Document:

Exhibit 106

		

			EXHIBIT 10.6

		

		

			 

		

		
			PRICESMART, INC.
		

		
			2013 EQUITY INCENTIVE AWARD PLAN

PERFORMANCE STOCK UNIT GRANT NOTICE AND
PERFORMANCE STOCK UNIT AGREEMENT
		

		
			PriceSmart, Inc., a Delaware corporation (the “Company”), pursuant to the PriceSmart, Inc. 2013 Equity Incentive Award Plan (the “Plan”), hereby grants to the holder listed below (“Holder”), an award of performance stock units (“Performance Stock Units” or “PSUs”) with respect to the number of shares of the Company’s Common Stock (the “Shares”) indicated below.  Each PSU is hereby granted in tandem with a corresponding dividend equivalent, as further described in Article II of the Performance Stock Unit Agreement (the “Dividend Equivalents”).  This award for Performance Stock Units and Dividend Equivalents (this “Award”) is subject to all of the terms and conditions as set forth herein and in the Performance Stock Unit Agreement attached hereto as Exhibit A (the “Performance Stock Unit Agreement”) and the Plan, each of which are incorporated herein by reference.  Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Performance Stock Unit Agreement.
		

			
					
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						Holder:

					
					
						 

				
	
					
						Grant Date:

					
					
						 

				
	
					
						Total Number of PSUs Awarded:

					
					
						 

				
	
					
						Vesting Schedule:

					
					
						[Specify vesting schedule and Performance Metrics]

					
						 

					
						In addition, (i) if [the/either/any] Performance Metric has been achieved, then upon the occurrence of a Change in Control, the unvested PSUs shall vest as of immediately prior to the occurrence of a Change in Control, and (ii) in the event of a Termination of Service due to Holder’s death or Disability, the vesting contingent on continued service or employment shall be deemed achieved and the PSUs will remain eligible to vest if and when [the/either/any] Performance Metric has been achieved so long as the Holder (A) received this Award in his or her capacity as an Employee or Consultant, and (B) was in good standing as of the date of Termination of Service and was employed by or providing services to the Company or an Affiliate for at least one year prior to the date of the Termination of Service.

				
	
					
						Distribution Schedule:

					
					
						The PSUs shall be distributable as they vest pursuant to the Vesting Schedule.

				

		
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		SIGNATURE PAGE TO PERFORMANCE STOCK UNIT GRANT NOTICE
		

		
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			Instructions:  Print this page, sign below and return the completed page to the office of the Company’s general counsel.
		

		
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			By his or her signature below, Holder agrees to be bound by the terms and conditions of the Plan, the Performance Stock Unit Agreement and the Performance Stock Unit Grant Notice to which this signature page is attached.  Holder has reviewed the Performance Stock Unit Agreement, the Plan and the Performance Stock Unit Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this signature page and fully understands all provisions of the Performance Stock Unit Grant Notice, the Performance Stock Unit Agreement and the Plan.  Holder has been provided with a copy or electronic access to a copy of the prospectus for the Plan.  Holder hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, the Performance Stock Unit Grant Notice or the Performance Stock Unit Agreement.  
		

			
					
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						PRICESMART, INC.

					
					
						 

					
					
						HOLDER

				
	
					
						By:

					
					
						 

					
					
						 

					
					
						By:

					
					
						 

				
	
					
						Print Name:

					
					
						 

					
					
						 

					
					
						Print Name:

					
					
						 

				
	
					
						Title:

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Address:

					
					
						9740 Scranton Road

					
					
						 

					
					
						 

					
					
						 

				
	
					
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						San Diego, CA  92121

					
					
						 

					
					
						 

					
					
						 

				

		
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		EXHIBIT A
TO PERFORMANCE STOCK UNIT GRANT NOTICE

PRICESMART, INC.
PERFORMANCE STOCK UNIT AGREEMENT
		

		
			Pursuant to the Performance Stock Unit Grant Notice (the “Grant Notice”) to which this Performance Stock Unit Agreement (this “Agreement”) is attached, the Company has granted to Holder the right to receive the number of PSUs set forth in the Grant Notice, and their corresponding Dividend Equivalents pursuant to Article II, subject to all of the terms and conditions set forth in this Agreement, the Grant Notice and the Plan.  The Grant Notice and this Agreement are subject to the Plan, the terms and conditions of which are incorporated herein by reference.  In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.
		

		
			ARTICLE I.
		

		
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			AWARD OF PERFORMANCE STOCK UNITS
		

		
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			1.1    Award of Performance Stock Units.  
		

		
			(a)    Award.  In consideration of Holder’s service to the Company or any Affiliate thereof, and for other good and valuable consideration, the Company hereby grants to Holder the right to receive the number of PSUs set forth in the Grant Notice and their corresponding Dividend Equivalents pursuant to Article II, subject to all of the terms and conditions set forth in this Agreement, the Grant Notice and the Plan.  Each PSU represents the right to receive one Share.  Prior to actual issuance of any Shares, the Award, including the PSUs and the Dividend Equivalents conferred hereby, represents an unsecured obligation of the Company, payable only from the general assets of the Company.
		

		
			(b)    Vesting; Effect of Termination of Service.  The PSUs subject to the Award shall vest in accordance with the Vesting Schedule set forth in the Grant Notice.  Unless and until the PSUs have vested in accordance with the Vesting Schedule set forth in the Grant Notice, Holder will have no right to any distribution with respect to such PSUs.  In the event of Holder’s Termination of Service prior to the vesting of all of the PSUs (other than a Termination of Service due to death or Disability), any unvested PSUs will terminate automatically without any further action by the Company and be forfeited without further notice and at no cost to the Company.  In the event of a Termination of Service due to Holder’s death or Disability, the vesting contingent on continued service or employment shall be deemed achieved and the PSUs will remain eligible to vest if and when [the/either/any] Performance Metric has been achieved so long as the Holder (i) received the Award in his or her capacity as an Employee or Consultant, and (ii) was in good standing as of the date of Termination of Service and was employed by or providing services to the Company or an Affiliate for at least one year prior to the date of the Termination of Service.  
		

		
			(c)    Distribution of Shares.  
		

		
			(i)    Shares of Common Stock, to which the Holder is entitled, shall be distributed to Holder (or in the event of Holder’s death, to his or her estate) with respect to such Holder’s vested PSUs within ten (10) days following the date on which such PSUs vest pursuant to the Vesting Schedule set forth in the Grant Notice, subject to the terms and provisions of the Plan and this Agreement.  
		

		
			(ii)    All distributions shall be made by the Company in the form of whole shares of Common Stock.  Fractional Shares issuable upon vesting of the PSUs shall be rounded down to the nearest whole Share.
		

		

		

		 

		

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			(iii)    Neither the time nor form of distribution of Common Stock with respect to the PSUs may be changed, except as may be permitted by the Administrator in accordance with the Plan and Section 409A of the Code and the Treasury Regulations thereunder.
		

		
			(d)    Generally. Shares issued under the Award shall be issued to Holder (or in the event of Holder’s death, to his or her estate) in either (a) uncertificated form or (b) certificate form.
		

		
			1.2    Taxes.  
		

		
			(a)    Representation.  Holder has reviewed with Holder’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by the Grant Notice and this Agreement.  Holder is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. Holder understands that Holder (and not the Company) shall be responsible for Holder’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. 
		

		
			(b)    Tax Withholding.  Notwithstanding anything to the contrary in this Agreement, the Company or its Affiliate, as applicable, shall have the authority to deduct or withhold, or require Holder to remit to the Company or Holder’s employer, an amount sufficient to satisfy any Tax Liability (as defined below) with respect to any taxable event arising pursuant to this Agreement.  Holder hereby authorizes either the Company or its Affiliate, as applicable, to satisfy Holder’s obligations with regard to the Tax Liability by one or a combination of the following, in the Company’s or its Affiliate’s, as applicable, discretion: 
		

		
			(i)    Withholding from the number of Shares otherwise issuable upon vesting of the PSUs or pursuant to payment of Dividend Equivalents in shares of Common Stock such number of shares of Common Stock having a Fair Market Value equal to the Tax Liability; 
		

		
			(ii)    Deducting the amount of such Tax Liability from any Dividend Equivalent to be paid in cash; 
		

		
			(iii)    Deducting the amount of such Tax Liability from other compensation payable to Holder; 
		

		
			(iv)    Electing to instruct any brokerage firm determined acceptable to the Company for such purpose to sell on Holder’s behalf a whole number of shares of Common Stock from those Shares issuable to Holder upon settlement of the PSUs or the Dividend Equivalents as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy Holder’s Tax Liability (and any broker’s fees and other costs of sale) and to remit the proceeds of such sale to the Company or its Affiliate, as applicable, with respect to which the Tax Liability arises; or
		

		
			(v)    Any combination of the foregoing.
		

		
			(c)    In the event of any broker-assisted sale of Shares in connection with the payment of withholding taxes as provided in Section 1.2(b)(iv) above: (i) any Shares to be sold through a broker-assisted sale will be sold on the day the Tax Liability arises or as soon thereafter as practicable; (ii) such Shares may be sold as part of a block trade with other participants in the Plan in which all participants receive an average price; (iii) Holder will be responsible for all broker’s fees and other costs of sale, and Holder agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale; (iv) to the extent the proceeds of such sale exceed the applicable tax withholding obligation, the Company agrees to pay such excess in cash to Holder as soon as reasonably practicable;
		

		

		

		 

		

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			(v) Holder acknowledges that the Company or its designee is under no obligation to arrange for such sale at any particular price, and that the proceeds of any such sale may not be sufficient to satisfy the applicable tax withholding obligation; and (vi) in the event the proceeds of such sale are insufficient to satisfy the applicable tax withholding obligation, Holder agrees to pay immediately upon demand to the Company or its Affiliate with respect to which the withholding obligation arises an amount in cash sufficient to satisfy any remaining portion of the Tax Liability.  Holder’s acceptance of this Award constitutes Holder’s instruction and authorization to the Company and such brokerage firm to complete the transactions described above.  
		

		
			(d)    Holder is ultimately liable and responsible for any Tax Liability owed in connection with the PSUs or the Dividend Equivalents, regardless of any action the Company or any Affiliate takes with respect to any tax withholding obligations that arise in connection with the PSUs or the Dividend Equivalents.  Neither the Company nor any Affiliate makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or payment of the PSUs or the Dividend Equivalents or the subsequent sale of the Shares.  The Company and its Affiliates do not commit and are under no obligation to structure this Award to reduce or eliminate Holder’s tax liability.
		

		
			(e)    For purposes of this Agreement, the “Tax Liability” shall mean all U.S. federal, state, local and any non-U.S. withholding or other taxes applicable to the taxable income of Holder resulting from the grant of Shares or the lapse or removal of the restrictions set forth in this Agreement or otherwise pursuant to this Agreement.  To avoid negative accounting treatment, the Company shall withhold for the Tax Liability by considering applicable minimum statutory withholding amounts or other applicable withholding rates. 
		

		
			1.3    Conditions to Issuance of Stock Certificates.  The Company shall not be required to issue or deliver any Shares upon settlement of the PSUs prior to fulfillment of all of the conditions set forth in Section 11.4 of the Plan.
		

		
			ARTICLE II.
		

		
			Dividend EquivalentS 
		

		
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			2.1    Dividend Equivalents.  Notwithstanding Section 3.2 hereof, for so long as unvested PSUs are outstanding under this Agreement, Holder shall have the right specifically described herein and no others, to receive distributions (the “Dividend Equivalents”) from the Company equal to any dividends or other distributions (cash or securities) that would have been distributed to Holder if each then-unvested PSU were instead an outstanding Share owned by Holder; provided, however, that such Dividend Equivalents will only be payable upon the satisfaction of the Performance Metrics.  The Dividend Equivalents shall be paid on the vest date once the Performance Metrics have been deemed by the Compensation Committee to be achieved pursuant to the Vesting Schedule set forth in the Grant Notice, subject to any applicable tax withholding as provided in Section 1.2, but in no event shall such Dividend Equivalents be paid later than the March 15 of the calendar year following the year in which the related dividend or distribution is declared.
		

		
			2.2    Termination of Eligibility for Dividend Equivalents.  In no event shall Holder be eligible for a Dividend Equivalent (i) with respect to any dividend or distribution the record date for which is after Holder’s Termination of Service, or (ii) with respect to any PSU that has been terminated prior to the applicable record date of the dividend or distribution for any reason.
		

		
			2.3    No Adjustments.  Notwithstanding anything to the contrary contained in Section 13.2 of the Plan, no adjustment shall be made to any unvested PSUs pursuant to Section 13.2 of the Plan with 
		

		

		

		 

		

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			respect to any dividend or distribution to the extent that Dividend Equivalents are paid to Holder in connection therewith. 
		

		
			2.4    Separate Payments.  Dividend Equivalents and any amounts that may become distributable in respect thereof shall be treated separately from the PSUs and the rights arising in connection therewith for purposes of the designation of time and form of payments required by Section 409A of the Code.
		

		
			ARTICLE III.
OTHER PROVISIONS
		

		
			3.1    Award and Interests Not Transferable.  This Award, including the PSUs awarded hereunder and the corresponding Dividend Equivalents awarded hereunder, and the rights and privileges conferred hereby, may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution, unless and until the Shares issuable pursuant to the Award have been issued, and all restrictions applicable to such Shares have lapsed. This Award and the rights and privileges conferred hereby, including the PSUs and the corresponding Dividend Equivalents awarded hereunder, shall not be liable for the debts, contracts or engagements of Holder or his or her successors in interest and shall not be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence.
		

		
			3.2    Rights as Stockholder.  Neither Holder nor any person claiming under or through Holder shall have any of the rights or privileges of a stockholder of the Company in respect of any Shares issuable hereunder unless and until certificates representing such Shares (which may be in uncertificated form) will have been issued and recorded on the books and records of the Company or its transfer agents or registrars, and delivered to Holder (including through electronic delivery to a brokerage account).   After such issuance, recordation and delivery, Holder shall have all the rights of a stockholder of the Company, including with respect to the right to vote the Shares and the right to receive any cash or share dividends or other distributions paid to or made with respect to the Shares. 
		

		
			3.3    Forfeiture and Claw-Back Provisions.  Holder hereby acknowledges and agrees that the PSUs and any Shares issuable upon distribution thereof are subject to the provisions of Section 11.5 of the Plan.
		

		
			3.4    Adjustments.  Holder acknowledges that the PSUs, including the vesting of the PSUs and the number of Shares issuable upon distribution thereof, are subject to adjustment in the discretion of the Administrator upon the occurrence of certain events as provided in this Agreement and Section 13.2 of the Plan.
		

		
			3.5    No Right to Continued Service or Awards; Not a Contract of Employment or Service.  
		

		
			(a)    Nothing in the Plan, the Grant Notice, or this Agreement shall confer upon Holder any right to continue in the employ or service of the Company or any Affiliate, shall form part of any contract of employment or service between the Company or any Affiliate and Holder, or shall interfere with or restrict in any way the rights of the Company and any Affiliate, which rights are hereby expressly reserved, to discharge or terminate the services of Holder at any time for any reason whatsoever, except to the extent expressly provided otherwise in a written agreement between the Company or any Affiliate and Holder. 
		

		

		

		 

		

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			(b)    The grant of the PSUs is a one-time benefit and does not create any contractual or other right or interest to receive a grant of Awards or benefits in lieu of Awards in the future or otherwise.  Future grants, if any, will be at the sole discretion of the Company.  In addition, the value of the PSUs and the Shares issuable upon distribution thereof is an extraordinary item of compensation outside the scope of any employment contract.  As such, neither the PSUs, the Dividend Equivalents nor the Shares issuable upon distribution thereof are part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments. The future value of the underlying Common Stock is unknown and cannot be predicted with certainty.
		

		
			(c)    The rights or opportunity granted to Holder to receive an Award of PSUs or Dividend Equivalents shall not give Holder any rights or additional rights and if Holder ceases to be employed by Holder’s employer, Holder shall not be entitled to compensation for the loss of any right or benefit or prospective right or benefit under the Plan (including, in particular but not by way of limitation, any Awards held by him or her which lapse or are forfeited by reason of his or her ceasing to be employed by Holder’s employer) whether by way of damages for unfair dismissal, wrongful dismissal, breach of contract or otherwise.  
		

		
			(d)    Holder shall not be entitled to any compensation or damages for any loss or potential loss which he or she may suffer by reason of being unable to acquire or retain the PSUs, the Dividend Equivalents or the Shares issuable upon distribution thereon, or any interest in the PSUs, Dividend Equivalents or Shares in consequence of the loss or Termination of Service with Holder’s employer for any reason whatsoever (whether or not the termination is ultimately held to be wrongful or unfair).
		

		
			(e)    Holder acknowledges that a fundamental purpose of the Award of PSUs and Dividend Equivalents represented by this Agreement is to provide an incentive for Holder to maintain continued employment with Holder’s employer (as to which the Company has an interest in maintaining management stability).
		

		
			(f)    By accepting the grant of the PSUs and Dividend Equivalents and not renouncing it, Holder is deemed to have agreed to the provisions of this Section 3.5.
		

		
			3.6    Governing Law; Severability; Venue.   The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.  Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.  Any suit brought with respect to the Award, the Grant Notice, the Plan or this Agreement shall be brought in the state or federal courts sitting in San Diego County, California, the parties hereby waiving any claim or defense that such forum is not convenient or proper.  The jurisdiction agreement contained in this Section 3.6 is made for the benefit of the Company only, and the Company retains the right to bring proceedings in any other court of competent jurisdiction.  By signing the Grant Notice, Holder is deemed to have agreed to submit to such jurisdiction.  THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING.
		

		
			3.7    Conformity to Securities Laws.  Holder acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act, and any and all regulations and rules promulgated thereunder by the U.S. Securities and Exchange Commission, including, without limitation, Rule 16b-3 under the Exchange Act.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Awards are granted, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law, the Plan, the 
		

		

		

		 

		

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			Grant Notice and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
		

		
			3.8    Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the Plan or this Agreement, if Holder is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and the Award shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule.  To the extent permitted by Applicable Law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
		

		
			3.9    Amendment, Suspension and Termination.  To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator, provided, that, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall impair any rights or obligations under the Award in any material way without the prior written consent of Holder.
		

		
			3.10    Notices.  Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the Company’s corporate headquarters or to the then-current email address for the Secretary of the Company, and any notice to be given to Holder shall be addressed to Holder at the most recent physical or email address for Holder listed in the Company’s personnel records. By a notice given pursuant to this Section 3.10, either party may hereafter designate a different address for notices to be given to that party. Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.
		

		
			3.11    Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Holder and his or her heirs, executors, administrators, successors and assigns.
		

		
			3.12    Section 409A.  This Agreement is not intended to provide for any deferral of compensation subject to Section 409A of the Code, and, accordingly, the Shares issuable pursuant to the PSUs and the Dividend Equivalents corresponding thereto shall be distributed to Holder no later than the later of:  (a) the fifteenth (15th) day of the third month following Executive’s first taxable year in which such PSUs or Dividend Equivalents, as applicable, are no longer subject to a substantial risk of forfeiture, and (b) the fifteenth (15th) day of the third month following first taxable year of the Company in which such benefit is no longer subject to substantial risk of forfeiture, as determined in accordance with Section 409A of the Code and any Treasury Regulations and other guidance issued thereunder.  To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder.  Each payment under this Agreement shall be considered a separate and distinct payment for purposes of Section 409A of the Code.  
		

		
			3.13    Paperless Administration.  By accepting this Award, Holder hereby agrees to receive documentation related to the Award by electronic delivery, such as a system using an internet website or interactive voice response, maintained by the Company or a third party designated by the Company. 
		

		
			3.14    Entire Agreement.  The Plan, the Grant Notice and this Agreement constitute the entire agreement of the parties and supersede in their entirety all oral, implied or written promises, statements, understandings, undertakings and agreements between the Company and Holder with respect to the subject 
		

		

		

		 

		

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			matter hereof, including without limitation, the provisions of any employment agreement or offer letter regarding equity awards to be awarded to Holder by the Company, or any other oral, implied or written promises, statements, understandings, undertakings or agreements by the Company or any of its representatives regarding equity awards to be awarded to Holder by the Company.
		

		
			3.15    Data Protection.    Holder hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Holder’s “Data” (as defined below) by and among, as applicable, the Company and its Affiliates (the “Company Group”) for the purpose of administering his or her participation in the Plan.  For purposes of this Section 3.15, “Data” means Holder’s personal information, including, but not limited to, Holder’s name, home address and telephone number, date of birth, social security number, or other identification number, salary, nationality, job title, any Shares of stock or directorships held in the Company and details of all Awards held by Holder.  Holder understands that Data will be transferred to such stock plan service providers as may be selected by the Company, which are assisting the Company with the implementation, administration and management of the Plan.  Holder understands that the recipients of the Data may be subject to different data privacy laws and protections than those in Holder’s country.  Holder authorizes the Company Group and any other possible recipients which may assist the Company with administering the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of administering Holder’s participation in the Plan. Holder understands that he or she may, at any time, request additional information about this consent (including a list with the names and addresses of all recipients of the Data), or withdraw this consent, by contacting in writing Holder’s local human resources representative.  Withdrawal of this consent may affect Holder’s ability to participate in the Plan.
		

		
			3.16    Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.
		

		
			3.17    Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
		

		 

		

			A-7lnn-ex101_70.htm

 

Exhibit 10.1

 

 

Certain identified information has been excluded from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

 

 

 

 

 

 

 

 

 

LINDSAY CORPORATION

MANAGEMENT INCENTIVE PLAN (MIP)

2020

Plan Year

 

 

 

 

 

 

 

 

 

 

	
 
	
Senior Vice President - HR/Date

	
 
	
 

	
 
	
 

	
 
	
Chief Financial Officer/Date

	
 
	
 

	
 
	
 

	
 
	
Chief Executive Officer/Date

 

 

 

 

Table of Contents

 

	
1.
	
Purpose
	
 
	
1

	
2.
	
Definitions
	
 
	
1

	
3.
	
Effective Date
	
 
	
1

	
4.
	
Eligibility for Participation
	
 
	
2

	
5.
	
Enrollment in the Plan
	
 
	
2

	
6.
	
Determination of Target Payout Levels
	
 
	
3

	
7.
	
Basis of Awards
	
 
	
4&5

	
8.
	
Changes in Employment Status
	
 
	
5

	
9.
	
Administration
	
 
	
6

	
10.
	
Attachments
	
 
	
7

 

 

 

 

 

1.Purpose

 

The purpose of the Management Incentive Plan (the “Plan”) is to:

 

	
 
	
•
	
Encourage performance consistent with the Company’s business strategy. 

 

	
 
	
•
	
Focus on near-term performance results as well as progress toward the achievement of long-term objectives.

 

	
 
	
•
	
Strengthen the link between performance and pay by delivering awards based on measurable corporate and individual goals.

 

 

2.Definitions

 

The terms used in this Plan have the meanings set forth below.

 

	
 
	
A.
	
“Company” shall mean Lindsay Corporation.

 

	
 
	
B.
	
“Committee” shall mean the Human Resources and Compensation Committee of the Company’s Board of Directors.

 

	
 
	
C.
	
“Financial Performance Component” shall mean the portion of a Participant’s Plan award that is based on the Company’s and specific Market financial performance as defined in Section 7B.

 

	
 
	
D.
	
"Named Executive Officers" shall mean the executives of the Company listed in the Executive Compensation section of the Company’s Proxy Statement, other executive officers of the Company for SEC reporting purposes and any other elected officers.

 

	
 
	
E.
	
“Participant” shall mean a key employee eligible for awards under the terms outlined in Section 4 of this Plan.

 

	
 
	
F.
	
“Plan” shall mean Lindsay Corporation Management Incentive Plan.

 

	
 
	
G.
	
“Strategic Goal Performance Component” shall mean the portion of a Participant’s Plan award that is based on Company performance relative to certain strategic goals established in accordance with Section 7C.

 

 

3.Effective Date

 

The Plan shall be effective as of September 1, 2019 and will be in effect for the 2020 bonus year.  The 2020 bonus year is defined as September 1, 2019 through August 31, 2020.

 

 

1

 

4.Eligibility for Participation

 

	
 
	
A.
	
Participation in the Plan is limited to individuals in positions which have significant responsibility for and impact on the Company’s corporate performance.

 

	
 
	
B.
	
Only the Named Executive Officers are eligible to be considered for participation in the Plan.  

 

	
 
	
C.
	
Participation in the Plan does not guarantee or entitle any employee to participate in any bonus plan enacted in the future.  Participation in the Plan at any target bonus level does not guarantee or entitle any employee to be eligible to participate at any similar target bonus level in any bonus plan which may be enacted in the future.

 

 

5.Enrollment in the Plan

 

	
 
	
A.
	
Initial Enrollment

 

At the beginning of the Plan year, each Participant must be enrolled in the Plan subject to the approvals and eligibility criteria set forth in Sections 4 and 6. The enrollment process is as follows: 

 

i.Plan Participants will participate in the Plan at the target percentage set forth opposite his or her name on Exhibit A. 

 

ii.The Company’s Chief Executive Officer will review the participant list and projected bonus costs of enrolled employees with the Committee.  The Committee provides final approval on the aggregate potential cost of the Plan.

 

	
 
	
B.
	
Mid-year Enrollment

 

When hiring or promoting employees during the Plan year who may be eligible for participation in the Plan, the following procedures must be followed:

 

i.Prior to the commencement of the recruiting or promotion process, the hiring manager consults with Human Resources to determine the position’s eligibility for participation in the Plan and the recommended target bonus amount.

 

ii.Offer letters indicating bonus Plan participation and target bonus award opportunities to new hires and/or promoted employees must be reviewed by the CEO or, in the case of a Named Executive Officer, by the Committee.  Target bonus recommendations must be approved before communication to a prospective Participant.  Generally, employees hired or promoted during the fourth quarter 2020 are not eligible to participate in the 2020 Plan.

 

 

2

 

6.Determination of Target Payout Levels

 

	
 
	
A.
	
Incentive awards will be calculated as a percentage of the Participant’s annual base salary received during the Plan year, provided that annual base salary increases which are made during the first quarter of the Plan year will be treated for purposes of calculating a Participant’s bonus as if they had been made at the beginning of the Plan year.  The impact of promotions or other adjustments to base pay made after the annual pay adjustment noted above will be prorated for the time in effect.  While award amounts will vary based on the range of award opportunity and an assessment of individual performance results, the target award opportunities for each Participant are set forth opposite his or her name on Exhibit A.  Actual participation is subject to approval by the CEO and by the Committee.  Actual participation is based on an assessment of the individual's position impact on the organization.

 

	
 
	
B.
	
If a Participant’s Plan target award opportunity (Target % of Salary as set forth above) changes due to promotion into a grade level with a higher target bonus, the Participant’s bonus will be calculated based on his or her annual salary during the Plan year and a pro-rated bonus award.  The pro-rated bonus award will reflect the portion of the Plan year spent in each grade level (e.g., 26 weeks at 40% and 26 weeks at 50%).  In evaluating the performance of Participants who change positions during the Plan year, consideration will be given to the length of time and results in each position.  Actual award decisions will be made by the CEO or, in the case of a Named Executive Officer, by the Committee.  Generally, fourth quarter promotions will not result in an increase in a Participant’s target award opportunity. 

 

	
 
	
C.
	
Examples of various award calculations are included with this Plan document as Attachment A.

 

	
 
	
D.
	
The Committee will determine the award payments to the Named Executive Officers.

 

	
 
	
E.
	
Award payments will be calculated on an annual basis and paid in accordance with the Company’s normal payroll cycle.  Payments will be made within 75 days following the Plan year.  The payment date may be changed at any time and for any reason at the discretion of the CEO, or in the case of a Named Executive Officer, with approval of the Committee, but may not be later than March 15 following the end of the Plan year for which the award is paid.

 

 

3

 

7.Basis of Awards

 

	
 
	
A.
	
Measurable performance objectives for each Plan Participant will be established at the beginning of the Plan year (or at mid-year for mid-year hires or newly eligible employees).  In 2020, consideration will be given to:

 

i.Financial Performance Component:  Company and Market financial performance vs. Plan performance objectives in accordance with Section 7B.

ii.Strategic Goal Performance Component:  Company performance relative to strategic goals established in accordance with Section 7C. 

iii.Financial and Strategic Goal Performance Components will be added to reach a Participant’s total bonus. The relative weighting between these Components for each Participant is set forth opposite his or her name on Exhibit A.

 

	
 
	
B.
	
At the beginning of the Plan year, the objectives for the Financial Performance Component are identified and approved by the Committee and are set forth on Exhibit B.

 

i.Recommended award amounts may range from 0 - 200% of the Financial Performance Component of the Participant’s target award, based on performance.   

ii.Percentages between the threshold, intermediate, target, and maximum award will be interpolated.

iii.In the event of an acquisition, actual results for the selected financial performance metrics (e.g., revenue, operating margin) will be adjusted by subtracting the Board-approved business case for each acquisition for purposes of award payout calculations, unless the Committee approves a modification to include any such items.  Any transaction costs associated with any acquisition considered, pursued or closed shall be added back to profitability.

iv.In the event of a divestiture, actual results for the selected financial performance metrics will be adjusted by including the Board-approved budget (and removing actual performance results) for each divestiture for purposes of award payout calculations, unless the Committee approves a modification to any such items.  If a planned divestiture is not included in the budget, its financial performance metrics will not be included in the calculation of the Financial Performance Component if the divestiture is not complete by the end of the fiscal year.  Any transaction costs associated with any divestiture considered, pursued or closed shall be added back to profitability.  

v.Award payout calculations shall exclude the positive or negative impact of any adjustments to the accrual for environmental remediation liability or unbudgeted expenses related to the existing contamination at the Lindsay facility as disclosed in the Company’s SEC filings.

4

 

vi.Award payout calculations shall be adjusted to remove Project Foundation consulting fees, if any, from the resulting operating margin calculation which were not included in the annual budget.

vii.Award payout calculations may be adjusted for any items of gain, loss or expense (i) from non-cash impairments; (ii) related to loss contingencies identified in the Company’s 10-K; (iii) that are unusual in nature or infrequent in occurrence; (iv) related to the disposal of a segment of a business; or (v) related to a change in accounting principle. The Plan also permits adjustments to remove the effects of changes in the tax law.

 

	
 
	
C.
	
At the beginning of the Plan year, the objectives for the Strategic Goal Performance Component are identified and approved by the Committee and are set forth on Exhibit B.  

 

i.Objectives under the Strategic Goal Performance Component may be linked to team-based goals, if appropriate.

 

ii.Recommended award amounts may range from 0% - 200% of the target amount under the Strategic Goal Performance Component.  Recommended award amounts will be based on an assessment of the Participant or Company’s performance, as applicable, relative to objectives established under the Strategic Goal Performance Component as set forth on Exhibit B. 

 

iii.The “Payout (as % of Target Individual Performance Component)” represents the payout relative to target award for the Strategic Goal Performance Component of the Plan.

 

8.Changes in Employment Status

 

	
 
	
A.
	
Participants who cease to be employees of the Company during the Plan year will not be eligible to receive an award.  Only active employees on the date that the bonus is paid will be eligible to receive an award.  Any exceptions will require the approval of the CEO, or in the case of a Named Executive Officer, the Committee.

 

	
 
	
B.
	
In the event that a Participant transfers out of an eligible position into an ineligible position within the Company, the employee may be eligible for a prorated bonus award based upon the approval of the CEO, or in the case of a Named Executive Officer, the Committee.

 

	
 
	
C.
	
In all cases awards will be calculated and paid according to the provisions in Sections 6 and 7 of this Plan document.

 

 

5

 

9.Administration

 

	
 
	
A.
	
General authority for Plan administration and responsibility for ongoing Plan administration will rest with the Committee of the Company’s Board of Directors.  The Committee has sole authority for decisions regarding interpretation of the terms of this Plan.

 

	
 
	
B.
	
The Company reserves the right to amend or change the Plan in whole or in part at any time during the Plan year.  Amendments to the Plan require the approval of the Committee.

 

	
 
	
C.
	
Participation in the Plan does not constitute a contract of employment nor a contractual agreement of payment.  It shall not affect the right of the Company to discharge, transfer, or change the position of a Participant.  The Plan shall not be construed to limit or prevent the Company from adopting or changing, from time to time, any rules, standards or procedures affecting the Participant’s employment with the Company or any Company affiliate, including those which affect bonus payouts.

 

	
 
	
D.
	
If any provision of this Plan is found to be illegal, invalid or unenforceable under present or future laws, that provision shall be severed from the Plan.  If such a provision is severed, this Plan shall be construed and enforced as if the severed provision had never been part of it and the remaining provisions of this Plan shall remain in full force and effect and shall not be affected by the severed provisions or by its severance from this Plan.  In place of any severed provision there shall be added automatically as part of this Plan a provision as similar in terms to the severed provision as may be possible and be legal, valid and enforceable.

 

	
 
	
E.
	
This is not an ERISA plan.  This is a bonus program. 

6

 

ATTACHMENT A

Award Calculation Guidelines

 

The following examples are to be used as guidelines in calculating bonus awards at the end of the 2020 Plan year.  Managers should use their discretion in calculating actual bonus awards and may consider exceptions to the calculations below when necessary.  Any such exceptions must be fully documented and are subject to review and approval by the Chief Executive Officer, or in the case of a Named Executive Officer, the Committee.

 

	
Full Year Participation
	
 
	
Mid-Year Promotion
	
 

	
 
	
 
	
 
	
 

	
Strategic Goal Performance Score:
	
100
	
Strategic Goal Performance Score:
	
100

	
Financial Performance Score:
	
100.00%
	
Financial Performance Score:
	
100.00%

	
 
	
 
	
 
	
 

	
 
	
 
	
Pre-Promotion Calculation
	
 

	
Strategic Goal Score
	
100
	
Strategic Goal Score
	
100

	
Total Incentive Plan %
	
40%
	
Total Incentive Plan %
	
40%

	
% Strategic to Total Incentive Plan Participation
	
20%
	
% Strategic to Total Incentive Plan Participation
	
20%

	
Base Salary
	
$150,000
	
Base Salary
	
$150,000

	
Strategic Goal Performance Payout
	
$12,000
	
Strategic Goal Performance Payout
	
$12,000

	
 
	
 
	
 
	
 

	
Financial Score
	
100%
	
Financial Score
	
100%

	
Total Incentive Plan %
	
40%
	
Total Incentive Plan %
	
40%

	
% Financial to Total Incentive Plan Participation
	
80%
	
% Financial to Total Incentive Plan Participation
	
80%

	
Base Salary
	
$150,000
	
Base Salary
	
$150,000

	
Financial Performance Payout
	
$48,000
	
Financial Performance Payout
	
$48,000

	
Incentive Amount
	
$60,000
	
Incentive Amount
	
$60,000

	
Time Period (weeks)
	
52
	
Time Period (weeks)
	
26

	
Proration Factor
	
1
	
Proration Factor
	
0.5

	
Prorated Payout for Time Period
	
$60,000
	
Prorated Payout for Time Period
	
$30,000

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
Partial Year Participation
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
Strategic Goal Performance Score:
	
100
	
 
	
 

	
Financial Performance Score:
	
100.00%
	
 
	
 

	
 
	
 
	
Post Promotion Calculation
	
 

	
Strategic Goal Score
	
100
	
Strategic Goal Score
	
100

	
Total Incentive Plan %
	
40%
	
Total Incentive Plan %
	
50%

	
% Strategic to Total Incentive Plan Participation
	
20%
	
% Strategic to Total Incentive Plan Participation
	
20%

	
Base Salary
	
$150,000
	
Base Salary
	
$200,000

	
Strategic Goal Performance Payout
	
$12,000
	
Strategic Goal Performance Payout
	
$20,000

	
 
	
 
	
 
	
 

	
Financial Score
	
100%
	
Financial Score
	
100%

	
Total Incentive Plan %
	
40%
	
Total Incentive Plan %
	
50%

	
% Financial to Total Incentive Plan Participation
	
80%
	
% Financial to Total Incentive Plan Participation
	
80%

	
Base Salary
	
$150,000
	
Base Salary
	
$200,000

	
Financial Performance Payout
	
$48,000
	
Financial Performance Payout
	
$80,000

	
Incentive Amount
	
$60,000
	
Incentive Amount
	
$100,000

	
Time Period (weeks)
	
30
	
Time Period (weeks)
	
26

	
Proration Factor
	
0.576923
	
Proration Factor
	
0.5

	
Prorated Payout for Time Period
	
$34,615
	
Prorated Payout for Time Period
	
$50,000

	
 
	
 
	
 
	
 

	
 
	
 
	
Total Prorated Incentive Amount
	
$80,000

	
 
	
 
	
 
	
 

 

 

7

 

[**The appendix that includes Financial Performance and Strategic Goal Component Elements and Weighting for Fiscal Year 2020 constitutes confidential information and has been omitted from this filing because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.**]

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