Document:

EXHIBIT 10.32

 

HELEN OF TROY LIMITED

RESTRICTED STOCK UNIT AGREEMENT

 

FOR GOOD AND VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, Helen of Troy Limited (the “Company”), a Bermuda company, hereby grants to Gerald J. Rubin, the Chief Executive Officer and President of the Company (the “Holder”), Restricted Stock Units (“RSUs”), each such RSU contingently entitling the Holder to acquire one common share, par value $0.10 per share of the Company (the “Shares”), which are subject to certain restrictions and to a risk of forfeiture upon the terms set forth in this restricted stock unit agreement (this “Agreement”):

 

WHEREAS, the Company has established and maintains the Helen of Troy Limited 2008 Stock Incentive Plan (as amended from time to time, the “Plan”); and

 

WHEREAS, Helen of Troy Nevada Corporation, a Nevada corporation and a wholly owned subsidiary of the Company (“HoT Nevada”), and the Holder have entered into an Amended and Restated Employment Agreement dated September 13, 2011 (as amended from time to time, the “Employment Agreement”); and

 

WHEREAS, in accordance with the terms of the Employment Agreement, the Holder has been granted the following award under the Plan (the “Award”) in connection with his retention as Chief Executive Officer and President and as compensation for services to be rendered.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto agree as follows:

 

1.                                     Defined Terms; Plan.  Terms used but not defined herein shall have the same meaning ascribed to such terms in the Plan.  This Agreement and the grant herein are subject to the terms and conditions herein and the terms and conditions of the applicable provisions of the Plan and the Employment Agreement, the terms of which are incorporated herein by reference.  For purposes of this Agreement:

 

(a)                               “Average Invested Capital” means, with respect to any fiscal year performance period, as of any date of determination, the sum of the following: (i) total assets determined by disregarding any impairment charges recorded during such fiscal year performance period minus (ii) total current liabilities plus (iii) indebtedness for borrowed money included in total current liabilities, in each case, of the Company and its subsidiaries as determined in accordance with GAAP, with such amount derived from clauses (i), (ii) and (iii) calculated as the simple average during such fiscal year performance period based on the last day of each of the trailing five (5) fiscal quarters through the end of such fiscal year performance period, minus (iv) the impairment charges disregarded in clause (i) above.  For purposes of clarity, aggregate impairment charges with respect to the applicable fiscal year performance period will not be averaged over the fiscal quarters of such fiscal year performance period but aggregate impairment charges with respect to the applicable fiscal year performance period will reduce the average invested capital calculated pursuant to clauses (i), (ii) and (iii) above.

 

(b)                               “Corporate Tax Rate” means, for any fiscal year performance period, the lesser of (i) the effective income tax rate of the Company and its subsidiaries for the fiscal year corresponding with the applicable EBITDA ROIC performance, or (ii) twenty (20) percent.

 

(c)                               “EBITDA” for purposes of the RSUs, the Plan and this Agreement, means, for any fiscal year performance period, the sum (without duplication) of (i) operating income (loss) after impairment charges plus (ii) depreciation and amortization charges, in each case as determined in accordance with GAAP, plus (iii) to the extent included in clause (i) above, any impairment charges incurred by the Company and its subsidiaries, as determined in accordance with GAAP, solely to the extent such charges result from capital market and/or economic conditions creating a stock market trigger that requires testing for and recording of impairments under GAAP which cannot be attributed to any fundamental change in the underlying current or expected operating cash flows associated with the impaired assets, as reflected in the financial statements of the Company and its subsidiaries and the notes thereto.

 

 

(d)                               “EBITDA ROIC” means, for any fiscal year performance period, an amount equal to (i) the product of (y) EBITDA and (z) one (1) minus the Corporate Tax Rate divided by (ii) Average Invested Capital.

 

(e)                               “GAAP” means generally accepted accounting principles used and applied in the United States of America.

 

2.                                     Grant. The Holder is hereby granted 700,000 performance-based RSUs pursuant to the Plan, each such RSU contingently entitling the Holder to acquire one Share, subject to certain restrictions and a risk of forfeiture as set forth in this Agreement, the Plan and the Employment Agreement.  The RSUs are granted as of March 1, 2012 (the “Date of Grant”).

 

3.                                     Vesting of Award.  The Award is subject to the terms and conditions set forth below (and as otherwise set forth in the Employment Agreement):

 

(a)                               Tranche 1 RSUs.  Up to 100,000 RSUs may be earned based on the Company’s achievement of certain EBITDA ROIC goals for fiscal 2013 as set forth on the schedule attached hereto as Exhibit A (“Tranche 1 RSUs”).  Earned Tranche 1 RSUs, if any, shall vest, subject to Holder’s continued employment with HoT Nevada or the Company or its subsidiaries, as follows: (i) 33.4% upon the Committee’s certification of the attainment of the EBITDA ROIC goals for the Tranche 1 RSUs; (ii) 33.3% on February 28, 2014; and (iii) 33.3% on February 28, 2015.  On or before May 15, 2013, the Committee shall meet to evaluate whether the EBITDA ROIC goals for the Tranche 1 RSUs have been attained.

 

(b)                               Tranche 2 RSUs.  Up to 200,000 RSUs may be earned based on the Company’s achievement of certain EBITDA ROIC goals for fiscal 2014 as set forth on the schedule attached hereto as Exhibit A (“Tranche 2 RSUs”).  Earned Tranche 2 RSUs, if any, shall vest, subject to Holder’s continued employment with HoT Nevada or the Company or its subsidiaries, as follows: (i) 66.7% on upon the Committee’s certification of the attainment of the EBITDA ROIC goals for the Tranche 2 RSUs; and (ii) 33.3% on February 28, 2015.  On or before May 15, 2014, the Committee shall meet to evaluate whether the EBITDA ROIC goals for the Tranche 2 RSUs have been attained.

 

(c)                               Tranche 3 RSUs.  Up to 700,000 RSUs (less the number of Tranche 1 RSUs and Tranche 2 RSUs previously earned, if any) may be earned based on the Company’s achievement of either (i) certain EBITDA ROIC goals for fiscal 2015, or (ii) the average EBITDA ROIC obtained by dividing EBITDA ROIC for the sum of fiscal 2013, 2014 and 2015 by three (3), in either case, as set forth on the schedule attached hereto as Exhibit A (“Tranche 3 RSUs”).  Earned Tranche 3 RSUs, if any, shall vest, 100% upon the Committee’s certification of the attainment of the EBITDA ROIC goals for the Tranche 3 RSU; provided Holder continues employment with HoT Nevada or the Company or its subsidiaries through February 28, 2015.  On or before May 15, 2015, the Committee shall meet to evaluate whether the EBITDA ROIC goals for the Tranche 3 RSUs have been attained.

 

(d)                               Holding Period.  In addition to the performance and service conditions set forth in this Section 3, 33.3% of the earned and vested Shares received in settlement of the RSUs, if any, shall be subject to a holding period for six months following the end of the Employment Period (as defined in the Employment Agreement); provided, however, that Holder shall be entitled to satisfy applicable withholding taxes without regard to such holding period either through the net settlement provisions described in Section 12 hereof or as otherwise permitted under the Plan.

 

4.                                     Effect of Termination of Service; Effect on Unvested RSUs.  Upon a Termination of Service for any reason prior to the vesting of the RSUs, the Holder shall only be entitled to the Shares to the extent provided in the Employment Agreement.

 

5.                                     Issuance of Shares; Certificates. If, and at the time, the Holder’s RSUs vest under the terms of this Agreement or the Employment Agreement, the Holder shall be issued a number of Shares equal to the number of RSUs which have vested on such date, without payment therefore, as full consideration for the vested RSUs.  Except as otherwise provided in Section 14 of this Agreement, upon the vesting of the RSUs, certificates for vested Shares shall be delivered to the Holder or his legal representative on the last business day of the calendar quarter in which such vesting event occurs or as soon thereafter as practicable (but not later than the last day of the calendar year in which such RSUs vest).  No fractional Shares shall be issued under this Agreement.

 

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6.                                     No Rights of a Shareholder. Until such time as the RSUs vest and Shares are duly issued and transferred to Holder in accordance with the terms of this Agreement, the Holder shall not have any of the rights of a shareholder, including, without limitation, the right to vote Shares and the right to receive dividends thereon.

 

7.                                     Nontransferability.  The RSUs shall not be transferable by the Holder otherwise than by will or by the laws of descent and distribution.  Notwithstanding anything to the contrary herein, the Committee, in its sole discretion, shall have the authority to waive the requirements of this Section 7 and Section 21 of the Plan or any part hereof or thereof that is not required under the rules promulgated under any law, rule or regulation applicable to the Company.

 

8.                                     Transfer of Shares.  Upon the vesting of the RSUs and the delivery of vested Shares hereunder, such vested Shares or any interest therein may be sold, assigned, pledged, hypothecated, encumbered, or transferred or disposed of in any other manner, in whole or in part, only in compliance with the terms, conditions and restrictions as set forth in the governing instruments of the Company, applicable United States federal and state securities laws or any other applicable laws or regulations and the terms and conditions of this Agreement and the Plan.

 

9.                                     Effect of Change of Control.  Notwithstanding the terms and conditions of the Plan, in the event there occurs a Change in Control (as defined in the Employment Agreement) or a Change of Control (as defined in the Plan) prior to vesting, the terms and conditions of the Employment Agreement shall control and the Holder shall be entitled to the Shares only to the extent provided in the Employment Agreement.

 

10.                              Lock Up Agreement.  The Holder agrees that upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities, the Holder shall agree in writing that for a period of time (not to exceed 180 days) from the effective date of any registration of securities of the Company, the Holder will not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Shares issued pursuant to the vesting and settlement of the RSUs, without the prior written consent of the Company or such underwriters, as the case may be.

 

11.                              Expenses of Issuance of Shares.  The issuance of stock certificates representing the Shares, in whole or in part, shall be without charge to the Holder.  The Company shall pay, and indemnify the Holder from and against any issuance, stamp or documentary taxes (other than transfer taxes) or charges imposed by any governmental body, agency or official (other than income taxes) or by reason of the issuance of Shares hereunder.

 

12.                              Net Settlement.  Notwithstanding the terms and conditions of the Plan, the Holder shall be entitled to elect to satisfy applicable withholding taxes (the “Applicable Withholding”) that arise in connection with the RSUs by having cash or common shares withheld by the Company or HoT Nevada from such awards that would have otherwise been received by Holder; provided that (a) the election to so satisfy any Applicable Withholding shall be subject to any terms and conditions that may be established by the Committee pursuant to the terms and conditions of the Plan, and (b) Holder shall not be entitled to so satisfy the Applicable Withholding to the extent such election (i) would cause the Company or any of its subsidiaries to violate, or cause any default or event of default under, that certain Credit Agreement dated December 30, 2010, by and among Helen of Troy, L.P., the Company, and Bank of America, N.A., as amended, restated and modified from time to time, or any other credit agreement or arrangement for borrowed money of the Company or any of its subsidiaries or (ii) in the good faith judgment of the Committee, would not be in the best interests of the Company and its subsidiaries after considering the liquidity, cash flows and financial condition of the Company and its subsidiaries.  Subject to the terms and conditions of the immediately preceding sentence, to the extent the Applicable Withholding is less than the sum of the highest marginal federal and, if applicable, state income tax rate plus applicable employment tax withholding (the “Maximum Withholding”), Holder shall be entitled to remit a number of mature common shares of the Company to the Company or HoT Nevada with a Fair Market Value, as of the business day immediately preceding the date of settlement of the applicable RSUs, equal to the Maximum Withholding less the Applicable Withholding.

 

13.                              Clawback Policy.  The Award granted pursuant to this Agreement shall be subject to (a) Section 304 of the Sarbanes Oxley Act of 2002 and (b) to the extent required under the rules and/or regulations issued pursuant to the Dodd-Frank Act of 2010, any clawback policy adopted by the Company pursuant to such rules and/or regulations.

 

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14.                              Timing of Payments and Compliance with Deferred Compensation Rules.  Notwithstanding any other provision of the Plan or Agreement, if pursuant to the terms of the Employment Agreement the Holder becomes entitled to a delivery of the Shares underlying his RSUs by reason of his “separation from service” (as determined in accordance with Code Section 409A) at a time when the Holder is a “specified employee,” then to the extent necessary to avoid a prohibited distribution under Code Section 409A(a)(2), the delivery of such Shares will be delayed until the earlier of the first day of the seventh month following the Holder’s separation from service or the date of the participant’s death.

 

15.                              References. References herein to rights and obligations of the Holder shall apply, where appropriate, to the Holder’s legal representative or estate without regard to whether specific reference to such legal representative or estate is contained in a particular provision of this Agreement.

 

16.                              Notices.  Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given (a) when delivered if delivered in person, (b) three days after being sent by registered or certified mail, return receipt requested, postage prepaid, (c) one day after being sent for next business day delivery, fees prepaid, via a reputable nationwide overnight courier service, (d) on the date of confirmation of receipt of transmission by facsimile or (e) on the date of the notice being sent by e-mail at the e-mail address in the records of the Company, in each case to the intended recipient as set forth below (or to such other address, facsimile number, email address or individual as a party may designate by notice to the other parties):

 

If to the Company:

 

Helen of Troy Limited

One Helen of Troy Plaza

El Paso, TX 79912

Attn.: General Counsel

 

If to the Holder:

 

Gerald J. Rubin

c/o Helen of Troy L.P.

One Helen of Troy Plaza

El Paso, TX 79912

 

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

17.                              Governing Law.  This Agreement and all claims or disputes arising hereunder or related to this Agreement, the transactions contemplated hereby or the conduct of any person in connection herewith shall be governed by and construed in accordance with the laws of the State of Texas applicable to contracts made and to be performed in the State of Texas without regard to conflict of laws principles.

 

18.                              Code 409A and Code 457A.  This Agreement and the benefits provided hereunder are intended to comply, to the extent applicable, with Code Section 409A and the Treasury Regulations and other guidance promulgated or issued thereunder or Code Section 457A and the Treasury Regulations and other guidance promulgated or issued thereunder (the “Deferred Compensation Rules”), and the provisions of this Agreement shall be interpreted and construed consistent with this intent.  If Holder, the Company or HoT Nevada believes, that the Agreement does not so comply with the Deferred Compensation Rules, it shall promptly advise the others and shall negotiate reasonably and in good faith to amend the terms of the Agreement such that it complies with the Deferred Compensation Rules, as applicable, (with the most limited possible economic effect on the Holder, the Company and HoT Nevada).  Notwithstanding the foregoing, in the event the Agreement is found not to comply with the Deferred Compensation Rules, neither the Company nor HoT Nevada shall be required to assume any increased economic burden in connection therewith.

 

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19.                              Entire Agreement.  This Agreement, the Employment Agreement and the Plan constitute the entire agreement among the parties relating to the subject matter hereof, and any previous agreement or understanding among the parties with respect thereto is superseded by this Agreement, the Employment Agreement and the Plan.

 

20.                              Counterparts.  This Agreement may be executed in two counterparts, each of which shall constitute one and the same instrument.

 

21.                              Conflict.  To the extent the provisions of this Agreement conflict with the terms and conditions of the Employment Agreement (including regarding the effect, if any, on the RSUs of a Change in Control (as defined in the Employment Agreement) or any analogous term or otherwise and/or termination of Holder’s employment with HoT Nevada for any reason), the terms and conditions of the Employment Agreement shall control.

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Date of Grant.

 

	
 
    	
HELEN OF TROY LIMITED
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gary B. Abromovitz
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Gary B.Abromovitz
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Deputy Chairman
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
HOLDER
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
/s/ Gerald J. Rubin
    	
 
    
	
 
    	
GERALD J. RUBIN
    	
 
    

 

5Exhibit 10.1

 

EARTHLINK, INC.

2012 SHORT-TERM INCENTIVE BONUS PLAN

 

THIS 2012 SHORT-TERM INCENTIVE BONUS PLAN (this “Plan”) of EarthLink, Inc., a Delaware corporation (the “Company”), for the benefit of the eligible employees described herein, is adopted as of the 14th day of February 2012.  This Plan replaces and supersedes the terms of the Company’s 2011 Short-Term Incentive Bonus Plan as in effect prior to the adoption of this Plan.

 

WITNESSETH:

 

WHEREAS, the Board of Directors of the Company has approved the Plan as set forth herein.

 

NOW, THEREFORE, the Company hereby establishes the Plan as set forth below.

 

1.                                      STATEMENT OF PURPOSE

 

1.1                               Statement of Purpose.  The purpose of the Plan is to encourage the creation of shareholder value by establishing a direct link between Adjusted EBITDA (as defined below), Revenue (as defined below) and other Corporate Performance Objectives achieved and the incentive compensation of Participants in the Plan.

 

Participants contribute to the success of the Company through the application of their skills and experience in fulfilling the responsibilities associated with their positions.  The Company desires to benefit from the contributions of the Participants and to provide an incentive bonus plan that encourages the sustained creation of shareholder value.

 

2.                                      DEFINITIONS

 

2.1                               Definitions.  Capitalized terms used in the Plan shall have the following meanings:

 

“Adjusted EBITDA” means EBITDA excluding stock-based compensation expense under SFAS No. 123(R), net losses of equity affiliates, gain (loss) on investments, net, impairment of goodwill and intangible assets and restructuring and acquisition costs.  To the extent any Bonus Award to be paid to any Participant pursuant to the Plan is paid (i) in cash, the calculation of Adjusted EBITDA shall include any compensation expense attributable to the Bonus Awards paid in cash or (ii) in shares of Common Stock, the calculation of Adjusted EBITDA shall exclude any compensation expense attributable to the Bonus Awards paid in shares of Common Stock.

 

“Bonus Award” means (i) for each Participant who is not a Management Participant, the Participant’s Performance Bonus or such lesser amount as the Committee in its sole discretion may determine as of a result of the failure by the individual Participant to achieve desired individual performance levels for the Bonus Period and (ii) for each Management Participant, the sum of (a) the Management Participant’s Performance Bonus or such lesser amount as the Committee in its

 

 

sole discretion may determine as of a result of the failure by the individual Management Participant to achieve desired individual performance levels for the Bonus Period and (b) the Management Participant’s Discretionary Bonus, if any, for the Bonus Period.

 

“Bonus Period” means the period beginning January 1 and ending December 31 of the calendar year, in respect of which the Corporate Performance Objectives are measured and the Participants’ Bonus Awards, if any, are to be determined.

 

“Cause” has the same definition as under any employment or service agreement between the Employer and the Participant or, if no such employment or service agreement exists or if such employment or service agreement does not contain any such definition, Cause means (i) the Participant’s willful and repeated failure to comply with the lawful directives of the Board of Directors of any Employer or any supervisory personnel of the Participant; (ii) any criminal act or act of dishonesty or willful misconduct by the Participant that has a material adverse effect on the property, operations, business or reputation of any Employer; (iii) the material breach by the Participant of the terms of any confidentiality, non-competition, non-solicitation or other such agreement that the Participant has with any Employer or (iv) acts by the Participant of willful malfeasance or gross negligence in a matter of material importance to any Employer.

 

“Change in Control” means the occurrence of any of the following events:

 

(a)                                 the accumulation in any number of related or unrelated transactions by any person of beneficial ownership (as such term is used in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of more than fifty percent (50%) of the combined voting power of the Company’s voting stock; provided that, for purposes of this subsection (a), a Change in Control will not be deemed to have occurred if the accumulation of more than fifty percent (50%) of the voting power of the Company’s voting stock results from any acquisition of voting stock (i) directly from the Company that is approved by the Incumbent Board, (ii) by the Company, (ii) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Employer, or (iv) by any person pursuant to a merger, consolidation, or reorganization (a “Business Combination”) that would not cause a Change in Control under clauses (i) and (ii) of subsection (b) below; or

 

(b)                                 consummation of a Business Combination, unless, immediately following that Business Combination, (i) all or substantially all of the persons who are the beneficial owners of voting stock of the Company immediately prior to that Business Combination beneficially own, directly or indirectly, at least fifty percent (50%) of the then outstanding shares of common stock and at least fifty percent (50%) of the combined voting power of the then outstanding voting stock entitled to vote generally in the election of directors of the entity resulting from that Business Combination (including, without limitation, an entity that as a result of that transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), in substantially the same proportions relative to each other as their ownership, immediately prior to that Business Combination, of the voting stock of the Company, and (ii) at least sixty percent (60%) of the members of the Board of Directors of the entity resulting from that Business Combination holding at least sixty percent (60%) of the voting power of such Board of Directors were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board of Directors providing for that Business Combination and,

 

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as a result of or in connection with such Business Combination, no person has the right to dilute either such percentages by appointing additional members to the Board of Directors or otherwise without election or action by the shareholders; or

 

(c)                                  a sale or other disposition of all or substantially all the assets of the Company, except pursuant to a Business Combination that would not cause a Change in Control under clauses (i) and (ii) of subsection (b) above, or

 

(d)                                 approval by the shareholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a Business Combination that would not cause a Change in Control under clauses (i) and (ii) of subsection (b) above; or

 

(e)                                  the acquisition by any person, directly or indirectly, of the power to direct or cause the direction of the management and policies of the Company (i) through the ownership of securities which provide the holder with such power, excluding voting rights attendant with such securities, or (ii) by contract; provided the Change in Control will not be deemed to have occurred if such power was acquired (x) directly from the Company in a transaction approved by the Incumbent Board, (y) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Employer or (z) by any person pursuant to a Business Combination that would not cause a Change in Control under clauses (i) and (ii) of subsection (b) above.

 

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

 

“Committee” means the Leadership and Compensation Committee of the Board of Directors of the Company which will administer the Plan.

 

“Compensation” means the Participant’s actual wages earned during the Bonus Period, excluding incentive payments, salary continuation, bonuses, income from equity awards, stock options, restricted stock, restricted stock units, deferred compensation, commissions, and any other forms of compensation over and above the Participant’s actual wages earned during the Bonus Period.

 

“Common Stock” means the common stock, $.01 par value per share, of the Company.

 

“Corporate Performance Objectives” means Adjusted EBITDA and Revenue, in such amounts as the Committee shall determine in its sole discretion for the Bonus Period that must be achieved for the Participant’s Performance Bonus Multiplier for the Bonus Period to be greater than zero (0). Notwithstanding the foregoing, the Committee may establish Corporate Performance Objectives based upon any of the business criteria with respect to which Awards (as defined therein) that are intended to constitute qualified performance-based compensation under the Company’s 2011 Equity and Cash Incentive Plan may be based.  The Committee shall adjust the Corporate Performance Objectives as the Committee in its sole discretion may determine is appropriate in the event of unbudgeted acquisitions or divestitures or other unexpected fundamental changes in the business of the Company, an Affiliate or business unit or any product that is material taken as a whole to fairly and equitably determine the Bonus Awards and to prevent any inappropriate enlargement or dilution of the Bonus Awards.  In that respect, the Corporate Performance Objectives may be adjusted to reflect, by way of example and not of limitation, (i) unanticipated asset write-downs or impairment charges, (ii) litigation or claim judgments or

 

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settlements thereof, (iii) changes in tax laws, accounting principles or other laws or provisions affecting reported results, (iv) accruals for reorganization or restructuring programs, or extraordinary non-reoccurring items as described in Accounting Principles Board Opinion No.  30 or as described in management’s discussion and analysis of the financial condition and results of operations appearing in the Company’s Annual Report on Form 10-K for the applicable year, (v) acquisitions or dispositions or (vi) foreign exchange gains or losses.  To the extent any such  adjustments affect any Bonus Award, the intent is that the adjustments shall be in a form that allows the Bonus Award to continue to meet the requirements of Section 162(m) of the Code for deductibility to the extent intended.

 

“Corporate Priorities” means the established goals of the Company to (i) conduct the Company’s business in a way that is consistent with the Company’s mission and values; (ii) meet or exceed the financial commitments the Company makes to its shareholders; (iii) build and communicate the Company’s strategy to evolve the Company into a leading IP infrastructure and managed services company; (iv) successfully integrate recent acquisitions against goals to meet financial synergy targets and optimize the assets and skill sets acquired; (v) build a strong succession planning process that serves as the foundation for developing and deploying people at every level of the Company to support the Company’s short and long-term strategic intent; and (vi) develop a capital structure strategy that provides the flexibility to support the Company’s strategic direction and optimizes shareholder value.

 

“Disability” has the same definition as under any employment or service agreement between the Employer and the Participant or, if no such employment or service agreement exists or if such employment or service agreement does not contain any such definition, Disability means where the Participant is “disabled” or has incurred a “disability” in accordance with the policies of the Employer that employs the Employee in effect at the applicable time.

 

“Discretionary Bonus” means the dollar amount which results from multiplying the Management Participant’s Compensation for the Bonus Period by the product of the Management Participant’s Discretionary Target Bonus Percent and the Management Participant’s Discretionary Bonus Multiplier.

 

“Discretionary Bonus Multiplier” means either (i) zero (0) or (ii) the percentage from one percent (1%) to two hundred percent (200%) that applies to determine the Management Participant’s Discretionary Bonus for the Bonus Period.  The Committee may but is not required to establish, in advance, the Discretionary Bonus Multipliers that relate to the individual performance levels that must be achieved during the Bonus Period to calculate the Management Participant’s Discretionary Bonus; the Committee alternatively may determine the Management Participant’s Discretionary Bonus Multiplier at any time before payment of the Discretionary Bonus, including after the end of the Bonus Period.

 

“Discretionary Target Aggregate Bonus” means the Discretionary Bonus that would be earned if the Management Participant’s Discretionary Bonus Multiplier were one hundred percent (100%).

 

“Discretionary Target Bonus Percent” means the percent of the Management Participant’s Compensation that will be earned as a Discretionary Bonus where the individual performance

 

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levels that are achieved for the Bonus Period results in a Discretionary Bonus Multiplier of one hundred percent (100%).  The Discretionary Target Bonus Percent for each Management Participant shall be established by the Committee but may not exceed twenty percent (20%) for the Bonus Period.

 

“Distribution” means the payment of the Bonus Award under the Plan.

 

“Distribution Date” means the date on which the Distribution occurs.

 

“EBITDA” means income (loss) from continuing operations before interest income (expense) and other, net, income, taxes, depreciation and amortization.

 

“Effective Date” means January 1, 2012.

 

“Employee” means a common law employee of an Employer who is classified as “exempt” on the Employer’s payroll, personnel or tax records.  A common law employee of an Employer only includes an individual who renders personal services to the Employer and who, in accordance with the established payroll, accounting and personnel policies of the Employer, is characterized by the Employer as an “exempt” common law employee.  An Employee does not include (i) any person whom the Employer has identified on its payroll, personnel or tax records as an independent contractor or (ii) any person who has acknowledged in writing to the Employer that such person is an independent contractor, whether or not in case of both (i) and (ii) a court, the Internal Revenue Service or any other authority ultimately determines such classification to be correct or incorrect as a matter of law or (iii) any person who is classified other than as “exempt” on the Employer’s payroll, personnel or tax records.

 

“Employer” means EarthLink, Inc. (also referred to as the “Company”) and any other entity that is part of a controlled group of corporations or is under common control with the Company within the meaning of Sections 1563(a), 414(b) or 414(c) of the Code, except that, in making any such determination, fifty percent (50%) shall be substituted for eighty percent (80%) each place therein.

 

“Incumbent Board” means a Board of Directors of the Company at least a majority of whom consist of individuals who either are (a) members of the Company’s Board of Directors as of the Effective Date of the adoption of this Plan or (b) members who become members of the Company’s Board of Directors subsequent to the date of the adoption of this Plan whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least sixty percent (60%) of the directors then comprising the Incumbent Board (either by specific vote or by approval of a proxy statement of the Company in which that person is named as a nominee for director, without objection to that nomination), but excluding, for that purpose, any individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Securities Exchange act of 1934, as amended) with respect to the election or removal of directors or other action or threatened solicitation of proxies or consents by or on behalf of a person other than the Board of Directors of the Company.

 

“Management” means the Employees or Participants, as applicable, who are the executive officers of EarthLink, Inc., individually or as a group, as designated by the Board of Directors of the Company.

 

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“Maximum Bonus Award” means the maximum Bonus Award, denoted as a dollar amount, which can be earned and paid to the Participant for the Bonus Period as established by the Committee.

 

“Participant” means an Employee of an Employer who is selected to participate in the Plan.

 

“Performance Bonus” means the dollar amount which results from multiplying the Participant’s Compensation for the Bonus Period by the product of the Participant’s Performance Target Bonus Percent and the Participant’s Performance Bonus Multiplier.

 

“Performance Bonus Multiplier” means either (i) zero (0) or (ii) the percentage from fifty percent (50%) to two hundred percent (200%) that applies to determine the Participant’s Performance Bonus for the Bonus Period.  The Committee shall establish the Performance Bonus  Multipliers that relate to the levels of Corporation Performance Objectives that must be achieved during the Bonus Period to calculate the Participant’s Performance Bonus.

 

“Performance Target Aggregate Bonus” means the Performance Bonus that would be earned if the Participant’s Performance Bonus Multiplier were one hundred percent (100%).

 

“Performance Target Bonus Percent” means the percent of the Participant’s Compensation that will be earned as a Performance Bonus where the Corporate Performance Objectives that are achieved for the Bonus Period result in a Performance Bonus Multiplier of one hundred percent (100%).  The Performance Target Bonus Percent for each Participant shall be established consistent with the Participant’s position in the Company’s compensation structure except that the Performance Target Bonus Percent for each Management Participant shall be established by the Committee but may not exceed eighty percent (80%) for the Bonus Period.

 

“Plan” means this EarthLink, Inc. 2012 Short-Term Incentive Bonus Plan, in its current form and as it may be hereafter amended.

 

“Revenue” means gross revenue from operations.

 

“Target Aggregate Bonus” means the Bonus Award that would be earned (i) for a Participant other than a Management Participant, if the Participant’s Performance Bonus Multiplier were one hundred percent (100%) and (ii) for a Management Participant, if the Management Participant’s Performance Bonus Multiplier and Discretionary Bonus Multiplier were both one hundred percent (100%).

 

3.                                      ADMINISTRATION OF THE PLAN

 

3.1                               Administration of the Plan.  The Committee shall be the sole administrator of the Plan and shall have full authority to formulate adjustments and make interpretations under the Plan as it deems appropriate. The Committee shall also be empowered to make any and all of the determinations not herein specifically authorized which may be necessary or desirable for the effective administration of the Plan. Any decision or interpretation of any provision of this Plan adopted by the Committee shall be final and conclusive. Benefits under this Plan shall be paid only if the Committee determines, in its sole discretion, that the Participant or Beneficiary is entitled to

 

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them. None of the members of the Committee shall be liable for any act done or not done in good faith with respect to this Plan. The Company shall bear all expenses of administering this Plan.

 

4.                                      ELIGIBILITY

 

4.1                               Establishing Participation.  Each Employee whose position in the Company’s compensation structure entitles him or her to participate in the Plan shall participate in the Plan for the applicable Bonus Period except that (a) the Committee must approve the members of Management, if any, who shall be entitled to participate in the Plan for the Bonus Period and (b) no Employee who is eligible for commission or incentive-based compensation (in lieu of wages or base salary) shall be eligible to participate in the Plan.  The Committee shall retain the discretion to name as a Participant any otherwise-eligible member of Management hired or promoted after the commencement of the Bonus Period.

 

5.                                      AMOUNT OF BONUS AWARDS

 

5.1                               Establishment of Bonuses.

 

(a)                                 Initial Determinations.  The Committee shall establish generally for each Participant the Performance Target Bonus Percent and the Performance Bonus Multiplier that will apply with respect to the designated levels of achievement of the Corporate Performance Objectives for the Bonus Period.  The Performance Bonus Multiplier for each Participant will be based on the achievement of such Corporate Performance Objectives as the Committee shall designate, which may include the achievement of one or more Corporate Performance Objectives or any combination of Corporate Performance Objectives as the Committee may select.  The Committee also shall establish generally for each Management Participant the Discretionary Target Bonus Percent and Discretionary Bonus Multiplier that will apply with respect to the designated levels of individual performance for the Bonus Period. The Discretionary Bonus Multiplier for each Management Participant shall be based on the achievement of such individual performance levels, whether or not with respect to Corporate Priorities, as the Committee shall designate, which may include the achievement of one or more individual levels of performance or any combination of individual performance levels as the Committee may select.

 

(b)                                 Corporate Performance Objectives.  The Committee shall establish the Corporate Performance Objectives that must be achieved to determine each Participant’s Performance Bonus Multiplier for the Bonus Period. To the extent the Corporate Performance Objectives are not achieved, the Performance Bonus Multiplier shall be zero (0).  The Corporate Performance Objectives to be achieved must take into account and be calculated with respect to the full accrual and payment of the Bonus Awards under the Plan.

 

The Corporate Performance Objectives must be established in writing no later than the earlier of (i) ninety (90) days after the beginning the period of service to which they relate and (ii) before the lapse of twenty-five percent (25%) of the period of service to which they relate; they must be uncertain of achievement at the time they are established; and the achievement of the Corporate Performance Objectives must be determinable by a third party with knowledge of the relevant facts.  The Corporate Performance Objectives may be stated with respect to the Company’s, an Affiliate’s, a product’s, and/or a business unit’s Adjusted EBITDA, Revenue or

 

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other Corporate Performance Objectives and/or any combination of the foregoing as the Committee may designate.  The Corporate Performance Objectives may, but need not, be based upon an increase or positive result under the aforementioned business criteria and could include, for example and not by way of limitation, maintaining the status quo or limiting the economic losses (measured, in each case, by reference to the specific business criteria).  The Corporate Performance Objectives may not include solely the mere continued employment of the Participant.  However, the Performance Bonus may become payable contingent on the Participant’s continued employment at the time the Bonus Award becomes payable, in addition to the Corporate Performance Objectives described above.

 

(c)                                  Individual Performance Levels.  The Committee shall establish the individual performance levels that must be achieved to determine each Management Participant’s Discretionary Bonus Multiplier for the Bonus Period.  The individual performance levels may be established at the same time as the Committee establishes the Corporate Performance Objectives or any other time during the Bonus Period or the Committee may determine each Management Participant’s Discretionary Bonus Multiplier after review of the Management Participant’s  individual performance level for the Bonus Period.  The Discretionary Bonus may become payable contingent on the Management Participant’s continued employment at the time the Bonus Award becomes payable, in addition to the individual performance levels that may be designated.

 

5.2                               Calculation of Bonus Awards.

 

(a)                                 Timing of the Calculation.  The calculations necessary to determine the Bonus Awards for the Bonus Period shall be made no later than the fifteenth day of the third month following the end of the Bonus Period for which the Bonus Awards are to be calculated. Such calculation shall be carried out in accordance with this Section 5.2.

 

(b)                                 Calculation.  Following the end of the Bonus Period, each Participant’s Performance Bonus shall be calculated, and the Participant’s Performance Bonus for the Bonus Period shall be either the Participant’s Performance Bonus or such lesser amount as the Committee in its sole discretion may determine as set forth in Section 5.2(d).  Following the end of the Bonus Period, each Management Participant’s Discretionary Bonus, if any, also shall be calculated, and the Management Participant’s Discretionary Bonus for the Bonus Period shall be either the Participant’s Discretionary Bonus or such lesser amount as the Committee in its sole discretion may determine as set forth in Section 5.2(d).  Each Participant’s Bonus Award will then be calculated.  Notwithstanding any other provision of the Plan, the Participant’s Bonus Award may not exceed the Participant’s Maximum Bonus Award.

 

(c)                                  Written Determination.  For the Performance Bonus, which is based on the achievement of Corporate Performance Objectives, the Committee shall certify in writing whether such Corporate Performance Objectives have been achieved.  For the Discretionary Bonus, the Committee may not increase or award any Discretionary Bonus as a result of, or where the facts and circumstances indicate that such increase or award is because of, the failure to achieve the Corporate Performance Objectives upon which the Performance Bonus for the same Bonus Period which were intended to constitute qualified performance-based compensation within the meaning of Section 162(m) of the Code were based.  The Bonus Awards payable under this Plan are intended to constitute Awards (as defined therein) under the Company’s 2011 Equity and Cash Incentive Plan or under any other plan under which Bonus Awards may be paid (as the Committee shall designate), to the maximum extent possible.  Accordingly, the Bonus Awards hereunder also will be subject to the terms of the Company’s 2011 Equity and Cash

 

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Incentive Plan or such other plan, to the extent applicable.  Any Bonus Awards or portions thereof that do not constitute Awards (as defined therein) under the Company’s 2011 Equity and Cash Incentive Plan or such other plan shall be deemed separate Bonus Awards that are granted under this Plan but outside of the Company’s 2011 Equity and Cash Incentive Plan or any other such plan.

 

(d)                                 Negative Discretion.  Notwithstanding any other provision of the Plan, the Participant’s Performance Bonus may be reduced, but not below zero (0), if the Participant’s individual performance for the Bonus Period falls below that expected of such Participant.  Management “subject to the approval of the Committee” may determine if any Participant’s Performance Bonus should be reduced to determine the Participant’s Bonus Award as a result of the Participant’s failure to achieve required individual performance levels during the Bonus Period. The Committee shall determine in its discretion whether any Performance Bonuses for Management Participants should be reduced to determine the Participant’s Bonus Award for failure to achieve the desired individual performance levels, whether or not with respect to Corporate Priorities, during the Bonus Period.  Additionally, notwithstanding any other provision  of the Plan, a Management Participant’s Discretionary Bonus may be reduced, but not below zero (0), by the Committee if the Management Participant’s individual performance level for the Bonus Period, whether or not with respect to Corporate Priorities, falls below that expected of such Management Participant, regardless of achievement of any individual performance levels previously designated by the Committee.  Any reduction of a Participant’s Performance Bonus or a Management Participant’s Discretionary Bonus shall be at the sole and absolute discretion of the Committee.

 

6.                                      PAYMENT OF AWARDS

 

6.1                               Eligibility for Payment.  Except as otherwise set forth in Sections 7.1 and 8.1 of this Plan, Bonus Awards shall not be paid to any Participant who is not employed by an Employer on the date the Distribution is to be made, and a Participant who terminates employment with all Employers shall not be eligible to receive any Distribution for (i) the Bonus Period that includes such termination of employment, (ii) any prior Bonus Period to the extent not paid before such termination of employment nor (iii) any future Bonus Periods.

 

6.2                               Timing of Payment.  Any Distribution to be paid for a Bonus Period shall be paid no later than the 15th day of the third month following the end of the Bonus Period.

 

6.3                               Payment of Award.  The amount of the Bonus Award to be paid pursuant to this Section 6 to a Participant who is employed by the Company shall be paid in one lump sum cash payment by the Company, except that the Company, in its sole discretion, may elect to pay part or all of the amount of any Bonus Award payable to such Participant for the Bonus Period that exceeds the Participant’s Target Aggregate Bonus for such Bonus Period in shares of Common Stock in lieu of cash.  The amount of the Bonus Award to be paid pursuant to this Section 6 to a Participant who is employed by an Affiliate shall be paid in one lump sum cash payment by the Affiliate that employs the Participant, except that the Affiliate, in its sole discretion, may elect to

 

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pay part or all of the amount of any Bonus Award payable to such Participant for the Bonus Period that exceeds the Participant’s Target Aggregate Bonus for such Bonus Period in shares of Common Stock in lieu of cash.  In the event part or all of any Bonus Award is to be paid in shares of Common Stock, the number of shares to be delivered shall be equal to the dollar amount of the Bonus Award otherwise payable divided by the closing price of a share of Common Stock on the day the Committee approves the amount of the Participant’s Bonus Award if such day is a trading day or, if such day is not a trading day, the closing price of a share of Common Stock on the last trading day immediately before the day the Committee approves the amount of the Participant’s Bonus Award.  Shares of Common Stock to be delivered under this Plan shall be paid under the Company’s 2011 Equity and Cash Incentive Plan or under any other plan under which shares of Common Stock are otherwise available for payment of Bonus Awards, as the Committee shall designate.

 

6.4                               Taxes; Withholding.  To the extent required by law, the Employer shall withhold from all Distributions made hereunder any amount required to be withheld by Federal and state or local government or other applicable laws. Each Participant shall be responsible for satisfying in cash or cash equivalent acceptable to the Company any income and employment tax withholdings applicable to any Distribution to the Participant under the Plan. The Company, to the extent applicable law permits, may permit the Participant to pay applicable tax withholdings by  withholding shares of Common Stock that the Participant otherwise would receive upon the Distribution but only to satisfy the Participant’s minimum required tax withholdings.  Any shares of Common Stock withheld to pay applicable tax withholdings shall be equal to the dollar amount of the withholding divided by the closing price of a share of Common Stock on the last trading date immediately before the date of the Distribution.

 

7.                                      CHANGE IN CONTROL

 

7.1                               Payment after a Change in Control.  If at any time after a Change in Control occurs the Participant’s employment with all Employers is terminated by an Employer for any reason other than Cause, death or Disability, then, the Participant shall be entitled to receive for the Bonus Period that includes the date of the Participant’s termination of employment the Bonus Award that would result based on actual business results for the entire Bonus Period taking into account the Corporate Performance Objectives achieved during the Bonus Period, calculated on the same basis as other similarly-situated Participants, and assuming for each Management Participant a Discretionary Bonus Multiplier of no less than one hundred percent (100%), or such greater or lesser percent if established prior to the Change in Control, except that the Bonus Award for that Bonus Period shall be based solely upon the Participant’s Compensation for that Bonus Period through the time of termination of employment; provided, however, that Participant shall only be entitled to receive such Bonus Award for the Bonus Period that includes the date of the Participant’s termination of employment if the Participant’s termination of employment occurs after the first calendar quarter of the Bonus Period and prior to payment of the Bonus Award for the Bonus Period in which the Participant’s employment is so terminated.  Each Participant described above also shall be entitled to receive any Bonus Award payable for any Bonus Period that ended before the termination of the Participant’s employment on the same basis as the Bonus Award for the Bonus Period that includes the date of the Participant’s termination of employment.  Such Bonus Awards shall be paid at the normal time of the bonus payout as if the Participant had

 

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remained employed but in no event later than the 15th day of the third month following the end of the Bonus Period.  If at any time after a Change in Control occurs the Participant’s employment with all Employers is terminated by an Employer for any reason other than Cause, death or Disability, the Participant shall not be entitled to receive a Bonus Award for the Bonus Period that includes the date of the Participant’s termination of employment if the Participant’s termination of employment occurs during the first calendar quarter of the Bonus Period.

 

8.                                      TERMINATION OF EMPLOYMENT

 

8.1                               Payment after Termination of Employment.  If before a Change in Control occurs the Participant’s employment with all Employers is terminated by an Employer, such that the Participant is entitled to receive benefits under any severance plan maintained by the Company or any Affiliate, then, if the Participant’s employment is terminated by an Employer after the first calendar quarter of the Bonus Period and prior to payment of the Bonus Award for the Bonus Period in which the Participant’s employment is terminated, the Participant shall be entitled to receive for the Bonus Period that includes the date of the Participant’s termination of employment the Bonus Award that would result based on actual business results for the entire Bonus Period, taking into account the Corporate Performance Objectives achieved during the Bonus Period, and actual individual performance levels achieved for the entire Bonus Period, calculated on the same basis as other similarly-situated Participants, except that the Bonus Award for that Bonus Period shall be based solely upon the Participant’s Compensation for that Bonus Period through the time of termination of employment.  Each Participant described above also shall be entitled to receive any Bonus Award payable for any Bonus Period that ended before the termination of the Participant’s employment.  Such Bonus Awards shall be paid at the normal time of the bonus payout as if the Participant had remained employed but in no event later than the 15th day of the third month following the end of the Bonus Period.  If before a Change in Control occurs the Participant’s employment with all Employers is terminated by an Employer, such that the Participant is entitled to receive benefits under any severance plan maintained by the Company or any Affiliate, if the Participant’s employment is terminated by an Employer during the first calendar quarter of the Bonus Period, the Participant shall not be entitled to receive any Bonus Award for the Bonus Period that includes the date of the Participant’s termination of employment.

 

9.                                      MISCELLANEOUS

 

9.1                               Unsecured General Creditor.  Participants and their beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests, or other claim in any property or assets of the Employer. Any and all assets shall remain general, unpledged, unrestricted assets of the Employer. The Employer’s obligation under the Plan shall be that of an unfunded and unsecured promise to pay cash or shares of Common Stock in the future, and there shall be no obligation to establish any fund, any security or any other restricted asset in order to provide for the payment of amounts under the Plan.

 

9.2                               Obligations to the Employer.  If a Participant becomes entitled to a Distribution under the Plan, and, if, at the time of the Distribution, such Participant has outstanding any debt, obligation or other liability representing an amount owed to any Employer, then the Employer may offset such amounts owing to it or any other Employer against the amount of any Distribution.

 

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Such determination shall be made by the Committee. Any election by the Committee not to reduce any Distribution payable to a Participant shall not constitute a waiver of any claim for any outstanding debt, obligation, or other liability representing an amount owed to the Employer.

 

9.3                               Nonassignability.  Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and nontransferable. No part of a Distribution, prior to actual Distribution, shall be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor shall it be transferable by operation of law in the event of the Participant’s or any other persons bankruptcy or insolvency, except as set forth in Section 9.2 above.

 

9.4                               Employment or Future Pay or Compensation Not Guaranteed.  Nothing contained in this Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any Participant or any former Participant any right to be retained in the employ of an Employer or receive or continue to receive any rate of pay or other compensation, nor shall it interfere in any way with the right of an Employer to terminate the Participant’s employment at any time without assigning a reason therefore.

 

9.5                               Gender, Singular and Plural.  All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.

 

9.6                               Captions.  The captions to the articles, sections, and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.

 

9.7                               Applicable Law.  This Plan shall be governed and construed in accordance with the laws of the State of Georgia.

 

9.8                               Validity.  In the event any provision of the Plan is held invalid, void, or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of the Plan.

 

9.9                               Notice.  Any notice or filing required or permitted to be given to the Committee shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of the Company, directed to the attention of the President and CEO of the Company. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

 

9.10                        Compliance.  No Distribution shall be made hereunder except in compliance with all applicable laws and regulations (including, without limitation, withholding tax requirements), any listing agreement with any stock exchange to which the Company is a party, and the rules of

 

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all domestic stock exchanges on which the Company’s shares of capital stock may be listed. The Company shall have the right to rely on an opinion of its counsel as to such compliance. No Distribution shall be made hereunder unless the Employer has obtained such consent or approval as the Employer may deem advisable from regulatory bodies having jurisdiction over such matters.

 

9.11                        No Duplicate Payments.  The Distributions payable under the Plan are the maximum to which the Participant is entitled in connection with the Plan. To the extent the Participant and the Employer are parties to any other agreements or arrangements relating to the Participant’s employment that provide for payments of any bonuses under this Plan on termination of employment, this Plan shall be construed and interpreted so that the Bonus Awards and Distributions payable under the Plan are only paid once; it being the intent of this Plan not to provide the Participant any duplicative payments of Bonus Awards. To the extent a Participant is entitled to a bonus payment calculated under this Plan under any other agreement or arrangement that would constitute a duplicative payment of the Bonus Award or Distribution; to the extent of that duplication, no Bonus Award or Distribution will be payable hereunder.

 

9.12                        Confidentiality.  The terms and conditions of this Plan and the Participant’s participation hereunder shall remain strictly confidential. The Participant may not discuss or disclose any terms of this Plan or its benefits with anyone except for Participant’s attorneys, accountants and immediate family members who shall be instructed to maintain the confidentiality agreed to under this Plan, except as may be required by law.

 

9.13                        Temporary Leaves of Absence.  The Committee in its sole discretion may decide to what extent leaves of absence for government or military service, illness, temporary disability or other reasons shall, or shall not be, deemed an interruption or termination of employment.

 

9.14                        Clawback Provision.  Notwithstanding any other provision of the Plan, the Participant shall reimburse or return to the Employer (i) the gross aggregate amount of any cash Distribution that the Participant previously received under the Plan, (ii) any shares of Common Stock that the Participant previously received under the Plan, (iii) an amount equal to any dividends the Participant previously received with respect to any shares of Common Stock that must be returned to the Employer and (iv) any and all other amounts the Participant received or earned that are attributable to a Distribution under the Plan, to the extent required under applicable law or any clawback or compensation recoupment policy that the Employer may adopt as long as such requirement to reimburse or return is triggered by action of the Committee or the Board that is taken prior to a Change in Control.

 

10.                               AMENDMENT AND TERMINATION OF THE PLAN

 

10.1                        Amendment.  Except as set forth in Section 10.3 below, the Committee in its sole discretion may at any time amend the Plan in whole or in part.

 

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10.2                        Termination of the Plan.

 

(a)                                 Employer’s Right to Terminate.  Except as set forth in Section 10.3 below, the Committee may at any time terminate the Plan, if it determines in good faith that the continuation of the Plan is not in the best interest of the Company and its shareholders.  No such termination of the Plan shall reduce any Distributions already made.

 

(b)                                 Payments upon Termination of the Plan.  Upon the termination of the Plan under this Section, Awards for future Bonus Periods shall not be made.  With respect to the Bonus Period in which such termination takes place, the Employer will pay to each Participant the Participant’s Bonus Award, if any, for such Bonus Period, less any applicable withholdings, only to the extent the Committee provides for any such payments on termination of the Plan (in which case all such payments will be made no later than the 15th day of the third month following the end of the Bonus Period that includes the effective date of termination of the Plan).

 

10.3                        Amendment or Termination after a Change in Control.  Notwithstanding any other provision of the Plan, the Committee may not amend or terminate the Plan in whole or in part, or change eligibility for participation in the Plan, on or after a Change in Control to the extent any such amendment or termination, or change in eligibility for participation in the Plan, would adversely affect the Participants’ rights hereunder or result in Bonus Awards not being paid consistent with the terms of the Plan in effect prior to such amendment or termination for the Bonus Period in which the amendment or termination of the Plan takes place and any prior Bonus Period, and assuming for each Management Participant a Discretionary Bonus Multiplier of no less than one hundred percent (100%), or such greater or lesser percent if established prior to the Change in Control, for any such Bonus Period.

 

11.                               COMPLIANCE WITH SECTION 409A

 

11.1                        Tax Compliance.  This Plan is intended to be exempt from the applicable requirements of Section 409A of the Code and shall be construed and interpreted in accordance therewith. The Company may at any time amend, suspend or terminate this Plan, or any payments to be made hereunder, as necessary to be exempt from Section 409A of the Code. Notwithstanding the preceding, neither the Company nor any Employer shall be liable to any Employee or any other person if the Internal Revenue Service or any court or other authority having jurisdiction over such matter determines for any reason that any Bonus Award or Distribution to be made under this Plan is subject to taxes, penalties or interest as a result of failing to comply with Section 409A of the Code. The Distributions under the Plan are intended to satisfy the exemption from Section 409A of the Code for “short-term deferrals.”

 

12.                               CLAIMS PROCEDURES

 

12.1                        Filing of Claim.  If a Participant becomes entitled to a Bonus Award or a Distribution has otherwise become payable, and the Participant has not received the benefits to which the Participant believes he is entitled under such Bonus Award or Distribution, then the Participant must submit a written claim for such benefits to the Committee within ninety (90) days

 

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of the date the Bonus Award would have become payable (assuming the Participant is entitled to the Bonus Award) or the claim will be forever barred.

 

12.2                        Appeal of Claim.  If a claim of a Participant is wholly or partially denied, the Participant or his duly authorized representative may appeal the denial of the claim to the Committee. Such appeal must be made at any time within thirty (30) days after the Participant receives written notice from the Committee of the denial of the claim. In connection therewith, the Participant or his duly authorized representative may request a review of the denied claim, may review pertinent documents and may submit issues and comments in writing. Upon receipt of an appeal, the Committee shall make a decision with respect to the appeal and, not later than sixty (60) days after receipt of such request for review, shall furnish the Participant with a decision on review in writing, including the specific reasons for the decision, as well as specific references to the pertinent provisions of the Plan upon which the decision is based.  Notwithstanding the foregoing, if the Committee has not rendered a decision on appeal within sixty (60) days after receipt of such request for review, the Participant’s appeal shall be deemed to have been denied upon the expiration of the sixty (60)-day review period.

 

12.3                        Final Authority.  The Committee has discretionary and final authority under the Plan to determine the validity of any claim. Accordingly, any decision the Committee makes on the Participant’s appeal shall be final and binding on all parties. If a Participant disagrees with the Committee’s final decision, the Participant may bring suit, but only after the claim on appeal has been denied or deemed denied. Any such lawsuit must be filed within ninety (90) days of the Committee’s denial (or deemed denial) of the Participant’s claim or the claim will be forever barred.

 

13.                               COMPLIANCE WITH SECTION 162(M)

 

13.1                        Section 162(m) Compliance. It is the intent of the Company that the Plan and any Performance Bonus payable under the Plan to Participants who are or may become persons whose compensation is subject to Section 162(m) of the Code and that are intended to constitute qualified performance-based compensation satisfy any applicable requirements of Section 162(m) of the Code to qualify as qualified performance-based compensation.  Any provision, application or interpretation of the Plan inconsistent with this intent shall be disregarded or deemed to be amended to the extent necessary to conform to such requirements.  Any Performance Bonus that is intended to constitute qualified performance-based compensation may only become payable if the applicable Corporate Performance Objectives are achieved.  Any Performance Bonus that is intended to constitute qualified performance-based compensation that is only nominally or partially contingent on achieving the Corporate Performance Objectives may not be awarded under the Plan.  However, the Company may pay a Discretionary Bonus, or other types of compensation, inside or outside the Plan, which may or may not be deductible.  In no event, however, may any Management Participant be entitled to a Discretionary Bonus under the Plan under two arrangements, where payment of the Discretionary Bonus that is not intended to be qualified performance-based compensation is contingent upon the failure to meet the Corporate Performance Objectives upon which the Performance Bonus that is intended to constitute qualified performance-based compensation is based.  The provisions of the Plan may be bifurcated by the Committee at any time, so that certain provisions of the Plan required in order to satisfy the

 

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requirements of Section 162(m) of the Code are only applicable to Participants whose compensation is subject to 162(m) of the Code.

 

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