations

The Committee may permit or require a Participant to satisfy all or part of his or her tax withholding obligations and other obligations by (a) paying cash to the Company, (b) having the Company withhold an amount from any cash amounts otherwise due or to become due from the Company to the Participant, (c) having the Company withhold a number of shares of Common Stock that would otherwise be issued to the Participant (or become vested in the case of Restricted Stock) having a Fair Market Value equal to the tax withholding obligations and other obligations, or (d) surrendering a number of shares of Common Stock the Participant already owns having a value equal to the tax withholding obligations and other obligations. The value of the shares so withheld or tendered may not exceed the employee's minimum required tax withholding rate or such other rate as may be approved by the Committee so long as such withholding does not result in adverse treatment for financial accounting purposes.

section 13.  assignability

 

No Award or interest in an Award may be sold, assigned, pledged (as collateral for a loan or as security for the performance of an obligation or for any other purpose) or transferred by the Participant or made subject to attachment or similar proceedings otherwise than by will or by the applicable laws of descent and distribution, except that to the extent the Participant designates one or more beneficiaries on a Company-approved form who may exercise the Award or receive payment under an Award after the Participant’s death.  During a Participant’s lifetime, an Award may be exercised only by the Participant.  Notwithstanding the foregoing and to the extent permitted by Section 422 of the Code with respect to Stock Options, the Committee, in its sole discretion, may permit a Participant to assign or transfer an Award without consideration, subject to such terms and conditions as the Committee shall specify.

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section 14.  ADJUSTMENTS

14.1Adjustment of Shares

	
(a)
	
In the event, at any time or from time to time, a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization, merger, consolidation, extraordinary cash dividend, distribution to shareholders other than a normal cash dividend, or other change in the Company’s corporate or capital structure results in (i) the outstanding shares of Common Stock, or any securities exchanged therefore or received in their place, being exchanged for a different number or kind of securities of the Company or (ii) new, different or additional securities of the Company or of any other company being received by the holders of shares of Common Stock, then the Committee shall make proportional adjustments, taking into consideration the accounting and tax consequences, in (A) the maximum number and kind of securities available for issuance under the Plan; (B) the maximum number and kind of securities issuable as Incentive Stock Options as set forth in Section 4.2; (C) the maximum number and kind of securities set forth in Section 15.4; (D) the number and kind of securities that are subject to any outstanding Awards and the per share exercise or grant price of such securities, without any change in the aggregate price to be paid therefor.  The determination by the Committee as to the terms of any of the foregoing adjustments shall be conclusive and binding.

	
(b)
	
Notwithstanding the foregoing, the issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services rendered, either upon direct sale or upon the exercise of rights or warrants to subscribe therefore, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, outstanding Awards.  Also notwithstanding the foregoing, a dissolution or liquidation of the Company or a Business Combination shall not be governed by this Section 14.1, but shall be governed by Sections 14.2 and 14.3, respectively.

14.2Dissolution or Liquidation 

To the extent not previously exercised or settled, and unless otherwise determined by the Committee in its sole discretion, Awards shall terminate immediately prior to the dissolution or liquidation of the Company. To the extent a vesting condition, forfeiture provision or repurchase right applicable to an Award has not been waived by the Committee, the Award shall be forfeited immediately prior to the consummation of the dissolution or liquidation.

14.3Change of Control 

Notwithstanding any other provision of the Plan to the contrary, unless the Committee shall determine otherwise in the instrument evidencing the Award or, if not provided for in such instrument, in a written employment, services or other agreement between the Participant and the Company or a Related Company, in the event of a Change of Control:

(a)If the Change of Control is a Business Combination in which Awards, other than Performance Shares and Performance Units, could be converted, assumed, substituted for or replaced by the Successor Company, then, if and to the extent that the Successor Company converts, assumes, substitutes or replaces an Award, the vesting restrictions or forfeiture provisions applicable to such Award shall not be accelerated or lapse, and all such vesting restrictions or forfeiture provisions shall continue with respect to any shares of the Successor 

17

 

Company or other consideration that may be received with respect to such Award.  If and to the extent that such Awards are not converted, assumed, substituted for or replaced by the Successor Company, such Awards shall become fully vested and exercisable or payable, and all applicable restrictions or forfeiture provisions shall lapse, immediately prior to the Change of Control and such Awards shall terminate at the effective time of the Change of Control. 

If the Change of Control is not a Business Combination in which Awards, other than Performance Shares and Performance Units, could be converted, assumed, substituted for or replaced by the Successor Company, all outstanding Awards, other than Performance Shares and Performance Units, shall become fully vested and exercisable or payable, and all applicable restrictions or forfeiture provisions shall lapse, immediately prior to the Change of Control and shall terminate at the effective time of the Change of Control.

For the purposes of this Section 14.3(a), an Award shall be considered converted, assumed, substituted for or replaced by the Successor Company if following the Business Combination the option or right confers the right to purchase or receive, for each share of Common Stock subject to the Award immediately prior to the Business Combination, the consideration (whether stock, cash or other securities or property) received in the Business Combination by holders of Common Stock for each share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the Business Combination is not solely common stock of the Successor Company, the Committee may, with the consent of the Successor Company, provide for the consideration to be received pursuant to the Award, for each share of Common Stock subject thereto, to be solely common stock of the Successor Company substantially equal in Fair Market Value to the per share consideration received by holders of Common Stock in the Business Combination.  The determination of such substantial equality of value of consideration shall be made by the Committee, and its determination shall be conclusive and binding.

(b)All Performance Shares or Performance Units earned and outstanding as of the date the Change of Control is determined to have occurred and for which the payout level has been determined shall be payable in full in accordance with the payout schedule pursuant to the instrument evidencing the Award.  Any remaining outstanding Performance Shares or Performance Units (including any applicable performance period) for which the payout level has not been determined shall be payable in accordance with the terms and payout schedule pursuant to the instrument evidencing the Award.  Any existing deferrals or other restrictions not waived by the Committee in its sole discretion shall remain in effect.  

(c)Notwithstanding the foregoing, the Committee, in its sole discretion, may instead provide in the event of a Change of Control that is a Business Combination that a Participant’s outstanding Awards shall terminate upon or immediately prior to such Business Combination and that such Participant shall receive, in exchange therefor, a cash payment equal to the amount (if any) by which (x) the value of the per share consideration received by holders of Common Stock in the Business Combination, or, in the event the Business Combination is one of the transactions listed under subsection (c) in the definition of Business Combination or otherwise does not result in direct receipt of consideration by holders of Common Stock, the value of the deemed per share consideration received, in each case as determined by the Committee in its sole 

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discretion, multiplied by the number of shares of Common Stock subject to such outstanding Awards (to the extent then vested and exercisable or whether or not then vested and exercisable, as determined by the Committee in its sole discretion) exceeds (y) if applicable, the respective aggregate exercise price or grant price for such Awards.  

(d)For the avoidance of doubt, nothing in this Section 14.3 requires all outstanding Awards to be treated similarly. 

14.4Further Adjustment of Awards 

Subject to Sections 14.2 and 14.3, the Committee shall have the discretion, exercisable at any time before a sale, merger, consolidation, reorganization, liquidation, dissolution or change of control of the Company, as defined by the Committee, to take such further action as it determines to be necessary or advisable with respect to Awards.  Such authorized action may include (but shall not be limited to) establishing, amending or waiving the type, terms, conditions, or duration of, or restrictions on, Awards so as to provide for earlier, later, extended or additional time for exercise, lifting restrictions and other modifications, and the Committee may take such actions with respect to all Participants, to certain categories of Participants or only to individual Participants.  The Committee may take such action before or after granting Awards to which the action relates and before or after any public announcement with respect to such sale, merger, consolidation, reorganization, liquidation, dissolution or change of control that is the reason for such action.  

14.5No Limitations 

The grant of Awards shall in no way affect the Company’s right to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 

14.6No Fractional Shares

In the event of any adjustment in the number of shares covered by any Award, each such Award shall cover only the number of full shares resulting from such adjustment, and any fractional shares resulting from such adjustment shall be disregarded.

14.7Section 409A 

Notwithstanding any other provision of the Plan to the contrary, (a) any adjustments made pursuant to this Section 14 to Awards that are considered “deferred compensation” within the meaning of Section 409A shall be made in compliance with the requirements of Section 409A and (b) any adjustments made pursuant to this Section 15 to Awards that are not considered “deferred compensation” subject to Section 409A shall be made in such a manner as to ensure that after such adjustment the Awards either (i) continue not to be subject to Section 409A or (ii) comply with the requirements of Section 409A.

SECTION 15.  sECTION 162(m) PROVISIONS

15.1Terms of Section 162(m) Awards Generally

Notwithstanding any other provision of the Plan to the contrary, if the Committee determines, at the time Awards are granted to a Participant who is, or is likely to be as of the end of the tax year 

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in which the Company would claim a tax deduction in connection with such Award, a Covered Employee, then the Committee may provide that this Section 15 is applicable to such Award.

15.2Performance Criteria

This Section 15 is not intended to apply to any Options or SARs granted under the Plan.  However, if an Award is subject to this Section 15, then the lapsing of restrictions thereon and the distribution of cash, shares of Common Stock or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of specified levels of one of or any combination of the following “performance criteria” for the Company as a whole or any affiliate or business unit of the Company, as reported or calculated by the Company: cash flows (including, but not limited to, operating cash flow, free cash flow or cash flow return on capital); working capital; earnings per share; book value per share; operating income (including or excluding depreciation, amortization, extraordinary items, restructuring charges or other expenses); funds from operations and funds from operations per share; revenues; operating margins; return on assets; return on equity; return on net assets; debt; debt plus equity; market or economic value added; stock price appreciation; total shareholder return; cost control; strategic initiatives; market share; net income; return on invested capital; improvements in capital structure; or customer satisfaction, employee satisfaction, services performance, subscriber, cash management or asset management metrics (together, the “Performance Criteria”).

Such performance goals also may be based on the achievement of specified levels of Company performance (or performance of an applicable affiliate or business unit of the Company) under one or more of the Performance Criteria described above relative to the performance of other corporations or a market index. Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the Code, or any successor provision thereto, and the regulations thereunder.

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: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (iv) any reorganization and restructuring programs, (v) extraordinary nonrecurring items as described in Accounting Standards Codification 225-20 or in Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in the Company’s annual report to shareholders for the applicable year, (vi) acquisitions or divestitures, (vii) foreign exchange gains and losses, (viii) gains and losses on asset sales, and (ix) impairments. To the extent such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that satisfies the requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code, or any successor provision thereto.

The Committee shall certify in writing that any Performance Criteria have been met prior to settling any Award subject to Performance Criteria. 

15.3Adjustment of Awards

Notwithstanding any provision of the Plan other than Section 15, with respect to any Award that is subject to this Section 15, the Committee may adjust downwards, but not upwards, the amount 

20

 

payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance goals except in the case of the death or Disability of the Covered Employee or a Change in Control.

15.4Limitations

Subject to adjustment from time to time as provided in Section 14.1, no Participant may be granted during any calendar year (i) Options or SARs with respect to more than 2,000,000 shares, and (ii) Awards other than Options and SARs that are intended to comply with the performance-based exception under Code Section 162(m) and are denominated in shares under which more than 1,000,000 shares of Common Stock may be earned in each 12 months in the performance period.  During any calendar year, no Participant may be granted Awards other than Options and SARs that are intended to comply with the performance-based exception under Code Section 162(m) and are denominated in cash under which more than $10,000,000 may be earned in each 12 months in the performance period.  Each of the limitations in this section shall be multiplied by two with respect to Awards granted to a Participant during the first calendar year in which the Participant commences employment with the Company.  If an Award is cancelled, the cancelled Award shall continue to be counted toward the applicable limitation in this section.

The Committee shall have the power to impose such other restrictions on Awards subject to this Section 15 as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code, or any successor provision thereto.

SECTION 16.  amendment and termination

16.1Amendment, Suspension or Termination of the Plan

The Board or the Compensation Committee of the Board may amend, suspend or terminate the Plan or any portion of the Plan at any time and in such respects as it shall deem advisable; provided, however, that, to the extent required by applicable law, regulation or stock exchange rule other than Section 162(m) of the Code, shareholder approval shall be required for any amendment to the Plan; and provided, further, that any amendment that requires shareholder approval may be made only by the Board.  Subject to Section 16.3, the Committee may amend the terms of any outstanding Award, prospectively or retroactively.

16.2Term 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 future 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.  Notwithstanding the foregoing, no Incentive Stock Options may be granted more than 10 years after the earlier of approval by the Board or the shareholders of the Plan (or any amendment to the Plan that constitutes the adoption of a new plan for purposes of Section 422 of the Code).

16.3Consent of Participant

The amendment, suspension or termination of the Plan or a portion thereof or the amendment of an outstanding Award shall not, without the Participant’s consent, materially adversely affect any 

21

 

rights under any outstanding Award under the Plan.  Except as otherwise determined by the Committee, any change or adjustment to an outstanding Incentive Stock Option shall not, without the consent of the Participant, be made in a manner so as to constitute a “modification” that would cause such Incentive Stock Option to fail to continue to qualify as an Incentive Stock Option.  Notwithstanding the foregoing, any adjustments made pursuant to Section 14 shall not be subject to these restrictions.

section 17.  general

17.1No Individual Rights

	
(a)
	
person or Participant shall have any claim to be granted any Award under the Plan, and the Company has no obligation for uniformity of treatment of Participants under the Plan.

	
(b)
	
Nothing in the Plan or any Award granted under the Plan shall be deemed to constitute an employment contract or confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Related Company or limit in any way the right of the Company or any Related Company to terminate a Participant’s employment or other relationship at any time, with or without cause.

17.2Issuance of Shares

	
(a)
	
Notwithstanding any other provision of the Plan, the Company shall have no obligation to issue or deliver any shares of Common Stock under the Plan or make any other distribution of benefits under the Plan unless, in the opinion of the Company’s counsel, such issuance, delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the Securities Act or the laws of any state or foreign jurisdiction) and the applicable requirements of any securities exchange or similar entity.

	
(b)
	
The Company shall be under no obligation to any Participant to register for offering or resale or to qualify for exemption under the Securities Act, or to register or qualify under the laws of any state or foreign jurisdiction, any shares of Common Stock, security or interest in a security paid or issued under, or created by, the Plan, or to continue in effect any such registrations or qualifications if made.  

	
(c)
	
As a condition to the exercise of an Option or any other receipt of Common Stock pursuant to an Award under the Plan, the Company may require (i) the Participant to represent and warrant at the time of any such exercise or receipt that such shares are being purchased or received only for the Participant’s own account and without any present intention to sell or distribute such shares and (ii) such other action or agreement by the Participant as may from time to time be necessary to comply with the federal, state and foreign securities laws.  At the option of the Company, a stop-transfer order against any such shares may be placed on the official stock books and records of the Company, and a legend indicating that such shares may not be pledged, sold or otherwise transferred, unless an opinion of counsel is provided (concurred in by counsel for the Company) stating that such transfer is not in violation of any applicable law or regulation, may be stamped on stock certificates to ensure exemption from registration.  The Committee may also require the Participant to execute and deliver to the Company a purchase agreement or 

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such other agreement as may be in use by the Company at such time that describes certain terms and conditions applicable to the shares.

	
(d)
	
To the extent the Plan or any instrument evidencing an Award provides for issuance of stock certificates to reflect the issuance of shares of Common Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange.

17.3Indemnification

Each person who is or shall have been a member of the Board or a committee appointed by the Board or an officer of the Company to whom authority was delegated in accordance with Section 3, shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any claim, action, suit or proceeding to which such person may be a party or in which such person may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by such person in settlement thereof, with the Company’s approval, or paid by such person in satisfaction of any judgment in any such claim, action, suit or proceeding against such person; provided, however, that such person shall give the Company an opportunity, at its own expense, to handle and defend the same before such person undertakes to handle and defend it on such person’s own behalf, unless such loss, cost, liability or expense is a result of such person’s own willful misconduct or except as expressly provided by statute.

The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such person may be entitled under the Company’s certificate of incorporation or bylaws, as a matter of law, or otherwise, or of any power that the Company may have to indemnify or hold harmless.

17.4No Rights as a Shareholder

Unless otherwise provided by the instrument evidencing the Award or, if not provided in such instrument, in a written employment or services agreement, no Award other than a Stock Award, shall entitle the Participant to any cash dividend, voting or other right of a shareholder unless and until the date of issuance under the Plan of the shares that are the subject of such Award.

17.5Compliance with Laws and Regulations

	
(a)
	
In interpreting and applying the provisions of the Plan, any Option granted as an Incentive Stock Option pursuant to the Plan shall, to the extent permitted by law, be construed as an “incentive stock option” within the meaning of Section 422 of the Code.

 

	
(b)
	
The Plan and Awards granted under the Plan are intended to be exempt from the requirements of Section 409A of the Code to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the exclusion applicable to stock options, stock appreciation rights and certain other equity-based compensation under Treasury Regulation Section 1.409A-1(b)(5),  or otherwise.  To the extent Code Section 409A is applicable to the Plan or any Award granted under the Plan, it is intended that the Plan and any Awards granted under the Plan comply with the deferral, payout and other limitations and restrictions imposed under Code Section 409A.  Notwithstanding any other 

23

 

		
provision of the Plan or any Award granted under the Plan to the contrary, the Plan and any Award granted under the Plan shall be interpreted, operated and administered in a manner consistent with such intentions.  

 

Without limiting the generality of the foregoing, and notwithstanding any other provision of the Plan or any Award granted under the Plan to the contrary, with respect to any payments and benefits under the Plan or any Award granted under the Plan to which Code Section 409A applies, all references in the Plan or any Award granted under the Plan to the termination of the Participant's employment or service are intended to mean the Participant's “separation from service” within the meaning of Code Section 409A(a)(2)(A)(i).  In addition, if the Participant is a “specified employee” within the meaning of Code Section 409, then to the extent necessary to avoid subjecting the Participant to the imposition of any additional tax under Code Section 409A, amounts that would otherwise be payable under the Plan or any Award granted under the Plan during the six-month period immediately following the Participant's “separation from service” within the meaning of Code Section 409A(a)(2)(A)(i), shall not be paid to the Participant during such period, but shall instead be accumulated and paid to the Participant (or, in the event of the Participant's death, the Participant's estate) in a lump sum on the first business day after the earlier of the date that is six months following the Participant's separation from service or the Participant's death.  

 

Notwithstanding any other provision in the Plan to the contrary, the Committee, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify the Plan and any Award granted under the Plan so that the Award qualifies for exemption from or complies with Code Section 409A; provided, however, that the Committee makes no representations that Awards granted under the Plan shall be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to Awards granted under the Plan.

17.6Participants in Other Countries

Without amending the Plan, the Committee may grant Awards to Eligible Persons who are foreign nationals on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan and shall have the authority to adopt such modifications, procedures and subplans and the like as may be necessary or desirable to comply with provisions of the laws of other countries in which the Company or any Related Company may operate or have employees to ensure the viability of the benefits from Awards granted to Participants employed in such countries or jurisdictions, meet the requirements that permit the Plan to operate in a qualified or tax-efficient manner, comply with applicable foreign laws and to meet the objectives of the Plan.

17.7No Trust or Fund

The Plan is intended to constitute an “unfunded” plan.  Nothing contained herein shall require the Company to segregate any monies or other property, or shares of Common Stock, or to create any trusts, or to make any special deposits for any immediate or deferred amounts payable to any Participant, and no Participant shall have any rights that are greater than those of a general unsecured creditor of the Company.

24

 

17.8Successors

All obligations of the Company under the Plan with respect to Awards 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 the business or assets of the Company.

17.9Severability

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

17.10Choice of Law

The Plan, all Awards granted thereunder and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the laws of the United States, shall be governed by the laws of the State of Washington without giving effect to principles of conflicts of law.  Participants irrevocably consent to the nonexclusive jurisdiction and venue of the state and federal courts located in the State of Washington.

17.11Legal Requirements

The granting of Awards and the issuance of shares of Common Stock under the Plan are subject to all applicable laws, rules and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required. 

section 18.  effective date

 

The effective date (the “Effective Date”) is the date on which the Plan is approved by the shareholders of the Company.  If the shareholders of the Company do not approve the Plan within 12 months after the Board’s adoption of the Plan, any Incentive Stock Options granted under the Plan will be treated as Nonqualified Stock Options.

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