Document:

Exhibit 10.3

 

AMENDED AND RESTATED

EQUITY INCENTIVE PLAN
 OF
 WESCO HOLDINGS, INC.

 

Wesco Holdings, Inc., a Delaware corporation (the “Company”), hereby adopts this Amended and Restated Equity Incentive Plan of Wesco Holdings, Inc. (the “Plan”).  The purposes of this Plan are as follows:

 

(1)           To further the growth, development and financial success of the Company and its Subsidiaries (as defined herein), by providing additional incentives to employees, consultants and directors of the Company and its Subsidiaries who have been or will be given responsibility for the management or administration of the Company’s (or one of its Subsidiaries’) business affairs, by assisting them to become owners of Common Stock, thereby benefiting directly from the growth, development and financial success of the Company and its Subsidiaries.

 

(2)           To enable the Company (and its Subsidiaries) to obtain and retain the services of the type of professional, technical and managerial employees, consultants and directors considered essential to the long-range success of the Company (and its Subsidiaries) by providing and offering them an opportunity to become owners of Common Stock pursuant to the exercise of Options, including, in the case of employees, Options that are intended to qualify as “incentive stock options” under Section 422 of the Code (as defined herein).

 

ARTICLE I.
 DEFINITIONS

 

Whenever the following terms are used in this Plan, they shall have the meaning specified below unless the context clearly indicates to the contrary.  The singular pronoun shall include the plural where the context so indicates.

 

Section 1.1       “Administrator” shall mean the Board or any of its Committees as shall be administering the Plan in accordance with Article VII hereof.

 

Section 1.2       “Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person where “control” shall have the meaning given such term under Rule 405 of the Securities Act.  For the purposes of this Plan, Affiliates of the Company shall include all Principal Stockholders.

 

Section 1.3       “Applicable Laws” shall mean the requirements relating to the administration of stock option and restricted stock plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options or Restricted Stock are granted under the Plan.

 

Section 1.4       “Award” shall mean an Option, Restricted Stock award or a Restricted Stock Unit award granted to a Participant pursuant to the Plan.

 

 

Section 1.5       “Award Agreement” shall mean any written agreement, contract, or other instrument or document evidencing an Award, including through electronic medium.

 

Section 1.6       “Board”shall mean the Board of Directors of the Company.

 

Section 1.8       “Cause” shall mean (a) the Board’s determination that the Participant failed to substantially perform his duties as a Service Provider (other than any such failure resulting from the Participant’s Disability); (b) the Board’s determination that the Participant failed to carry out, or comply with, in any material respect any lawful and reasonable directive of the Board or the Participant’s immediate supervisor; (c) the Participant’s willful misconduct, negligence or a breach of fiduciary duty that, in each case or in the aggregate, results in material harm to Wesco Aircraft Hardware Corp, a California corporation (“Wesco”) or any of its Affiliates; (d) the Participant’s willful and material breach of any Award Agreement or the bylaws of the Wesco; (e) the Participant’s conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or crime involving moral turpitude; (f) the Participant’s unlawful use (including being under the influence) or possession of illegal drugs on Wesco’s premises or while performing the Participant’s duties and responsibilities to Wesco or any of its Affiliates; or (g) the Participant’s commission of an act of fraud, embezzlement, or misappropriation, in each case, against Wesco or any of its Affiliates.  Notwithstanding the foregoing, if the Participant is a party to a written employment agreement, consulting agreement, or Award Agreement with the Company or any of its Subsidiaries and such agreement contains a definition of cause, then “Cause” shall be as such term is defined in the applicable written employment agreement, consulting agreement, or Award Agreement.

 

Section 1.7       “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

Section 1.8       “Committee” shall mean a committee of Directors or other individuals satisfying Applicable Laws appointed by the Board in accordance with Article VII hereof.

 

Section 1.9       “Common Stock” shall mean the Class B common stock, par value $0.001 per share, of the Company, or the Class A common stock, par value $0.001 per share, of the Company, as determined by the Administrator in its discretion and set forth in the applicable Award Agreement.

 

Section 1.10     “Company” shall mean Wesco Holdings, Inc., a Delaware corporation, and any successor.

 

Section 1.11     “Consultant” shall mean any Person who is engaged by the Company or any of its Subsidiaries to render consulting or advisory services to such entity.

 

Section 1.12     “Corporate Event” shall mean, as determined by the Administrator in its sole discretion, any transaction or event described in Section 8.1(a) or any unusual or nonrecurring transaction or event affecting the Company, any Subsidiary of the Company, or the financial statements of the Company or any of its Subsidiaries, or changes in applicable laws, regulations, or accounting principles (including, without limitation, a recapitalization of the Company).

 

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Section 1.13     “Director” shall mean a member of the Board or a member of the Board of Directors of any Subsidiary of the Company.

 

Section 1.14     “Disability” shall mean “disability,” as such term is defined in Section 22(e)(3) of the Code.

 

Section 1.15     “Eligible Representative” for a Participant shall mean such Participant’s personal representative or such other person as is empowered under the deceased Participant’s will or the then applicable laws of descent and distribution to represent the Participant hereunder.

 

Section 1.16     “Employee” shall mean any employee (as defined in accordance with the regulations and revenue rulings then applicable under Section 3401(c) of the Code) of the Company or one of its Subsidiaries, whether such employee is so employed at the time this Plan is adopted or becomes so employed subsequent to the adoption of this Plan.  A Service Provider shall not cease to be an Employee in the case of (a) any leave of absence approved by the Company or (b) transfers between locations of the Company or between the Company, any of its Subsidiaries, or any successor.  For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 181st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Non-Qualified Stock Option.

 

Section 1.17     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

Section 1.18     “Fair Market Value” of a share of Common Stock as of a given date shall be:

 

(a)   If the Common Stock is listed on any established stock exchange or a national market system, including, without limitation, The Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for a share of such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(b)   If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for a share of the Common Stock on the day of determination; or

 

(c)   In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

 

Section 1.19     “Incentive Stock Option” shall mean an Option which qualifies under Section 422 of the Code and is designated as an Incentive Stock Option by the Administrator.

 

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Section 1.20     “Independent Director” shall mean a member of the Board or a member of the Board of Directors of any Subsidiary of the Company who is not an Employee of the Company or any of its Subsidiaries.

 

Section 1.21     “Non-Qualified Stock Option” shall mean an Option which is not an “incentive stock option” under Section 422 of the Code and shall include an Option which is designated as a Non-Qualified Stock Option by the Administrator.

 

Section 1.22     “Officer” shall mean an officer of the Company, as defined in Rule 16a-l(f) under the Exchange Act, as such Rule may be amended in the future.

 

Section 1.23     “Option” shall mean an option granted under the Plan to purchase Common Stock. “Options” includes both Incentive Stock Options and Non-Qualified Stock Options.

 

Section 1.24     “Option Price” shall have the meaning set forth in Section 4.3.

 

Section 1.25     “Optionee” shall mean a Service Provider to whom an Option is granted under the Plan.

 

Section 1.26     “Participant” shall mean any Service Provider who has been granted an Award pursuant to the Plan.

 

Section 1.27     “Person” shall mean an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.

 

Section 1.28     “Plan” shall mean this Amended and Restated Equity Incentive Plan of Wesco Holdings, Inc.

 

Section 1.29     “Principal Stockholders” shall mean (i) Falcon Aerospace Holdings, LLC, a Delaware limited liability company and (ii) any of its Affiliates to which (a) any of the Principal Stockholders or any other Person transfers Common Stock or (b) the Company issues Common Stock.

 

Section 1.30     “Restricted Stock” shall mean an Award granted pursuant to Section 6.1.

 

Section 1.31     “Restricted Stock Unit” shall mean an Award granted pursuant to Section 6.2.

 

Section 1.32     “Secretary” shall mean the Secretary of the Company.

 

Section 1.33     “Securities Act” shall mean the Securities Act of 1933, as amended.

 

Section 1.34     “Service Provider” shall mean an Employee, Consultant or Director.

 

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Section 1.35     “Share” shall mean a share of Common Stock.

 

Section 1.36     “Stockholders Agreement” shall mean that certain agreement by and between each Participant, the Principal Stockholders, the Company and other parties thereto, which contains certain restrictions and limitations applicable to Options, the shares of Common Stock acquired upon Option exercise, grant of Restricted Stock or settlement of a Restricted Stock Unit, as may be amended from time to time.  If the Participant is not a party to a Stockholders Agreement at the time of grant of Restricted Stock, settlement of a Restricted Stock Unit or exercise of the Option (or any portion thereof), the grant of Restricted Stock, settlement of a Restricted Stock Unit or, as applicable, the exercise of the Option shall be subject to the condition that the Participant enter into the Stockholders Agreement with the Company.

 

Section 1.37     “Subsidiary” of any entity shall mean any corporation in an unbroken chain of corporations beginning with such entity if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

ARTICLE II.
 SHARES SUBJECT TO PLAN

 

Section 2.1       Shares Subject to Plan

 

(a)   Subject to Section 8.1, the aggregate number of shares of Common Stock which may be issued under this Plan is 1,700,000.  The shares may be authorized but unissued, or reacquired Common Stock.

 

(b)   To the extent that an Award terminates, is forfeited, is repurchased, expires, or lapses for any reason, any shares of Common Stock subject to the Award shall again be available for the grant of an Award pursuant to the Plan; provided, however, vested shares of Common Stock that are repurchased after being issued from the Plan shall not be available for future issuance under the Plan.  Additionally, any shares of Common Stock tendered or withheld to satisfy the grant or exercise price or tax withholding obligation pursuant to any Award shall again be available for the grant of an Award pursuant to the Plan.  To the extent permitted by applicable law or any exchange rule, shares of Common Stock issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of combination by the Company or any of its Subsidiaries shall not be counted against shares of Common Stock available for grant pursuant to this Plan.

 

ARTICLE III.

GRANTING OF OPTIONS

 

Section 3.1       Eligibility.   Non-Qualified Stock Options may be granted to Service Providers.  Subject to Section 3.2, Incentive Stock Options may only be granted to Employees.

 

Section 3.2       Qualification of Incentive Stock Options.   No Employee may be granted an Incentive Stock Option under the Plan if such Employee, at the time the Incentive Stock

 

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Option is granted, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any then existing Subsidiary of the Company or “parent corporation” (within the meaning of Section 424(e) of the Code) unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the Code.

 

Section 3.3       Granting of Options to Service Providers

 

(a)   The Administrator shall from time to time:

 

(i)            Select from among the Service Providers (including those to whom Options have been previously granted under the Plan) such of them as in its opinion should be granted Options;

 

(ii)           Determine the number of Shares to be subject to such Options granted to such Service Provider, and determine whether such Options are to be Incentive Stock Options or Non-Qualified Stock Options; and

 

(iii)          Determine the terms and conditions of such Options, consistent with the Plan.

 

(b)   Upon the selection of a Service Provider to be granted an Option pursuant to subsection (a), the Administrator shall instruct the Secretary or another authorized Officer of the Company to issue such Option and may impose such conditions on the grant of such Option as it deems appropriate.  Without limiting the generality of the preceding sentence, the Administrator may, subject to applicable securities laws, require as a condition to the grant of an Option to a Service Provider that the Service Provider surrender for cancellation all or a portion of the unexercised Options which have previously been granted to him or her.  An Option the grant of which is conditioned upon such surrender may have an Option exercise price lower (or higher) than the Option exercise price of the surrendered Option, may cover the same (or a lesser or greater) number of shares of stock as the surrendered Option, may contain such other terms as the Administrator deems appropriate and shall be exercisable in accordance with its terms, without regard to the number of shares, price, period of exercisability or any other term or condition of the surrendered Option.  Subject to Section 8.3 of the Plan, any Incentive Stock Option granted under the Plan may be modified by the Administrator, without the consent of the Optionee, even if such modification would result in the disqualification of such Option as an “incentive stock option” under Section 422 of the Code.

 

ARTICLE IV.
 TERMS OF OPTIONS

 

Section 4.1       Award Agreement

 

(a)   Each Option shall be evidenced by a written Award Agreement (“Award Agreement”), which shall be executed by the Optionee and an authorized Officer of the Company and which shall contain such terms and conditions as the

 

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Administrator shall determine, consistent with the Plan.  Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to qualify such Options as “incentive stock options” under Section 422 of the Code.

 

(b)   The Administrator at any time, and from time to time, may amend the terms of any one or more existing Award Agreements, provided, however, that subject to the provisions of this Plan the rights of an Optionee under an Award Agreement shall not be adversely impaired in any material respect without the Optionee’s written consent.  The Company shall provide an Optionee with written notice of any amendment made to such Optionee’s existing Award Agreement.

 

Section 4.2       Exercisability and Vesting of Options

 

(a)   Each Option shall become exercisable according to the terms of the applicable Award Agreement; provided, however, that by a resolution adopted after an Option is granted the Administrator may, on such terms and conditions as it may determine to be appropriate, accelerate the time at which such Option or any portion thereof may be exercised.

 

(b)   Except as otherwise provided in the applicable Award Agreement, no portion of an Option which is unexercisable on the date of the Service Provider’s termination of service or employment shall thereafter become exercisable.

 

(c)   The aggregate Fair Market Value (determined as of the time the Option is granted) of all shares of Common Stock with respect to which Incentive Stock Options are first exercisable by a Service Provider in any calendar year may not exceed $100,000 or such other limitation as imposed by Section 422(d) of the Code, or any successor provision.  To the extent that Incentive Stock Options are first exercisable by a Participant in excess of such limitation, the excess shall be considered Non-Qualified Stock Options.

 

Section 4.3       Option Price.    The per share purchase price of the shares of Common Stock subject to each Option (the “Option Price”) shall be set by the Administrator and shall be not less than 100% of the Fair Market Value of such shares on the date such Option is granted.  With respect to Incentive Stock Options, in the case of an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company, the Option Price shall not be less than 110% of the Fair Market Value of such shares on the date such Incentive Stock Option is granted.

 

Section 4.4       Expiration of Options  

 

No Option may be exercised to any extent by anyone after the first to occur of the following events:

 

(a)   The expiration of ten years from the date the Option was granted; or

 

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(b)   With respect to an Incentive Stock Option in the case of an Optionee owning (within the meaning of Section 424(d) of the Code), at the time the Incentive Stock Option was granted, more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary corporation, the expiration of five years from the date the Incentive Stock Option was granted.

 

ARTICLE V.
 EXERCISE OF OPTIONS

 

Section 5.1       Person Eligible to Exercise.  During the lifetime of the Optionee, only he or she may exercise an Option (or any portion thereof granted to him or her); provided, however, that the Optionee’s Eligible Representative may exercise his or her Option during the period of the Optionee’s disability (as defined in Section 22(e)(3) of the Code).  After the death of the Optionee, any exercisable portion of an Option may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Award Agreement, be exercised by his or her Eligible Representative.

 

Section 5.2       Partial Exercise.  At any time and from time to time prior to the time when the Option becomes unexercisable under the Plan or the applicable Award Agreement, the exercisable portion of an Option may be exercised in whole or in part; provided, however, that the Company shall not be required to issue fractional shares of stock and the Administrator may, by the terms of the Option, require any partial exercise to exceed a specified minimum number of shares of stock.

 

Section 5.3       Manner of Exercise.  An exercisable Option, or any exercisable portion thereof, may be exercised solely by delivery to the Secretary of all of the following prior to the time when such Option or such portion becomes unexercisable under the Plan or the applicable Award Agreement:

 

(a)   Subject to any conditions that may be imposed by the Administrator, notice in writing signed by the Optionee or his or her Eligible Representative, stating that such Option or portion is exercised, and specifically stating the number of shares of Common Stock with respect to which the Option is being exercised;

 

(b)   A copy of the Stockholders Agreement signed by the Optionee or Eligible Representative, as applicable;

 

(c)   Full payment (in cash or by personal, certified, or bank cashier check) of the aggregate purchase price of the shares of stock with respect to which such Option (or portion thereof) is thereby exercised; or

 

(i)            With the consent of the Administrator, (A) shares of Common Stock owned by the Optionee for at least a six month period duly endorsed for transfer to the Company (or such other period as the Administrator may specify); or (B) shares of the Common Stock issuable to the Optionee upon exercise of the Option, with a Fair Market Value on the date of Option exercise equal to the aggregate Option Price of the shares with respect to which such Option (or portion thereof) is thereby exercised; or

 

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(ii)           With the consent of the Administrator, any form of payment permitted by Applicable Laws and any combination of the foregoing methods of payment;

 

(d)   The payment to the Company (in cash or by personal, certified or bank cashier or by any other means of payment approved by the Administrator) of all minimum amounts necessary to satisfy any and all federal, state and local tax withholding requirements arising in connection with the exercise of the Option;

 

(e)   Such representations and documents as the Administrator deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other federal or state securities laws or regulations.  The Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer orders to transfer agents and registrars; and

 

(f)    In the event that the Option or portion thereof shall be exercised as permitted under Section 5.1 by any person or persons other than the Optionee, appropriate proof of the right of such person or persons to exercise the Option or portion thereof.

 

Section 5.4       Optionee Representations. The Administrator, in its sole discretion, may require an Optionee to make certain representations or acknowledgements, on or prior to the purchase of any shares of Common Stock pursuant to any Option granted under this Plan, in respect thereof including, without limitation, that the Optionee is acquiring the shares for an investment purpose and not for resale, and, if the Optionee is an affiliate of the Company (as defined in Rule 405 of the rules and regulations promulgated under the Securities Act), additional acknowledgements regarding when and to what extent any transfers of shares of such Common Stock may occur.

 

Section 5.5       Conditions to Issuance of Stock Certificates. The shares of Common Stock issuable and deliverable upon the exercise of an Option, or any portion thereof, may be either previously authorized but unissued shares or issued shares which have then been reacquired by the Company.  A certificate of shares will be delivered to the Optionee at the Company’s principal place of business as soon as practicable after the Option is properly exercised.  Notwithstanding the above, the Company shall not be required to issue or deliver any certificate or certificates for shares of stock purchased upon the exercise of any Option or portion thereof prior to fulfillment of all of the following conditions:

 

(a)   The admission of such shares to listing on any and all stock exchanges on which such class of stock is then listed;

 

(b)   The completion of any registration or other qualification of such shares under any state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Administrator shall, in its sole discretion, deem necessary or advisable;

 

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(c)   The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its sole discretion, determine to be necessary or advisable; and

 

(d)   The payment to the Company (or its Subsidiary, as applicable) of all amounts which it is required to withhold under applicable law in connection with the exercise of the Option.

 

The Administrator shall not have any liability to any Optionee for any delay in the delivery of shares to be issued upon an Optionee’s exercise of an Option.

 

Section 5.6       Rights as Stockholders. The holder of an Option shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any shares purchasable upon the exercise of any part of an Option unless and until such holder has signed a Stockholders Agreement provided by the Administrator and certificates representing such shares have been issued by the Company to such holder.

 

Section 5.7       Transfer Restrictions. Shares acquired upon exercise of an Option shall be subject to the terms and conditions of a Stockholders Agreement.  In addition, the Administrator, in its sole discretion, may impose further restrictions on the transferability of the shares purchasable upon the exercise of an Option as it deems appropriate.  Any such restriction shall be set forth in the respective Award Agreement and may be referred to on the certificates evidencing such shares.  The Administrator may require the Employee to give the Company prompt notice of any disposition of shares of stock, acquired by exercise of an Incentive Stock Option, within two years from the date of granting such Option or one year after the transfer of such shares to such Employee.  The Administrator may direct that the certificates evidencing shares acquired by exercise of an Incentive Stock Option refer to such requirement.

 

ARTICLE VI.
 RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNIT AWARDS

 

Section 6.1       Restricted Stock.

 

(a)   Grant of Restricted Stock.  Administrator is authorized to make Awards of Restricted Stock to any Service Provider selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator.  All Awards of Restricted Stock shall be evidenced by an Award Agreement. Notwithstanding the foregoing, any Restricted Stock which is granted in connection with the transactions contemplated by the Stock Purchase and Exchange Agreement and Agreement and Plan of Merger, dated July 23, 2006, by and among the Company, Wesco Aircraft Hardware Corp, a California corporation (“Wesco”) and certain other parties thereto (the “Stock Purchase Agreement”), which is forfeited following its grant date as a result of the Participant failing to vest in the Restricted Stock pursuant to the terms of the Award Agreement governing such Restricted Stock, may be reallocated to other Employees upon recommendation by the Chief Executive Officer of Wesco and

 

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subject to approval by the Administrator, which approval shall not be unreasonably withheld.

 

(b)   Issuance and Restrictions.  Restricted Stock shall be subject to such restrictions on transferability and other restrictions as the Administrator may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock).  These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such installments, or otherwise, as the Administrator determines at the time of the grant of the Award or thereafter.

 

(c)   Forfeiture.  Except as otherwise determined by the Administrator at the time of the grant of the Award or thereafter, upon termination of employment or service during the applicable restriction period, Restricted Stock that is at that time subject to restrictions shall be forfeited; provided, however, that, the Administrator may (a) provide in any Restricted Stock Award Agreement that restrictions or forfeiture conditions relating to Restricted Stock will be waived in whole or in part in the event of terminations resulting from specified causes and (b) in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock.

 

(d)   Certificates for Restricted Stock.  Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Administrator shall determine.  If certificates representing shares of Restricted Stock are registered in the name of the Participant, certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, and the Company may, at its discretion, retain physical possession of the certificate until such time as all applicable restrictions lapse.

 

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Section 6.2       Restricted Stock Units.  The Administrator is authorized to make Awards of Restricted Stock Units to any Participant selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator.  At the time of grant, the Administrator shall specify the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate.  At the time of grant, the Administrator shall specify the maturity date applicable to each grant of Restricted Stock Units which shall be no earlier than the vesting date or dates of the Award and may be determined at the election of the grantee. On the maturity date, the Company shall, subject to the terms of this Plan,  transfer to the Participant one Share for each Restricted Stock Unit scheduled to be paid out on such date and not previously forfeited.  The Administrator shall specify the purchase price, if any, to be paid by the grantee to the Company for such Shares. Notwithstanding the foregoing, any Restricted Stock Units which are granted in connection with the transactions contemplated by the Stock Purchase Agreement, which is forfeited following its grant date as a result of the Participant failing to vest in the Restricted Stock Units pursuant to the terms of the Award Agreement governing such Restricted Stock Units, may be reallocated to other Employees upon recommendation by the Chief Executive Officer of Wesco and subject to approval by the Administrator, which approval shall not be unreasonably withheld.

 

ARTICLE VII.
 ADMINISTRATION

 

Section 7.1       Administrator. The Plan shall be administered by the Board or an Administrator appointed by the Board, which Administrator shall be constituted to comply with Applicable Laws.

 

Section 7.2       Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Administrator, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

 

(a)   to determine the Fair Market Value;

 

(b)   to determine the type or types of Awards to be granted to each Service Provider;

 

(c)   to select the Service Providers to whom Awards may from time to time be granted hereunder;

 

(d)   to determine the number of Awards to be granted and the number of shares of Common Stock to which an Award will relate;

 

(e)   to approve forms of agreement for use under the Plan, which need not be identical for each Service Provider;

 

(f)    to determine the terms and conditions of any Awards granted hereunder (including, but not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting

 

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acceleration or waiver of forfeiture restrictions and any restriction or limitation regarding any Awards or the Common Stock relating thereto) based in each case on such factors as the Administrator, in its sole discretion, shall determine;

 

(g)   to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;

 

(h)   to determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise or purchase price of an Award may be paid in, cash, Common Stock, other Awards, or other property, or an Award may be canceled, forfeited or surrendered;

 

(i)    to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; and

 

(j)    to make all other decisions and determinations that may be required pursuant to the Plan or as the Administrator deems necessary or advisable to administer the Plan.

 

Section 7.3       Effect of Administrator’s Decision.   All decisions, determinations and interpretations of the Administrator shall be final and binding on all Service Providers.

 

Section 7.4       Compensation, Professional Assistance, Good Faith Actions.  The Administrator may receive such compensation for its services hereunder as may be determined by the Board.  All expenses and liabilities incurred by the Administrator in connection with the administration of the Plan shall be borne by the Company.  The Administrator may employ attorneys, consultants, accountants, appraisers, brokers or other persons.  The Administrator, the Company and its Officers and Directors shall be entitled to rely upon the advice, opinions or valuations of any such persons.  All actions taken and all interpretations and determinations made by the Administrator, in good faith shall be final and binding upon all Participants, the Company and all other interested persons.  The Administrator shall not be personally liable for any action, determination or interpretation made with respect to the Plan or the Awards, and the Administrator shall be fully protected by the Company in respect to any such action, determination or interpretation.

 

ARTICLE VIII.
 OTHER PROVISIONS

 

Section 8.1       Changes in Common Stock; Disposition of Assets and Corporate Events

 

(a)   In the event that the Administrator determines that any recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, acquisition, disposition, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or any disposition of all or substantially all of the capital stock or assets of the Company (including, but not limited to, a Liquidity Event or Change in Control (as such terms may be defined in any Award Agreement)), exchange of Common Stock or other securities of the

 

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Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, the acquisition or disposition of any material assets or business or other similar corporate transaction or event, in the Administrator’s sole discretion, affects the Common Stock such that an adjustment to the Awards or Plan is determined by the Administrator to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award, then the Administrator shall, in such manner as it may deem equitable, adjust any or all of:

 

(i)            The number and kind of shares of Common Stock (or other securities or property) with respect to which an Award may be granted under the Plan (including, but not limited to, adjustments of the limitations in Section 2.1 on the maximum number and kind of shares which may be issued);

 

(ii)           The number and kind of shares of Common Stock (or other securities or property) subject to outstanding Awards;

 

(iii)          The grant or exercise price per share for any outstanding Awards under the Plan; and

 

(iv)          The terms and conditions of any outstanding Awards (including, without limitation, any applicable financial or other performance “targets” specified in each Award Agreement).

 

(b)   Upon the occurrence of a Corporate Event, the Administrator, in its sole discretion, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to (x) prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under this Plan, (y) facilitate such Corporate Event or (z) give effect to such changes in laws, regulations or accounting principles:

 

(i)            In its sole discretion, and on such terms and conditions as it deems appropriate, the Administrator may provide, either by the terms of the applicable Award Agreement or by action taken prior to the occurrence of such Corporate Event, and either automatically or upon the Participant’s request, for either (A) the purchase of any outstanding Award for an amount of cash, securities, or other property equal to the amount that could have been attained upon the exercise of the portion of such Award that was vested and exercisable (and such additional portion of the Award as the Administrator may determine) immediately prior to the occurrence of such Corporate Event or (B) the replacement of such vested (and other) portion of such Award with other rights or property selected by the Administrator in its sole discretion;

 

(ii)           In its sole discretion, the Administrator may provide, either by the terms of the applicable Award Agreement or by action taken prior to the occurrence of such

 

14

 

Corporate Event, that the Award (or any portion thereof) will terminate upon the occurrence of such event and cannot vest, be exercised or become payable after such event;

 

(iii)          In its sole discretion, and on such terms and conditions as it deems appropriate, the Administrator may provide, either by the terms of the applicable Award Agreement or by action taken prior to the occurrence of such Corporate Event, that for a specified period of time prior to such Corporate Event, such Award shall be exercisable as to all shares covered thereby or a specified portion of such shares, notwithstanding anything to the contrary in (A) Section 4.2; or (B) the provisions of the applicable Award Agreement;

 

(iv)          In its sole discretion, and on such terms and conditions as it deems appropriate, the Administrator may provide, either by the terms of the applicable Award Agreement or by action taken prior to the occurrence of such Corporate Event, that upon such event, such Award (or any portion thereof) be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or Awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; and

 

(v)           In its sole discretion, and on such terms and conditions as it deems appropriate, the Administrator may make adjustments in the number and type of shares of Common Stock (or other securities or property) subject to the Plan and outstanding Awards (or any portion thereof) and/or in the terms and conditions of (including the exercise price), and the criteria included in, outstanding Awards and Awards which may be granted in the future.

 

(c)   The Administrator may, in its sole discretion, include such further provisions and limitations in any Award Agreement or Stockholders Agreement as it may deem equitable and in the best interests of the Company and its Subsidiaries.

 

(d)   To the extent required by the terms of an Award Agreement, the Company shall notify the Participant prior to the date of a Corporate Event.

 

Section 8.2       Awards Not Transferable.  Unless otherwise agreed in writing by the Administrator, no Award or interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law, by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that nothing in this Section 8.2 shall prevent transfers by will or by the applicable laws of descent and distribution.

 

Section 8.3       Amendment, Suspension or Termination of the Plan or Award Agreements

 

(a)   The Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator.  However, without stockholder approval or ratification within 12 months before or after such action, no action of the Administrator may, except as provided in Section 8.1, increase any limit imposed in Section 2.1 on the maximum number of

 

15

 

shares of Common Stock which may be issued on exercise of Options under the Plan or extend the limit imposed in this Section 8.3 on the period during which Awards may be granted.

 

(b)   Except as provided by Section 8.1, neither the amendment, suspension nor termination of the Plan shall, without the consent of the holder of the Award, adversely alter or impair any rights or obligations under any Award theretofore granted.  Notwithstanding the foregoing, the Administrator at any time, and from time to time, may amend the terms of any one or more existing Award Agreements, provided however, that the rights of a Participant under an Award Agreement shall not be adversely impaired without the Participant’s written consent.  The Company shall provide a Participant with notice of any amendment made to such Participant’s existing Award Agreement in accordance with the terms of this Section 8.3(b).

 

(c)   No Award may be granted during any period of suspension nor after termination of the Plan, and in no event may any Award be granted under this Plan after the expiration of ten years from the date the Plan is adopted by the Board.

 

Section 8.4       Effect of Plan Upon Other Award and Compensation Plans.  The adoption of this Plan shall not affect any other compensation or incentive plans in effect for the Company or any of its Subsidiaries.  Nothing in this Plan shall be construed to limit the right of the Company or any of its Subsidiaries (a) to establish any other forms of incentives or compensation for Service Providers or (b) to grant or assume options or restricted stock otherwise than under this Plan in connection with any proper corporate purpose, including, but not by way of limitation, the grant or assumption of options or restricted stock in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, firm or association.

 

Section 8.5       At-Will Employment.  Nothing in the Plan, the Stockholders Agreement or any Award Agreement hereunder shall confer upon the Participant any right to continue as a Service Provider for the Company or any of its Subsidiaries or shall interfere with or restrict in any way the rights of the Company and any of its Subsidiaries, which are hereby expressly reserved, to discharge any Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written employment agreement between the Participant and the Company or any of its Subsidiaries.

 

Section 8.6       Stockholder Approval.  This Plan will be submitted for the approval of the Company’s stockholders within twelve months of the date of the Board’s initial adoption of this Plan.  No Option may be exercised to any extent by anyone unless and until the Plan is so approved by the stockholders, and if such approval has not been obtained by the end of said twelve-month period, the Plan and all Awards theretofore granted shall thereupon be canceled and become null and void.

 

Section 8.7       Titles.  Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.

 

16

 

Section 8.8       Conformity to Securities Laws.  The Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated under any of the foregoing, to the extent the Company, any of its Subsidiaries or any Participant is subject to the provisions thereof.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and Awards shall be granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law, the Plan and Awards granted hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

 

Section 8.9       Governing Law.  To the extent not preempted by federal law, the Plan shall be construed in accordance with and governed by the laws of the State of Delaware.

 

Section 8.10     Severability.  In the event any portion of the Plan or any action taken pursuant thereto shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provisions had not been included, and the illegal or invalid action shall be null and void.

 

Section 8.11     Governing Documents.  In the event of any contradiction between the Plan and any Award Agreement or any other written agreement between Participant and the Company or any Subsidiary of the Company that has been approved by the Administrator, the terms of the Plan shall govern, unless it is expressly specified in such Award Agreement or other written document that a specific provision of the Plan shall not apply.

 

Section 8.12     Section 409A.  To the extent that the Administrator determines that any Award granted under the Plan is subject to Section 409A of the Code, the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code.  To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the adoption of the Plan.  Notwithstanding any provision of the Plan to the contrary, in the event that following the adoption of the Plan the Administrator determines that any Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the adoption of the Plan), the Administrator may adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance.

 

17

 

I hereby certify that the foregoing Plan was duly adopted by the Board on May 17, 2007.

 

Executed on this        day of May 17, 2007.

 

 

	
 
    	
/s/   George Hess
    
	
 
    	
Name:
    	
George   Hess
    
	
 
    	
Title:
    	
Secretary
    

 

18

 

APPENDIX A

 

TO

 

AMENDED AND RESTATED EQUITY INCENTIVE PLAN

 

OF WESCO HOLDINGS, INC.

 

CALIFORNIA RESIDENTS ONLY

 

This Appendix A to the Amended and Restated Equity Incentive Plan of Wesco Holdings, Inc. (the “Plan”) shall apply only to Participants who are residents of the State of California who receive Awards under the Plan and whose Awards are intended to be exempt from registration in California pursuant to Section 25102(o) of the California Corporate Securities Law of 1968, as amended (“Section 25102(o)”), and the applicable provisions of the California Code of Regulations (the “California Regulations”).  Capitalized terms contained herein shall have the same meanings given to them in the Plan, unless otherwise provided by this Appendix A.  Notwithstanding any provisions contained in the Plan to the contrary and to the extent required by Applicable Laws, the following terms shall apply to all Awards granted to residents of the State of California whose Awards are intended to be exempt from registration in California pursuant to Section 25102(o), until such time as the Administrator amends this Appendix A.

 

(a)           Non-Qualified Stock Options granted to a person who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any “parent corporation,” as defined in Section 424(e) of the Code, or any Subsidiary of the Company, shall have an exercise price not less than 110% of the Fair Market Value per share on the date of grant.  Non-Qualified Stock Options granted to any other person shall have an exercise price that is not less than eighty-five percent (85%) of the Fair Market Value per share on the date of grant.  Notwithstanding the foregoing, Options may be granted with a per share exercise price other than as required above pursuant to a merger or other corporate transaction.

 

(b)           The term of each Option and right to purchase Restricted Stock shall be stated in the Award Agreement; provided, however, that the term of an Option shall be no more than ten (10) years from the date of grant thereof and the term of each right to purchase Restricted Stock shall be no more than ten (10) years from the date the Award Agreement is entered into.

 

(c)           Options or rights to purchase Restricted Stock may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Optionee, only by the Optionee.  If the Administrator in its sole discretion makes an Option or right to purchase Restricted Stock transferable, such Option or right to purchase Restricted Stock may only be transferred (i) by will, (ii) by the laws of descent and distribution, or (iii) to family members (as defined in Rule 701(c)(3) of the Securities Act) through gifts or domestic relations orders, as permitted by Rule 701 of the Securities Act.

 

19

 

(d)           Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement.  Except in the case of Options granted to officers, Directors and Consultants, Options shall become exercisable at a rate of no less than twenty percent (20%) per year over five (5) years from the date the Options are granted.

 

(e)           Unless employment or service is terminated for Cause, the Optionee may exercise his or her Option within thirty (30) days of termination, or such longer period of time as specified in the Award Agreement, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Award Agreement).

 

(f)            If the Optionee’s employment or service terminates as a result of the Optionee’s Disability, the Optionee may exercise his or her Option within six (6) months of termination, or such longer period of time as specified in the Award Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement).

 

(g)           If the Optionee dies while a Service Provider, the Option may be exercised within six (6) months following the Optionee’s death, or such longer period of time as specified in the Award Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement) by the Optionee’s designated beneficiary, personal representative, or by the person(s) to whom the Option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution.

 

(h)           No Option or right to purchase Restricted Stock shall be granted to a resident of California more than ten (10) years after the earlier of the date of adoption of the Plan or the date the Plan is approved by the shareholders.

 

(i)            If an Option granted to a Participant gives the Company the right to repurchase shares of Common Stock issued pursuant to the Plan upon termination of employment of such Participant, the terms of such repurchase right must comply with Section 260.140.41(k) of the California Regulations.

 

(j)            If an Award of Restricted Stock granted to a Participant gives the Company the right to repurchase shares of Common Stock issued pursuant to the Plan upon termination of employment of such Participant, the terms of such repurchase right must comply with Section 260.140.42(h) of the California Regulations.

 

(k)           The purchase price for an Award of Restricted Stock granted to a Participant shall be not less than 85% of the Fair Market Value of the Common Stock at the time such Participant is granted the right to purchase shares under the Plan or at the time the purchase is consummated; provided, however, that if such Participant is a person who owns stock possessing more than 10% of the total combined voting power or value of all classes of stock of the Company or its parent or subsidiary corporations, the purchase price shall be not less than

 

20

 

100% of the Fair Market Value of the Common Stock at the time such Participant is granted the right to purchase shares under the Plan or at the time the purchase is consummated.

 

(l)            Notwithstanding anything to the contrary in Section 8.1 of the Plan, the number of shares of Common Stock covered by each outstanding Option, as well as the price per share of Common Stock covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of type of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, recapitalization, combination, reclassification or other distribution of shares of Common Stock effected without the receipt of consideration by the Company.   The conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the Administrator, whose determination in that respect shall be final, binding and conclusive.  Except as specifically provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number, type or price of shares of Common Stock subject to an Option.

 

(n)           The Company shall provide to each Participant, not less frequently than annually during the period such Participant has one or more Awards outstanding, copies of annual financial statements.  The Company shall not be required to provide such statements to key Employees whose duties in connection with the Company assure their access to equivalent information.

 

(o)           The terms of the Option or right to purchase Restricted Stock shall be governed by Article VIII of the Plan; provided, however, that the Administrator shall make such adjustments to the extent required by Section 25102(o) of the California Corporations Code.

 

(p)           This Appendix A shall be deemed to be part of the Plan and the Administrator shall have the authority to amend this Appendix A in accordance with Section 8.3 of the Plan.

 

21Exhibit 10.4

 

WESCO AIRCRAFT

MANAGEMENT ANNUAL INCENTIVE PLAN

 

Covering the Period beginning October 1, 2010 and ending September 30, 2011

 

PURPOSE:

 

The compensation strategy of WESCO Aircraft (“Company”) is to reward its managers and key employees in a manner that permits the Company to attract, retain and motivate outstanding individuals.

 

The Management Annual Incentive Plan (“AIP”) is designed to compensate managers and key employees of the Company for achieving annual Company performance objectives, as well as for individual contributions towards accomplishing these objectives.  The AIP aligns the interests of the Company’s managers and key employees with the objectives and goals of the Company.

 

ELIGIBILITY:

 

Eligibility for the AIP is limited to those employees approved by the Board of Directors of the Company or its parent (collectively, the “Board”) or its delegate(s) and will typically include those positions which have a significant effect on the Company’s growth and financial results.  Eligible positions and target incentive amounts will be reviewed and determined each year by the Company and may change from year to year.  Participants must be full time employees of the Company in order to participate or receive payments under the AIP.  A participant in the AIP will not be eligible to participate in the Employee Annual Shared Plan.

 

TARGET INCENTIVE:

 

Each AIP participant will be eligible for an incentive award based upon the Company’s financial performance.  For each participant, there will be a target incentive award (“Target Incentive Award”) equal to an established percentage (“Target Incentive Percentage”) of each participant’s base salary (“Base Salary”).  The Target Incentive Award will be awarded upon the achievement of external audit-confirmed and Board-approved financial targets.  Awards (if any) may be higher or lower than the calculated Target Incentive Award, based on whether the Company’s performance is above or below its financial targets.  A participant’s Base Salary for Target Incentive Award purposes is the participant’s salary on (i) October 1, 2010 or (ii) the date during 2010 or 2011 that the participant is admitted as a participant in the AIP.  Final decision of any incentive payments must be approved by the Board.

 

BONUS POOL:

 

Each year, the Company plans for a 100% payout of the Target Incentive Award for each individual.  At the conclusion of the year, the CEO will propose to the Board a total pool of funds to be made available for payout of individual bonuses (“Bonus Pool”).  The total Bonus Pool will be based upon the achievement of the Company’s EBITDA and cash flow targets.  The Company may not distribute funds in excess of the Board-approved Bonus Pool.  Additionally, the CEO has the discretion to adjust (either via increase or decrease) the payout for each individual based upon his or her contributions to the achievement of the Company’s targets.

 

The Target Incentive Award components are described below:

 

INCENTIVE COMPONENTS:

 

There are TWO components to the AIP:

 

No Target Incentive Award will be awarded unless the “baseline” goal (i.e. the minimum that is set for each bonus plan year) is met with respect to both Component A and Component B. The Company must exceed the baseline goals before any portion of the Target Incentive Award will be paid.  If the Company exceeds the baseline goals, the Target Incentive Award amounts increase from [100%] of the Target Incentive Award to a maximum of 200% of the Target Incentive Award.

 

1

 

COMPONENT A:                                EBITDA

 

A “target goal” (for 100% payout) for Company EBITDA is established annually by the Company’s senior leadership, with Board approval. There are several milestone goals both below and above the target goal that will qualify the AIP participant for an incentive award. However, the established baseline goal for Component B must also be achieved in addition to Component A before any payout can occur.

 

COMPONENT B:                CASH FLOW FROM OPERATIONS

 

A target goal for the Company to increase Cash Flow from Operations is established annually by the Company’s senior leadership, with Board approval. There are several milestone goals below and above the target goal that will qualify the AIP participant for an incentive award. However, the established baseline goal for Component A must also be achieved in addition to Component B before any payout can occur.

 

DETERMINATION OF AWARDS:

 

After receipt of the audited financial statements for the year ending September 30, 2011, the Company’s CEO will submit to the Board his evaluation of the bonus earnings of each participant in the plan and the Board shall make the final determination as to the amount of bonus that may be received by each participant.  When a question arises regarding extraordinary gains or losses, for example, the impact of an acquisition (which would not have been included in the target calculation), or the operation (gain or loss) of a particular division, the Company will have sole discretion in making any adjustments to any bonus amount.

 

PAYOUTS AND NEW EMPLOYEES:

 

Bonus awards will be paid no later than thirty (30) days following Board approval, which follows the completion of the fiscal year end review.  A participant must be on active payroll and a full-time employee of the Company during the Plan year AND at the time awards are distributed in order to be eligible to receive an incentive award payout.  Prior to actual payment of a bonus award, no bonus will be earned under the AIP. A participant who is promoted within the AIP year will be entitled to receive a pro-rated incentive award based upon the time spent in each position.

 

GENERAL:

 

At the beginning of each fiscal year that the AIP is in effect, participants will be notified that they are  operating under the AIP and their participation shall continue for that year unless the employee is terminated or transferred to other jobs not covered by the AIP.  Notice of participation in the AIP shall not restrict the Company’s rights to transfer participants to other jobs or terminate their employment.

 

DISABILITY, DEATH OR SPECIAL CIRCUMSTANCES:

 

In the event of disability, death or special circumstances affecting a plan participant, the Company may, but has no obligation to, approve partial or prorated awards.

 

PLAN EXCEPTIONS AND ADMINISTRATION:

 

The Company reserves the right to change or cancel the AIP at any time.  In addition, all exceptions or modifications to the AIP must be approved by the Company’s CEO.  The Company, through its Board or its delegate(s) shall have all powers and discretion necessary or appropriate to administer the AIP and to control its operation.  All determinations and decisions made by the Company shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law.

 

DISCLAIMER:

 

The Company is an “at will” employer and participation in the AIP is not to be construed in any way as an employment contract or agreement and does not in any way guarantee continued employment.

 

2

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