Document:

ex4-2.htm

Exhibit 4.2

	

	
 

Industry Canada   

	
 

Industrie Canada

	
Certificate of Arrangement

	  	
Certificat d’arrangement

	  	  	  
	
Canada Business Corporations Act

	  	
Loi canadienne sur les sociétés par actions

	  	
 

 

 

 

Just Energy Exchange Corp.

 

	  	
449031-2

 

	  
	  	
Just Energy Group Inc.

	  	
155876-7

	  
	  	
 

 

 

 

 

 

 

 

 

	  	  	  
	  	  	  	  	  
	  	
Name of CBCA corporation(s) involved -

Dénomination(s) de la (des) société(s)

I C S A concernée(s)

	  	
Corporation number - Numero de la société

	  
	  	  	  	  	  
	  	
I hereby certify that the arrangement set out in the attached articles of arrangement, involving the above-referenced corporation(s), has been effected under section 192 of the Canada Business Corporations Act.

	  	
Je certifie que l’arrangement mentionné dans les clauses d’arrangement annexées, concernant la (les) société(s) susmentionnée(s), a pris effet en vertu de l’article 192 de la Loi canadienne sur les sociétés par actions.

	  
	  	
 

 

/s/ Marcie Girouard

	  	
January 1, 2011 – le 1er janvier 2011

	  
	  	
Marcie Girouard

Director - Directeur

	  	  	  
	  	  	
Date of Arrangement – Date de l’arrangement

	  

 

 

 

  

  

  

	
Industry Canada 

Canada Business 

Corporation Act

	 	
Industrie Canada Loi 

Canadians sur les 

societies par actions

	 	
FORM 14.1 

ARTICLES OF 

ARRANGEMENT 

(SECTION 192)

	 	
FORMULAIRE 14.1 

CLAUSES 

D'ARRANGEMENT 

(ARTICLE 192)

	
1-Name of the applicant corporation(s) Denomination sociale (s)

Just Energy Exchange Corp., Just Energy Group, Inc.

 

	
2-Corporation No.(s)

449031-2, 755876-7

	
3-Name of the corporation(s), the articles of which are amended, if applicable

Just Energy Group, Inc.

 

	
4-Corporation No(s)

755876-7

	
5-Name of the corporation(s) created by amalgamation, if applicable

Just Energy Group Inc.

(for further information on the Corporation(s) created by amalgamation, Just Energy 

Group Inc., see Schedule "A" attached hereto)   

 

	
6-Corporation No.(s)

7502079

	
7-Name of the dissolved Corporation(s) if applicable

 

 

	
8-Corporation No.(s)

	
9-Name of the other Corporation(s) involved, if applicable

 

OESC Exchangeco II Inc., UEGL Exchangeco Corp

 

 

	
10-Corporation No.(s) or Jurisdiction of Incorporations

767242-0, 717333-4

	
11-In accordance with the order approving the arrangement –

 

	
a.  þ

	
The articles of the above named corporation(s) are amended in accordance with the attached plan of arrangement

 

The name of _______________________________________ is changed to ______________________________

 

	
b.  þ

	
The following bodies corporate are amalgamated to accordance with the attached plan of arrangement

(see Schedule "B" attached hereto)

 

	
c.  o

	
The above named corporation(s) is(are) liquidated and dissolved in accordance with the attached plan of arrangement

 

	
d.  þ

	
The plan of arrangement attached hereto, involving the above named body(ies), corporate is hereby affected

 

	
Signature

 

 

/s/ Jonah Davids

	 	
Printed Names

 

 

Jonah Davids

	 	
12 – Capacity of

 

 

Officer

	 	
13 – Tel. No.

 

 

(905) 795-3563

 

  

  

  

 

SCHEDULE "A"

 

Information concerning Just Energy Group Inc., created by the amalgamation of Just Energy 

Group Inc. (Corporation No. 755876-7), Just Energy Exchange Corp. (Corporation No. 449031-2), 

OESC Exchangeco II Inc. (Corporation No. 767242-0) and

UEGL Ezchangeco Corp. (Corporation No. 717333-4)

 

 

	
1.

	
Name of the Amalgamated Corporation

 

Just Energy Group Inc.

 

	
2.

	
The province or territory in Canada where the registered office is to be situated

 

Ontario

 

	
3.

	
The classes and any maximum number of shares that the corporation is authorized to issue

 

The annexed Appendix "A" is incorporated in this Schedule

 

	
4.

	
Restrictions, if any, on share transfers

 

None

 

	
5.

	
Minimum and maximum number of directors

 

Minimum of three (3) and a maximum of twelve (12)

 

	
6.

	
Restrictions, if any, on business the corporation may carry on

 

None

 

	
7.

	
Other provisions, if any

 

The annexed Appendix "B" is incorporated in this Schedule

 

  

  

  

 

APPENDIX "A"

 

Authorized Share Capital

 

 

The Corporation is authorized to issue an unlimited number of Common Shares and 50,000,000 Preferred Shares, issuable in series.

 

COMMON SHARES

 

The rights, privileges, restrictions and conditions attaching to the Common Shares shall be as follows:

 

	
1.

	
VOTING

 

Holders of Common Shares shall be entitled to receive notice of and to attend and vote at all meetings of shareholders of the Corporation, except meetings of holders of another class of shares. Each Common Share shall entitle the holder thereof to one vote.

 

	
2.

	
DIVIDENDS

 

Subject to the preferences accorded to holders of Preferred Shares and any other shares of the Corporation ranking senior to the Common Shares from time to time with respect to the payment of dividends, holders of Common Shares shall be entitled to receive, if, as and when declared by the Board of Directors, such dividends as may be declared thereon by the Board of Directors from time to time.

 

	
3.

	
LIQUIDATION, DISSOLUTION OR WINDING-UP

 

In the event of the voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, or any other distribution of its assets among its shareholders for the purpose of winding-up its affairs (such event referred to herein as a "Distribution"), holders of Common Shares shall be entitled, subject to the preferences accorded to holders of Preferred Shares and any other shares of the Corporation ranking senior to the Common Shares from time to time with respect to payment on a Distribution, to share equally, share for share, in the remaining property of the Corporation.

 

PREFERRED SHARES

 

The rights, privileges, restrictions and conditions attaching to the Preferred Shares, as a class, shall be as follows:

 

	
4.

	
ISSUANCE IN SERIES

 

	
4.1

	
Subject to the filing of Articles of Amendment in accordance with the Canada Business Corporations Act (the "Act"), the Board of Directors may at any time and from time to time issue the Preferred Shares in one or more series, each series to consist of such number of shares as may, before the issuance thereof, be determined by the Board of Directors.

 

	
4.2

	
Subject to the filing of Articles of Amendment in accordance with the Act, the Board of Directors may from time to time fix, before issuance, the designation, rights, privileges, restrictions and conditions attaching to each series of Preferred Shares including, without limiting the generality of the foregoing, the amount, if any, specified as being payable preferentially to such series on a Distribution; the extent, if any, of further participation on a Distribution; voting

 

  

  

  

 

	
5.

	
LIQUIDATION

 

	
5.1

	
In the event of a Distribution, holders of each series of Preferred Shares shall be entitled, in priority to holders of Common Shares and any other shares of the Corporation ranking junior to the Preferred Shares from time to time with respect to payment on a Distribution, to be paid rateably with holders of each other series of Preferred Shares the amount, if any, specified as being payable preferentially to the holders of such series on a Distribution.

 

	
6.

	
DIVIDENDS

 

	
6.1

	
The holders of each series of Preferred Shares shall be entitled, in priority to holders of Common Shares and any other shares of the Corporation ranking junior to the Preferred Shares from time to time with respect to the payment of dividends, to be paid rateably with holders of each other series of Preferred Shares, the amount of accumulated dividends, if any, specified as being payable preferentially to the holders of such series.

 

 

  

  

  

 

APPENDIX "B''

 

Other Provisions

 

	
a.

	
The Board of Directors of the Corporation or any committee of the Board of Directors authorized so to do may, without authorization of the shareholders and without in any way limiting the authority conferred on the Directors by Section 189 of the Canada Business Corporations Act (the "Act"):

 

	
  

	
i.

	
borrow money upon the credit of the Corporation;

 

	
  

	
ii.

	
issue, reissue, sell or pledge debt obligations of the Corporation;

 

	
  

	
iii.

	
mortgage hypothecate, pledge or otherwise create a security interest in all or any property of the Corporation, owned or subsequently acquired, to secure any obligation of the Corporation;

 

	
  

	
iv.

	
subject to the Act, give a guarantee on behalf of the Corporation to secure performance of an obligation of any person, and;

 

	
  

	
v.

	
the Board of Directors and any such committee of the Board of Directors may from time to time delegate to such one or more of the Directors and officers of the Corporation as may be designated by it, all or any of the powers conferred by sub-clauses (c)(i), (ii), (iii) and (iv) to such extent and in such manner as it shall determine at the time of each such delegation.

 

	
b.

	
The Board of Directors may, appoint one or more Directors, who shall hold office for a term expiring not later than the close of the next annual meeting of shareholders, but the total number of Directors so appointed may not exceed one-third of the number of Directors elected at the previous annual meeting of shareholders.

 

	
c.

	
The Articles of the Corporation may be amended by special resolution pursuant to Section 173 of the Act to:

 

	
  

	
i.

	
increase or decrease any maximum number of authorized shares of such class, or increase any maximum number of authorized shares of a class having rights or privileges equal or superior to the shares of another class; or

 

	
  

	
ii.

	
effect an exchange, reclassification or cancellation of all or part of the shares of any class; or

 

	
  

	
iii.

	
create a new class of shares equal or superior to the shares of another class;

 

and no separate class or (except as may otherwise be provided for a particular series in the provisions attaching thereto) series vote shall be required under Section 176 of such Act in respect of the amendment.

 

  

  

  

 

SCHEDULE "B"

 

Corporations being Amalgamated

 

Just Energy Exchange Corp. (449031-2)

 

Just Energy Group Inc. (755876-7)

 

OESC Exchangeco II Inc. (767242-0)

 

UEGL Exchangeco Corp. (717333-4)

 

 

 

  

  

  

 

Exhibit A

 

Plan of Arrangement

 

 

  

  

  

 

Plan of Arrangement under Section 192

of the

Canada Business Corporations Act

 

ARTICLE 1

INTERPRETATION

 

1.1       In this Plan of Arrangement, the following terms have the following meanings:

 

	
  

	
(a)

	
"AcquisitionCo" means Just Energy Group Inc., a corporation incorporated under the CBCA and a wholly-owned subsidiary of the Fund;

 

	
  

	
(b)

	
"AcquisitionCo Common Shares" means common shares in the capital of AcquisitionCo and, following the Amalgamation, means the New Just Energy Common Shares;

 

	
  

	
(c)

	
"AcquisitionCo DSGs" means deferred share grants in respect of AcquisitionCo Common Shares to be granted to holders of Fund Director DUGS under the Arrangement;

 

	
  

	
(d)

	
"AcquisitionCo EPS Rights" means rights to acquire AcquisitionCo Common Shares to be granted to holders of rights to acquire Fund Units under the Fund EPS Plan under the Arrangement;

 

	
  

	
(e)

	
"AcquisitionCo EUP Rights" means rights to acquire AcquisitionCo Common Shares to be granted to holders of rights to acquire Fund Units under the Fund EUP Plan under the Arrangement;

 

	
  

	
(f)

	
"AcquisitionCo Options" means options to acquire AcquisitionCo Common Shares to be granted to holders of Fund Options under the Arrangement;

 

	
  

	
(g)

	
"AcquisitionCo RSGs" means restricted share grants in respect of AcquisitionCo Common Shares to be granted to holders of Fund UARs under the Arrangement;

 

	
  

	
(h)

	
"Amalgamation" means the amalgamation pursuant to this Plan of Arrangement of AcquisitionCo and, provided that it has been continued as a corporation under the CBCA prior to the Effective Time, OESC ExchangeCo, and, if the JEEC Arrangement Resolution is approved, JEEC and UEGL ExchangeCo;

 

	
  

	
(i)

	
"Arrangement", "herein", "hereof", "hereto", "hereunder" and similar expressions mean and refer to the arrangement pursuant to Section 192 of the CBCA set forth in this Plan of Arrangement as supplemented, modified or amended, and not to any particular article, section or other portion hereof;

 

	
  

	
(j)

	
"Arrangement Agreement" means the arrangement agreement dated effective May 27, 2010 among the Fund, JEEC, AcquisitionCo, and JEC, with respect to the Arrangement and all amendments thereto and restatements thereof;

 

	
  

	
(k)

	
"Articles of Arrangement" means the articles of arrangement in respect of the Arrangement required by the CBCA to be sent to the Director after the Final Order has been made;

 

  

A-1

  

 

	
  

	
(l)

	
"Business Day" means a day other than a Saturday, Sunday or a day when banks in the City of Toronto, Ontario are not generally open for business;

 

	
  

	
(m)

	
"CBCA" means the Canada Business Corporations Act, R.S.C. 1985, c. C-44;

 

	
  

	
(n)

	
"Certificate" means the certificate of arrangement which may be issued by the Director pursuant to subsection 192(7) of the CBCA in respect of the Articles of Arrangement and giving effect to the Arrangement;

 

	
  

	
(o)

	
"Computershare" means Computershare Trust Company of Canada;

 

	
  

	
(p)

	
"CT" means ESIF Commercial Trust I, an open ended investment-trust established under the laws of the Province of Ontario pursuant to the CT Declaration of Trust;

 

	
  

	
(q)

	
"CI Declaration of Trust" means the trust indenture dated March 16, 2004 between the Fund, as the initial unitholder and JEC as trustee, as amended from time to time;

 

	
  

	
(r)

	
"CT Preferred Units" means the 1,394,489 preferred units of CT owned by JEC;

 

	
  

	
(s)

	
"Court" means the Court of Queen's Bench of Alberta;

 

	
  

	
(t)

	
"Depositary" means Computershare, or such other person as may be designated by the Fund or, following the Effective Time, New Just Energy, for the purpose of receiving the deposit of certificates formerly representing Fund Securities;

 

	
  

	
(u)

	
"Director" means the Director appointed pursuant to section 260 of the CBCA;

 

	
  

	
(v)

	
"Dissenting Securityholders" means registered holders of Fund Units and, if the JEEC Arrangement Resolution is approved, registered holders of JEEC Exchangeable Shares, in each case who validly exercise the rights of dissent with respect to the Arrangement provided to them under the Interim Order and whose dissent rights remain valid immediately before the Effective Time;

 

	
  

	
(w)

	
"Effective Date" means the date shown in the Certificate;

 

	
  

	
(x)

	
"Effective Time" means 12:01 a.m. (Toronto time) on the Effective Date or such other time on the Effective Date as may be specified in writing by the Fund, JEC, in its capacity as administrator of the Fund, or New Just Energy;

 

	
  

	
(y)

	
"Final Order" means the order of the Court approving the Arrangement, as such order may be affirmed, amended or modified by any court of competent jurisdiction;

 

	
  

	
(z)

	
"Fund" means Just Energy Income Fund, a trust organized under the laws of the Province of Ontario and governed by the Fund Declaration of Trust;

 

	
  

	
(aa)

	
"Fund Arrangement Parties" means the Fund, JEC, AcquisitionCo, OESC ExchangeCo, JEEC, CT, and UEGL ExchangeCo, and, following the Amalgamation, New Just Energy;

 

	
  

	
(bb)

	
"Fund Arrangement Resolution" means the special resolution in respect of the Arrangement passed by the Fund Voting Securityholders at the Fund Meeting;

 

  

A-2

  

 

	
  

	
(cc)

	
"Fund Declaration of Trust" means the amended and restated declaration of trust dated April 18, 2001 between JEC and the Fund Trustee, as the same may be further amended or amended and estated from time to time;

 

	
  

	
(dd)

	
"Fund DDC Plan" means the Directors' Deferred Compensation Plan of the Fund as amended from time to time;

 

	
  

	
(ee)

	
"Fund DUGs" means deferred unit grants in respect of Fund Units outstanding under the Fund DDC Plan;

 

	
  

	
(ff)

	
"Fund EPS Plan" means the Employee Profit Sharing Plan of the Fund as amended from time to tirne;

 

	
  

	
(gg)

	
"Fund EUP Plan" means the Employee Unit Purchase Plan (for employees of U.S. subsidiaries) of the Fund as amended from time to time;

 

	
  

	
(hh)

	
"Fund Incentive Plans" means, collectively, the Fund DDC Plan, the Fund EPS Plan, the Fund EUP Plan, the Fund Option Plan and the Fund UAR Plan;

 

	
  

	
(ii)

	
"Fund Note" means the promissory note, in aggregate principal amount equal to the fair market value of the CT Preferred Units, to be issued in favour of JEC pursuant to subsection 3.1(r) hereof; in consideration of the transfer of the CT Preferred Units by JEC to the Fund;

 

	
  

	
(jj)

	
"Fund Meeting" means the annual and special meeting of Fund Voting Securityholders held to consider the Fund Arrangement Resolution and related matters in accordance with the terms of the Interim Order, and any adjournments) thereof;

 

	
  

	
(kk)

	
"Fund Option Plan" means the 2001 Unit Option Plan of the Fund as amended from time to time;

 

	
  

	
(ll)

	
"Fund Options" means options to acquire Fund Units outstanding under the Fund Option Plan;

 

	
  

	
(mm)

	
"Fund Irustee" means Montreal Trust Company of Canada (and its successors), in its capacity as trustee under the Fund Declaration of Trust;

 

	
  

	
(nn)

	
"Fund Securities" means, collectively, the Fund Units, the JEEC Exchangeable Shares and the JEC Class A Shares;

 

	
  

	
(oo)

	
"Fund Securityholders" means, collectively, the Fund Unitholders, the JEEC Exchangeable Shareholders and the holder(s) of the JEC Class A Shares;

 

	
  

	
(pp)

	
"Fund Special Voting Right" means the one special voting right of the Fund issued to Computershare in its capacity as trustee under the voting and exchange trust agreement dated July 1, 2009 among the Fund, JEEC, UEGL ExchangeCo and Computershare, the beneficiaries of which are the JEEC Exchangeable Shareholders;

 

	
  

	
(qq)

	
"Fund UAR Plan" means the 2004 Unit Appreciation Rights Plan of the Fund as amended from time to time;

 

  

A-3

  

 

	
  

	
(rr)

	
"Fund UARs" means unit appreciation rights in respect of Fund Units outstanding under the Fund UAR Plan;

 

	
  

	
(ss)

	
"Fund Unitholders" means registered holders Fund Units from time to time;

 

	
  

	
(tt)

	
"Fund Units" means the trust units of the Fund,

 

	
  

	
(uu)

	
"Fund Voting Securitybolders" means the holders of Fund Voting Securities and the Fund Special Voting Right from time to time;

 

	
  

	
(vv)

	
"Fund Voting Securities" means, collectively, the Fund Units, the Fund Special Voting Rightand the JEC Class A Shares;

 

	
  

	
(ww)

	
"Interim Order" means the interim order of the Court containing declarations and directions with respect to the notice to be given in respect of, and the conduct of, the Fund Meeting and otherwise with respect to the Arrangement, as such order may be affirmed, amended or modified by any court of competent jurisdiction;

 

	
  

	
(xx)

	
"Letter of Transmittal" means the letter of transmittal to be sent to the Fund Securityholders, pursuant to which such holders will be required to deliver certificates representing Fund Securities in order to receive the New Just Energy Common Shares issuable to them pursuant to the Arrangement;

 

	
  

	
(yy)

	
"JEC" means Just Energy Corp, a corporation amalgamated under the laws of the Province of Ontario and a subsidiary of the Fund;

 

	
  

	
(zz)

	
"JEC Class A Shares" means the Class A preference shares in the capital of JEC;

 

	
  

	
(aaa)

	
"JEEC" means Just Energy Exchange Corp, a corporation incorporated under the CBCA and a subsidiary of the Fund;

 

	
  

	
(bbb)

	
"JEEC Arrangement Resolution" means the special resolution of JEEC Exchangeable Shareholders approving the Arrangement

 

	
  

	
(ccc)

	
"JEEC Exchangeable Shareholders" means the holders from time to time of JEEC Exchangeable Shares;

 

	
  

	
(ddd)

	
"JEEC Exchangeable Shares" means the exchangeable shares, series 1 in the capital of JEEC;

 

	
  

	
(eee)

	
"New Just Energy" means the corporation formed pursuant to the Amalgamation and, if the Amalgamation is not completed, means AcquisitionCo;

 

	
  

	
(fff)

	
"New Just Energy Common Shares" means the common shares in the capital of New Just Energy outstanding following completion of the Amalgamation;

 

	
  

	
(ggg)

	
"OESC ExchangeCo" means OESC Exchangeco II Inc., a corporation incorporated under the laws of the Province of Ontario; and

 

	
  

	
(hhh)

	
"UEGL ExchangeCo" means UEGL Exchangeco Corp., a corporation incorporated under the CBCA and a wholly-owned subsidiary of the Fund.

 

  

A-4

  

 

 

1.2       The division of this Plan of Arrangement into articles and sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Plan of Arrangement.

 

1.3       Unless reference is specifically made to some other document or instrument, all references herein o articles and sections are to articles and sections of this Plan of Arrangement.

 

1.4       Unless the context otherwise requires, words importing the singular number shall include the plural and vice versa; words importing any gender shall include all genders; and words importing persons shall include individuals, partnerships, associations, corporations, bodies corporate, trusts, unincorporated organizations, governments, regulatory authorities, and other entities.

 

1.5       In the event that the date on which any action is required to be taken hereunder by any of the arties is not a Business Day in the place where the action is required to be taken, such action shall be required to be taken on the next succeeding day which is a Business Day in such place.

 

1.6       References in this Plan of Arrangement to any statute or sections thereof shall include such statute as amended or substituted and any regulations promulgated thereunder from  time to time in effect.

 

 

ARTICLE 2

ARRANGEMENT AGREEMENT

 

2.1       This Plan of Arrangement is made pursuant to the Arrangement Agreement.

 

2.2       The parties to this Plan of Arrangement intend that for United States federal income tax purposes the transactions contemplated hereby qualify as a "reorganization" within the meaning of subsection 368(a) of the United States Internal Revenue Code of 1986, as amended, and that this Plan of Arrangement constitutes a "plan of reorganization" for such purposes.

 

2.3       This Plan of Arrangement, upon the filing of the Articles of Arrangement and the issue of the Certificate, if any, shall become effective as of, and be binding as of and after, the Effective Time on: (i) the Fund Securityholders; (ii) the Fund Arrangement Parties; and (iii) the holders of Fund Options, Fund DUGs, Fund UARs and rights to acquire Fund Units under the Fund EPS Plan and the Fund EUP Plan; provided that for greater certainty, if the JEEC Arrangement Resolution is not approved, JEEC, the JEEC Exchangeable Shareholders and UEGL ExchangeCo shall not participate in this Plan of Arrangement.

 

2.4       The Articles of Arrangement and Certificate shall be filed and issued, respectively, with respect to the Arrangement in its entirety. The Certificate shall be conclusive evidence that the Arrangement has become effective and that, subject to the provisions of Section 3.1, each of the provisions of Article 3 has become effective in the sequence and at the times set out therein.

 

2.5       Other than as expressly provided for herein, no portion of this Plan of Arrangement shall take effect with respect to any party or person until the Effective Time. Furthermore, each of the events listed in Article 3 shall be, without affecting the timing set out in Article 3, mutually conditional, such that no event described in Article 3 may occur without all steps occurring, and those events shall effect the integrated transaction which constitutes the Arrangement.

 

  

A-5

  

 

ARTICLE 3

ARRANGEMENT

 

3.1       Commencing at the Effective Time, each of the events set out below shall occur and shall be deemed to occur in the following order, each occurring immediately after the completion of the previous step, without any further act or formality except as otherwise provided herein:

 

Amendment of Fund Declaration of Trust

 

	
  

	
(a)

	
the Fund Declaration of Trust shall be amended to the extent necessary to facilitate the Arrangement and the implementation of the steps and transactions contemplated herein;

 

Amendment of CT Declaration of Trust

 

	
  

	
(b)

	
the CT Declaration of Trust shall be amended to the extent necessary to facilitate the Arrangement and the implementation of the steps and transactions contemplated herein;

 

Dissenting Securityholders

 

	
  

	
(c)

	
the Fund Units held by Dissenting Securityholders shall be deemed to have been transferred to the Fund (flee and clear of any and all liens, claims and encumbrances) and shall be immediately cancelled and cease to be outstanding, and such Dissenting Securityholders shall cease to be Fund Unitholders or to have any rights as Fund Unitholders, other than the right to be paid the fair value of their Fund Units in accordance with Article 4;

 

	
  

	
(d)

	
if the JEEC Arrangement Resolution is approved, the JEEC Exchangeable Shares held by Dissenting Securityholders shall be deemed to have been transferred to JEEC (free and clear of any and all liens, claims and encumbrances) and shall be immediately cancelled and cease to be outstanding, and such Dissenting Securityholders shall cease to be JEEC Exchangeable Shareholders or to have any rights as JEEC Exchangeable Shareholders, other than the right to be paid the fair value of their IEEC Exchangeable Shares in accordance with Article 4;

 

Removal of AcquisitionCo Share Transfer and Issue Restrictions

 

	
  

	
(e)

	
the articles of AcquisitionCo shall be amended to eliminate the restrictions on share transfers and the limitations on share issuances and shareholders by deleting Item 4 and paragraphs a and b of Item 7 thereof in their entirety;

 

Exchange of Fund Units

 

	
  

	
(f)

	
all of the issued and outstanding Fund Units (for greater certainty, other than those Fund Units (if any) previously transferred to the Fund by Dissenting Securityholders and immediately cancelled by the Fund pursuant to subsection 3.1(c)) shall be transferred by Fund Unitholders to, and acquired by, AcquisitionCo (free and clear of any and all liens, claims and encumbrances);

 

	
  

	
(g)

	
in exchange for each one (1.0) Fund Unit acquired by AcquisitionCo pursuant to subsection 3.l(f), AcquisitionCo shall issue one (1.0) AcquisitionCo Common Share to the Fund Unitholder who transferred such Fund Unit to AcquisitionCo;

 

  

A-6

  

 

Exchange of JEC Class A Shares

 

	
  

	
(h)

	
all of the issued and outstanding JEC Class A Shares shall be transferred by the holder(s) thereof to, and acquired by, AcquisitionCo (free and clear of any and all liens, claims and encumbrances);

 

	
  

	
(i)

	
in exchange for each one (1.0) JEC Class A Share acquired by AcquisitionCo pursuant to subsection 3.1(h), AcquisitionCo shall issue one (1.0) AcquisitionCo Common Share to the holder who transferred such JEC Class A Share to AcquisitionCo;

 

Exchange of JEEC Exchangeable Shares

 

	
  

	
(j)

	
if the JEEC Arrangement Resolution is approved, all of the issued and outstanding JEEC Exchangeable Shares (for greater certainty, other than those JEEC Exchangeable Shares (if any) previously transferred to JEEC by Dissenting Securityholders and immediately cancelled by JEEC pursuant to subsection 3.1(d)) shall be transferred by JEEC Exchangeable Shareholders to, and acquired by, AcquisitionCo (free and clear of any and all liens, claims and encumbrances);

 

	
  

	
(k)

	
in exchange for each one (1.0) JEEC Exchangeable Share acquired by AcquisitionCo pursuant to subsection 3.1(j), AcquisitionCo shall transfer one (1.0) AcquisitionCo Common Share to the JEEC Exchangeable Shareholder who transferred such JEEC Exchangeable Share to AcquisitionCo;

 

Termination of Special Voting Right

 

	
  

	
(l)

	
The Special Voting Right shall be cancelled and cease to be outstanding;

 

Exchange of Rights Under Fund Incentive Plans

 

	
  

	
(m)

	
each of the issued and outstanding Fund Options shall be exchanged for an AcquisitionCo Option under an agreement with AcquisitionCo to acquire the same number of AcquisitionCo Common Shares as the number of Fund Units subject to the Fund Option, at the same price and on the same terms as provided in the Fund Option;

 

	
  

	
(n)

	
each of the issued and outstanding Fund UARs shall be exchanged for an AcquisitionCo RSG under an agreement with AcquisitionCo to receive the same number of AcquisitionCo Common Shares as the number of Fund Units subject to the Fund UARs on the same terms as provided in the Fund UARs;

 

	
  

	
(o)

	
each of the issued and outstanding Fund DUGs shall be exchanged for an AcquisitionCo DSG under an agreement with AcquisitionCo to receive the same number of AcquisitionCo Common Shares as the number of Fund Units subject to the Fund DUGs on the same terms as provided in the Fund DUGs;

 

	
  

	
(p)

	
each of the issued and outstanding rights to acquire Fund Units under the Fund EPS Plan shall be exchanged for equivalent AcquisitionCo EPS Rights under an agreement with AcquisitionCo to acquire the same number of AcquisitionCo Common Shares as the number of Fund Units subject to the tights under the Fund EPS Plan; on the same terms as provided in the rights under the Fund EPS Plan;

 

 

 

  

A-7

  

 

	
  

	
(q)

	
each of the issued and outstanding rights to acquire Fund Units under the Fund EUP Plan shall be exchanged for equivalent AcquisitionCo EUP Rights under an agreement with AcquisitionCo to acquire the same number of AcquisitionCo Common Shares as the number of Fund Units subject to the rights under the Fund EUP Plan on the same terms as provided in the rights under the Fund EUP Plan;

 

Transfer of CT Preferred Units

 

	
  

	
(r)

	
JEC shall sell, transfer, assign and convey the CT Preferred Units to the Fund and as consideration for the CT Preferred Units, the Fund shall issue to JEC the Fund Note;

 

CT Distribution

 

	
  

	
(s)

	
CT shall declare a distribution to the Fund of an amount equal to any remaining taxable income not declared payable or paid to the Fund prior to the Effective Time;

 

Wind-Up and Termination of CT

 

	
  

	
(t)

	
CT shall be liquidated and dissolved (as a result of which CT shall cease to exist), and all of the assets and liabilities of CT shall be distributed to and assumed by the Fund;

 

Repurchase of Initial AcquisitionCo Common Shares

 

	
  

	
(u)

	
AcquisitionCo shall repurchase the 100 AcquisitionCo Common Shares held by the Fund for $1.00 per share and such AcquisitionCo Common Shares shall be cancelled;

 

Fund Distribution

 

	
  

	
(v)

	
the Fund shall declare a distribution to AcquisitionCo of an amount equal to any remaining taxable income not declared payable or paid to Fund Unitholders prior to the Effective Time;

 

Wind-Up and Termination of the Fund

 

	
  

	
(w)

	
the Fund shall be liquidated and dissolved (as a result of which the Fund shall cease to exist), and all of the assets and liabilities of the Fund shall be distributed to and assumed by AcquisitionCo, including, without limitation, all liabilities in respect of any declared but unpaid distributions payable by the Fund;

 

Amalgamation of AcquisitionCo and Certain Subsidiaries

 

	
  

	
(x)

	
AcquisitionCo, and, provided that it has been continued as a corporation under the CBCA prior to the Effective Time, OESC ExchangeCo, and, if the JEEC Arrangement Resolution is approved, JEEC and UEGL ExchangeCo, shall be amalgamated and continued as one corporation, New Just Energy, in accordance with the following:

 

	
  

	
(i)

	
the stated capital of all of the shares of OESC ExchangeCo shall be reduced to $1.00 in aggregate immediately prior to the amalgamation;

 

	
  

	
(ii)

	
the stated capital of all of the shares of JEEC shall be reduced to $1.00 in aggregate immediately prior to the amalgamation;

 

  

A-8

  

 

	
  

	
(iii)

	
the stated capital of all of the shares of UEGL ExchangeCo shall be reduced to $1.00 in aggregate immediately prior to the amalgamation;

 

	
  

	
(iv)

	
the articles of New Just Energy shall be the same as the articles of AcquisitionCo, and the name of New Just Energy shall be "Just Energy Group Inc.";

 

	
  

	
(v)

	
all of the shares of OESC ExchangeCo (which, as a result of the transactions in subsection 3.1(w) shall be held by AcquisitionCo) shall be cancelled without any repayment of capital in respect thereof;

 

	
  

	
(vi)

	
all of the shares of JEEC (which, as a result of the transactions in subsection 3.1(d) and subsection 3 1(j) shall either have been cancelled or be held by AcquisitionCo) shall be cancelled without any repayment of capital in respect thereof;

 

	
  

	
(vii)

	
all of the shares of UEGL ExchangeCo (which, as a result of the transactions in subsection 3.1(w) shall be held by AcquisitionCo) shall be cancelled without any repayment of capital in respect thereof;

 

	
  

	
(viii)

	
the property of each of AcquisitionCo, OESC ExchangeCo, JEEC and UEGL ExchangeCo shall continue to be the property of New Just Energy;

 

	
  

	
(ix)

	
New Just Energy shall continue to be liable for the obligations of each of AcquisitionCo, OESC ExchangeCo, JEEC and UEGL ExchangeCo including, without limitation, obligations of AcquisitionCo in respect of the AcquisitionCo Options, AcquisitionCo RSGs, AcquisitionCo DSGs, AcquisitionCo EPS Rights and AcquisitionCo EUP Rights;

 

	
  

	
(x)

	
any existing cause of action, claim or liability to prosecution of any of AcquisitionCo, OESC ExchangeCo, JEEC or UEGL ExchangeCo shall be unaffected;

 

	
  

	
(xi)

	
any civil, criminal or administrative action or proceeding pending by or against any of AcquisitionCo, OESC ExchangeCo, JEEC or UEGL ExchangeCo may be continued to be prosecuted by or against New Just Energy;

 

	
  

	
(xii)

	
a conviction against, or ruling, order or judgment in favour of or against, any of AcquisitionCo, OESC ExchangeCo, JEEC or UEGL ExchangeCo may be enforced by or against New Just Energy;

 

	
  

	
(xiii)

	
the Articles of Amalgamation of New Just Energy shall be deemed to be the Articles of Incorporation of New Just Energy and the Certificate of Amalgamation of New Just Energy shall be deemed to be the Certificate of Incorporation of New Just Energy;

 

	
  

	
(xiv)

	
the by-laws of New Just Energy shall be the by-laws of AcquisitionCo;

 

	
  

	
(xv)

	
the first directors of New Just Energy shall be the directors of AcquisitionCo, and each director of any of OESC ExchangeCo, JEEC and UEGL ExchangeCo immediately prior to the amalgamation shall be deemed to have ceased to hold office as a director;

 

  

A-9

  

 

	
  

	
(xvi)

	
the first officers of New Just Energy shall be the officers of AcquisitionCo, and each officer of any of OESC ExchangeCo, JEEC and UEGL ExchangeCo immediately prior to the amalgamation shall be deemed to have ceased to hold office as an officer; and

 

	
  

	
(xvii)

	
the registered office of New Just Energy shall be the registered office of AcquisitionCo;

 

Transfer of JEC Class A Shares

 

	
  

	
(y)

	
New Just Energy shall sell, transfer, assign and convey the JEC Class A Shares to JEC and as consideration for the JEC Class A Shares, JEC shall issue to New Just Energy one (1) common share in the capital of JEC;

 

Cancellation of JEC Class A Shares

 

	
  

	
(z)

	
The JEC Class A Shares acquired by JEC pursuant to subsection 3.1(y) shall be cancelled and shall cease to be outstanding;

 

3.2       the Fund Arrangement Parties shall make the appropriate entries in their securities registers to reflect the matters referred to, and the transactions provided for, in Section 3.1.

 

 

3.3       The Fund incentive Plans and all agreements, elections, allocation notices and other documents representing or evidencing Fund Options, Fund UARs, Fund DUGs and rights to acquire Fund Units under the Fund EPS Plan and the Fund EUP Plan, as the case may be, shall be deemed amended at the Effective Time to the extent necessary to facilitate the exchanges contemplated by subsection 3.1(m), 3.1(n), 3.1(o), 3.1(p) and 3.1(q) without further action by the Fund, JEC, AcquisitionCo, New Just Energy or the holders thereof and such agreements, elections, allocation notices and other documents shall thereafter represent or evidence the right to receive the AcquisitionCo Common Shares in accordance with the terms of the AcquisitionCo Options, AcquisitionCo RSGs, AcquisitionCo DSGs, AcquisitionCo EPS Rights and AcquisitionCo EUP Rights to which the holder is entitled pursuant to the exchanges contemplated by subsection 3.1(m), 3.1(n), 3.1(o), 3.1(p) or 3.1(q), as the case may be.

 

 

3.4       The sole consideration to be received by the Fund Securityholders for the transfer of the Fund Securities to AcquisitionCo as provided by subsection 3.1(f), 3.1(h) and 3.1(j), as the case may be, shall be the AcquisitionCo Common Shares issued in connection with such transfer as contemplated by subsection 3.1(g), 3.1(i) and 3.1(k), as the case may be.

 

ARTICLE 4

DISSENTING SECURITYHOLDERS

 

4.1       Registered Fund Unitholders and, provided the JEEC Arrangement Resolution is approved, JEEC Exchangeable Shareholders may exercise rights of dissent with respect to the Fund Units and JEEC Exchangeable Shares, respectively, held by such Fund Securityholders pursuant to and in the manner set forth in section 190 of the CBCA as modified by the Interim Order, and this Section 4.1 in connection with the Arrangement. Registered Fund Unit holders and JEEC Exchangeable Shareholders who duly exercise such rights of dissent and who:

 

	
  

	
(a)

	
are ultimately entitled to be paid fair value for their Fund Units or .JEEC Exchangeable Shares, as the case may be, shall be deemed not to have exchanged their Fund Units or JEEC Exchangeable Shares, as the case may be, for AcquisitionCo Common Shares

 

  

A-10

  

 

pursuant to the Arrangement, and such Fund Units or JEEC Exchangeable Shares, as the case may be, shall be cancelled in accordance with the Arrangement and will not be exchanged for AcquisitionCo Common Shares in accordance with the Arrangement; or

 

	
  

	
(b)

	
are ultimately not entitled, for any reason, to be paid fair value for their Fund Units or JEEC Exchangeable Shares, as the case may be, shall be deemed to have participated the Arrangement on the same basis as Fund Unitholders or JEEC Exchangeable Shareholders, as the case may be, who have not exercised dissent rights pursuant to this Section 4.1, and shall receive AcquisitionCo Common-Shares in exchange for their Fund Units or JEEC Exchangeable Shares, as the case may be, on the basis determined in accordance with subsection 3.1(g) or subsection 3.1(k), as the case may be;

 

but in no case shall the Fund, JEEC, AcquisitionCo or New Just Energy or any other person be required to recognize such holders as Fund Unitholders or JEEC Exchangeable Shareholders after the Effective Time, and the names of such Fund Securityholders shall be deleted from the applicable registers of Fund Securities effective as at the Effective Time. The fair value for the Fund Units and JEEC Exchangeable Shares shall be determined as of the close of business on the Business Day before the day on which the Arrangement is approved by Fund Voting Securityholders at the Fund Meeting.

 

ARTICLE 5

OUTSTANDING CERTIFICATES AND FRACTIONAL SECURITIES

 

5.1       From and after the Effective Time, certificates formerly representing Fund Securities that were exchanged pursuant to subsection 3.1(f), subsection 3.1(h) or subsection 3.1(j), as the case may be, shall represent only the right to receive the certificates representing AcquisitionCo Common Shares which the former holder of such Fund Securities is, subject to Section 5.5, entitled to receive pursuant to Article 3 of this Plan of Arrangement, subject to compliance with the requirements set forth in this Article 5, or as to those certificates formerly representing Fund Units and/or JEEC Exchangeable Shares held by Dissenting Securityholders (other than those Dissenting Securityholders deemed to have participated in the Arrangement pursuant to Section 4.1), to receive the fair value of the Fund Units and/or JEEC Exchangeable Shares formerly represented by such certificates.

 

5.2       The Fund shall forward or cause to be forwarded to each Fund Securityholder (being in the case of the Fund Securityholders CDS&Co as the sole registered holder of Fund Units) at the address of such holder as it appears on the applicable register of Fund Securities on the Effective Date, a Letter of Transmittal and instructions for obtaining delivery of the AcquisitionCo Common Shares to be issued to such holder pursuant to this Arrangement. A Fund Securityholder may take delivery of such AcquisitionCo Common Shares by delivering the certificates representing such holder's Fund Securities to the Depositary at any of the offices indicated in the Letter of Transmittal, accompanied by a duly completed Letter of Transmittal and such other documents as the Depositary may reasonably require. The certificates representing the AcquisitionCo Common Shares issued to such holder shall be registered in such names and, delivered to such addresses as such holder may direct in such Letter of Transmittal, or if requested by the former Fund Securityholder in the Letter of Transmittal, made available at the Depositary for pick-up by the former Fund Securityholder, as soon as practicable after receipt by the Depositary of the required documents.

 

5.3       If any certificate which immediately prior to the Effective Time represented an interest in outstanding Fund Securities that were exchanged pursuant to Section 3.1 has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such certificate to have been lost, stolen or destroyed, the Depositary shall issue and deliver in exchange for such lost, stolen or destroyed certificate the consideration to which the holder is entitled pursuant to the Arrangement (and

 

  

A-11

  

 

any dividends or distributions with respect thereto) as determined in accordance with the Arrangement. The person who is entitled to receive such consideration shall, as a condition precedent to the receipt thereof, give a bond to each of the Fund and New Just Energy and their respective transfer agents, which bond is in form and substance satisfactory to each of the Fund and New Just Energy and their respective transfer agents, in their sole and absolute discretion, or shall otherwise indemnify the Fund and New Just Energy and their respective transfer agents to their satisfaction, in their sole and absolute discretion, against any claim that may be made against any of them with respect to the certificate alleged to have been lost, stolen or destroyed.

 

5.4       All distributions made or dividends paid with respect to any AcquisitionCo Common Shares allotted and issued to former holders of Fund Securities pursuant to the Arrangement but for which a certificate has not been issued shall be paid or delivered to the Depositary to be held by the Depositary in trust for the registered holder thereof. The Depositary shall pay and deliver to any such registered holder, as soon as reasonably practicable after application therefor is made by the registered holder to the Depositary in such form as the Depositary may reasonably require, such distributions or dividends to which such holder is entitled, without interest.

 

5.5       Fund Securityholders shall not be entitled to any interest, distribution, premium or other payment on or with respect to the former Fund Securities other than the certificates representing the New Just Energy Common Shares which they are entitled to receive pursuant to this Arrangement.

 

5.6       Any certificate formerly representing Fund Securities that is not deposited with all other documents as required by this Plan of Arrangement on or before the day prior to the fifth anniversary of the Effective Date shall cease to represent a light or claim of any kind or nature including the right of the holder of such Fund Securities to receive AcquisitionCo Common Shares and any distributions made or dividends paid thereon. In such case, such AcquisitionCo Common Shares shall be returned to New Just Energy for cancellation, and any dividends or distributions in respect of AcquisitionCo Common Shares shall be returned to New Just Energy.

 

5.7       No fractional AcquisitionCo Common Shares shall be issued under the Arrangement. In lieu of any fractional AcquisitionCo Common Shares, each registered holder of Fund Securities otherwise entitled to a fractional interest in AcquisitionCo Common Shares shall receive the nearest whole number of AcquisitionCo Common Shares (with fractions equal to exactly 0.5 being rounded up).

 

5.8       The Fund, New Just Energy and the Depositary shall be entitled to deduct and withhold from any distribution, dividend or other consideration payable to any former Fund Securityholder, such amounts as the Fund, New Just Energy or the Depositary are required to deduct and withhold with respect to such payment under the any provision of applicable federal, provincial, state, local or foreign laws relating to taxes, in each case as amended. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the holder of the securities in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority. To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash component, if any, of the consideration otherwise payable to the holder, the Fund, New Just Energy and the Depositary are hereby authorized to sell or otherwise dispose of such portion of the AcquisitionCo Common Shares otherwise issuable to the holder as is necessary to provide sufficient funds to the Fund, New Just Energy or the Depositary, as the case may be, to enable it to comply with such deduction or withholding requirement and the Fund, New Just Energy or the Depositary shall notify the holder thereof and remit the applicable portion of the net proceeds of such sale to the appropriate taxing authority.

 

  

A-12

  

 

ARTICLE 6

AMENDMENTS

 

6.1       The Fund, JEC, JEEC and AcquisitionCo may by mutual agreement amend this Plan of Arrangement at any time and from time to time prior to the Effective Time, provided that each such amendment must be: (i) set out in writing; and (ii) filed with the Court.

 

 

6.2       Any amendment, modification or supplement to this Plan of Arrangement may be made prior to the Effective Time by the Fund, JEC, JEEC and AcquisitionCo (or, following the Effective Time, by New Just Energy) without the approval of the Court or the Fund Voting Securityholders, provided that it concerns a matter which, in the reasonable opinion the Fund, JEC, JEEC and AcquisitionCo (or, following the Effective Time, New Just Energy), is of an adminishative nature required to better give effect to the implementation of this Plan of Arrangement or is not adverse to the financial or economic interests of any former holder of Fund Units, JEEC Exchangeable Shares or JEC Class A Shares

 

 

6.3       Subject to Section 6.2, any amendment to this Plan of Arrangement may be proposed by the Fund, JEC, JEEC or AcquisitionCo at any time prior to or at the Fund Meeting (provided that the other parties to the Arrangement Agreement shall have consented thereto) with or without any prior notice or communication to Fund Voting Securityholders or holders of, JEEC Exchangeable Shares and if so proposed and accepted by the Fund Voting Securityholders voting at the Fund Meeting (other than as may be required under the Interim Order), shall become part of this Plan of Arrangement for all purposes.

 

 

6.4       Subject to Section 6.2 the Fund, JEC, JEEC and AcquisitionCo may amend, modify and/or supplement this Plan of Arrangement at any time and from time to time after the Meeting and prior to the Effective Time with the approval of the Court and, if and as required by the Court, after communication to the Fund Voting Securityholders and holders of, JEEC Exchangeable Shares.

 

 

ARTICLE 7

FURTHER ASSURANCES

 

7.1       Notwithstanding that the transactions and events set out herein shall occur and be deemed to occur in the order set out in this Plan of Arrangement without any further act or formality, each of the parties to the Arrangement Agreement shall make, do and execute, or cause to be made, done and executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by any of them in order to further document or evidence any of the transactions or events set out herein.

 

 

7.2       If, prior to the Effective Date, any term or provision of this Plan of Arrangement is held by the Court to be invalid, void or unenforceable, the Court, at the request of any parties, shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and provisions of this Plan of Arrangement shall remain in full force and effect and shall in no way be affected, impaired or invalidated by such holding, alteration or interpretation.

 

 

7.3       The Fund, JEC and AcquisitionCo may agree not to implement this Plan of Arrangement, notwithstanding the passing of the Fund Arrangement Resolution by the Fund Securityholders and the JEEC Arrangement Resolution by the JEEC Exchangeable Shareholders and the receipt of the Final Order.

 

 

A-13Unassociated Document

Franklin Credit Management Corporation 10-12G/A

Exhibit
10.3

 

Franklin Credit Management Corporation

 

2012 Stock Incentive Plan

 

ARTICLE I

General

 

1.1           Purpose

 

The Franklin Credit Management Corporation 2012 Incentive Plan (the “Plan”) is designed to provide certain key persons, on whose initiative and efforts the successful conduct of the business of Franklin Credit Management Corporation (the “Company”) depends, and who are responsible for the management, growth and protection of the business of the Company, with incentives to: (a) enter into and remain in the service of the Company or a Company Affiliate (as herein defined), (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance of the Company (whether directly or indirectly through enhancing the long-term performance of a Company Affiliate). The Plan is also designed to provide certain “performance-based” compensation to these key persons.

 

1.2           Administration

 

(a)           Administration by Committee; Constitution of Committee. The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the “Board”) or such other committee or subcommittee as the Board may designate or as shall be formed by the abstention or recusal of a non-Qualified Member (as defined below) of such committee (the “Committee”). The members of the Committee shall be appointed by, and serve at the pleasure of, the Board. While it is intended that at all times that the Committee acts in connection with the Plan, the Committee shall consist solely of Qualified Members, the number of whom shall not be less than two, the fact that the Committee is not so comprised will not invalidate any grant hereunder that otherwise satisfies the terms of the Plan. A “Qualified Member” is both a “non-employee director” within the meaning of Rule 16b-3 (“Rule 16b-3”) promulgated under the Securities Exchange Act of 1934 (the “1934 Act”) and an “outside director” within the meaning of section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). If the Committee does not exist, or for any other reason determined by the Board, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee.

 

(b)           Committee’s Authority. The Committee shall have the authority (i) to exercise all of the powers granted to it under the Plan, (ii) to construe, interpret and implement the Plan and any Grant Certificates executed pursuant to Section 2.1, (iii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules governing its own operations, (iv) to make all determinations necessary or advisable in administering the Plan, (v) to correct any defect, supply any omission and reconcile any inconsistency in the Plan, and (vi) to amend the Plan to reflect changes in applicable law.

 

(c)           Committee Action; Delegation. Actions of the Committee shall be taken by the vote of a majority of its members. Any action may be taken by a written instrument signed by a majority of the Committee members, and action so taken shall be fully as effective as if it had been taken by a vote at a meeting. Notwithstanding the foregoing or any other provision of the Plan, the Committee or, pursuant to Section 1.2(a), the Board, may delegate to one or more officers of the Company the authority to designate the individuals (other than such officer(s)), among those eligible to receive awards pursuant to the terms of the Plan, who will receive rights or options under the Plan and the size of each such grant, to the fullest extent permitted by Section 157 of the Delaware General Corporation Law (or any successor provision thereto), provided that the Committee shall itself grant awards to those individuals who could reasonably be considered to be subject to the insider trading provisions of section 16 of the 1934 Act or whose awards could reasonably be expected to be subject to the deduction limitations of section 162(m) of the Code.

 

 

 

 

 

(d)           Determinations Final. The determination of the Committee on all matters relating to the Plan or any Grant Certificate shall be final, binding and conclusive.

 

(e)           Limit on Committee Members’ Liability. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any award thereunder.

 

1.3           Persons Eligible for Awards

 

The persons eligible to receive awards under the Plan are those officers, directors (whether or not they are employed by the Company), and executive, managerial, professional or administrative employees of, and consultants to, the Company or any Company Affiliate (collectively, “key persons”) as the Committee in its sole discretion shall select.

 

1.4           Types of Awards Under Plan

 

Awards may be made under the Plan in the form of (a) incentive stock options, (b) non-qualified stock options, (c) stock appreciation rights, (d) dividend equivalent rights, (e) restricted stock, (f) restricted stock units, (g) unrestricted stock, and (h) performance shares, all as more fully set forth in Article II. The term “award” means any of the foregoing. No incentive stock option may be granted to a person who is not an employee of the Company or a subsidiary corporation with respect to the Company on the date of grant.

 

1.5           Shares Available for Awards

 

(a)           Aggregate Number Available; Certificate Legends. The total number of shares of common stock of the Company (“Common Stock”) with respect to which awards may be granted pursuant to the Plan shall not exceed the sum of 1,500,000 shares. Shares issued pursuant to the Plan may be authorized but unissued Common Stock, authorized and issued Common Stock held in the Company’s treasury or Common Stock acquired by the Company for the purposes of the Plan. The Committee may direct that any stock certificate evidencing shares issued pursuant to the Plan shall bear a legend setting forth such restrictions on transferability as may apply to such shares.

 

(b)           Adjustment Upon Changes in Common Stock. Upon certain changes in Common Stock, the number of shares of Common Stock available for issuance with respect to awards that may be granted under the Plan pursuant to Section 1.5(a), shall be adjusted pursuant to Section 3.7(a).

 

(c)           Certain Shares to Become Available Again. The following shares of Common Stock shall again become available for awards under the Plan: any shares that are subject to an award under the Plan and that remain unissued upon the cancellation or termination of such award for any reason whatsoever; any shares of restricted stock forfeited pursuant to Section 2.7(e), provided that any dividends paid on such shares are also forfeited pursuant to such Section 2.7(e); and any shares in respect of which a performance share award is settled for cash.

 

(d)           Individual Limits. Except for the limits set forth in this Section 1.5(d) and in Section 2.2(h), no provision of this Plan shall be deemed to limit the number or value of shares with respect to which the Committee may make awards to any eligible person. Subject to adjustment as provided in Section 3.7(a), the total number of shares of Common Stock with respect to which awards may be granted to any one employee of the Company or a Company Affiliate during any one calendar year shall not exceed 225,000 shares. Stock options and stock appreciation rights granted and subsequently canceled or deemed to be canceled in a calendar year count against this limit even after their cancellation.

 

1.6           Definitions of Certain Terms

 

(a)           The “Fair Market Value” of a share of Common Stock on any day shall be the closing price on the New York Stock Exchange as reported for such day in The Wall Street Journal or, if no such price is reported for such day, the average of the high bid and low asked price of Common Stock as reported for such day. If no quotation is made for the applicable day, the Fair Market Value of a share of Common Stock on such day shall be determined in the manner set forth in the preceding sentence using quotations for the next preceding day for which there were quotations, provided that such quotations shall have been made within the ten (10) business days preceding the applicable day. Notwithstanding the foregoing, if deemed necessary or appropriate by the Committee, the Fair Market Value of a share of Common Stock on any day shall be determined by the Committee. In no event shall the Fair Market Value of any share of Common Stock be less than its par value.

 

  

- 2 -

  

 

(b)           The term “incentive stock option” means an option that is intended to qualify for special federal income tax treatment pursuant to sections 421 and 422 of the Code as now constituted or subsequently amended, or pursuant to a successor provision of the Code, and which is so designated in the applicable Grant Certificate. Any option that is not specifically designated as an incentive stock option shall under no circumstances be considered an incentive stock option. Any option that is not an incentive stock option is referred to herein as a “non-qualified stock option.”

 

(c)           A grantee shall be deemed to have a “termination of employment” upon (i) the date the grantee ceases to be employed by, or to provide consulting services for, the Company or any Company Affiliate, or for any corporation (or any of its subsidiaries) which assumes the grantee’s award in a transaction to which section 424(a) of the Code applies; or (ii) the date the grantee ceases to be a Board member, provided, however, that in the case of a grantee (x) who is, at the time of reference, both an employee or consultant and a Board member, or (y) who ceases to be engaged as an employee, consultant or Board member and immediately is engaged in another of such relationships with the Company or any Company Affiliate, the grantee shall be deemed to have a “termination of employment” upon the later of the dates determined pursuant to subparagraphs (i) and (ii) above. For purposes of clause (i) above, a grantee who continues his or her employment or consulting relationship with an entity that has ceased to be a Company Affiliate for any reason shall have a termination of employment upon the date such entity ceases to be a Company Affiliate. The Committee may in its discretion determine whether any leave of absence constitutes a termination of employment for purposes of the Plan and the impact, if any, of any such leave of absence on awards theretofore made under the Plan. Notwithstanding the foregoing, a grantee of any award that constitutes deferred compensation within the meaning of Section 409A of the Code shall be deemed to have had “termination of employment” with respect to such award only upon such grantee’s “separation from service” within as defined in Treasury Regulation section 1.409A-1(h).

 

(d)           The terms “parent corporation” and “subsidiary corporation” shall have the meanings given them in sections 424(e) and (f) of the Code, respectively.

 

(e)           The term “Company Affiliate” means a corporation, joint venture or other entity in which the Company or an other entity in a chain ending with the Company has a “controlling interest” within the meaning of Treasury Regulation section 1.409A-1(b)(5)(iii)(E).

 

(f)           The term “employment” shall be deemed to mean an employee’s employment with, or a consultant’s provision of services to, the Company or any Company Affiliate and each Board member’s service as a Board member.

 

(g)           The term “cause” in connection with a termination of employment by reason of a dismissal for cause shall mean:

 

(i)            to the extent that there is an employment, severance or other agreement governing the relationship between the grantee and the Company or a Company Affiliate, which agreement contains a definition of “cause,” cause shall consist of those acts or omissions that would constitute “cause” under such agreement; and otherwise,

 

(ii)           the grantee’s termination of employment by the Company or a Company Affiliate on account of any one or more of the following:

 

(A)           grantee’s willful and intentional repeated failure or refusal, continuing after notice that specifically identifies the breach(es) complained of, to perform substantially his or her material duties, responsibilities and obligations (other than a failure resulting from grantee’s incapacity due to physical or mental illness or other reasons beyond the control of grantee), and which failure or refusal results in demonstrable direct and material injury to the Company or a Company Affiliate;

 

 

- 3 -

 

 

(B)           any willful and intentional act or failure to act involving fraud, misrepresentation, theft, embezzlement, dishonesty or moral turpitude (collectively, “Fraud”) which results in demonstrable direct and material injury to the Company or a Company Affiliate; and

 

(C)           conviction of (or a plea of nolo contendere to) an offense which is a felony in the jurisdiction involved or which is a misdemeanor in the jurisdiction involved but which involves Fraud.

 

For purposes of determining whether cause exists, no act, or failure to act, on grantee’s part shall be deemed “willful” or “intentional” unless done, or omitted to be done, by grantee in bad faith, and without reasonable belief that his or her action or omission was in the best interests of the Company.

 

Notwithstanding the foregoing, the grantee shall not be deemed to have been terminated for “cause” hereunder unless and until there shall have been delivered to the grantee a copy of a resolution (a “Cause Resolution”) duly adopted by the affirmative vote of not less than two thirds (2/3) of the Board then in office at a meeting of the Board called upon reasonable notice to all directors and held for such purpose, after reasonable notice to the grantee and an opportunity for the grantee, together with his counsel (if the grantee chooses to have counsel present at such meeting), to be heard before the Board at such meeting, finding that, in the good faith opinion of the Board, the grantee had committed an act constituting “cause” as herein defined and specifying the particulars thereof in detail. Nothing herein will limit the right of the grantee or his beneficiaries to contest the validity or propriety of any such determination and/or Cause Resolution.

 

Any rights the Company may have hereunder in respect of the events giving rise to cause shall be in addition to the rights the Company may have under any other agreement with a grantee or at law or in equity. Any determination of whether a grantee’s employment is (or is deemed to have been) terminated for cause for purposes of the Plan or any award hereunder shall be made by the Committee in its discretion. If, subsequent to a grantee’s voluntary termination of employment or involuntary termination of employment without cause, it is discovered that the grantee’s employment could have been terminated for cause, the Committee may deem such grantee’s employment to have been terminated for cause. A grantee’s termination of employment for cause shall be effective as of the date of the occurrence of the event giving rise to cause, regardless of when the determination of cause is made.

 

ARTICLE II

Awards Under the Plan

 

2.1           Certificates Evidencing Awards

 

Each award granted under the Plan (except an award of unrestricted stock) shall be evidenced by a written certificate (“Grant Certificate”) which shall contain such provisions as the Committee may in its sole discretion deem necessary or desirable. By accepting an award pursuant to the Plan, a grantee thereby agrees that the award shall be subject to all of the terms and provisions of the Plan and the applicable Grant Certificate.

 

2.2           Grant of Stock Options, Stock Appreciation Rights and Dividend Equivalent Rights

 

(a)           Stock Option Grants. The Committee may grant incentive stock options and non-qualified stock options (collectively, “options”) to purchase shares of Common Stock from the Company, to such key persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Committee shall determine in its sole discretion, subject to the provisions of the Plan.

 

 

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(b)           Stock Appreciation Right Grants; Types of Stock Appreciation Rights. The Committee may grant stock appreciation rights to such key persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Committee shall determine in its sole discretion, subject to the provisions of the Plan. The terms of a stock appreciation right may provide that it shall be automatically exercised for a cash payment upon the happening of a specified event that is outside the control of the grantee and that it shall not be otherwise exercisable. Stock appreciation rights may be granted in connection with all or any part of, or independently of, any option granted under the Plan. A stock appreciation right granted in connection with a non-qualified stock option may be granted at or after the time of grant of such option. A stock appreciation right granted in connection with an incentive stock option may be granted only at the time of grant of such option.

 

(c)           Nature of Stock Appreciation Rights. The grantee of a stock appreciation right shall have the right, subject to the terms of the Plan and the applicable Grant Certificate, to receive from the Company an amount equal to (i) the excess of the Fair Market Value of a share of Common Stock on the date of exercise of the stock appreciation right over the Fair Market Value of a share of Common Stock on the date of grant (or over the option exercise price if the stock appreciation right is granted in connection with an option), multiplied by (ii) the number of shares with respect to which the stock appreciation right is exercised. Payment upon exercise of a stock appreciation right shall be in cash or in shares of Common Stock (valued at their Fair Market Value on the date of exercise of the stock appreciation right) or both, all as the Committee shall determine in its sole discretion. Upon the exercise of a stock appreciation right granted in connection with an option, the number of shares subject to the option shall be reduced by the number of shares with respect to which the stock appreciation right is exercised. Upon the exercise of an option in connection with which a stock appreciation right has been granted, the number of shares subject to the stock appreciation right shall be reduced by the number of shares with respect to which the option is exercised.

 

(d)           Option Exercise Price. Each Grant Certificate with respect to an option shall set forth the amount (the “option exercise price”) payable by the grantee to the Company upon exercise of the option evidenced thereby. The option exercise price per share shall be determined by the Committee in its sole discretion; provided, however, that the option exercise price shall be at least 100% of the Fair Market Value of a share of Common Stock on the date the option is granted, and provided further that in no event shall the option exercise price be less than the par value of a share of Common Stock.

 

(e)           Exercise Period. Each Grant Certificate with respect to an option or stock appreciation right shall set forth the periods during which the award evidenced thereby shall be exercisable, whether in whole or in part. Such periods shall be determined by the Committee in its sole discretion; provided, however, that no stock option (or a stock appreciation right granted in connection with an incentive stock option) shall be exercisable more than 10 years after the date of grant. (See the default exercise period provided for under Sections 2.3(a) and (b).)

 

(f)           Dividend Equivalent Rights. The Committee may in its sole discretion include in any Grant Certificate with respect to an option, stock appreciation right or performance shares, a dividend equivalent right entitling the grantee to receive amounts equal to the ordinary dividends that would be paid, during the time such award is outstanding and unexercised, on the shares of Common Stock covered by such award if such shares were then outstanding. In the event such a provision is included in a Grant Certificate, the Committee shall determine whether such payments shall be made in cash or in shares of Common Stock, the time or times at which they shall be made, and such other vesting and forfeiture provisions and other terms and conditions as the Committee shall deem appropriate. Notwithstanding the foregoing, (i) no dividend equivalent rights shall be conditioned on the exercise of any option or stock appreciation right and (ii) no dividend equivalent right shall be granted to the extent such dividend equivalent right shall result in the payment of any tax under section 409A of the Code.

 

(g)           Incentive Stock Option Limitation: $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined as of the time the option is granted) of the stock with respect to which incentive stock options are first exercisable by any employee during any calendar year shall exceed $100,000, or such higher amount as may be permitted from time to time under section 422 of the Code, such options shall be treated as non-qualified stock options.

 

 

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(h)           Incentive Stock Option Limitation: 10% Owners. Notwithstanding the provisions of paragraphs (d) and (e) of this Section 2.2, an incentive stock option may not be granted under the Plan to an individual who, at the time the option is granted, owns stock possessing more than 10% of the total combined voting power of all classes of stock of his or her employer corporation or of its parent or subsidiary corporations (as such ownership may be determined for purposes of section 422(b)(6) of the Code) unless (i) at the time such incentive stock option is granted the option exercise price is at least 110% of the Fair Market Value of the shares subject thereto and (ii) the incentive stock option by its terms is not exercisable after the expiration of 5 years from the date it is granted.

 

2.3           Exercise of Options and Stock Appreciation Rights

 

Subject to the other provisions of this Article II, each option or stock appreciation right granted under the Plan shall be exercisable as follows:

 

(a)           Beginning of Exercise Period. Unless the applicable Grant Certificate otherwise provides, an option or stock appreciation right shall become exercisable with respect to a number of whole shares as close as possible to 25% of the shares subject to such option or stock appreciation right on each of the first four anniversaries of the date of grant.

 

(b)           End of Exercise Period. Unless the applicable Grant Certificate otherwise provides, once an installment becomes exercisable, it shall remain exercisable until the earlier of (i) the tenth anniversary of the date of grant of the award or (ii) the expiration, cancellation or termination of the award.

 

(c)           Timing and Extent of Exercise. Unless the applicable Grant Certificate otherwise provides, (i) an option or stock appreciation right may be exercised from time to time as to all or part of the shares as to which such award is then exercisable and (ii) a stock appreciation right granted in connection with an option may be exercised at any time when, and to the same extent that, the related option may be exercised.

 

(d)           Notice of Exercise. An option or stock appreciation right shall be exercised by the filing of a written notice with the Company or the Company’s designated exchange agent (the “exchange agent”), on such form and in such manner as the Committee shall in its sole discretion prescribe.

 

(e)           Payment of Exercise Price. Any written notice of exercise of an option shall be accompanied by payment for the shares being purchased. Such payment shall be made: (i) by certified or official bank check (or the equivalent thereof acceptable to the Company or its exchange agent) for the full option exercise price; or (ii) with the consent of the Committee, by delivery of shares of Common Stock owned by the grantee (whether acquired by option exercise or otherwise, provided that if such shares were acquired pursuant to the exercise of a stock option, they were acquired at least six months prior to the option exercise date or such other period as the Committee may from time to time determine) having a Fair Market Value (determined as of the exercise date) equal to all or part of the option exercise price and a certified or official bank check (or the equivalent thereof acceptable to the Company or its exchange agent) for any remaining portion of the full option exercise price; or (iii) at the discretion of the Committee and to the extent permitted by law, by such other provision, consistent with the terms of the Plan, as the Committee may from time to time prescribe.

 

(f)           Delivery of Certificates Upon Exercise. Promptly after receiving payment of the full option exercise price, or after receiving notice of the exercise of a stock appreciation right, the Company or its exchange agent shall, subject to the provisions of Section 3.2, deliver to the grantee or to such other person as may then have the right to exercise the award, certificate or certificates for the shares of Common Stock for which the award has been exercised. If the method of payment employed upon option exercise so requires, and if applicable law permits, a grantee may direct the Company, or its exchange agent, as the case may be, to deliver the stock certificate(s) to the grantee’s stockbroker.

 

(g)           No Stockholder Rights. No grantee of an option or stock appreciation right (or other person having the right to exercise such award) shall have any of the rights of a stockholder of the Company with respect to shares subject to such award until the issuance of a stock certificate to such person for such shares. Except as otherwise provided in Section 1.5(b), no adjustment shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such stock certificate is issued.

 

 

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2.4           Compensation in Lieu of Exercise of an Option

 

Upon written application of the grantee of an option, the Committee may in its sole discretion determine to substitute, for the exercise of such option, compensation to the grantee not in excess of the difference between the option exercise price and the Fair Market Value of the shares covered by such written application on the date of such application. Such compensation shall be in shares of Common Stock, and the payment thereof may be subject to conditions, all as the Committee shall determine in its sole discretion. In the event compensation is substituted pursuant to this Section 2.4 for the exercise, in whole or in part, of an option, the number of shares subject to the option shall be reduced by the number of shares for which such compensation is substituted.

 

2.5           Termination of Employment; Death Subsequent to a Termination of Employment

 

(a)           General Rule. Except to the extent otherwise provided in paragraphs (b), (c), or (d) of this Section 2.5, a grantee who incurs a termination of employment may exercise any outstanding option or stock appreciation right on the following terms and conditions: (i) exercise may be made only to the extent that the grantee was entitled to exercise the award on the termination of employment date; and (ii) exercise must occur within three months after termination of employment but in no event after the original expiration date of the award.

 

(b)           Dismissal for Cause. If a grantee incurs a termination of employment as the result of a dismissal for cause, all options and stock appreciation rights not theretofore exercised shall terminate upon the commencement of business on the date of the grantee’s termination of employment.

 

(c)           Disability. If a grantee incurs a termination of employment by reason of a disability (as defined below), then any outstanding option or stock appreciation right shall be exercisable on the following terms and conditions: (i) exercise may be made only to the extent that the grantee was entitled to exercise the award on the termination of employment date; and (ii) exercise must occur by the earlier of (A) the first anniversary of the grantee’s termination of employment, or (B) the original expiration date of the award. For this purpose “disability” shall mean: (x) except in connection with an incentive stock option, any physical or mental condition that would qualify a grantee for a disability benefit under the long-term disability plan maintained by the Company or, if there is no such plan, a physical or mental condition that prevents the grantee from performing the essential functions of the grantee’s position (with or without reasonable accommodation) for a period of six consecutive months and (y) in connection with an incentive stock option, a disability described in section 422(c)(6) of the Code. The existence of a disability shall be determined by the Committee in its absolute discretion.

 

(d)           Death.

 

(i)           Termination of Employment as a Result of Grantee’s Death. If a grantee incurs a termination of employment as the result of death, then any outstanding option or stock appreciation right shall be exercisable on the following terms and conditions: (A) exercise may be made only to the extent that the grantee was entitled to exercise the award on the date of death; and (B) exercise must occur by the earlier of (1) the first anniversary of the grantee’s termination of employment, or (2) the original expiration date of the award.

 

(ii)           Death Subsequent to a Termination of Employment. If a grantee dies subsequent to incurring a termination of employment but prior to the expiration of the exercise period with respect to a stock option or a stock appreciation right (as provided by paragraphs (a) or (c) above), then the award shall remain exercisable until the earlier to occur of (A) the first anniversary of the grantee’s date of death or (B) the original expiration date of the award.

 

 

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(iii)           Restrictions on Exercise Following Death. Any such exercise of an award following a grantee’s death shall be made only by the grantee’s executor or administrator or other duly appointed representative reasonably acceptable to the Committee, unless the grantee’s will specifically disposes of such award, in which case such exercise shall be made only by the recipient of such specific disposition. If a grantee’s personal representative or the recipient of a specific disposition under the grantee’s will shall be entitled to exercise any award pursuant to the preceding sentence, such representative or recipient shall be bound by all the terms and conditions of the Plan and the applicable Grant Certificate which would have applied to the grantee including, without limitation, the provisions of Sections 3.2 hereof.

 

(e)           Special Rules for Incentive Stock Options. An incentive stock option shall cease to be treated as a incentive stock option to the extent that it remains exercisable for more than three months following a grantee’s termination of employment for any reason other than death (including death within three months after the termination of employment or within one year after a termination due to disability) or disability, or for more than one year following a grantee’s termination of employment as the result of disability.

 

(f)           Committee Discretion. The Committee, in the applicable Grant Certificate, may waive or modify the application of the foregoing provisions of this Section 2.5.

 

2.6           Transferability of Options and Stock Appreciation Rights

 

Except as otherwise provided in an applicable Grant Certificate evidencing an option or stock appreciation right, during the lifetime of a grantee, each option or stock appreciation right granted to a grantee shall be exercisable only by the grantee and no option or stock appreciation right shall be assignable or transferable otherwise than by will or by the laws of descent and distribution. The Committee may, in any applicable Grant Certificate evidencing an option (other than an incentive stock option to the extent inconsistent with the requirements of section 422 of the Code applicable to incentive stock options), permit a grantee to transfer all or some of the options to (A) the grantee’s spouse, children or grandchildren (“Immediate Family Members”), (B) a trust or trusts for the exclusive benefit of such Immediate Family Members, or (C) other parties approved by the Committee in its absolute discretion. Following any such transfer, any transferred options shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer.

 

2.7           Grant of Restricted Stock

 

(a)           Restricted Stock Grants. The Committee may grant restricted shares of Common Stock to such key persons, in such amounts, and subject to such vesting and forfeiture provisions and other terms and conditions as the Committee shall determine in its sole discretion, subject to the provisions of the Plan. Restricted stock awards may be made independently of or in connection with any other award under the Plan. A grantee of a restricted stock award shall have no rights with respect to such award unless such grantee accepts the award within such period as the Committee shall specify by accepting delivery of a Grant Certificate in such form as the Committee shall determine and makes payment to the Company or its exchange agent by certified or official bank check (or the equivalent thereof acceptable to the Company) of the purchase price, if any, for such restricted shares as determined by the Committee its sole discretion.

 

(b)           Issuance of Stock Certificate(s). Promptly after a grantee accepts a restricted stock award, the Company or its exchange agent shall issue to the grantee a stock certificate or stock certificates for the shares of Common Stock covered by the award or shall establish an account evidencing ownership of the stock in uncertificated form. Upon the issuance of such stock certificate(s), or establishment of such account, the grantee shall have the rights of a stockholder with respect to the restricted stock, subject to: (i) the nontransferability restrictions and forfeiture provision described in paragraphs (d) and (e) of this Section 2.7; (ii) in the Committee’s discretion, a requirement that any dividends paid on such shares shall be subject to the same forfeiture restrictions applicable to such restricted shares and held in escrow until all restrictions on such shares have lapsed; and (iii) any other restrictions and conditions contained in the applicable Grant Certificate.

 

(c)           Custody of Stock Certificate(s). Unless the Committee shall otherwise determine, any stock certificates issued evidencing shares of restricted stock shall remain in the possession of the Company until such shares are free of any restrictions specified in the applicable Grant Certificate. The Committee may direct that such stock certificate(s) bear a legend setting forth the applicable restrictions on transferability.

 

 

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(d)           Nontransferability. Shares of restricted stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as otherwise specifically provided in this Plan or the applicable Grant Certificate. The Committee at the time of grant shall specify the date or dates (which may depend upon or be related to a period of continued employment with the Company, the attainment of performance goals or other conditions or a combination of such conditions) on which the nontransferability of the restricted stock shall lapse.

 

(e)           Consequence of Termination of Employment. Except as may otherwise be provided by the Committee at any time prior to a grantee’s termination of employment, a grantee’s termination of employment for any reason (including death) shall cause the immediate forfeiture of all shares of restricted stock that have not yet vested as of the date of such termination of employment. All dividends paid on such shares also shall be forfeited, whether by termination of any escrow arrangement under which such dividends are held, by the grantee’s repayment of dividends received directly, or otherwise.

 

2.8           Grant of Restricted Stock Units

 

(a)           Restricted Stock Unit Grants. The Committee may grant awards of restricted stock units to such key persons, in such amounts, and subject to such terms and conditions as the Committee shall determine in its discretion, subject to the provisions of the Plan. Restricted stock units may be awarded independently of or in connection with any other award under the Plan. A grantee of a restricted stock unit award shall have no rights with respect to such award unless such grantee accepts the award within such period as the Committee shall specify by accepting delivery of a Grant Certificate in such form as the Committee shall determine. A grant of a restricted stock unit entitles the grantee to receive a share of Common Stock on the date that such restricted stock unit vests.

 

(b)           Vesting. Restricted stock units may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as otherwise specifically provided in this Plan or the applicable Grant Certificate. The Committee at the time of grant shall specify the date or dates (which may depend upon or be related to a period of continued employment with the Company, the attainment of performance goals or other conditions or a combination of such conditions) on which the restricted stock units shall vest.

 

(c)           Consequence of Termination of Employment. Except as may otherwise be provided by the Committee at any time prior to a grantee’s termination of employment, a grantee’s termination of employment for any reason (including death) shall cause the immediate forfeiture of all restricted stock units that have not yet vested as of the date of such termination of employment.

 

2.9           Grant of Unrestricted Stock

 

The Committee may grant (or sell at a purchase price at least equal to par value) shares of Common Stock free of restrictions under the Plan, to such key persons and in such amounts and subject to such forfeiture provisions as the Committee shall determine in its sole discretion. Shares may be thus granted or sold in respect of past services or other valid consideration, provided, however, that any such awards to officers or directors shall involve a number of shares determined by the Committee as being reasonable and shall be identified as being granted in lieu of salary or cash bonus.

 

2.10         Grant of Performance Shares

 

(a)           Performance Share Grants. The Committee may grant performance share awards to such key persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Committee shall in its sole discretion determine, subject to the provisions of the Plan. Such an award shall entitle the grantee to acquire shares of Common Stock, or to be paid the value thereof in cash, as the Committee shall determine, if specified performance goals are met. Performance shares may be awarded independently of, or in connection with, any other award under the Plan. A grantee shall have no rights with respect to a performance share award unless such grantee accepts the award by accepting delivery of a Grant Certificate at such time and in such form as the Committee shall determine.

 

 

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(b)           Stockholder Rights. The grantee of a performance share award will have the rights of a stockholder only as to shares for which a stock certificate has been issued pursuant to the award or for which an account has been established evidencing ownership of the stock in uncertificated form and not with respect to any other shares subject to the award.

 

(c)           Consequence of Termination of Employment. Except as may otherwise be provided by the Committee at any time prior to a grantee’s termination of employment, the rights of a grantee of a performance share award shall automatically terminate upon the grantee’s termination of employment by the Company and its subsidiaries for any reason (including death).

 

(d)           Payment of Award. The grantee of a performance share award shall receive the shares of Common Stock or cash payment subject to such award as soon as practicable following the satisfaction of the applicable performance goals, but in no event later than 2-1/2 months after the year in which the performance goals were satisfied.

 

(e)           Tandem Grants; Effect on Exercise. Except as otherwise specified by the Committee, (i) a performance share award granted in tandem with an option may be exercised only while the option is exercisable, (ii) the exercise of a performance share award granted in tandem with any other award shall reduce the number of shares subject to such other award in the manner specified in the applicable Grant Certificate, and (iii) the exercise of any award granted in tandem with a performance share award shall reduce the number of shares subject to the performance share award in the manner specified in the applicable Grant Certificate.

 

(f)           Nontransferability. Performance shares may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as otherwise specifically provided in this Plan or the applicable Grant Certificate.

 

2.11         Right of Recapture

 

If at any time after the date on which a grantee has been granted or become vested in an award pursuant to the achievement of performance goals under this Article II, the Committee determines that the earlier determination as to the achievement of the performance goals was based on incorrect data and that in fact the performance goals had not been achieved or had been achieved to a lesser extent than originally determined, then (i) any award or portion of an award granted based on such incorrect determination shall be forfeited, (ii) any award or portion of an award that became vested based on such incorrect determination shall be deemed to be not vested, and (iii) any amounts paid to the grantee based on such incorrect determination shall be paid by the grantee to the Company upon notice from the Company.

 

ARTICLE III

Miscellaneous

 

3.1           Amendment of the Plan; Modification of Awards

 

(a)           Amendment of the Plan. Subject to Section 3.1(b), the Board may from time to time suspend, discontinue, revise or amend the Plan in any respect whatsoever, except that no such amendment shall materially impair any rights or materially increase any obligations under any award theretofore made under the Plan without the consent of the grantee (or, upon the grantee’s death, the person having the right to exercise the award). For purposes of this Section 3.1, any action of the Board or the Committee that in any way alters or affects the tax treatment of any award or that in the sole discretion of the Board is necessary to prevent an award from being subject to tax under Section 409A of the Code shall not be considered to materially impair any rights of any grantee.

 

 

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(b)           Stockholder Approval Requirement. Stockholder approval shall be required with respect to any amendment to the Plan (i) which increases the aggregate number of shares which may be issued pursuant to incentive stock options or changes the class of employees eligible to receive such options, (ii) which otherwise materially increases the benefits under the Plan, (iii) to the extent required by stock exchange rules, or (iv) to the extent the Board determines that stockholder approval is necessary to enable awards under the Plan to comply with Sections 422 or 162(m) of the Code.

 

(c)           Modification of Awards. The Committee may cancel any award under the Plan. The Committee also may amend any outstanding Grant Certificate, including, without limitation, by amendment which would: (i) accelerate the time or times at which the award becomes unrestricted or vested or may be exercised; (ii) waive or amend any goals, restrictions or conditions set forth in the Grant Certificate; or (iii) waive or amend the operation of Section 2.5 with respect to the termination of the award upon termination of employment, provided however, that no such amendment may lower the exercise price of an outstanding option or stock appreciation right. However, any such cancellation or amendment (other than an amendment pursuant to Sections 3.7) that materially impairs the rights or materially increases the obligations of a grantee under an outstanding award shall be made only with the consent of the grantee (or, upon the grantee’s death, the person having the right to exercise the award). Under no circumstances may the Committee modify an award in a manner that would cause the award to be subject to tax under Section 409A of the Code.

 

3.2           Consent Requirement

 

(a)           No Plan Action without Required Consent. If the Committee shall at any time determine that any Consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of any award under the Plan, the issuance or purchase of shares or other rights thereunder, or the taking of any other action thereunder (each such action being hereinafter referred to as a “Plan Action”), then such Plan Action shall not be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the full satisfaction of the Committee.

 

(b)           Consent Defined. The term “Consent” as used herein with respect to any Plan Action means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the grantee with respect to the disposition of shares, or with respect to any other matter, which the Committee shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made and (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies.

 

3.3           Nonassignability

 

Except as provided in Sections 2.5(d), 2.6, 2.7(d) and 2.9(f): (a) no award or right granted to any person under the Plan or under any Grant Certificate shall be assignable or transferable other than by will or by the laws of descent and distribution; and (b) all rights granted under the Plan or any Grant Certificate shall be exercisable during the life of the grantee only by the grantee or the grantee’s legal representative.

 

3.4           Requirement of Notification of Election Under Section 83(b) of the Code

 

If any grantee shall, in connection with the acquisition of shares of Common Stock under the Plan, make the election permitted under section 83(b) of the Code (i.e., an election to include in gross income in the year of transfer the amounts specified in section 83(b)), such grantee shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under the authority of Code section 83(b).

 

3.5           Requirement of Notification Upon Disqualifying Disposition Under Section 421(b) of the Code

 

Each grantee of an incentive stock option shall notify the Company of any disposition of shares of Common Stock issued pursuant to the exercise of such option under the circumstances described in section 421(b) of the Code (relating to certain disqualifying dispositions), within 10 days of such disposition.

 

 

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3.6           Withholding Taxes

 

(a)           With Respect to Cash Payments. Whenever cash is to be paid pursuant to an award under the Plan, the Company shall be entitled to deduct therefrom an amount sufficient in its opinion to satisfy all federal, state and other governmental tax withholding requirements related to such payment.

 

(b)           With Respect to Delivery of Common Stock. Whenever shares of Common Stock are to be delivered pursuant to an award under the Plan or whenever the forfeiture restrictions on shares of restricted stock lapse, the Company shall be entitled to require as a condition of delivery or upon lapse of forfeiture restrictions that the grantee remit to the Company an amount sufficient in the opinion of the Company to satisfy all federal, state and other governmental tax withholding requirements related thereto. With the approval of the Committee, which the Committee shall have sole discretion whether or not to give, the grantee may satisfy the foregoing condition by electing to have the Company withhold from delivery shares (including deliver of stock certificates that remain in the Company’s custody with respect to the grant of shares of restricted stock pursuant to Section 2.7(c)) having a value equal to the minimum amount of tax required to be withheld. Such shares shall be valued at their Fair Market Value as of the date on which the amount of tax to be withheld is determined. Fractional share amounts shall be settled in cash. Such a withholding election may be made with respect to all or any portion of the shares to be delivered pursuant to an award.

 

3.7           Adjustment Upon Changes in Common Stock

 

(a)           Shares Available for Grants. In the event of any change in the number of shares of Common Stock outstanding by reason of any stock dividend or split, reverse stock split, recapitalization, merger, consolidation, combination or exchange of shares or similar corporate change, the maximum number of shares of Common Stock with respect to which the Committee may grant awards under Article II hereof, as described in Section 1.5(a), and the individual annual limit described in Section 1.5(d), shall be appropriately adjusted by the Committee in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. In the event of any change in the number of shares of Common Stock outstanding by reason of any other event or transaction, the Committee may, but need not, make such adjustments in the number and class of shares of Common Stock with respect to which awards: (i) may be granted under Article II hereof and (ii) granted to any one employee of the Company or a Company Affiliate during any one calendar year, in each case as the Committee may deem appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

 

(b)           Outstanding Restricted Stock, Restricted Stock Units and Performance Shares. Unless the Committee in its absolute discretion otherwise determines, any securities or other property (including dividends paid in cash) received by a grantee with respect to a share of restricted stock, which has not yet vested, as a result of any dividend, stock split, reverse stock split, recapitalization, merger, consolidation, combination, exchange of shares or otherwise, will not vest until such share of restricted stock vests, and shall be promptly deposited with the Company or other custodian designated pursuant to Section 2.7(c) hereof.

 

The Committee may, in its absolute discretion, adjust any grant of restricted stock units or performance shares payable in shares of Common Stock, to reflect any dividend, stock split, reverse stock split, recapitalization, merger, consolidation, combination, exchange of shares or similar corporate change as the Committee may deem appropriate to prevent the enlargement or dilution of rights of grantees.

 

(c)           Outstanding Options, Stock Appreciation Rights and Dividend Equivalent Rights -- Increase or Decrease in Issued Shares Without Consideration. Subject to any required action by the stockholders of the Company, in the event of any increase or decrease in the number of issued shares of Common Stock resulting from a subdivision or consolidation of shares of Common Stock or the payment of a stock dividend (but only on the shares of Common Stock), or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company, the Committee shall proportionally adjust the number of shares of Common Stock subject to each outstanding option and stock appreciation right, the exercise price-per-share of Common Stock of each such option and stock appreciation right and the number of any related dividend equivalent rights.

 

 

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(d)           Outstanding Options, Stock Appreciation Rights and Dividend Equivalent Rights -- Certain Mergers. Subject to any required action by the stockholders of the Company, in the event that the Company shall be the surviving corporation in any merger or consolidation (except a merger or consolidation as a result of which the holders of shares of Common Stock receive securities of another corporation), each option, stock appreciation right and dividend equivalent right outstanding on the date of such merger or consolidation shall pertain to and apply to the securities which a holder of the number of shares of Common Stock subject to such option, stock appreciation right or dividend equivalent right would have received in such merger or consolidation.

 

(e)           Outstanding Options, Stock Appreciation Rights and Dividend Equivalent Rights -- Certain Other Transactions. In the event of (i) a dissolution or liquidation of the Company, (ii) a sale of all or substantially all of the Company’s assets, (iii) a merger or consolidation involving the Company in which the Company is not the surviving corporation or (iv) a merger or consolidation involving the Company in which the Company is the surviving corporation but the holders of shares of Common Stock receive securities of another corporation and/or other property, including cash, the Committee shall, in its absolute discretion, have the power to:

 

(A)           cancel, effective immediately prior to the occurrence of such event, each option and stock appreciation right (including each dividend equivalent right related thereto) outstanding immediately prior to such event (whether or not then exercisable), and, in full consideration of such cancellation, pay to the grantee to whom such option or stock appreciation right was granted an amount in cash, for each share of Common Stock subject to such option or stock appreciation right, respectively, equal to the excess of (x) the value, as determined by the Committee in its absolute discretion, of the property (including cash) received by the holder of a share of Common Stock as a result of such event over (y) the exercise price of such option or stock appreciation right; or

 

(B)           provide for the exchange of each option and stock appreciation right (including any related dividend equivalent right) outstanding immediately prior to such event (whether or not then exercisable) for an option on or stock appreciation right and dividend equivalent right with respect to, as appropriate, some or all of the property which a holder of the number of shares of Common Stock subject to such option or stock appreciation right would have received and, incident thereto, make an equitable adjustment as determined by the Committee in its absolute discretion in the exercise price of the option or stock appreciation right, or the number of shares or amount of property subject to the option, stock appreciation right or dividend equivalent right or, if appropriate, provide for a cash payment to the grantee to whom such option or stock appreciation right was granted in partial consideration for the exchange of the option or stock appreciation right.

 

(f)           Outstanding Options, Stock Appreciation Rights and Dividend Equivalent Rights -- Other Changes. In the event of any change in the capitalization of the Company or a corporate change other than those specifically referred to in Sections 3.7(c), (d) or (e) hereof, the Committee may, in its absolute discretion, make such adjustments in the number and class of shares subject to options, stock appreciation rights and dividend equivalent rights outstanding on the date on which such change occurs and in the per-share exercise price of each such option and stock appreciation right as the Committee may consider appropriate to prevent dilution or enlargement of rights. In addition, if and to the extent the Committee determines it is appropriate, the Committee may elect to cancel each option and stock appreciation right (including each dividend equivalent right related thereto) outstanding immediately prior to such event (whether or not then exercisable), and, in full consideration of such cancellation, pay to the grantee to whom such option or stock appreciation right was granted an amount in cash, for each share of Common Stock subject to such option or stock appreciation right, respectively, equal to the excess of (i) the Fair Market Value of Common Stock on the date of such cancellation over (ii) the exercise price of such option or stock appreciation right.

 

(g)           No Other Rights. Except as expressly provided in the Plan, no grantee shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger or consolidation of the Company or any other corporation. Except as expressly provided in the Plan, 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 of shares of Common Stock subject to an award or the exercise price of any option or stock appreciation right.

 

 

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(h)           Notwithstanding the foregoing, no adjustment shall be made pursuant to the foregoing provisions of this Section 3.7 with respect to any option or stock appreciation right to the extent that such adjustment would cause the option or appreciation right (determined as if such option or stock appreciation right was an incentive stock option) to violate Code section 424(a) or otherwise subject any grantee to taxation under Code section 409A.

 

3.8           Right of Discharge Reserved

 

Nothing in the Plan or in any Grant Certificate shall confer upon any grantee the right to continue employment or service with the Company or any Company Affiliate or otherwise affect any right which the Company or any Company Affiliate may have to terminate such grantee’s employment or service.

 

3.9           Nature of Payments

 

(a)           Consideration for Services Performed. Any and all grants of awards and issuances of shares of Common Stock under the Plan shall be in consideration of services performed for the Company by the grantee.

 

(b)           Not Taken into Account for Benefits. All such grants and issuances shall constitute a special incentive payment to the grantee and shall not be taken into account in computing the amount of salary or compensation of the grantee for the purpose of determining any benefits under any pension, retirement, profit-sharing, bonus, life insurance or other benefit plan of the Company or under any agreement between the Company and the grantee, unless such plan or agreement specifically otherwise provides.

 

3.10         Non-Uniform Determinations

 

The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or who are eligible to receive, awards under the Plan (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make non-uniform and selective determinations, and to enter into non-uniform and selective Grant Certificates, as to (a) the persons to receive awards under the Plan, (b) the terms and provisions of awards under the Plan, and (c) the treatment of leaves of absence pursuant to Section 1.6(c).

 

3.11         Other Payments or Awards

 

Nothing contained in the Plan shall be deemed in any way to limit or restrict the Company from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.

 

3.12         Headings

 

Any section, subsection, paragraph or other subdivision headings contained herein are for the purpose of convenience only and are not intended to expand, limit or otherwise define the contents of such subdivisions.

 

3.13         Effective Date and Term of Plan

 

(a)           Adoption; Stockholder Approval. The Plan was adopted by the Board on July 25, 2012, subject to approval by the Company’s stockholders. All awards under the Plan prior to such stockholder approval are subject in their entirety to such approval. If such approval is not obtained prior to the first anniversary of the date of adoption of the Plan, the Plan and all awards thereunder shall terminate on that date.

 

 

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(b)           Termination of Plan. Unless sooner terminated by the Board or pursuant to paragraph (a) above, the provisions of the Plan respecting the grant of any award pursuant to which shares of Common Stock will be granted shall terminate on the tenth anniversary of the adoption of the Plan by the Board, and no such awards shall thereafter be made under the Plan. All awards made under the Plan prior to the its termination of shall remain in effect until such awards have been satisfied or terminated in accordance with the terms and provisions of the Plan and the applicable Grant Certificates.

 

3.14         Restriction on Issuance of Stock Pursuant to Awards

 

The Company shall not permit any shares of Common Stock to be issued pursuant to Awards granted under the Plan unless such shares of Common Stock are fully paid and non-assessable, within the meaning of Section 152 of the Delaware General Corporation Law, except as otherwise permitted by Section 153(c) of the Delaware General Corporation Law.

 

3.15         Deferred Compensation

 

All grants made under the Plan are intended to comply with, or be exempt from, the requirements of section 409A of the Code so as not subject any grantee to any tax imposed under Code section 409A, and this Plan and each grant made hereunder shall be interpreted accordingly.

 

Notwithstanding anything herein or in any Grant Certificate to the contrary, to the extent that any grant made under this Plan constitutes deferred compensation under Code section 409A that is distributable to the grantee as a result of his termination of employment (for any reason other than his death), if the grantee is then a “specified employee” (as defined in Treasury Regulation section 1.409A-1(i)), no distribution to such grantee may be made before the date which is six (6) months after such grantee’s termination of employment or, if earlier, the date of the grantee’s death.

 

This Plan does not permit the acceleration of the time or schedule of any distribution under any grant that constitutes deferred compensation under Code section 409A, except as provided by Code section 409A and/or applicable regulations or rulings issued thereunder.

 

3.16         Governing Law

 

Except to the extent preempted by any applicable federal law, the Plan will be construed and administered in accordance with the laws of the State of Delaware, without giving effect to principles of conflict of laws.

 

 

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