Document:

Exhibit 10.1

 

DIRECTORS’ DEFERRED COMPENSATION PLAN

 

OF

 

DANVERS BANCORP, INC.

 

 

 

 

Effective as of January 1, 2011

 

 

TABLE OF CONTENTS

 

	
 
  	
 
  	
Page
  
	
 
  	
 
  
	
ARTICLE I
  	
 
  
	
DEFINITIONS
  	
 
  
	
 
  	
 
  	
 
  
	
Section 1.1
  	
Acceleration Event
  	
1
  
	
Section 1.2
  	
Administrator
  	
1
  
	
Section 1.3
  	
Beneficiary
  	
1
  
	
Section 1.4
  	
Board
  	
1
  
	
Section 1.5
  	
Code
  	
1
  
	
Section 1.6
  	
Company
  	
1
  
	
Section 1.7
  	
Change in Control Event
  	
1
  
	
Section 1.8
  	
Cash Compensation
  	
1
  
	
Section 1.9
  	
Committee
  	
1
  
	
Section 1.10
  	
Compensation
  	
1
  
	
Section 1.11
  	
Disability
  	
2
  
	
Section 1.12
  	
Effective Date
  	
2
  
	
Section 1.13
  	
Equity Compensation
  	
2
  
	
Section 1.14
  	
Fair Market Value
  	
2
  
	
Section 1.15
  	
Investment Benchmark
  	
2
  
	
Section 1.16
  	
ISO Share
  	
2
  
	
Section 1.17
  	
Memorandum Account
  	
2
  
	
Section 1.18
  	
Memorandum Subaccount
  	
3
  
	
Section 1.19
  	
Non-Employee Director
  	
3
  
	
Section 1.20
  	
Option-Related Compensation
  	
3
  
	
Section 1.21
  	
Participant
  	
3
  
	
Section 1.22
  	
Participating Company
  	
3
  
	
Section 1.23
  	
Phantom Share
  	
3
  
	
Section 1.24
  	
Plan
  	
3
  
	
Section 1.25
  	
Previously Acquired Share
  	
3
  
	
Section 1.26
  	
Share
  	
3
  
	
Section 1.27
  	
Service Recipient
  	
3
  
	
Section 1.28
  	
Unforeseeable Emergency
  	
4
  
	
 
  	
 
  	
 
  
	
ARTICLE II
  	
 
  
	
PARTICIPATION
  	
 
  
	
 
  	
 
  	
 
  
	
Section 2.1
  	
Election to Participate
  	
4
  
	
Section 2.2
  	
Election to Defer Cash Compensation
  	
4
  
	
Section 2.3
  	
Election to Defer Equity Compensation
  	
4
  
	
Section 2.4
  	
Election to Defer Option-Related Compensation
  	
5
  
	
Section 2.5
  	
Changes in Participation
  	
5
  

 

i

 

	
ARTICLE III
  	
 
  
	
ACCOUNTING FOR DEFERRED AMOUNTS
  	
 
  
	
 
  	
 
  	
 
  
	
Section 3.1
  	
In General
  	
6
  
	
Section 3.2
  	
Adjustments to Memorandum Accounts
  	
6
  
	
Section 3.3
  	
Vesting
  	
8
  
	
 
  	
 
  	
 
  
	
ARTICLE IV
  	
 
  
	
TRUST
  	
 
  
	
 
  	
 
  	
 
  
	
Section 4.1
  	
Establishment of Trust.
  	
8
  
	
Section 4.2
  	
Contributions to Trust; Investments
  	
8
  
	
Section 4.3
  	
Unfunded Character of Plan
  	
8
  
	
 
  	
 
  	
 
  
	
ARTICLE V
  	
 
  
	
LIFE INSURANCE
  	
 
  
	
 
  	
 
  	
 
  
	
Section 5.1
  	
Authority to Purchase Life Insurance
  	
9
  
	
Section 5.2
  	
Cooperation to Effect Purchases
  	
9
  
	
Section 5.3
  	
Ownership of Policies
  	
9
  
	
Section 5.4
  	
Effect of Termination of Participation
  	
10
  
	
 
  	
 
  	
 
  
	
ARTICLE VI
  	
 
  
	
DISTRIBUTIONS
  	
 
  
	
 
  	
 
  	
 
  
	
Section 6.1
  	
Early Distributions
  	
10
  
	
Section 6.2
  	
Scheduled Distributions to Participants
  	
10
  
	
Section 6.3
  	
Distributions to Beneficiaries
  	
11
  
	
Section 6.4
  	
Mandatory Cashout of Small Balances
  	
 
  
	
Section 6.5
  	
Restrictions on Payments to Key Employees
  	
12
  
	
 
  	
 
  	
 
  
	
ARTICLE VII
  	
 
  
	
ADMINISTRATION
  	
 
  
	
 
  	
 
  	
 
  
	
Section 7.1
  	
Administrator
  	
12
  
	
Section 7.2
  	
Committee Responsibilities
  	
13
  
	
Section 7.3
  	
Claims Procedure
  	
14
  
	
Section 7.4
  	
Claims Review Procedure
  	
14
  
	
Section 7.5
  	
Other Administrative Provisions
  	
14
  
	
 
  	
 
  	
 
  
	
ARTICLE VIII
  	
 
  
	
AMENDMENT AND TERMINATION
  	
 
  
	
 
  	
 
  	
 
  
	
Section 8.1
  	
Amendment by the Company
  	
15
  
	
Section 8.2
  	
Termination
  	
15
  
	
Section 8.3
  	
Amendment or Termination by Other Companies
  	
16
  

 

ii

 

	
ARTICLE IX
  	
 
  
	
MISCELLANEOUS PROVISIONS
  	
 
  
	
 
  	
 
  	
 
  
	
Section 9.1
  	
Notice and Election
  	
16
  
	
Section 9.2
  	
Construction and Language
  	
16
  
	
Section 9.3
  	
Headings
  	
17
  
	
Section 9.4
  	
Non-Alienation of Benefits
  	
17
  
	
Section 9.5
  	
Indemnification
  	
17
  
	
Section 9.6
  	
Severability
  	
17
  
	
Section 9.7
  	
Waiver
  	
17
  
	
Section 9.8
  	
Governing Law
  	
17
  
	
Section 9.9
  	
Withholding
  	
18
  
	
Section 9.10
  	
No Deposit Account
  	
18
  
	
Section 9.11
  	
Rights of Participants
  	
18
  
	
Section 9.12
  	
Status of Plan under ERISA
  	
18
  
	
Section 9.13
  	
Successors and Assigns
  	
18
  
	
Section 9.14
  	
Non-dilution Provisions
  	
18
  
	
Section 9.15
  	
Compliance with Section 409A of the Code
  	
19
  

 

iii

 

DIRECTORS’ DEFERRED COMPENSATION PLAN

 

OF

 

DANVERS BANCORP, INC.

 

ARTICLE I
 DEFINITIONS

 

The following definitions shall apply for the purposes of this Plan unless a different meaning is clearly indicated by the context:

 

Section 1.1            Acceleration Event means, with respect to a Participant, any of the events described in section 6.1 on the basis of which the Administrator may permit acceleration of the payment of the balance credited to the Participant’s Memorandum Account.

 

Section 1.2            Administrator means any person, committee, corporation or organization appointed by the Committee to perform the responsibilities assigned to the Administrator hereunder.

 

Section 1.3            Beneficiary means the person or persons designated by a Participant under section 6.3 of the Plan.

 

Section 1.4            Board means the Board of Directors of the Company.

 

Section 1.5            Code means the Internal Revenue Code of 1986 (including the corresponding provisions of any succeeding law).

 

Section 1.6            Company means Danvers Bancorp, Inc. or any successor thereto.

 

Section 1.7            Change in Control Event means, with respect to a Participant: (a) a change in ownership of the Participant’s Service Recipient; (b) a change in effective control of the Participant’s Service Recipient; or (c) a change in the ownership of a substantial portion of the assets of the Participant’s Service Recipient. The existence of a Change in Control Event shall be determined by the Administrator in accordance with section 409A of the Code and the regulations thereunder.

 

Section 1.8            Cash Compensation means the monetary compensation payable to a Non-Employee Director for service as a member of the board of directors of a Participating Company, including retainer payments and fees for attendance at board and committee meetings.

 

Section 1.9            Committee means the Compensation Committee of the Board.

 

Section 1.10         Compensation means, during any period, the compensation payable to a Non-Employee Director by any Participating Company that is reportable to the Internal Revenue Service as compensation for such period on Form 1099 in the absence of an election to defer receipt thereof under the terms of this Plan. Compensation shall include Cash Compensation,

 

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Equity Compensation and Option-Related Compensation. Compensation shall not include amounts that become payable under this Plan.

 

Section 1.11         Disability means, with respect to a Participant, any medically determinable physical or mental impairment which can be expected to result in death or to last for a continuous period of at least twelve (12) months and as a result of which either: (a) the Participant is unable to engage in any substantial gainful activity or (b) the Participant has been receiving income replacement benefits for a period of at least three (3) months under an accident and health plan covering employees of the Participant’s employer. The existence of a Disability shall be determined by the Administrator in accordance with section 409A and the regulations thereunder.

 

Section 1.12         Effective Date means January 1, 2011.

 

Section 1.13         Equity Compensation means, with respect to any Participant, that portion of the Participant’s Compensation, other than Option-Related Compensation, that is paid to him in Shares or the amount of which is based upon the value, or increase in value, of a Share.

 

Section 1.14         Fair Market Value means, with respect to a Share on a specified date:

 

(a)           the final reported sales price on the date in question (or if there is no reported sale on such date, on the last preceding date on which any reported sale occurred) as reported in the principal consolidated reporting system with respect to securities listed or admitted to trading on the principal United States securities exchange on which the Shares are listed or admitted to trading; or

 

(b)           if the Shares are not listed or admitted to trading on any such exchange, the closing bid quotation with respect to a Share on such date on the National Association of Securities Dealers Automated Quotations System, or, if no such quotation is provided, on another similar system, selected by the Committee, then in use; or

 

(c)           if sections 1.14(a) and (b) are not applicable, the fair market value of a Share as the Administrator may determine.

 

Section 1.15         Investment Benchmark means a hypothetical investment classification in which a Participant’s Memorandum Account shall be deemed to be invested for purposes of crediting or charging earnings, losses, appreciation or depreciation with respect to the Participant’s Memorandum Account, in accordance with section 3.2. The Investment Benchmark shall be interest at an annual rate equal to the rate on the highest yielding certificate of deposit issued by Danversbank during the year or any other investment classification set as an option by the Committee for this Plan.

 

Section 1.16         ISO Share means a Share acquired upon exercise of an incentive stock option (within the meaning of section 422 of the Code).

 

Section 1.17         Memorandum Account means, with respect to a Participant, a bookkeeping account maintained by the Company to which is credited the amount of the Participant’s deferred Compensation, together with any earnings and appreciation thereon, and

 

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against which are charged any losses, depreciation or distributions thereof, pursuant to Article III.

 

Section 1.18         Memorandum Subaccount means, with respect to a Participant, a portion of the Participant’s Memorandum Account that is separately accounted for by the Company due to the application of unique provisions relating to the applicable distribution schedule or Investment Benchmark(s).

 

Section 1.19         Non-Employee Director means a voting member of the board of directors of a Participating Company who is not an officer or employee of any Participating Company.

 

Section 1.20         Option-Related Compensation means, with respect to an option to purchase Shares that is exercised by paying the entire exercise price therefor by actual or constructive delivery of Previously Acquired Shares, a number of Shares equal to the excess of (a) the total number of Shares as to which the option is exercised, over (b) the number of Shares actually or constructively delivered in payment of the exercise price.

 

Section 1.21         Participant means a Non-Employee Director or former Non-Employee Director who has a Memorandum Account under the Plan.

 

Section 1.22         Participating Company means the Company, Danversbank and any other company which, with the prior approval of the Board, may adopt this Plan.

 

Section 1.23         Phantom Share means a unit of value that, at any relevant date, corresponds to the Fair Market Value of a Share.

 

Section 1.24         Plan means the Directors’ Deferred Compensation Plan of Danvers Bancorp, Inc.

 

Section 1.25         Previously Acquired Share means, with respect to a Participant on any date: (a) a Share (other than an ISO Share) that was acquired by the Participant more than six (6) months prior to such date and has been held by the Participant continuously since such acquisition and (b) an ISO Share that was acquired by the Participant upon the exercise, at least one year prior to such date, of an incentive stock option (within the meaning of section 422 of the Code) that was granted to him at least two (2) years prior to such date and has been held by the Participant continuously since such acquisition.

 

Section 1.26         Share means a share of Common Stock, par value $.01 per share, of the Company.

 

Section 1.27         Service Recipient means with respect to a Participant on any date: (a) the corporation for which the Participant is performing services on such date; (b) all corporations that are liable to the Participant for the benefits due to him under the Plan; (c) a corporation that is a majority shareholder of a corporation described in section 1.27(a) or (b); or (d) any corporation in a chain of corporations each of which is a majority shareholder of another corporation in the chain, ending in a corporation described in section 1.27(a) or (b).

 

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Section 1.28         Unforeseeable Emergency means, with respect to a Participant, a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse or a dependent (within the meaning of section 152(e) of the Code) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The existence of an Unforeseeable Emergency shall be determined by the Administrator in accordance with section 409A of the Code and the regulations hereunder.

 

ARTICLE II
 PARTICIPATION

 

Section 2.1            Election to Participate.

 

Any Non-Employee Director may elect to become a Participant in the Plan by submitting to the Administrator a written election, on a form prescribed by the Administrator, to defer the receipt of all or any portion of his Compensation in the manner described in sections 2.2 through 2.5; provided, however, that no Non-Employee Director shall be permitted to defer receipt of Compensation that is required to be withheld and remitted to any federal, state or local taxing authority pursuant to any requirement for the collection of tax at the source or that is required to fund any contribution or premium payment or co-payment required of the Non-Employee Director as a condition of participation in any employee benefit plan maintained by the Company or any other Participating Company at the time the election is made. A Non-Employee Director who elects to become a Participant may make separate deferral elections with respect to Cash Compensation, Equity Compensation and Option-Related Compensation.

 

Section 2.2            Election to Defer Cash Compensation.

 

An election to defer Cash Compensation shall specify the amount or percentage of each payment of Cash Compensation to be deferred, shall be made on or before the last day of any calendar year and shall be effective for the calendar year following the calendar year in which such election is made and all subsequent calendar years unless status as a Non-Employee Director ceases or a change in the rate of deferral is elected pursuant to section 2.5; provided, however, that an initial election to defer Cash Compensation made by a Non-Employee Director and filed with the Administrator during the thirty (30) day period immediately following the later of the Effective Date of the Plan or the date the Non-Employee Director first becomes eligible to participate in the Plan shall take effect with the first payment of Compensation that relates to a period of service that begins after such election is made, or such later date as the Non-Employee Director shall specify in his election.

 

Section 2.3            Election to Defer Equity Compensation.

 

An election to defer Equity Compensation shall specify the amount or percentage of each payment of Equity Compensation that is to be deferred, shall be made on or before the first day of the calendar year in which such Equity Compensation will be paid and prior to the first day of the period of service for which such Equity Compensation is earned, and shall be effective for all subsequent calendar years and service periods, unless status as a Non-Employee Director ceases or a change in the rate of deferral is elected pursuant to section 2.5; provided,

 

4

 

however, that an initial election to defer Equity Compensation made by a Non-Employee Director and filed with the Administrator during the thirty (30) day period immediately following the later of the Effective Date or the date the Non-Employee Director first becomes eligible to participate in the Plan shall take effect with the first payment of Equity Compensation that relates to a period of service that begins after such election is made, or such later date as the Non-Employee Director shall specify in his election. Acceptance of an election to defer Equity Compensation shall not be held or construed as a guarantee that any conditions precedent to the payment thereof (including but not limited to continued employment) will be met or the amount to be deferred will in fact be earned. In the event the dollar amount of Equity Compensation actually paid is less than the dollar amount for which a deferral election has been made, the election shall be deemed effective to defer the maximum permissible amount.

 

Section 2.4            Election to Defer Option-Related Compensation.

 

Notwithstanding anything in this Plan to the contrary, no person shall elect to defer Option-Related Compensation until such time as the Plan is amended to provide for such elections.

 

Section 2.5            Changes in Participation.

 

(a)           An election by a Participant pursuant to section 2.2 shall continue in effect until termination of status as a Participant; provided, however, that the Participant may, by written election filed with the Administrator, increase or decrease the portion of his Cash Compensation to be deferred, or discontinue such deferral altogether. Such election shall be effective with respect to Cash Compensation payable for services rendered after the end of the calendar year in which such election is filed with the Administrator; provided, however, that if an election provides for the decrease or discontinuance of the Participant’s deferral of Cash Compensation and is made on account of Disability or an Unforeseeable Emergency or an Acceleration Event, such election shall, to the extent permitted under section 409A of the Code, be effective with respect to Cash Compensation payable after the filing of such election.

 

(b)           An election by a Participant pursuant to section 2.3 or 2.4 shall continue in effect until termination of status as a Participant; provided, however, that the Participant may, by written election filed with the Administrator, increase or decrease the portion of his Equity Compensation to be deferred, or discontinue such deferral altogether. Such election shall be effective with respect to Equity Compensation payable after the calendar year in which, and on account of a period of service that begins after, such election is filed with the Administrator; provided, however, that if an election provides for the decrease or discontinuance of the Participant’s deferral of Equity Compensation and is made on account of Disability or an Unforeseeable Emergency or an Acceleration Event, such election, to the extent permitted under section 409A of the Code, shall be effective with respect to Equity Compensation, payable after the filing of such election.

 

(c)           In the event that a Participant ceases to be a Non-Employee Director or in the event that a Non-Employee Director ceases to defer receipt of his Compensation, the balance in his Memorandum Account shall continue to be adjusted in accordance with Article III. A Non-Employee Director who has filed a written election to cease deferring receipt of any portion of his Compensation may thereafter again file an election to defer receipt of his Compensation in the manner described in sections 2.2 through 2.5.

 

5

 

 

ARTICLE III
 ACCOUNTING FOR DEFERRED AMOUNTS

 

Section 3.1            In General.

 

The Administrator shall maintain a separate Memorandum Account for each Participant and may establish within such Memorandum Account two or more Memorandum Subaccounts as may be necessary or appropriate to properly administer the Plan, including, but not limited to:

 

(a)           A separate Memorandum Subaccount for each portion of a Participant’s Memorandum Account to which a unique distribution schedule is applicable;

 

(b)           A separate Memorandum Subaccount for that portion of a Participant’s Memorandum Account that is attributable to Equity Compensation or Option-Related Compensation that has been deferred; and

 

(c)           A separate Memorandum Subaccount for that portion of a Participant’s Memorandum Account that is required to be adjusted for earnings and losses on the basis of an Investment Benchmark that is different from the Investment Benchmark(s) applicable to other portions of the Memorandum Account.

 

Credits, charges, and other adjustments to each Participant’s Memorandum Account and any Memorandum Subaccounts shall be made in accordance with this Article III. Neither the Company nor any Participating Company shall fund its liability for the balances credited to a Memorandum Account or Memorandum Subaccount, but each shall reflect its liability for such balances on its books.

 

Section 3.2            Adjustments to Memorandum Accounts.

 

(a)           Each Participant’s Memorandum Account and applicable Memorandum Subaccount(s) shall be credited with amounts of Compensation deferred by the Participant as of the date on which such Compensation would have been paid to the Participant in the absence of a deferral election. For purposes of this section 3.2(a):

 

(i)            Equity Compensation consisting of Shares or other property which would be taxable for federal income tax purposes pursuant to section 83 of the Code that is being deferred shall be credited as of the date on which such Shares or other property become vested or, if later, the date on which such Shares or other property are contractually required to be transferred to the Participant; and

 

(ii)           Option-Related Compensation that is being deferred shall be credited as of the earliest date on which all actions have been taken and conditions satisfied to effectively exercise the related options;

 

all as determined by the Administrator, whose determination shall be conclusive and binding in the absence of manifest error.

 

(b)           Each Participant’s Memorandum Account shall be adjusted to reflect the amount of earnings, losses, appreciation or depreciation, as appropriate that would result if the

 

6

 

balances credited to the Participant’s Memorandum Account, were actually invested in Investment Benchmarks according to the following guidelines:

 

(i)            That portion of a Participant’s Memorandum Account that is attributable to the deferral of Option-Related Compensation shall at all times be deemed to be invested in Phantom Shares. The number of Phantom Shares credited in connection with each deferral of Option-Related Compensation shall be equal to the number of Shares corresponding to the Option-Related Compensation that is being deferred. Additional Phantom Shares shall be credited to account for any stock dividends to holders of record of Shares in an amount equal to the product of (A) the number of Shares issued as a stock dividend to the holder of record of one Share, multiplied by (B) the number of Phantom Units credited to the Participant’s Memorandum Account as of the record date for the stock dividend. Additional Phantom Shares shall be credited to account for cash dividends paid to holders of record of Shares in an amount equal to the quotient of (A) the cash dividend per Share multiplied by the number of Phantom Shares credited to the Participant’s Memorandum Account as of the record date for the cash dividend, divided by (B) the Fair Market Value of a Share on the payment date for the cash dividend. Notwithstanding the foregoing, the Company, in its sole discretion, may elect to treat that portion of a Participant’s Memorandum Account that is attributable to the deferral of Option-Related Compensation as if it was actually invested in an Investment Benchmark other than Phantom Shares.

 

(ii)           That portion of a Participant’s Memorandum Account that is attributable to the deferral of Equity Compensation shall at all times be deemed to be invested in Phantom Shares. Notwithstanding the foregoing, the Company, in its sole discretion, may elect to treat that portion of a Participant’s Memorandum Account that is attributable to the deferral of Equity Compensation as if it was actually invested in an Investment Benchmark other than Phantom Shares.

 

(iii)          That Portion of a Participant’s Memorandum Account that is attributable to the deferral of Cash Compensation shall be credited with interest quarterly by applying the rate equal to the rate on the highest yielding certificate of deposit issued by Danversbank during the quarter. Notwithstanding the foregoing, the Company, in its sole discretion, may elect to treat that portion of a Participant’s Memorandum Account that is attributable to the deferral of Cash Compensation as if it was actually invested in an Investment Benchmark other than interest at a rate equal to the rate on the highest yielding certificate of deposit issued by Danversbank during each applicable quarter. If one of the Investment Benchmarks is Phantom Shares, such terms, conditions and procedures shall be designed to prevent the occurrence of non-exempt short-swing transactions described in section 16 of the Securities Exchange Act of 1934, as amended, to assure compliance with the Company’s securities trading policy and applicable federal and state securities laws, and unless otherwise determined by the Administrator, to permit the Company to account for its liability with respect to such portion of the Memorandum Account on the basis of EITF 94-6 or corresponding guidance in subsequent accounting standards.

 

7

 

(c)           The Memorandum Account established for each Participant shall be adjusted from time to time, but in no event less frequently than quarterly, to reflect:

 

(i)            credits of deferred Compensation;

 

(ii)           credits reflecting income, dividends and appreciation attributable to the applicable Investment Benchmarks;

 

(iii)          charges for losses or depreciation attributable to the applicable Investment Benchmarks; and

 

(iv)          charges for payments to the Participant or his Beneficiary.

 

Except to the extent otherwise provided by the Administrator, all such adjustments in respect of activity during a month shall be made as of the last business day of each month.

 

Section 3.3            Vesting.

 

Subject to section 5.3, all amounts credited to a Participant’s Memorandum Account shall be 100% vested at all times.

 

ARTICLE IV
 TRUST

 

Section 4.1            Establishment of Trust.

 

The Company may establish a trust fund which may be used to accumulate funds to satisfy benefit liabilities to Participants, former Participants and their Beneficiaries under the Plan; provided, however, that the assets of such trust shall be subject to the claims of the creditors of the Company in the event that it is determined that the Company is insolvent; and provided, further, that the trust agreement shall contain such terms, conditions and provisions as shall be necessary to cause the Company to be considered the owner of the trust fund for federal, state or local income tax purposes with respect to all amounts contributed to the trust fund or any income attributable to the investments of the trust fund. The Company shall pay all costs and expenses incurred in establishing and maintaining such trust. Any payments made to a Participant, former Participant or Beneficiary from a trust established under this section 4.1 shall offset payments which would otherwise be payable by the Company in the absence of the establishment of such trust. Any such trust will conform to the terms of the model trust prescribed by Revenue Procedure 92-64, as the same may be modified from time to time.

 

Section 4.2            Contributions to Trust; Investments.

 

If a trust is established in accordance with section 4.1, each Participating Company shall make contributions to such trust in such amounts and at such times as may be specified by the Committee or required pursuant to the terms of any trust agreement between the Company and the trustee that has been authorized by the Committee.

 

Section 4.3            Unfunded Character of Plan.

 

Notwithstanding the establishment of a trust pursuant to section 4.1, the Plan shall be unfunded. Any liability of the Company or another Participating Company to any person with

 

8

 

respect to benefits payable under the Plan shall be based solely upon such contractual obligations, if any, as shall be created by the Plan, and shall give rise only to a claim against the general assets of the Company or such Participating Company. No such liability shall be deemed to be secured by any pledge or any other encumbrance on any specific property of the Company or a Participating Company.

 

ARTICLE V
 LIFE INSURANCE

 

Section 5.1            Authority to Purchase Life Insurance.

 

To assist it in meeting its financial obligations under the Plan, the Company may purchase and hold, or may cause the trustee of a trust described in Article IV to purchase and hold, insurance on the life or lives of such Participant or Participants in such amounts as the Committee may determine. By electing to defer Compensation under the Plan, a Participant shall be deemed to have authorized and consented to such purchase.

 

Section 5.2            Cooperation to Effect Purchases.

 

Each Participant shall take such actions (including but not limited to submitting to such physical examinations, providing such medical information and executing such applications, consents to the purchase of insurance and other documents and instruments) as the Administrator may reasonably request to facilitate the purchase of insurance authorized by the Committee. Any person who fails or refuses to cooperate in the purchase of such insurance may, in the discretion of the Committee, be denied the right of future participation in the Plan, such denial to be effected in a manner that complies with the requirements of section 409A of the Code. No person shall be denied eligibility to participate in the Plan solely because he is deemed uninsurable by the carrier or carriers designated by the Committee.

 

Section 5.3            Ownership of Policies.

 

The Company (or, if applicable, a trust described Article IV) shall be the legal owner of any life insurance policies purchased under the Plan and shall have and enjoy all of the incidents of ownership, including, but not limited to, the right to cancel, surrender, extend or assign the policy in whole or in part, the right to exercise borrowing privileges against the cash value of the policy, the right designate the beneficiary of any death benefit proceeds that may become payable thereunder, the right to receive policy dividends, the right exercise voting rights with respect to all matters on which the holder of the policy may vote, and, in the case of a mutual insurance company, the right to participate in and receive and hold any proceeds distributed in relation to the policy in connection with any demutualization transaction. In no event shall the Participant, his Beneficiary or his heirs, successors or assigns have any rights in, to or under any such policy, including but not limited to the right to receive any portion of any death benefit proceeds that may be payable upon the death of the Participant. In the event that the Participant, his designated Beneficiary or any of his heirs, successors or assigns attempts to challenge the rights of the Company (or, if applicable, a trust described Article IV), then, in addition to any other rights and remedies that may be available, any balance credited to the Participant’s Memorandum Account that is then unpaid shall be forfeited.

 

9

 

Section 5.4            Effect of Termination of Participation.

 

Neither the cessation of a Participant’s performance of services for the Company or any Participating Employer, nor the cessation of a Participant’s deferrals of Compensation under the Plan, nor the complete distribution of the balance credited to the Participant’s Memorandum Account shall have any effect on the authority of the Company (or, if applicable, a trust described Article IV) to continue any life insurance policy then in effect on the life of such Participants for such future period as the Committee may determine, including but limited to the period extending through the date of the Participant’s death.

 

ARTICLE VI
 DISTRIBUTIONS

 

Section 6.1            Early Distributions.

 

(a)           In the event that a Participant has suffered an Unforeseeable Emergency, the Administrator may, in its sole discretion and to the extent permitted under section 409A of the Code, allow such Participant to obtain a lump sum withdrawal of an amount credited to his Memorandum Account that does not exceed the amount necessary to alleviate the Unforeseeable Emergency.

 

(b)           In the event of a Participant’s Disability, the Administrator may, in its sole discretion and to the extent permitted under section 409A of the Code, allow the Participant to obtain a lump sum withdrawal of the entire balance credited to his Memorandum Account.

 

(c)           To the extent required to comply with the terms of a domestic relations order (within the meaning of section 414(p) of the Code) directed to and served upon the Plan, the Administrator may direct the payment of all or any portion of the balance credited to a Participant’s Memorandum Account at any time or in accordance with any payment schedule set forth in said order.

 

(d)           To the extent necessary to effect compliance with a certificate of divestiture (within the meaning of section 1043(b)(2) of the Code), the Administrator may permit the distribution of all or a portion of the balance credited to a Participant’s Memorandum Account earlier than the times determined under section 6.2.

 

Section 6.2            Scheduled Distributions to Participants.

 

(a)           If a Participant so elects in his initial election to participate or in any subsequent deferral election, an amount equal to the balance credited to the Participant’s Memorandum Account shall be paid to the Participant  in a single payment as of the date specified by the Participant in his election, unless distributed earlier pursuant to another section of this Plan or delayed pursuant to section 6.4 of the Plan.

 

(b)           An amount equal to the balance credited to the Participant’s Memorandum Account shall be paid to the Participant, irrespective of any election by the Participant to receive a payment at a later specified date, in a single payment within thirty (30) days after the end of the calendar year in which (i) the Participant experiences a termination of service with the Company and all Participating Companies, or (ii) the Participant experiences a Disability.

 

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(c)           If the Participant’s Service Recipient experiences a Change in Control Event, an amount equal to the balance credited to the Participant’s Memorandum Account shall be paid to the Participant, irrespective of any election by the Participant to receive a payment at a later specified date, on the date of said Change in Control Event.

 

(d)           Notwithstanding section 6.2(a), each Participant may, by written election given in such form and manner as the Administrator may prescribe, elect to change the time and manner of distribution of the balance credited to any Memorandum Subaccount; provided, however, that

 

(i)            Any such election shall not take effect until twelve (12) months after it is received by the Administrator; and

 

(ii)           In the case of an election to defer a payment to be made on account of an event other than the Participant’s death, Disability or Unforeseeable Emergency, the first payment made under such election shall not occur until at least five (5) years later than such payment would otherwise have been made; and

 

(iii)          In the case of an election to defer a payment to be made on account of a Change in Control Event, such election shall be made at least twelve (12) months prior to the date of the first payment scheduled to be made on account of the Change in Control Event.

 

(e)           Distributions shall be made within 30 days after the date the Participant becomes entitled to payment pursuant to this section 6.2. Distributions of balances attributable to the deferral of Option-Related Compensation shall be made in whole Shares (with cash paid in lieu of fractional shares); distributions of the balances attributable to the deferral of Equity Compensation shall, unless the Administrator determines otherwise, be made in whole Shares (with cash paid in lieu of fractional Shares); and all other distributions shall be made in cash unless the Administrator, in its discretion, permits other forms of distribution.

 

Section 6.3            Distributions to Beneficiaries.

 

(a)           A Participant may designate a Beneficiary or Beneficiaries by filing a written notice with the Administrator prior to the Participant’s death, in such form and manner as the Administrator may prescribe. A Participant who has designated a Beneficiary or Beneficiaries may change or revoke such designation prior to the Participant’s death by means of a similar written instrument.

 

(b)           In the event that a Participant dies before receiving payment of his entire Memorandum Account, payment of the value of the deceased Participant’s Memorandum Account shall be made in a lump sum to his Beneficiary or Beneficiaries within ninety (90) days after the Administrator receives satisfactory evidence of the Participant’s death. If no Beneficiary shall have been designated or if any such designation shall be ineffective, or in the event that no designated Beneficiary survives the Participant, payment of the value of the Participant’s Memorandum Account shall be made to the Participant’s personal representative, or if no personal representative is appointed within six (6) months after the Participant’s death or such longer period as the Administrator deems reasonable in its discretion, to his surviving spouse, or if he has no surviving spouse, to his then living descendants, per stirpes, in the same manner and at the same time as the Participant’s Memorandum Account would have been paid to a Beneficiary. If any Participant and any one or more of his designated Beneficiary(ies) shall die in

 

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circumstances that leave substantial doubt as to who shall have been the first to die, the Participant shall be deemed to have survived the deceased Beneficiary(ies). The presence of substantial doubt for such purposes shall be determined by the Administrator in its sole and absolute discretion.

 

Section 6.4            Restrictions on Payments to Key Employees.

 

Notwithstanding anything in the Plan to the contrary, to the extent required under section 409A of the Code, no payment to be made to a key employee (within the meaning of section 409A of the Code) on or after the date of his termination of service shall be made sooner than six (6) months after such termination of service.

 

ARTICLE VII
 ADMINISTRATION

 

Section 7.1            Administrator.

 

The Administrator shall, subject to the responsibilities of the Committee and the Board, have the responsibility for the day-to-day control, management, operation and administration of the Plan. The Administrator shall have the following responsibilities:

 

(a)           To maintain records necessary or appropriate for the administration of the Plan;

 

(b)           To give and receive such instructions, notices, information, materials, reports and certifications as may be necessary or appropriate in the administration of the Plan;

 

(c)           To prescribe forms and make rules and regulations consistent with the terms of the Plan and with the interpretations and other actions of the Committee;

 

(d)           To require such proof or evidence of any matter from any person as may be necessary or appropriate in the administration of the Plan;

 

(e)           To determine any question arising in connection with the Plan, including any question of Plan interpretation, and the Administrator’s decision or action in respect thereof shall be final and conclusive and binding upon all persons having an interest under the Plan; provided however, that any question relating to inconsistency or omission in the Plan, or interpretation of the provisions of the Plan, shall be referred to the Committee by the Administrator and the decision of the Committee in respect thereof shall be final;

 

(f)            To review and dispose of claims under the Plan filed pursuant to section 7.3 and appeals of claims decisions pursuant to section 7.4;

 

(g)           If the Administrator shall determine that by reason of illness, senility, insanity, or for any other reason, it is undesirable to make any payment to the person entitled thereto, to direct the application of any amount so payable to the use or benefit of such person in any manner that the Administrator may deem advisable or to direct in the Administrator’s discretion the withholding of any payment under the Plan due to any person under legal

 

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disability until a representative competent to receive such payment in his behalf shall be appointed pursuant to law;

 

(h)           To discharge such other responsibilities or follow such directions as may be assigned or given by the Committee or the Board; and

 

(i)            To perform any duty or take any action which is allocated to the Administrator under the Plan.

 

The Administrator shall have the power and authority necessary or appropriate to carry out his responsibilities. The Administrator may resign only by giving at least 30 days’ prior written notice of resignation to the Committee, and such resignation shall be effective on the date specified in such notice.

 

Section 7.2            Committee Responsibilities.

 

The Committee shall, subject to the responsibilities of the Board, have the following responsibilities:

 

(a)           To review the performance of the Administrator;

 

(b)           To hear and decide appeals, pursuant to the claims procedure contained in section 7.4 of the Plan, taken from the decisions of the Administrator;

 

(c)           To hear and decide questions, including interpretation of the Plan, as may be referred to the Committee by the Administrator;

 

(d)           To report and make recommendations to the Board regarding changes in the Plan, including changes in the operation and management of the Plan;

 

(e)           To designate an alternate Administrator to serve in the event that the Administrator is absent or otherwise unable to discharge his responsibilities;

 

(f)            To remove and replace the Administrator or alternate, or both of them, and to fill a vacancy in either office;

 

(g)           To discharge such other responsibilities or follow such directions as may be assigned or given by the Board; and

 

(h)           To perform any duty or to take any action which is allocated to the Committee under the Plan.

 

The Committee shall have the power and authority necessary or appropriate to carry out its responsibilities. The Committee may take action under the Plan by vote of a majority of the members present at any meeting of the Committee at which a quorum is present or by unanimous written consent in lieu of meeting. No member of the Committee shall participate in any action or decision in which he has a personal interest unless all members of the Committee voting on such matter are similarly interested. The Committee may delegate to one of its members, to the Administrator or to any Non-Employee Director of the Company or any other Participating Company the power and responsibility, to the extent not expressly allocated under the Plan to the Administrator, to sign instruments and other communications in its behalf and to take appropriate action to implement the Committee’s decisions.

 

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Section 7.3            Claims Procedure.

 

Any claim relating to benefits under the Plan shall be filed with the Administrator on a form prescribed by it. If a claim is denied in whole or in part, the Administrator shall give the claimant written notice of such denial, which notice shall specifically set forth:

 

(a)           The reason for the denial;

 

(b)           The pertinent Plan provisions on which the denial is based;

 

(c)           Any additional material or information necessary for the claimant to perfect his claim and an explanation of why such material or information is needed; and

 

(d)           An explanation of the Plan’s procedure for review of the denial of the claim.

 

In the event that the claim is not granted and notice of denial of a claim is not furnished by the 30th day after such claim was filed, the claim shall be deemed to have been denied on that day for the purpose of permitting the claimant to request review of the claim.

 

Section 7.4            Claims Review Procedure.

 

Any person whose claim filed pursuant to section 7.3 has been denied in whole or in part by the Administrator may request review of the claim by the Committee, upon a form prescribed by the Administrator. The claimant shall file such form (including a statement of his position) with the Committee no later than 60 days after the mailing or delivery of the written notice of denial provided for in section 7.3, or, if such notice is not provided, within 60 days after such claim is deemed denied pursuant to section 7.3. The claimant shall be permitted to review pertinent documents. A decision shall be rendered by the Committee and communicated to the claimant not later than 30 days after receipt of the claimant’s written request for review. However, if the Committee finds it necessary, due to special circumstances (for example, the need to hold a hearing), to extend this period and so notifies the claimant in writing, the decision shall be rendered as soon as practicable, but in no event later than 120 days after the claimant’s request for review. The Committee’s decision shall be in writing and shall specifically set forth:

 

(a)           The reason for the decision; and

 

(b)           The pertinent Plan provisions on which the decisions is based.

 

Any such decision of the Committee shall be binding upon the claimant and the Participating Company, and the Administrator shall take appropriate action to carry out such decision.

 

Section 7.5            Other Administrative Provisions.

 

(a)           Any person whose claim has been denied in whole or in part must exhaust the administrative review procedures provided in section 7.4 prior to initiating any claim for judicial review.

 

(b)           neither the members of the Committee, the Administrator, nor any Non-Employee Director or employee of a Participating Company to whom responsibilities are assigned under the Plan shall be liable for any act of omission or commission by himself or by another person, except for his own individual willful and intentional malfeasance.

 

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(c)           The Administrator or the Committee may, shorten, extend or waive the time (but not beyond 60 days) required by the Plan for filing any notice or other form with the Administrator or Committee, or taking any other action under the Plan; provided, however, that no such shortening, extension or waiver shall be done that would cause any Participant to be in constructive receipt of the balance credited his Memorandum Account prior to the date on which such balance is scheduled to be paid.

 

(d)           Any person, group of persons, committee, corporation or organization may serve in more than one fiduciary capacity with respect to the Plan.

 

(e)           Any action taken or omitted by the Administrator or the Committee or any delegate of the Committee with respect to the Plan, including any decision, interpretation, claim denial or review on appeal, shall be conclusive and binding on and all interested parties and shall be subject to judicial modification or reversal only to the extent it is determined by a court of competent jurisdiction that such action or omission was arbitrary and capricious and contrary to the terms of the Plan.

 

ARTICLE VIII
 AMENDMENT AND TERMINATION

 

Section 8.1            Amendment by the Company.

 

The Company reserves the right, in its sole and absolute discretion, at any time and from to time, by action of the Board, to amend the Plan in whole or in part. In no event, however, shall any such amendment adversely affect the right of any Participant, former Participant or Beneficiary to receive any benefits under the Plan in respect of participation for any period ending on or before the later of the date on which such amendment is adopted or the date on which it is made effective.

 

Section 8.2            Termination.

 

(a)           The Company reserves the right, in its sole and absolute discretion, by action of the Board, to terminate the Plan, but only in the following circumstances:

 

(i)            Within twelve (12) months of any Change in Control Event; and

 

(ii)           At such other time and in such other circumstances as may be permitted under section 409A of the Code.

 

In such event, undistributed benefits attributable to participation prior to the date of termination shall be distributed in lump sum payments as soon as practicable following the effective date of termination.

 

(b)           The Company reserves the right, in its sole and absolute discretion, by action of the Board, to suspend the operation of the Plan, but only in the following circumstances:

 

(i)            With respect to Compensation to be earned and paid in calendar years beginning after the date of adoption of the resolution suspending the operation of the Plan; and

 

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(ii)           At such other time and in such other circumstances as may be permitted under section 409A of the Code.

 

In such event, no further Compensation shall be deferred following the effective date of the suspension and memorandum Accounts in existence prior to such date shall continue to be maintained, and payments shall continue to be made, in accordance with the provisions of the Plan.

 

Section 8.3            Amendment or Termination by Other Companies.

 

In the event that a corporation or trade or business other than the Company shall adopt this Plan, such corporation or trade or business shall, by adopting the Plan, empower the Company to amend or terminate the Plan, insofar as it shall cover employees of such corporation or trade or business, upon the terms and conditions set forth in sections 8.1 and 8.2; provided, however, that any such corporation or trade or business may, by action of its board of directors or other governing body, amend or terminate the Plan, insofar as it shall cover employees of such corporation or trade or business, at different times and in a different manner. In the event of any such amendment or termination by action of the board of directors or other governing body of such a corporation or trade or business, a separate plan shall be deemed to have been established for the employees of such corporation or trade or business, and any amounts set aside to provide for the satisfaction of benefit liabilities with respect to employees of such corporation or trade or business shall be segregated from the assets set aside for the purposes of this Plan at the earliest practicable date and shall be dealt with in accordance with the documents governing such separate plan.

 

ARTICLE IX
 MISCELLANEOUS PROVISIONS

 

Section 9.1            Notice and Election.

 

The Administrator shall provide a copy of this Plan and the resolutions of adoption to each Non-Employee Director who becomes eligible to participate, together with a form on which the Non-Employee Director may notify the Administrator of his election whether to become a Participant, which form, if he so elects, he may complete, sign and return to the Administrator.

 

Section 9.2            Construction and Language.

 

Wherever appropriate in the Plan, words used in the singular may be read in the plural, words used in the plural may be read in the singular, and the masculine gender may be read as referring equally to the feminine gender or the neuter.

 

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Section 9.3            Headings.

 

The headings of Articles and sections are included solely for convenience of reference. If there is any conflict between such headings and the text of the Plan, the text shall control.

 

Section 9.4            Non-Alienation of Benefits.

 

Except as may otherwise be required by law, no distribution or payment under the Plan to any Participant, former Participant or Beneficiary shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, whether voluntary or involuntary, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void; nor shall any such distribution or payment be in any way liable for or subject to the debts, contracts, liabilities, engagements or torts of any person entitled to such distribution or payment. If any Participant, former Participant or Beneficiary is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, assign, pledge encumber or charge any such distribution or payment, voluntarily or involuntarily, the Committee, in its sole discretion, may cancel such distribution or payment or may hold or cause to be held or applied such distribution or payment, or any part thereof, to or for the benefit of such Participant, former Participant or Beneficiary, in such manner as the Committee shall direct; provided, however, that no such action by the Committee shall cause the acceleration or deferral of any benefit payments from the date on which such payments are scheduled to be made.

 

Section 9.5            Indemnification.

 

The Company shall indemnify, hold harmless and defend each Participant, former Participant and Beneficiary, against their reasonable costs, including legal fees, incurred by them or arising out of any action, suit or proceeding in which they may be involved, as a result of their efforts, in good faith, to defend or enforce the obligations of the Company and any other Participating Employer under the terms of the Plan.

 

Section 9.6            Severability.

 

A determination that any provision of the Plan is invalid or unenforceable shall not affect the validity or enforceability of any other provision hereof.

 

Section 9.7            Waiver.

 

Failure to insist upon strict compliance with any of the terms, covenants or conditions of the Plan shall not be deemed a waiver of such term, covenant or condition. A waiver of any provision of the Plan must be made in writing, designated as a waiver, and signed by the party against whom its enforcement is sought. Any waiver or relinquishment of any right or power hereunder at any one or more times shall not be deemed a waiver or relinquishment of such right or power at any other time or times.

 

Section 9.8            Governing Law.

 

The Plan shall be construed, administered and enforced according to the laws of the Commonwealth of Massachusetts without giving effect to the conflict of laws principles thereof, except to the extent that such laws are preempted by federal law.

 

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Section 9.9            Withholding.

 

Payments from this Plan shall be subject to all applicable federal, state and local income withholding taxes. The Company, any other Participating Company or the Committee shall have the right to require any person entitled to receive a distribution in Shares under this Plan to pay the amount of any tax which is required to be withheld with respect to such Shares, or, in lieu thereof, to cancel without notice, a sufficient number of Phantom Shares to cover the amount required to be withheld.

 

Section 9.10         No Deposit Account.

 

Nothing in this Plan shall be held or construed to establish any deposit account for any Participant or any deposit liability on the part of the Company or any Participating Company. Participants’ rights hereunder shall be equivalent to those of a general unsecured creditor of each Participating Company.

 

Section 9.11         Rights of Participants.

 

No Participant shall have any right or claim to any benefit under the Plan except in accordance with the provisions of the Plan. The establishment of the Plan shall not be construed as conferring upon any Participant or other person any legal right to a continuation of service or to any terms or conditions of service, nor as limiting or qualifying the right of a Participating Company, its board of directors or its stockholders to remove any Non-Employee Director or to fail to re-elect him or her or decline to nominate him or her for re-election.

 

Section 9.12         Status of Plan under ERISA.

 

The Plan is intended to be a non-qualified deferred compensation plan maintained exclusively for non-employees. The Plan is not intended to comply with the requirements of section 401(a) of the Code or to be subject to Parts 2, 3 and 4 of Title I of ERISA. The Plan shall be administered and construed so as to effectuate this intent.

 

Section 9.13         Successors and Assigns.

 

The provisions of the Plan will inure to the benefit of and be binding upon the Participants and their respective legal representatives and testate or intestate distributes, and each Participating Company and their respective successors and assigns, including any successor by merger or consolidation or a statutory receiver or any other person or firm or corporation to which all or substantially all of the assets and business of any Participating Company may be sold or otherwise transferred.

 

Section 9.14         Non-dilution Provisions.

 

In the event of any merger, consolidation, or other business reorganization involving the Company, and in the event of any stock split, stock dividend or other event generally affecting the number of Shares held by each person who is then a holder of record of Shares, and in the event of any other occurrence which, in the judgment of the Committee warrants an adjustment to avoid unintended enhancement or dilution of the rights of one or more Participants under the Plan, the number of Phantom Units credited to each Participant’s Memorandum Account, and the unit value thereof, shall be adjusted to account for such event. Such adjustment shall be effected in such manner as the Committee shall determine to be

 

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appropriate in order to prevent the enlargement or diminution of any Participant’s rights under the Plan.

 

Section 9.15         Compliance with Section 409A of the Code.

 

The Plan is intended to be a non-qualified deferred compensation plan described in section 409A of the Code. The Plan shall be operated, administered and construed to give effect to such intent. In addition he Plan shall be subject to amendment, with or without advance notice to Participants and other interested parties, and on a prospective or retroactive basis, including but not limited amendment in a manner that adversely affects the rights of participants and other interested parties, to the extent necessary to effect such compliance.

 

19Exhibit 10.1

 

OMNICELL, INC.

2009 EQUITY INCENTIVE PLAN

Adopted by the Board of Directors: March 5, 2009

Approved by the Stockholders: May 19, 2009

Amended by the Board of Directors: November 17, 2010

Approved by the Stockholders: December 16, 2010

Termination Date: March 4, 2019

 

1.             GENERAL.

 

(a)   Successor to and Continuation of Prior Plans.  The Plan is intended as the successor to and continuation of the Omnicell, Inc. 1999 Equity Incentive Plan, the 2003 Equity Incentive Plan and the 2004 Equity Incentive Plan (together, the “Prior Plans”). On and after the Effective Date, no additional stock awards shall be granted under the Prior Plans. All outstanding stock awards granted under the Prior Plans shall remain subject to the terms of the Prior Plans; provided, however, that after December 31, 2008, any shares subject to outstanding stock awards granted under the Prior Plans that expire or terminate for any reason prior to exercise or settlement or are forfeited because of the failure to meet a contingency or condition required to vest such shares (the “Returning Shares”) shall become available for issuance pursuant to Awards granted hereunder. All Awards granted on or after the Effective Date of this Plan shall be subject to the terms of this Plan.

 

(b)   Eligible Award Recipients.  The persons eligible to receive Awards are Employees, Directors and Consultants.

 

(c)   Available Awards.  The Plan provides for the grant of the following Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards.

 

(d)   Purpose.  The Company, by means of the Plan, seeks to secure and retain the services of the group of persons eligible to receive Awards as set forth in Section 1(b), to provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate and to provide a means by which such eligible recipients may be given an opportunity to benefit from increases in value of the Common Stock through the granting of Stock Awards.

 

2.             ADMINISTRATION.

 

(a)   Administration by Board.  The Board shall administer the Plan unless and until the Board delegates administration of the Plan to a Committee or Committees, as provided in Section 2(c).

 

(b)   Powers of Board.  The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

 

(i)            To determine from time to time (A) which of the persons eligible under the Plan shall be granted Awards; (B) when and how each Award shall be granted; (C) what type or combination of types of Award shall be granted; (D) the provisions of each Award granted (which need not be identical), including the time or times when a person shall be permitted to receive cash or Common Stock pursuant to a Stock Award; (E) the number of shares of Common Stock with respect to which a Stock Award shall be granted to each such person; and (F) the Fair Market Value applicable to a Stock Award.

 

(ii)           To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement or in the

 

1

 

written terms of a Performance Cash Award, in a manner and to the extent it shall deem necessary or expedient to make the Plan or Award fully effective.

 

(iii)         To settle all controversies regarding the Plan and Awards granted under it.

 

(iv)          To accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Award stating the time at which it may first be exercised or the time during which it will vest.

 

(v)            To suspend or terminate the Plan at any time. Suspension or termination of the Plan shall not impair rights and obligations under any Award granted while the Plan is in effect except with the written consent of the affected Participant.

 

(vi)          To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments relating to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to bring the Plan or Awards granted under the Plan into compliance therewith, subject to the limitations, if any, of applicable law. However, except as provided in Section 9(a) relating to Capitalization Adjustments, to the extent required by applicable law or listing requirements, stockholder approval shall be required for any amendment of the Plan that either (A) materially increases the number of shares of Common Stock available for issuance under the Plan, (B) materially expands the class of individuals eligible to receive Awards under the Plan, (C) materially increases the benefits accruing to Participants under the Plan or materially reduces the price at which shares of Common Stock may be issued or purchased under the Plan, (D) materially extends the term of the Plan, or (E) expands the types of Awards available for issuance under the Plan. Except as provided above, rights under any Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (1) the Company requests the consent of the affected Participant, and (2) such Participant consents in writing.

 

(vii)         To submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of (A) Section 162(m) of the Code regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to Covered Employees, (B) Section 422 of the Code regarding “incentive stock options” or (C) Rule 16b-3.

 

(viii)        To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that except with respect to amendments that disqualify or impair the status of an Incentive Stock Option, a Participant’s rights under any Award shall not be impaired by any such amendment unless (A) the Company requests the consent of the affected Participant, and (B) such Participant consents in writing. Notwithstanding the foregoing, subject to the limitations of applicable law, if any, the Board may amend the terms of any one or more Awards without the affected Participant’s consent if necessary to maintain the qualified status of the Award as an Incentive Stock Option or to bring the Award into compliance with Section 409A of the Code.

 

(ix)          Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Awards.

 

(x)           To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors or Consultants who are foreign nationals or employed outside the United States.

 

 

(c)   Delegation to Committee.

 

(i)            General.  The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated.

 

(ii)           Section 162(m) and Rule 16b-3 Compliance.  The Committee may consist solely of two or more Outside Directors, in accordance with Section 162(m) of the Code, or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3.

 

(d)   Effect of Board’s Decision.  All determinations, interpretations and constructions made by the Board in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons.

 

(e)   Cancellation and Re-Grant of Stock Awards.  Neither the Board nor any Committee shall have the authority to: (i) reduce the exercise price of any outstanding Options or Stock Appreciation Rights under the Plan, or (ii) cancel any outstanding Options or Stock Appreciation Rights that have an exercise price or strike price greater than the current Fair Market Value of the Common Stock in exchange for cash or other Stock Awards under the Plan, unless the stockholders of the Company have approved such an action within twelve (12) months prior to such an event.

 

3.             SHARES SUBJECT TO THE PLAN.

 

(a)   Share Reserve.  Subject to Section 9(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to Stock Awards from and after the Effective Date shall not exceed 4,700,000 shares (which consists of (i) 2,100,000 shares approved by the stockholders on May 19, 2009 and (ii) 2,600,000 shares approved by stockholders on December 16, 2010) plus the Returning Shares, if any, as such shares become available from time to time less one (1) share for each share of stock issued pursuant to an option or stock appreciation right granted after December 31, 2008 under the Prior Plans with respect to which the strike price is at least one hundred percent (100%) of the Fair Market Value of the underlying Common Stock on the date of grant and 1.4 shares for each share of stock issued pursuant to an award other than an option or stock appreciation right granted after December 31, 2008 under the Prior Plans (the “Share Reserve”). For clarity, the Share Reserve in this Section 3(a) is a limitation in the number of shares of the Common Stock that may be issued pursuant to the Plan and does not limit the granting of Stock Awards except as provided in Section 7(a). Shares may be issued in connection with a merger or acquisition as permitted by NASDAQ Marketplace Rule 5635(c) or, if applicable, NYSE Listed Company Manual Section 303A.08, or AMEX Company Guide Section 711 or other applicable rule, and such issuance shall not reduce the number of shares available for issuance under the Plan. Furthermore, if a Stock Award or any portion thereof (i) expires or otherwise terminates without all of the shares covered by such Stock Award have been issued or (ii) is settled in cash (i.e., the Participant receives cash rather than stock), such expiration, termination or settlement shall not reduce (or otherwise offset) the number of shares of Common Stock that may be available for issuance under the Plan.

 

(b)           Subject to subsection 3(c), the number of shares available for issuance under the Plan shall be reduced by: (i) one (1) share for each share of stock issued pursuant to (A) an Option granted under Section 5, or (B) a Stock Appreciation Right granted under Section 5 with respect to which the strike price is at least one hundred percent (100%) of the Fair Market Value of the underlying Common Stock on the date of grant; (ii) prior to October 1, 2010, 1.4 shares for each share of Common Stock issued pursuant to a Restricted Stock Award, Restricted Stock Unit Award, Performance Stock Award or Other Stock Award; and (iii) on or after October 1, 2010, 1.8 shares for each share of Common Stock issued pursuant to a Restricted Stock Award, Restricted Stock Unit Award, Performance Stock Award or Other Stock Award.

 

 

(c)   Reversion of Shares to the Share Reserve.

 

(i)            Shares Available For Subsequent Issuance.

 

(1)           If any shares of common stock issued pursuant to a Stock Award are forfeited back to the Company prior to October 1, 2010 because of the failure to meet a contingency or condition required to vest such shares in the Participant, then the shares which are forfeited shall revert to and again become available for issuance under the Plan. Notwithstanding the provisions of this Section 3(c)(i)(1), any such shares shall not be subsequently issued pursuant to the exercise of Incentive Stock Options. To the extent (A) there is issued a share of Common Stock pursuant to a Stock Award that counted as 1.4 shares against the number of shares available for issuance under the Plan before October 1, 2010 pursuant to Section 3(b) or (B) any Returning Shares granted under the Prior Plan pursuant to an award other than an option or stock appreciation right, and such share of Common Stock becomes available for issuance under the Plan pursuant to Section 1(a), Section 3(a) or this Section 3(c)(i)(1), then the number of shares of Common Stock available for issuance under the Plan shall increase by 1.4 shares.

 

(2)           If any shares of common stock issued pursuant to a Stock Award are forfeited back to the Company on or after October 1, 2010 because of the failure to meet a contingency or condition required to vest such shares in the Participant, then the shares which are forfeited shall revert to and again become available for issuance under the Plan. Notwithstanding the provisions of this Section 3(c)(i)(2), any such shares shall not be subsequently issued pursuant to the exercise of Incentive Stock Options. To the extent (A) there is issued a share of Common Stock pursuant to a Stock Award that counted as 1.4 or 1.8 shares against the number of shares available for issuance under the Plan pursuant to Section 3(b) or (B) any Returning Shares granted under the Prior Plan pursuant to an award other than an option or stock appreciation right, and such share of Common Stock becomes available for issuance under the Plan on or after October 1, 2010 pursuant to Section 1(a), Section 3(a) or this Section 3(c)(i)(2), then the number of shares of Common Stock available for issuance under the Plan shall increase by 1.8 shares.

 

(ii)           Shares Not Available For Subsequent Issuance.  If any shares subject to a Stock Award are not delivered to a Participant because the Stock Award is exercised through a reduction of shares subject to the Stock Award (i.e., “net exercised”), the number of shares that are not delivered to the Participant shall not remain available for issuance under the Plan. Also, any shares reacquired by the Company pursuant to Section 8(g) or as consideration for the exercise of an Option shall not again become available for issuance under the Plan.

 

(d)   Incentive Stock Option Limit.  Notwithstanding anything to the contrary in this Section 3, subject to the provisions of Section 9(a) relating to Capitalization Adjustments the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options shall be the number of shares of Common Stock in the Share Reserve.

 

(e)   Source of Shares.  The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise.

 

4.             ELIGIBILITY.

 

(a)   Eligibility for Specific Stock Awards.  Incentive Stock Options may be granted only to employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and (f) of the Code). Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants; provided, however, Nonstatutory Stock Options and SARs may not be granted to Employees, Directors, and Consultants who are providing Continuous Services only to any “parent” of the Company, as such term is defined in Rule 405 promulgated under the Securities Act, unless such Stock Awards comply with the distribution requirements of Section 409A of the Code.

 

(b)   Ten Percent Stockholders.  A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.

 

 

(c)   Section 162(m) Limitation on Annual Grants.  Subject to the provisions of Section 9(a) relating to Capitalization Adjustments, at such time as the Company may be subject to the applicable provisions of Section 162(m) of the Code, no Participant shall be eligible to be granted during any calendar year Options, Stock Appreciation Rights and Other Stock Awards whose value is determined by reference to an increase over an exercise or strike price of at least one hundred percent (100%) of the Fair Market Value on the date the Stock Award is granted covering more than 1,500,000 shares of Common Stock.

 

5.             PROVISIONS RELATING TO OPTIONS AND STOCK APPRECIATION RIGHTS.

 

Each Option or SAR shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates shall be issued for shares of Common Stock purchased on exercise of each type of Option. If an Option is not specifically designated as an Incentive Stock Option, then the Option shall be a Nonstatutory Stock Option. The provisions of separate Options or SARs need not be identical; provided, however, that each Option Agreement or Stock Appreciation Right Agreement shall conform to (through incorporation of provisions hereof by reference in the applicable Award Agreement or otherwise) the substance of each of the following provisions:

 

(a)   Term.  Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option or SAR shall be exercisable after the expiration of ten (10) years from the date of its grant or such shorter period specified in the Award Agreement.

 

(b)   Exercise Price. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, the exercise price (or strike price) of each Option or SAR shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option or SAR on the date the Option or SAR is granted. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise price (or strike price) lower than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option or SAR if such Option or SAR is granted pursuant to an assumption of or substitution for another option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Sections 409A and 424(a) of the Code (whether or not such awards are Incentive Stock Options). Each SAR will be denominated in shares of Common Stock equivalents.

 

(c)   Purchase Price for Options.  The purchase price of Common Stock acquired pursuant to the exercise of an Option shall be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below. The Board shall have the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to utilize a particular method of payment. The permitted methods of payment are as follows:

 

(i)            by cash, check, bank draft or money order payable to the Company;

 

(ii)           pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds;

 

(iii)         by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock;

 

(iv)          if the option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that the Company shall accept a cash or other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued; provided, further, that shares of Common Stock will no longer be subject to an Option and will not be exercisable thereafter to the extent that (A) shares issuable upon

 

 

exercise are reduced to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations; or

 

(v)            in any other form of legal consideration that may be acceptable to the Board.

 

(d)   Exercise and Payment of a SAR.  To exercise any outstanding Stock Appreciation Right, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right. The appreciation distribution payable on the exercise of a Stock Appreciation Right will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the Stock Appreciation Right) of a number of shares of Common Stock equal to the number of Common Stock equivalents in which the Participant is vested under such Stock Appreciation Right, and with respect to which the Participant is exercising the Stock Appreciation Right on such date, over (B) the strike price that will be determined by the Board at the time of grant of the Stock Appreciation Right. The appreciation distribution in respect to a Stock Appreciation Right may be paid in Common Stock, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right.

 

(e)   Transferability of Options and SARs.  The Board may, in its sole discretion, impose such limitations on the transferability of Options and SARs as the Board shall determine. In the absence of such a determination by the Board to the contrary, the following restrictions on the transferability of Options and SARs shall apply:

 

(i)            Restrictions on Transfer.  An Option or SAR shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant; provided, however, that the Board may, in its sole discretion, permit transfer of the Option or SAR in a manner that is not prohibited by applicable tax and securities laws upon the Participant’s request. Except as explicitly provided herein, neither an Option nor a SAR may be transferred for consideration.

 

(ii)           Domestic Relations Orders. Notwithstanding the foregoing, an Option or SAR may be transferred pursuant to a domestic relations order; provided, however, that if an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.

 

(iii)         Beneficiary Designation. Notwithstanding the foregoing, the Participant may, by delivering written notice to the Company, in a form provided by or otherwise satisfactory to the Company and any broker designated by the Company to effect Option exercises, designate a third party who, in the event of the death of the Participant, shall thereafter be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, the executor or administrator of the Participant’s estate shall be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise.

 

(f)   Vesting Generally.  The total number of shares of Common Stock subject to an Option or SAR may vest and therefore become exercisable in periodic installments that may or may not be equal. The Option or SAR may be subject to such other terms and conditions on the time or times when it may or may not be exercised (which may be based on the satisfaction of Performance Goals or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options or SARs may vary. The provisions of this Section 5(f) are subject to any Option or SAR provisions governing the minimum number of shares of Common Stock as to which an Option or SAR may be exercised.

 

(g)   Termination of Continuous Service.  Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant and the Company, in the event that a Participant’s Continuous Service terminates (other than for Cause or upon the Participant’s death or Disability), the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Award as of the date of termination of Continuous Service) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Participant’s Continuous Service (or such longer or shorter period specified in the applicable Award Agreement), or (ii) the expiration of the term of the Option or SAR as set forth in the Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or

 

 

her Option or SAR within the time specified herein or in the Award Agreement (as applicable), the Option or SAR shall terminate.

 

(h)   Extension of Termination Date.  In the event that the exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than for Cause or upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option or SAR shall terminate on the earlier of (i) the expiration of a period of three (3) months after the termination of the Participant’s Continuous Service during which the exercise of the Option or SAR would not be in violation of such registration requirements, or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Award Agreement. In addition, unless otherwise provided in a Participant’s Award Agreement, if the sale of any Common Stock received upon exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than for Cause) would violate the Company’s insider trading policy, then the Option or SAR shall terminate on the earlier of (i) the expiration of a period equal to the applicable post-termination exercise period after the termination of the Participant’s Continuous Service during which the exercise of the Option or SAR would not be in violation of the Company’s insider trading policy, or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Award Agreement.

 

(i)   Disability of Participant.  Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant and the Company, in the event that a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination of Continuous Service (or such longer or shorter period specified in the Award Agreement), or (ii) the expiration of the term of the Option or SAR as set forth in the Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the time specified herein or in the Award Agreement (as applicable), the Option or SAR (as applicable) shall terminate.

 

(j)   Death of Participant.  Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant and the Company, in the event that (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii) the Participant dies within the period (if any) specified in the Award Agreement after the termination of the Participant’s Continuous Service for a reason other than death, then the Option or SAR may be exercised (to the extent the Participant was entitled to exercise such Option or SAR as of the date of death) by the Participant’s estate, by a person who acquired the right to exercise the Option or SAR by bequest or inheritance or by a person designated to exercise the Option or SAR upon the Participant’s death, but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Award Agreement), or (ii) the expiration of the term of such Option or SAR as set forth in the Award Agreement. If, after the Participant’s death, the Option or SAR is not exercised within the time specified herein or in the Award Agreement (as applicable), the Option or SAR shall terminate.

 

(k)   Termination for Cause.  Except as explicitly provided otherwise in a Participant’s Award Agreement, if a Participant’s Continuous Service is terminated for Cause, the Option or SAR shall terminate upon the date on which the event giving rise to the termination occurred, and the Participant shall be prohibited from exercising his or her Option or SAR from and after the time of such termination of Continuous Service.

 

(l)   Non-Exempt Employees.  No Option or SAR granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended shall be first exercisable for any shares of Common Stock until at least six months following the date of grant of the Option or SAR. Notwithstanding the foregoing, consistent with the provisions of the Worker Economic Opportunity Act, (i) in the event of the Participant’s death or Disability, (ii) upon a Corporate Transaction in which such Option or SAR is not assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon the Participant’s retirement (as such term may be defined in the Participant’s Award Agreement or in another applicable agreement or in accordance with the Company’s then current employment policies and guidelines) any such vested Options and SARs may be exercised earlier than six months following the date of grant. The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay.

 

 

6.             PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS AND SARS.

 

(a)   Restricted Stock Awards.  Each Restricted Stock Award Agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. To the extent consistent with the Company’s Bylaws, at the Board’s election, shares of Common Stock may be (x) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted Stock Award lapse; or (y) evidenced by a certificate, which certificate shall be held in such form and manner as determined by the Board. The terms and conditions of Restricted Stock Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Award Agreements need not be identical; provided, however, that each Restricted Stock Award Agreement shall conform to (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

 

(i)            Consideration.  A Restricted Stock Award may be awarded in consideration for (A) cash, check, bank draft or money order payable to the Company, (B) past services to the Company or an Affiliate, or (C) any other form of legal consideration (including future services) that may be acceptable to the Board in its sole discretion and permissible under applicable law.

 

(ii)           Vesting.  Shares of Common Stock awarded under the Restricted Stock Award Agreement may be subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the Board.

 

(iii)         Termination of Participant’s Continuous Service.  In the event a Participant’s Continuous Service terminates, the Company may receive via a forfeiture condition or a repurchase right, any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination of Continuous Service under the terms of the Restricted Stock Award Agreement.

 

(iv)          Transferability.  Rights to acquire shares of Common Stock under the Restricted Stock Award Agreement shall be transferable by the Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board shall determine in its sole discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the Restricted Stock Award Agreement.

 

(b)   Restricted Stock Unit Awards.  Each Restricted Stock Unit Award Agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of Restricted Stock Unit Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Unit Award Agreements need not be identical; provided, however, that each Restricted Stock Unit Award Agreement shall conform to (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the substance of each of the following provisions:

 

(i)            Consideration.  At the time of grant of a Restricted Stock Unit Award, the Board will determine the consideration, if any, to be paid by the Participant upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The consideration to be paid (if any) by the Participant for each share of Common Stock subject to a Restricted Stock Unit Award may be paid in any form of legal consideration that may be acceptable to the Board in its sole discretion and permissible under applicable law.

 

(ii)           Vesting.  At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions on or conditions to the vesting of the Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.

 

(iii)         Payment.  A Restricted Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, any combination thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Stock Unit Award Agreement.

 

 

(iv)          Additional Restrictions.  At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Restricted Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award.

 

(v)            Dividend Equivalents.  Dividend equivalents may be credited in respect of shares of Common Stock covered by a Restricted Stock Unit Award, as determined by the Board and contained in the Restricted Stock Unit Award Agreement. At the sole discretion of the Board, such dividend equivalents may be converted into additional shares of Common Stock covered by the Restricted Stock Unit Award in such manner as determined by the Board. Any additional shares covered by the Restricted Stock Unit Award credited by reason of such dividend equivalents will be subject to all the terms and conditions of the underlying Restricted Stock Unit Award Agreement to which they relate.

 

(vi)          Termination of Participant’s Continuous Service.  Except as otherwise provided in the applicable Restricted Stock Unit Award Agreement, such portion of the Restricted Stock Unit Award that has not vested will be forfeited upon the Participant’s termination of Continuous Service.

 

(c)   Performance Awards.

 

(i)            Performance Stock Awards.  A Performance Stock Award is a Stock Award that may vest or may be exercised contingent upon the attainment during a Performance Period of certain Performance Goals. A Performance Stock Award may, but need not, require the completion of a specified period of Continuous Service. The length of any Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals have been attained shall be conclusively determined by the Committee in its sole discretion. The maximum number of shares covered by an Award that may be granted to any Participant in a calendar year attributable to Stock Awards described in this Section 6(c)(i) (whether the grant, vesting or exercise is contingent upon the attainment during a Performance Period of the Performance Goals) shall not exceed 1,500,000 shares of Common Stock. In addition, to the extent permitted by applicable law and the applicable Award Agreement, the Board may determine that cash may be used in payment of Performance Stock Awards.

 

(ii)           Performance Cash Awards.  A Performance Cash Award is a cash award that may be paid contingent upon the attainment during a Performance Period of certain Performance Goals. A Performance Cash Award may also require the completion of a specified period of Continuous Service. The length of any Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals have been attained shall be conclusively determined by the Committee in its sole discretion. In any calendar year, the Committee may not grant a Performance Cash Award that has a maximum value that may be paid to any Participant in excess of $1,500,000. The Board may provide for or, subject to such terms and conditions as the Board may specify, may permit a Participant to elect for, the payment of any Performance Cash Award to be deferred to a specified date or event. The Committee may specify the form of payment of Performance Cash Awards, which may be cash or other property, or may provide for a Participant to have the option for his or her Performance Cash Award, or such portion thereof as the Board may specify, to be paid in whole or in part in cash or other property.

 

(d)   Other Stock Awards.  Other forms of Stock Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, including the appreciation in value thereof (e.g., options or stock rights with an exercise price or strike price less than 100% of the Fair Market Value of the Common Stock at the time of grant) may be granted either alone or in addition to Stock Awards provided for under Section 5 and the preceding provisions of this Section 6. Subject to the provisions of the Plan, the Board shall have sole and complete authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions of such Other Stock Awards.

 

 

7.             COVENANTS OF THE COMPANY.

 

(a)   Availability of Shares.  During the terms of the Stock Awards, the Company shall keep available at all times the number of shares of Common Stock reasonably required to satisfy such Stock Awards.

 

(b)   Securities Law Compliance.  The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained. A Participant shall not be eligible for the grant of a Stock Award or the subsequent issuance of Common Stock pursuant to the Stock Award if such grant or issuance would be in violation of any applicable securities law.

 

(c)   No Obligation to Notify.  The Company shall have no duty or obligation to any Participant to advise such holder as to the time or manner of exercising such Stock Award. Furthermore, the Company shall have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of a Stock Award or a possible period in which the Stock Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of a Stock Award to the holder of such Stock Award.

 

8.             MISCELLANEOUS.

 

(a)   Use of Proceeds from Sales of Common Stock.  Proceeds from the sale of shares of Common Stock pursuant to Stock Awards shall constitute general funds of the Company.

 

(b)   Corporate Action Constituting Grant of Stock Awards.  Corporate action constituting a grant by the Company of a Stock Award to any Participant shall be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Stock Award is communicated to, or actually received or accepted by, the Participant.

 

(c)   Stockholder Rights.  No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Stock Award unless and until (i) such Participant has satisfied all requirements for exercise of the Stock Award pursuant to its terms, if applicable, and (ii) the issuance of the Common Stock subject to such Stock Award has been entered into the books and records of the Company.

 

(d)   No Employment or Other Service Rights.  Nothing in the Plan, any Stock Award Agreement or any other instrument executed thereunder or in connection with any Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.

 

(e)   Incentive Stock Option $100,000 Limitation.  To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof that exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).

 

(f)   Investment Assurances.  The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to

 

 

the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (A) the issuance of the shares upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (B) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.

 

(g)   Withholding Obligations.  Unless prohibited by the terms of a Stock Award Agreement, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to an Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Award; provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid classification of the Stock Award as a liability for financial accounting purposes); (iii) withholding cash from an Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; or (v) by such other method as may be set forth in the Award Agreement.

 

(h)   Electronic Delivery.  Any reference herein to a “written” agreement or document shall include any agreement or document delivered electronically or posted on the Company’s intranet.

 

(i)   Deferrals.  To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is still an employee. The Board is authorized to make deferrals of Awards and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination of employment or retirement, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law.

 

(j)   Compliance with Section 409A.  To the extent that the Board determines that any Award granted hereunder is subject to Section 409A of the Code, the Award Agreement evidencing such Award shall incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code. To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Section 409A of the Code, including without limitation any applicable guidance that may be issued or amended after the Effective Date.

 

9.             ADJUSTMENTS UPON CHANGES IN COMMON STOCK; OTHER CORPORATE EVENTS.

 

(a)   Capitalization Adjustments.  In the event of a Capitalization Adjustment, the Board shall appropriately and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c), (iii) the class(es) and maximum number of securities that may be awarded to any person pursuant to Section 4(c) and 6(c)(i) , and (iv) the class(es) and number of securities and price per share of stock subject to outstanding Stock Awards. The Board shall make such adjustments, and its determination shall be final, binding and conclusive.

 

(b)   Dissolution or Liquidation.  Except as otherwise provided in the Stock Award Agreement, in the event of a dissolution or liquidation of the Company, all outstanding Stock Awards (other than Stock Awards

 

 

consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition or the Company’s right of repurchase) shall terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase rights or subject to a forfeiture condition may be repurchased or reacquired by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous Service, provided, however, that the Board may, in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Stock Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion.

 

(c)   Corporate Transaction.  The following provisions shall apply to Stock Awards in the event of a Corporate Transaction unless otherwise provided in the instrument evidencing the Stock Award or any other written agreement between the Company or any Affiliate and the holder of the Stock Award or unless otherwise expressly provided by the Board at the time of grant of a Stock Award.

 

(i)            Stock Awards May Be Assumed.  In the event of a Corporate Transaction, any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue any or all Stock Awards outstanding under the Plan or may substitute similar stock awards for Stock Awards outstanding under the Plan (including but not limited to, awards to acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate Transaction), and any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to Stock Awards may be assigned by the Company to the successor of the Company (or the successor’s parent company, if any), in connection with such Corporate Transaction. A surviving corporation or acquiring corporation (or its parent) may choose to assume or continue only a portion of a Stock Award or substitute a similar stock award for only a portion of a Stock Award, or may choose to assume or continue the Stock Awards held by some, but not all Participants. The terms of any assumption, continuation or substitution shall be set by the Board.

 

(ii)           Stock Awards Held by Current Participants.  In the event of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstanding Stock Awards or substitute similar stock awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and that are held by Participants whose Continuous Service has not terminated prior to the effective time of the Corporate Transaction (referred to as the “Current Participants”), the vesting of such Stock Awards (and, with respect to Options and Stock Appreciation Rights, the time when such Stock Awards may be exercised) shall be accelerated in full to a date prior to the effective time of such Corporate Transaction (contingent upon the effectiveness of the Corporate Transaction) as the Board shall determine (or, if the Board shall not determine such a date, to the date that is five (5) days prior to the effective time of the Corporate Transaction), and such Stock Awards shall terminate if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction, and any reacquisition or repurchase rights held by the Company with respect to such Stock Awards shall lapse (contingent upon the effectiveness of the Corporate Transaction).

 

(iii)         Stock Awards Held by Persons other than Current Participants.  In the event of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstanding Stock Awards or substitute similar stock awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and that are held by persons other than Current Participants, such Stock Awards shall terminate if not exercised (if applicable) prior to the effective time of the Corporate Transaction; provided, however, that any reacquisition or repurchase rights held by the Company with respect to such Stock Awards shall not terminate and may continue to be exercised notwithstanding the Corporate Transaction.

 

(d)   Change in Control.  A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration shall occur.

 

 

10.          TERMINATION OR SUSPENSION OF THE PLAN.

 

(a)   Plan Term.  The Board may suspend or terminate the Plan at any time. Unless terminated sooner by the Board pursuant to Section 2(b)(v), the Plan shall automatically terminate on the day before the tenth (10th) anniversary of the earlier of (i) the date the Plan is adopted by the Board, or (ii) the date the Plan is approved by the stockholders of the Company. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

 

(b)   No Impairment of Rights.  Suspension or termination of the Plan shall not impair rights and obligations under any Award granted while the Plan is in effect except with the written consent of the affected Participant.

 

11.          EFFECTIVE DATE OF PLAN.

 

This Plan shall become effective on the Effective Date.

 

12.          CHOICE OF LAW.

 

The law of the State of California shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to that state’s conflict of laws rules.

 

13.  DEFINITIONS.  As used in the Plan, the following definitions shall apply to the capitalized terms indicated below:

 

(a)           “Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the Company as such terms are defined in Rule 405 of the Securities Act. The Board shall have the authority to determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition.

 

(b)           “Award” means a Stock Award or a Performance Cash Award.

 

(c)           “Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of an Award.

 

(d)           “Board” means the Board of Directors of the Company.

 

(e)           “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the Effective Date without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or similar transaction). Notwithstanding the foregoing, the conversion of any convertible securities of the Company shall not be treated as a Capitalization Adjustment.

 

(f)            “Cause” shall have the meaning ascribed to such term in any written agreement between the Participant and the Company defining such term and, in the absence of such agreement, such term shall mean, with respect to a Participant, the occurrence of any of the following events: (i) an intentional action or intentional failure to act by the Participant that was performed in bad faith; (ii) a Participant’s intentional refusal or intentional failure to act in accordance with any lawful and proper direction or order of his or her superiors; (iii) a Participant’s habitual neglect of the duties of employment, which may include a failure to perform his or her job duties satisfactorily; (iv) a Participant’s indictment, charge, or conviction of a felony or any crime involving moral turpitude, or participation in any act of theft or dishonesty, regardless of whether such act has had or could reasonably be expected to have a material detrimental effect on the business of the Company or an Affiliate; or (v) a Participant’s violation of any material provision of the Company’s Proprietary Information and Inventions Agreement or violation of any material provision of any other written policy or procedure of the Company or an Affiliate. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause shall be made by the Company, in its sole discretion. Any determination by the Company that the Continuous

 

 

Service of a Participant was terminated with or without Cause for the purposes of outstanding Awards held by such Participant shall have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose.

 

(g)           “Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)            any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A) on account of the acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities, or (C) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control shall be deemed to occur;

 

(ii)           there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction;

 

(iii)         the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company shall otherwise occur, except for a liquidation into a parent corporation; or

 

(iv)          there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition.

 

Notwithstanding the foregoing or any other provision of this Plan, the term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company.

 

(h)           “Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.

 

(i)            “Committee” means a committee of one or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c).

 

 

(j)            “Common Stock” means the common stock of the Company.

 

(k)           “Company” means Omnicell, Inc., a Delaware corporation.

 

(l)            “Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, shall not cause a Director to be considered a “Consultant” for purposes of the Plan. Notwithstanding the foregoing, a person is treated as a Consultant under this Plan only if a Form S-8 Registration Statement under the Securities Act is available to register the sale of the Company’s securities to such person.

 

(m)          “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, shall not terminate a Participant’s Continuous Service; provided, however, if the Entity for which a Participant is rendering services ceases to qualify as an Affiliate, as determined by the Board in its sole discretion, such Participant’s Continuous Service shall be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of (i) any leave of absence approved by the Board or Chief Executive Officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence shall be treated as Continuous Service for purposes of vesting in a Stock Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law.

 

(n)           “Corporate Transaction” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)            the consummation of a sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;

 

(ii)           the consummation of a sale or other disposition of at least ninety percent (90%) of the outstanding securities of the Company;

 

(iii)         the consummation of a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or

 

(iv)          the consummation of a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

 

(o)           “Covered Employee” shall have the meaning provided in Section 162(m)(3) of the Code.

 

(p)           “Director” means a member of the Board.

 

(q)           “Disability” means, with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months, as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code, and shall be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.

 

 

(r)           “Effective Date” means the effective date of this Plan document, which is the date after the annual meeting of stockholders of the Company held in 2009 provided this Plan is approved by the Company’s stockholders at such meeting.

 

(s)           “Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for such services, shall not cause a Director to be considered an “Employee” for purposes of the Plan.

 

(t)            “Entity” means a corporation, partnership, limited liability company or other entity.

 

(u)           “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

(v)            “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” shall not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to a registered public offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities.

 

(w)           “Fair Market Value” means, as of any date, the value of the Common Stock determined as follows:

 

(i)            If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in a source the Board deems reliable.

 

(ii)           Unless otherwise provided by the Board, if there is no closing sales price for the Common Stock on the date of determination, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

(iii)         In the absence of such markets for the Common Stock, the Fair Market Value shall be determined by the Board in good faith and in a manner that complies with Sections 409A and 422 of the Code.

 

(x)           “Incentive Stock Option” means an option granted pursuant to Section 5 of the Plan that is intended to be, and qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.

 

(y)           “Non-Employee Director” means a Director who either (i) is not a current employee or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.

 

(z)           “Nonstatutory Stock Option” means any option granted pursuant to Section 5 of the Plan that does not qualify as an Incentive Stock Option.

 

 

(aa)         “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act.

 

(bb)         “Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.

 

(cc)         “Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan.

 

(dd)         “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.

 

(ee)         “Other Stock Award” means an award based in whole or in part by reference to the Common Stock which is granted pursuant to the terms and conditions of Section 6(d).

 

(ff)           “Other Stock Award Agreement” means a written agreement between the Company and a holder of an Other Stock Award evidencing the terms and conditions of an Other Stock Award grant. Each Other Stock Award Agreement shall be subject to the terms and conditions of the Plan.

 

(gg)         “Outside Director” means a Director who either (i) is not a current employee of the Company or an “affiliated corporation” (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an “affiliated corporation” who receives compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, has not been an officer of the Company or an “affiliated corporation,” and does not receive remuneration from the Company or an “affiliated corporation,” either directly or indirectly, in any capacity other than as a Director, or (ii) is otherwise considered an “outside director” for purposes of Section 162(m) of the Code.

 

(hh)         “Own,” “Owned,” “Owner,” “Ownership” A person or Entity shall be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

 

(ii)           “Participant” means a person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Stock Award.

 

(jj)           “Performance Cash Award” means an award of cash granted pursuant to the terms and conditions of Section 6(c)(ii).

 

(kk)        “Performance Criteria” means the one or more criteria that the Board shall select for purposes of establishing the Performance Goals for a Performance Period. The Performance Criteria that shall be used to establish such Performance Goals may be based on any one of, or combination of, the following as determined by the Board: (i) earnings (including earnings per share and net earnings); (ii) earnings before interest, taxes and depreciation; (iii) earnings before interest, taxes, depreciation and amortization; (iv) total stockholder return; (v) return on equity or average stockholder’s equity; (vi) return on assets, investment, or capital employed; (vii) stock price; (viii) margin (including gross margin); (ix) income (before or after taxes); (x) operating income; (xi) operating income after taxes; (xii) pre-tax profit; (xiii) operating cash flow; (xiv) sales, backlog or revenue targets; (xv) increases in revenue or product revenue; (xvi) expenses and cost reduction, or other budgetary goals; (xvii) improvement in or attainment of working capital levels; (xiii) economic value added (or an equivalent metric); (xix) market share; (xx) cash flow; (xxi) cash flow per share; (xxii) share price performance; (xxiii) debt reduction; (xxiv) implementation or completion of projects or processes; (xxv) customer satisfaction, service, or personal visitations; (xxvi) stockholders’ equity; (xxvii) capital expenditures; (xxiii) debt levels; (xxix) operating profit or net operating profit; (xxx) workforce diversity; (xxxi) growth of net income or operating income; (xxxii) billings; (xxxiii) completion of strategic, business, development, financial, employee or integration plan (or equivalent type of plan); (xxxiv) manufacturing, production, research and development, product launch or product objective goals;

 

 

(xxxvi) litigation, arbitration or other conflict achievements or resolutions; (xxxvii) hiring or reduction in headcount; (xxxviii) timely completion of internal and external analysis, or audits; (xxxix) completion of Performance Goals by direct reports; and (xl) to the extent that an Award is not intended to comply with Section 162(m) of the Code, other measures of performance selected by the Board.

 

(ll)           “Performance Goals” means, for a Performance Period, the one or more goals established by the Board for the Performance Period based upon the Performance Criteria. Performance Goals may be based on a Company-wide basis, with respect to one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise by the Board in the Award Agreement at the time the Award is granted or other terms setting forth the Performance Goals at the time the Performance Goals are established, the Board shall appropriately make adjustments in the method of calculating the attainment of Performance Goals for a Performance Period as follows: (i) to exclude restructuring and/or other nonrecurring charges; (ii) to exclude exchange rate effects, as applicable, for non-U.S. dollar denominated net sales and operating earnings; (iii) to exclude the effects of changes to generally accepted accounting principles; (iv) to exclude the effects of any statutory adjustments to corporate tax rates; and (v) to exclude the effects of any “extraordinary items” as determined under generally accepted accounting principles. In addition, the Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for such Performance Period. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the Stock Award Agreement or the written terms of a Performance Cash Award.

 

(mm)       “Performance Period” means the period of time selected by the Board over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Stock Award or a Performance Cash Award. Performance Periods may be of varying and overlapping duration, at the sole discretion of the Board.

 

(nn)         “Performance Stock Award” means a Stock Award granted under the terms and conditions of Section 6(c)(i).

 

(oo)         “Plan” means this Omnicell, Inc. 2009 Equity Incentive Plan.

 

(pp)         “Restricted Stock Award” means an award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(a).

 

(qq)         “Restricted Stock Award Agreement” means a written agreement between the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. Each Restricted Stock Award Agreement shall be subject to the terms and conditions of the Plan.

 

(rr)         “Restricted Stock Unit Award” means a right to receive shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(b).

 

(ss)         “Restricted Stock Unit Award Agreement” means a written agreement between the Company and a holder of a Restricted Stock Unit Award evidencing the terms and conditions of a Restricted Stock Unit Award grant. Each Restricted Stock Unit Award Agreement shall be subject to the terms and conditions of the Plan.

 

(tt)           “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.

 

(uu)         “Securities Act” means the Securities Act of 1933, as amended.

 

(vv)          “Stock Appreciation Right” or “SAR” means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 5.

 

 

(ww)        “Stock Appreciation Right Agreement” means a written agreement between the Company and a holder of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement shall be subject to the terms and conditions of the Plan.

 

(xx)         “Stock Award” means any right to receive Common Stock granted under the Plan, including an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation Right, a Performance Stock Award or any Other Stock Award.

 

(yy)         “Stock Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of a Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan.

 

(zz)         “Subsidiary” means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%).

 

(aaa)       “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Affiliate.

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