Document:

exv10w1

 

Exhibit 10.1

Avanade Inc. Long-Term Incentive Plan

Plan Document

 

 

Effective
as of June 19, 2006

 

 

Avanade Inc.

Long-Term Incentive Plan

	1.	 	Purpose

The Avanade Inc. Long-Term Incentive Plan (the “Plan”) was created to attract and retain the
best available employees over the long-term and to provide incentives that will align those
employees’ interests with the continued growth and success of the Company.

	2.	 	Definitions

In addition to the other definitions contained herein, the following definitions shall apply:

	 	•	 	“Agreement” means the document setting forth the terms and conditions of an award under
the Plan.
	 
	 	•	 	“Avanade Valuation Unit” means a right granted to a Participant pursuant to Section 4.
	 
	 	•	 	“Base Value” means, with respect to an Avanade Valuation Unit, the dollar value per
unit determined by the Plan Administrator on the Grant Date, which, in the case of the
initial awards of Avanade Valuation Units made under the Plan in June, 2006 shall be an
amount not less than the Fair Market Value per Share as of November 11, 2005 and, for all
subsequent awards, not less than the Fair Market Value per Share as of the applicable Grant
Date.
	 
	 	•	 	“Board” means the Company’s Board of Directors.
	 
	 	•	 	“Change in Control Event” means an Ownership Change Event (defined below) or a series
of related Ownership Change Events (collectively, a “Transaction”) in which the
shareholders of the Company immediately before the Transaction do not retain immediately
after the Transaction, in substantially the same proportions as their ownership of shares
of the Company’s voting stock immediately before the Transaction, direct or indirect
beneficial ownership of more than fifty percent (50%) of the total combined voting power of
the outstanding voting securities of the Company or the entity to which the assets of the
Company were transferred (the “Transferee”), as the case may be. The Board shall have the
right to determine whether multiple sales or exchanges of the voting securities of the
Company or multiple Ownership Change Events are related, and its determination shall be
final, binding and conclusive.
	 
	 	•	 	“Code” means the United States Internal Revenue Code of 1986, as amended from time to time.

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	 	•	 	“Common Stock” means the Company’s Common Stock, par value $0.0001 per share.
	 
	 	•	 	“Company” means Avanade Inc., a United States corporation incorporated in the state of
Washington.
	 
	 	•	 	“Compensation Committee” has the meaning set forth in Section 3.
	 
	 	•	 	“Disability” means any medically determinable mental or physical impairment of the
Participant that is expected to result in death or that has lasted or is expected to last
for a continuous period of at least 12 months and that causes the Participant to be unable,
in the opinion of the Company and an independent physician chosen by the Company, to engage
in any substantial gainful activity.
	 
	 	•	 	“Effective Date” means June 19, 2006.
	 
	 	•	 	“Employee” means any person employed by the Company or any Subsidiary.
	 
	 	•	 	“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
	 
	 	•	 	“Fair Market Value” means, as of the applicable date, the fair market value of the
Common Stock as determined in good faith by the Board or, if authorized, the Compensation
Committee, on the basis of such considerations as the Board or the Compensation Committee
determines to be appropriate. Such determination of the Fair Market Value is conclusive and
binding on all parties.
	 
	 	•	 	“GAAP” means generally accepted accounting principles in effect from time to time in
the United States.
	 
	 	•	 	“Grant Date” with respect to an award of Avanade Valuation Units means the date as
instructed by the Board, or the Plan Administrator, when approving the award.
	 
	 	•	 	“Operating Income” means, for any period being tested, income from operations before
other income/loss and tax expenses as determined in accordance with GAAP; provided,
however, that solely for purposes of calculating Operating Income hereunder, no deduction
should be considered for any Payment Amounts.
	 
	 	•	 	“Ownership Change Event” means (i) the direct or indirect sale or exchange by the
shareholders of the Company of more than fifty percent (50%) of the voting stock of the
Company; (ii) a merger or consolidation to which the Company is a party; or (iii) the sale,
exchange, or transfer of all or substantially all, as determined by the Board in its
discretion, of the assets of the Company.
	 
	 	•	 	“Participant” means any person who is eligible for and who is granted one or more
Avanade Value Units pursuant to the terms of the Plan.

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	 	•	 	“Payment Cap” means with respect to aggregate Payment Amounts relating to Avanade
Valuation Units with a Vesting Date in a calendar year, an amount that equals 12% of the
Operating Income for the fiscal year ending within such calendar year.
	 
	 	•	 	“Payment Date” means, with respect to the vested portion of an award of Avanade
Valuation Units, the date determined by the Plan Administrator for payment of a Payment
Amount, which date will be no later than March 15 of the calendar year following the year
in which the Vesting Date occurs.
	 
	 	•	 	“Plan Administrator” has the meaning set forth in Section 3.
	 
	 	•	 	“Shares” means shares of Common Stock of the Company.
	 
	 	•	 	“Subsidiary” means a current or future “subsidiary corporation” as defined in Section
424 of the Code and a limited liability company, partnership, or other entity in which the
Company controls 60% or more of the voting power or equity interests.
	 
	 	•	 	“Termination Date” means the date on which a Participant’s employment with the Company
and the Subsidiaries terminates for any reason. A Participant’s transfer of employment
between or among the Company and its Subsidiaries will not be considered a termination of
employment for purposes of the Plan.
	 
	 	•	 	“Vesting Date” means the date on which an Avanade Valuation Unit becomes vested. The
Vesting Date will also be the date on which the Payment Amount is determined for the vested
Avanade
Valuation Units in accordance with Section 4(b) of the Plan.
	 
	 	•	 	“Vesting Date FMV” as of any Vesting Date means the Fair Market Value of a Share as
determined for such Vesting Date.

	3.	 	Administration of Plan

The Plan will be administered by the Compensation Committee of the Board (the “Compensation
Committee”), or such other committee comprised of non-employee members of the Board as the Board
designates (as applicable, the “Plan Administrator”).

The Plan Administrator shall have the power to grant Avanade Valuation Units under the Plan
(subject to the terms and conditions herein), establish the terms and conditions of such awards,
interpret the Plan, establish any rules and regulations necessary or appropriate for administration
of the Plan, and make such other determinations and take such actions as it deems necessary or
advisable. This includes changing the terms and conditions of any outstanding award, except as
otherwise expressly prohibited by the terms of the Plan or applicable law. The Plan Administrator
may rely upon the advice and assistance of any individual it deems appropriate in administering the
Plan

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and, as may be permitted by governing state law, delegate authority to an officer(s) of the
Company to grant Avanade Valuation Units to certain Employees. However, no such officer shall have
or obtain authority to grant awards to himself or herself or to any person subject to the reporting
requirements of Section 16 of the Exchange Act.

Any determination or action made or taken by the Plan Administrator will be final and binding on
all parties. No member of a Plan Administrator will be liable for any action or determination taken
or made in good faith.

	4.	 	Avanade Valuation Units

     (a) Eligibility. Avanade Valuation Units may be awarded to Employees as determined by
the Plan Administrator. Members of the Board are eligible only if they are full-time
Employees.

     (b) Grants and Payment Amounts.

     (i) Each grant of an Avanade Valuation Unit to a Participant will be documented in an Agreement
designating, among other things, the number of Avanade Valuation Units subject to the award,
the Grant Date, the Base Value, and the Vesting Dates. Participants may be granted more than
one Avanade Valuation Unit, and, subject to the terms and conditions of the Plan, the terms
and timing of Avanade Valuation Units can vary among Participants and from Avanade Valuation
Units previously granted. Receipt of an Avanade Valuation Unit does not entitle a Participant
to future grants of Avanade Valuation Units.

     (ii) The grant of an Avanade Valuation Unit gives a Participant the right, after vesting of such
Avanade Valuation Unit, to receive a one-time cash payment on the applicable Payment Date
equal to the “Payment Amount.” The Payment Amount on any Payment Date shall be the amount
(not less than zero) equal to the difference between: (i) the Vesting Date FMV (determined as
of the Vesting Date immediately prior to or coincident with such Payment Date) and (ii) the
Base Value. Notwithstanding the foregoing, the payment of Payment Amounts to Participants is
subject to the Payment Cap and the Plan Administrator shall reduce the Payment Amount of all
applicable Participants (but not below $0) in the event the Payment Cap would otherwise be
exceeded. Any Participant’s Payment Amount may be further reduced (but not below zero) by the
Plan Administrator in its sole discretion, without notice or consideration, for any reason.

     (c) Vesting and Settlement of Avanade Valuation Units. The Agreement evidencing the grant
of Avanade Valuation Units will specify the times at which and the conditions under which the
Avanade Valuation Units granted to a Participant will become vested and, subject to the
provisions of paragraph (b) above, will be paid. Payment for vested Avanade Valuation Units
will be made one time only and once settled by payment and/or reduction of such Payment Amount
pursuant to Section 4(b) above, vested Avanade Valuation Units will expire and will be
cancelled and a

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Participant will have no further rights with respect to such Avanade Valuation
Units. Unless otherwise provided by the Plan Administrator at the time of grant (i) if a
Participant’s Termination Date occurs by reason of death or Disability, then that number of
Avanade Valuation Units that would have vested within twelve (12) months following such
Participant’s Termination Date (which Termination Date will be a Vesting Date), shall
automatically vest, and (ii) if a Change in Control Event occurs prior to the Participant’s
Termination Date, vesting and settlement of the Participant's outstanding Avanade Valuation
Units is as set forth in Section 4(d) below.

     (d) Effect of a Change in Control Event.

	 	i.	 	Accelerated Vesting. Upon the occurrence of a Change in Control Event and
subject to the requirements of Section 409A of the Code (if applicable), (1) the
effective date of such Change in Control Event will be a Vesting Date and (2) for
all Participants, that number of Avanade Valuation Units that would have vested
within twelve (12) months following such effective date shall automatically vest.
Notwithstanding the foregoing, payment of any Payment Amounts for vested
Avanade Valuation Units accelerated pursuant to this Section 4(d)(i) remains
subject to the Payment Cap and the requirements of Section 409A of the Code (if
applicable).
	 
	 	ii.	 	Assumption or Substitution. Upon the occurrence of a Change in
Control Event, the surviving, continuing, successor, or purchasing corporation or
other business entity or parent thereof, as the case may be (the “Acquiring
Corporation”), may, without the consent of any Participant, either assume the
Company’s rights and obligations under the outstanding Avanade Valuation Units or
substitute for the outstanding Avanade Valuation Units substantially equivalent
rights. Unless otherwise provided in an Agreement or by the Plan Administrator
pursuant to Section 4(d)(i) above, any Avanade Valuation Units which are neither
assumed nor substituted for by the Acquiring Corporation in connection with the
Change in Control Event shall terminate and cease to be outstanding upon the
effective date of the Change in Control Event. Further, all Avanade Valuation
Units for which the Acquiring Corporation provides a substitute shall terminate
and cease to be outstanding upon the effective date of a Change in Control Event.

	5.	 	No Acquired Rights

Neither the Plan nor receipt of an award of Avanade Valuation Units under the Plan confers
upon any Participant the right to continued employment at the Company
or any Subsidiary or affects
in any way the right of the Company or any Subsidiary to terminate the employment of a Participant.

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	6.	 	Restrictions on Transferability

Avanade Valuation Units may not be sold, given, transferred, assigned, pledged or otherwise
hypothecated in any manner or by will, and any attempted transfer in violation of these
prohibitions will be void ab initio. Avanade Valuation Units are not transferable and any payments
due to a Participant pursuant to an Avanade Valuation Unit which have not been completed upon his
or her death will be paid to his estate.

	7.	 	Conditions Upon Issuance of Avanade Valuation Units

The granting of Avanade Valuation Units under the Plan will be subject to all applicable laws,
rules, and regulations. Any purported grant of Avanade Valuation Units is void and shall have no
effect if such grant would constitute a violation of law in the applicable local jurisdiction or if
the Company determines, in its sole discretion, that it would be impracticable to obtain the
requisite legal or regulatory approvals.

	8.	 	Taxes

The Company will have the power and the right to deduct or withhold from any Payment
Amount, or require a Participant to remit to the Company, such amount the Company deems necessary
or desirable to satisfy all tax obligations with respect to any taxable event arising as a result
of the Plan.

	9.	 	Adjustments Upon Changes in Capitalization

     (a) In the event of a stock dividend, stock split, spin-off, combination or exchange of shares,
recapitalization, consolidation, or other change in the Company’s capital structure,
the Plan Administrator may make such proportional adjustments in the number of outstanding
Avanade Valuation Units and, if applicable, the Base Value, that the Plan Administrator deems
necessary or desirable in its sole discretion. Notwithstanding the foregoing, a dissolution or
liquidation of the Company is not governed by this Section 9(a) but is governed by Section
9(b) below and Section 4(d) shall apply in the event of a Change in Control Event.

     (b) In the event of the proposed dissolution or liquidation of the Company, outstanding Avanade
Valuation Units will terminate immediately prior to the consummation of such proposed action,
unless otherwise provided by the Plan Administrator.

	10.	 	Termination of Employment

Except as otherwise specifically provided herein or in the applicable Agreement, any Avanade
Valuation Units that are not vested on the Participant’s Termination Date will expire on such date.
The terms of Avanade Valuation Units upon a Participant’s Termination Date are solely governed by
the provisions of Section 4.

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	11.	 	Amendment and Termination

The Plan shall continue until the earliest to occur of the following: (a) termination of the
Plan by the Board or (b) the tenth anniversary of the Effective Date. The Board may amend, alter
or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would
impair a Participant’s rights under any then-outstanding Avanade Valuation Unit theretofore granted
to such Participant under the Plan, without the consent of such Participant; provided,
however, that the Board may amend the Plan in such manner as it deems necessary to permit
the granting of Avanade Valuation Units meeting the requirements of the Code or other applicable
laws, including, without limitation, Section 409A of the Code, any amendment thereto, and
applicable guidance issued thereunder if it is determined that the Plan would be subject to Section
409A of the Code. Notwithstanding the foregoing, the Plan Administrator may, without the consent
of a Participant, reduce any Payment Amount (but not below $0) pursuant to Section 4(b) above.

	12.	 	Awards to Employees outside the United States

To comply with the laws in other countries in which the Company or any of its Subsidiaries
operates or has Employees, the Plan Administrator, in its sole discretion, will have the power and
authority to:

     (a) Determine which Subsidiaries will be covered by the Plan;

     (b) Determine which Employees outside the United States are eligible to participate in the Plan;

     (c) Modify the terms and conditions of any award granted to Employees outside the United States
to comply with applicable foreign laws;

     (d) Establish sub-plans and modify exercise procedures and other terms and procedures, to the
extent such actions may be necessary or advisable. Any sub-plans and modifications to Plan
terms and procedures established under this Section 12 by the Plan Administrator will be
attached to this Plan document as appendices; and

     (e) Take any action, before or after an award is made, that it deems advisable to obtain approval
or comply with any necessary local government regulatory exemptions or approvals.

	13.	 	Choice of Law

The Plan and all determinations made and actions taken pursuant to the Plan, to the extent not
otherwise governed by the laws of the United States, will be governed by the laws of the State of
Washington without giving effect to principles of conflicts of laws.

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Exhibit 10.2

AVANADE INC.

AVANADE VALUATION UNIT GRANT NOTICE

LONG-TERM INCENTIVE PLAN

     Avanade Inc. (the “Company”), pursuant to the Avanade Inc. Long-Term Incentive Plan (the
“Plan”), hereby grants to the undersigned Employee that number of Avanade Valuation Units (each, a
“Unit” and collectively, the “Units”) set forth below. Each Unit is subject to all of the terms
and conditions as set forth in this Avanade Valuation Unit Grant Notice (the “Grant Notice”) and in
the Avanade Valuation Unit Agreement (“AVU Agreement”) and the Plan, which are attached to and
incorporated into this Grant Notice in their entirety. No payments will be made by the Company to
the Employee named below with respect to the Units unless the Employee has indicated his or her
agreement to such terms by execution of this Grant Notice and the AVU Agreement.

	 	 	 
	Employee:

	 	                                        
	 
	 	 
	Grant Date:

	 	                                        
	 
	 	 
	Number of Units:

	 	                                        
	 
	 	 
	Base Value (per Unit):

	 	                                        
	 
	 	 
	Vesting Schedule:

	 	[Twenty-five percent (25%) of the
Units will vest on [Date] and on each
annual anniversary thereafter, subject to
earlier termination or acceleration as
provided in the Agreement and/or the
Plan.]

Additional Terms/Acknowledgement: The undersigned Employee acknowledges receipt of, and
understands and agrees to this Grant Notice, the AVU Agreement, and the Plan. Employee further
acknowledges that the terms and provisions of this Grant Notice, the AVU Agreement, and the Plan,
taken together, set forth the entire understanding between Employee and the Company regarding the
Units and supersede any and all prior oral and written agreements on the subject.

	 	 	 	 	 	 	 
	AVANADE INC.	 	[EMPLOYEE]
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	Its:

	 	 	 	 	 	Signature
	 

	 	 	 	 	 	 
	 

	 	 	 	Date:	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 
	Attachments:
	 	 	 	 
	1. Avanade Valuation Unit Agreement

	 	Address:	 	 
	 

	 	 	 	 
	2. Long-Term Incentive Plan
	 	 	 	 
	 

	 	 	 	 
	 

	 	Taxpayer ID:

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