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f8kprwt051911dserpex101.htm - Generated by SEC Publisher for SEC Filing

 

EXHIBIT 10.1

 

PREMIERWEST BANK

 

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT

(SERP)

 

THIS
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT (this “Agreement”) is
effective as of May 16, 2011, by and between PremierWest Bancorp, an Oregon
corporation (“Bancorp”), PremierWest Bank, an Oregon state-chartered,
FDIC-insured bank with its main office in Medford, Oregon (the “Bank,”
and collectively with Bancorp, “PremierWest”), and T. Joe Danelson (“Executive”). 

 

WHEREAS,
the Executive is an executive eligible for Supplemental Executive Retirement
Plan (“SERP”) benefits having served as an executive for over the requisite
three years;

 

WHEREAS,
to encourage the Executive to remain an employee of the Bank, the Bank is
willing to provide SERP benefits to the Executive, payable out of the Bank’s
general assets, pursuant to the standard supplemental executive retirement plan
benefits approved by the Compensation Committee of the Board of Directors of
the Bank on January 14, 2008 and reflected on the attached Exhibit A; 

 

            WHEREAS, this
Agreement constitutes a plan of deferred compensation;

 

            WHEREAS, this
Agreement is intended to comply with § 409A of the Internal Revenue Code of
1986, as amended (the “Code”) and any ambiguity hereunder shall be interpreted
in such a way as to comply, to the extent necessary, with Code § 409A and the
regulations thereunder; and

 

NOW
THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

 

ARTICLE 1

DEFINITIONS

 

Whenever
used in this Agreement, the following terms shall have the meanings specified:

 

1.1        “Adjusted
Base Salary” means the highest amount of Base Salary paid to the Executive
during employment with the Bank.

 

1.2        “Base
Salary” means the annual base compensation, not including any bonuses or
benefits, paid to the Executive.

 

            1.3        “Cause”
for an Executive’s termination for Cause will exist upon the occurrence of one
or more of the following events:  

 

                        (a)        Fraudulent
Conduct. An act of fraud, embezzlement, or theft by Executive in the course
of his employment with PremierWest;

 

                        (b)        Breach of
Agreement. A breach by Executive of this Agreement or any employment
agreement with PremierWest if such breach is not remedied or is not being remedied to the Bank’s satisfaction within 30 days after written notice, including a description of the breach, has been delivered to Executive;

 

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                        (c)        Gross Negligence/Insubordination. Gross negligence or insubordination by Executive in the performance of his duties as an officer if such gross negligence or insubordination is not remedied or is not being remedied to PremierWest’s satisfaction within 30 days after written notice, including a description of the gross negligence or insubordination, has been delivered to Executive;

 

                        (d)        Breach of Fiduciary Duties. A breach by Executive of his fiduciary duties to PremierWest or its shareholders or misconduct involving dishonesty;

 

                        (e)        Criminal Conviction. Conviction of Executive for a felony or conviction of Executive for a misdemeanor involving moral turpitude;

 

                        (f)        Violation of Law. Intentional violation of any federal or state law or regulation, or significant policy of, PremierWest committed in connection with Executive’s employment, which adversely affects PremierWest;

 

                        (g)        FDIC Removal Order. Removal of Executive from office or prohibition of Executive from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1); or

 

                        (h)        Unsatisfactory Performance. If Executive’s performance review results in a rating of less than “consistently meets expectations” and Executive’s performance is not brought to at least such rating within 90 days after the performance review is complete and thereafter sustained at such rating.

 

1.4        “Change in Control” means the first of the following to occur to Bancorp (or to the Bank as set forth in more detail below): (1) a ‘change in the ownership,’ (2) a ‘change in the effective control,’ or (3) a ‘change in the ownership of a substantial portion of the assets’ (as those terms are defined in Treas. Reg. 1.409A-3(i)(5)).  A Change in Control as defined above includes items (a) through (e) below, provided, however, that (i) the placement of the Bank into receivership or conservatorship by the Federal Deposit Insurance Corporation or a state or federal banking regulatory agency with jurisdiction over the Bank; (ii) the acquisition of all or a substantial portion of the Bank’s assets or assumption of all or a substantial portion of the Bank’s deposit liabilities in an FDIC-assisted transaction; and (iii) a change in the composition of Bank’s or the Bancorp’s board of directors at the direction of a state or federal banking regulatory authority having jurisdiction over the Bank or Bancorp, shall not constitute a Change in Control.

 

            (a)        the date any one person, or more than one person acting as a group (as determined under Treas. Reg. 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Bank (or Bancorp) that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of Bancorp or the Bank; 

 

            (b)        the date on which the Bancorp or the Bank merges or consolidates with another entity and as a result less than 50% of the total fair market value or total voting power of the stock of the resulting entity immediately after the merger or consolidation is held by any one person, or more than one person acting as a group (as determined under Treas. 

Reg. 1.409A-3(i)(5)(v)(B)), who were the holders of Bancorp’s or the Bank’s voting securities immediately before the merger or consolidation; 

 

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            (c)        the date any one person, or more than one person acting as a group (as determined under Treas. Reg. 1.409A-3(i)(5)(v)(B)), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of Bancorp possessing 30% or more of the total voting power of the stock of Bancorp; 

 

            (d)        the date a majority of members of Bancorp’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of Bancorp’s board of directors before the date of the appointment or election (except for a change in the composition of Bancorp’s board of directors at the direction of a state or federal banking regulatory authority having jurisdiction over PremierWest); or

 

            (e)        the date any one person, or more than one person acting as a group (as determined under Treas. Reg. 1.409A-3(i)(5)(v)(B)), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from PremierWest that have a total gross fair market value (the value of the assets of Bank or Bancorp, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets) equal to or more than 40% of the total gross fair market value of all of the assets of the Bank or Bancorp immediately before such acquisition or acquisitions.  However, a Change in Control does not occur to the extent that ownership of assets is transferred to: (A) a Bancorp shareholder (immediately before the asset transfer) in exchange for or with respect to his or her Bancorp stock; (B) an entity, 50% or more of the total value or voting power of which is owned directly or indirectly by Bancorp; (C) a person, or more than one person acting as a group, that owns directly or indirectly 50% or more of the total value or voting power of Bancorp; or (D) an entity, at least 50% of the total value or voting power of which is owned directly or indirectly by a person described in (C).

 

1.5        “Disability” means the Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Bank.

 

1.6        “Disability Retirement” means termination of the Executive’s employment due to Disability.

 

1.7        “Early Retirement” means the Executive’s Termination of Employment with the Bank before Normal Retirement Age for reasons other than death, Disability, Termination under Article 5 of this Agreement, termination without Cause or termination with Good Reason.

 

1.8        “Early Retirement Date” means the month, day and year in which Early Retirement occurs.

 

1.9        “Effective Date” means the date indicated in the first paragraph hereof.

 

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1.10      “Good Reason” for Executive’s Termination of Employment by resignation will exist upon the occurrence, without Executive’s consent, of one or more of the following events, if Executive has informed PremierWest in writing of the circumstances described below in this Section that could give rise to Termination of Employment for Good Reason within 30 days of the event and PremierWest has not removed the circumstances (or notified Executive that PremierWest disputes that such circumstances qualify as a Good Reason) within 60 days of the written notice and Executive terminates his employment within 180 days of the occurrence of the Good Reason event:

 

                        (a)        Reduction in Base Salary. A material reduction of Executive’s Base Salary;

 

                        (b)        Failure to Obtain Assumption Agreement. The failure of a successor or assign of PremierWest to assume and agree to perform this Agreement, if assignment and assumption does not automatically occur under operation of law;

 

                        (c)        Material Breach. A material breach of this Agreement by PremierWest that is not corrected within a reasonable time; or

 

                        (d)        Relocation of Executive. Requiring Executive to change his principal work location to any location that is more than 25 miles from the location of the Bank’s principal executive offices on the Effective Date.

 

1.11      “Normal Retirement Date” means the Executive’s 65th birthday.

 

1.12      “Person” means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

 

1.13      “Plan Year” means a twelve-month period commencing on January 1, and ending on the last day of December of each year. The initial Plan Year shall commence on the Effective Date of this Agreement.

 

1.14      “Specified Employee” means an individual who, as of the date of his or her Separation from Service, meets the requirements to be a “key employee” as defined in Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations thereunder and without regard to Section 416(i)(5)) at any time during the 12-month period ending on the Specified Employee Identification Date.  For purposes of this determination, the Specified Employee Identification Date is each December 31 and the Specified Employee Effective Date is the April 1 following such Identification Date.  If the individual is a key employee as of a Specified Employee Identification Date, the individual is treated as a “key employee” for purposes of this section for the entire 12-month period beginning on the Specified Employee Effective Date.  The terms “Identification Date” and “Effective Date” for purposes of this paragraph have the meanings specified in Treas. Reg. 1.409A-1(i)(3) and (4).  

 

1.15      “Separation from Service” means the date on which an Executive dies, retires or otherwise has a termination of employment with PremierWest. Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that PremierWest and the Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (as an employee or independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed over the immediately preceding thirty-six (36) month period (or the full period in which the Executive provided services to PremierWest if the Executive has been providing services for less than thirty-six (36) months). An Executive will not be deemed to have 

experienced a Separation from Service if such Executive is on military leave, sick leave, or other bona fide leave of absence, to the extent such leave does not exceed a period of six (6) months or, if longer, such longer period of time during which a right to re-employment is protected by either statute or contract. If the period of leave exceeds six (6) months and the individual does not retain a right to re-employment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such 6-month period.   For purposes of determining if there has been a Separation from Service, PremierWest is defined to include all members of a controlled group of corporations or other business entities within the meaning of Code Sections 414(b) and (c) that includes the Bank, as modified by this Section. An Executive shall be considered to be in the employ of PremierWest and its related affiliates and subsidiaries as long as he remains an employee of the Bank, any subsidiary corporation of the Bank, or any corporation to which substantially all of the assets and business of the Bank are transferred. For this purpose, a subsidiary corporation of the Bank is any corporation (other than the Bank) in an unbroken chain of corporations beginning with the Bank if, as of the date such determination is to be made, each of the corporations other than the last corporation in the unbroken chain owns stock possessing greater than 50 percent of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

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1.16      “TARP Period” means the period ending on the last date upon which any obligation arising from financial assistance received by Bancorp under the U.S. Treasury’s Troubled Asset Relief Program Capital Purchase Program remains outstanding (disregarding any warrants to purchase common stock of Bancorp that the U.S. Treasury may hold).

 

1.17      “Termination of Employment” with the Bank means a Separation from Service.  

 

ARTICLE 2

LIFETIME BENEFITS

 

2.1        Normal Retirement Benefit.  Upon the Executive’s Termination of Employment on or after the Normal Retirement Date for reasons other than death or Disability, the Bank shall pay to the Executive the benefit described in this Section 2.1 instead of any other benefit under this Agreement.

 

2.1.1     Amount of Benefit.  The annual benefit under this Section 2.1 shall be calculated as a percentage of Base Salary. The applicable percentage is the percentage corresponding to the Plan Year in which the Executive’s Termination of Employment (for reasons other than death or Disability) on or after the Normal Retirement Date occurs as shown on Exhibit A. 

 

2.1.2     Payment of Benefit.  The payment of benefits under this Section 2.1 shall begin on the first day of the seventh month after the Executive’s Termination of Employment.  The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments on the first day of each month for a period of 15 years (with 6 monthly payments accumulated and paid on the commencement date and one payment made each month thereafter for the next 14 years and 6 months).  The monthly payments made hereunder shall be considered a series of separate payments for purposes of Code § 409A.

 

2.2        Early Retirement Benefit.  Upon Early Retirement the Bank shall pay to the Executive the benefit described in this Section 2.2 instead of any other benefit under this Agreement.

 

2.2.1     Amount of Benefit.  The annual benefit under this Section 2.2 is calculated as a percentage of Base Salary. The applicable percentage is the percentage corresponding to the Plan Year in which Early Retirement occurs as shown on Exhibit A.  

 

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2.2.2     Payment of Benefit.  The payment of benefits under this Section 2.2 shall begin on the later of: (i) Executive’s Normal Retirement Date or (ii) the first day of the seventh month after the Executive’s Termination of Employment.  The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments on the first day of each month for a period of 15 years (with 6 monthly payments accumulated and paid on the commencement date and one payment made each month thereafter for the next 14 years and 6 months).  The monthly payments made hereunder shall be considered a series of separate payments for purposes of Code § 409A.  

 

2.3        Premature Termination Benefit.  If the Executive’s employment with the Bank is terminated by the Bank without Cause or by the Executive for Good Reason, the Bank shall pay to the Executive the benefit described in this Section 2.3 instead of any other benefit under this Agreement.

 

2.3.1     Amount of Benefit.  The annual benefit under this Section 2.3 is calculated as a percentage of the Adjusted Base Salary. The applicable percentage is the percentage corresponding to the Plan Year in which the Termination of Employment by the Bank without Cause or by the Executive for Good Reason occurs, as shown on Exhibit A.  

 

2.3.2     Payment of Benefit.  The payment of benefits under this Section shall begin on the first day of the seventh month after the Executive’s Termination of Employment.  The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments on the first day of each month for a period of 15 years (with 6 monthly payments accumulated and paid on the commencement date and one payment made each month thereafter for the next 14 years and six months).  The monthly payments made hereunder shall be considered a series of separate payments for purposes of Code § 409A.  

 

2.4        Disability Retirement Benefit.  Upon the Executive’s Disability Retirement, the Bank shall pay to the Executive the benefit described in this Section 2.4 instead of any other benefit under this Agreement.  

 

2.4.1     Amount of Benefit.  The annual benefit under this Section 2.4 is calculated as a percentage of Base Salary. The applicable percentage is the percentage corresponding to the Plan Year in which Disability Retirement occurs as shown on Exhibit A. 

 

2.4.2     Payment of Benefit.  The payment of the benefits under this Section 2.4 shall begin on the first day of the month following the month in which Disability Retirement occurs.  The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments on the first day of each month for a period of 15 years.

 

ARTICLE 3

DEATH BENEFITS

 

3.1        Death During Active Service.  If the Executive dies in active service to the Bank before the Normal Retirement Date, the Executive’s designated beneficiary is entitled to receive the benefit in this Section 3.1 instead of any other benefit under this Agreement.

 

3.1.1     Amount of Benefit.  The annual benefit under this Section 3.1 is calculated as a percentage of the Adjusted Base Salary. The applicable percentage is the percentage corresponding to year in which the Normal Retirement Date would have occurred. In its sole discretion, the Bank’s board of directors may increase the applicable percentage and such increase shall be reflected in a revised Exhibit A. 

 

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3.1.2     Payment of Benefit.  Beginning with the month after the Executive’s death, the Bank shall pay the annual benefit to the Executive’s designated beneficiary in 12 monthly installments on the first day of each month. The annual benefit shall be paid to the Executive’s designated beneficiary for 15 years.

 

3.2        Death During Benefit Period.  If the Executive dies after benefit payments under Article 2 have commenced, and if benefit payments have been paid to Executive for less than 15 years, the Bank shall pay to the Executive’s beneficiary(ies) at the same time and in the same amounts the benefits that would have been paid to Executive, had the Executive survived, but the total period of payments to Executive and Executive’s beneficiary(ies) shall not exceed 15 years. 

 

3.3        Death After Termination of Employment But Before Benefit Payments Commence.  If the Executive is entitled to benefit payments under Article 2, but dies before payments commence, the benefits shall be payable to the Executive’s beneficiary(ies), but the payments shall commence on the first day of the month after the date of the Executive’s death, and payments shall be paid to the beneficiary(ies) for 15 years. Annual payments shall be in the same amounts they would have been paid to the Executive had the Executive survived. 

 

ARTICLE 4

BENEFICIARIES

 

4.1        Beneficiary Designations.  The Executive shall designate a beneficiary or beneficiaries by filing a written designation with the Bank. The Executive may revoke or modify the designation at any time by filing a new designation. However, designations will be effective only if signed by the Executive and accepted by the Bank during the Executive’s lifetime. The Executive’s beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Executive, or if the Executive names a spouse as beneficiary and the marriage is subsequently dissolved. If the Executive dies without a valid beneficiary designation, all payments shall be made to the Executive’s estate.

 

4.2        Facility of Payment.  If a benefit is payable to a minor, to a person declared incapacitated, or to a person incapable of handling the disposition of his or her property, the Bank may pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Bank may require such proof of incapacity, minority or guardianship as the Bank deems appropriate before distribution of the benefit. Distribution shall completely discharge the Bank from all liability for such benefit.

 

ARTICLE 5

GENERAL LIMITATIONS; TARP RESTRICTIONS

 

5.1        Removal.  If the Executive is removed from office or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement shall terminate as of the effective date of the order.

 

5.2        Insolvency.  If the Commissioner of the Oregon Department of Banking appoints the Federal Deposit Insurance Corporation as receiver for the Bank under Oregon Revised Statutes section 711.405, all obligations under this Agreement shall terminate as of the date of the Bank’s declared insolvency.

 

5.3        TARP. During the TARP Period, the provisions of Exhibit B to this Agreement shall control; in the event of conflict between Exhibit B and the remainder of this Agreement during the TARP 

Period, the provisions of Exhibit Bshall prevail.

 

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ARTICLE 6

CLAIMS AND REVIEW PROCEDURES

 

6.1        Claims Procedure.  If the Executive or his beneficiary (“claimant”) has not received benefits under the Agreement that he or she believes should be paid shall make a claim for such benefits as follows:

 

6.1.1     Initiation – Written Claim.  The claimant initiates a claim by submitting to the Bank a written claim for the benefits.

 

6.1.2     Timing of Bank Response.  The Bank shall respond to such claimant within 90 days after receiving the claim. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 90 days by notifying the claimant in writing, prior to the end of the initial 90-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Bank expects to render its decision.

 

6.1.3     Notice of Decision.  If the Bank denies part or all of the claim, the Bank shall notify the claimant in writing of such denial. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

 

6.1.3.1  The specific reasons for the denial;

 

6.1.3.2  A reference to the specific provisions of the Agreement on which the denial is based;

 

6.1.3.3  A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed;

 

6.1.3.4  An explanation of the Agreement’s review procedures and the time limits applicable to such procedures; and

 

6.1.3.5  A statement of the claimant’s right to bring a civil action under ERISA (Employees Retirement Income Security Act) Section 502(a) following an adverse benefit determination on review.

 

6.2        Review Procedure.  If the Bank denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Bank of the denial, as follows:

 

6.2.1     Initiation – Written Request.  To initiate the review, the claimant, within 60 days after receiving the Bank’s notice of denial, must file with the Bank a written request for review.

 

6.2.2     Additional Submissions – Information Access.  The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Bank shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.

 

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6.2.3     Considerations on Review.  In considering the review, the Bank shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

 

6.2.4     Timing of Bank Response.  The Bank shall respond in writing to such claimant within 60 days after receiving the request for review. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 60 days by notifying the claimant in writing, prior to the end of the initial 60-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Bank expects to render its decision.

 

6.2.5     Notice of Decision.  The Bank shall notify the claimant in writing of its decision on review. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

 

6.2.5.1  The specific reasons for the denial;

 

6.2.5.2  A reference to the specific provisions of the Agreement on which the denial is based;

 

6.2.5.3  A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits; and

 

6.2.5.4  A statement of the claimant’s right to bring a civil action under ERISA Section 502(a).

 

ARTICLE 7

MISCELLANEOUS

 

7.1        Amendments and Termination.  This Agreement may be amended or terminated only by a written agreement signed by the Bank and the Executive. 

 

7.2        Binding Effect.  This Agreement shall bind the Executive and the Bank, and their beneficiaries, survivors, executors, successors, administrators and transferees.

 

7.3        No Guarantee of Employment.  This Agreement is not an employment policy or contract. It does not give the Executive the right to remain an employee of the Bank, nor does it interfere with the Bank’s right to discharge the Executive. It also does not require the Executive to remain an employee nor interfere with the Executive’s right to terminate employment at any time.

 

7.4        Non-Transferability.  Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.

 

7.5        Successors; Binding Agreement.  If any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Bank does not assume this Agreement by operation of law, the Bank shall require such successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Bank would be required to perform this Agreement if no such succession had occurred. The Bank’s failure to obtain an assumption agreement, if necessary, before the succession becomes effective shall be considered a breach of this Agreement and shall entitle the Executive to the right to payments specified in 

Section 2.5. This Agreement shall not be terminated by the voluntary or involuntary dissolution of the Bank, by any merger, consolidation or acquisition where the Bank is not the surviving corporation, by any transfer of all or substantially all of the Bank’s assets, or by any other change in the Bank’s structure or the manner in which the Bank’s business or assets are held.  The Executive shall not be deemed to have had a Termination of Employment upon the occurrence of one of the foregoing events.

 

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7.6        Tax Withholding.  The Bank shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.

 

7.7        Applicable Law.  Except to the extent preempted by the laws of the United States of America, the validity, interpretation, construction, and performance of this Agreement shall be governed by and construed in accordance with the laws of the State of Oregon, without giving effect to the principles of conflict of laws of such state.

 

7.8        Unfunded Arrangement.  The Executive and the Executive’s beneficiary(ies) are general unsecured creditors of the Bank for the payment of benefits under this Agreement. The benefits represent the mere promise by the Bank to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive’s life is a general asset of the Bank to which the Executive and beneficiary(ies) have no preferred or secured claim.

 

7.9        Administration.  The Bank shall have the powers that are necessary to administer this Agreement, including but not limited to the power to:

 

(a)      interpret the provisions of the Agreement;

 

(b)      establish and revise the method of accounting for the Agreement;

 

(c)      maintain a record of benefit payments; and

 

(d)      establish rules and prescribe forms necessary or desirable to administer the Agreement.

 

7.10      Named Fiduciary.  The Bank shall be the named fiduciary and plan administrator under this Agreement. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan, including the employment of advisors and the delegation of ministerial duties to qualified individuals.

 

7.11      Severability.  If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement, and each such other provision shall continue in full force and effect to the full extent consistent with law. If any provision of this Agreement is held invalid in part, such invalidity shall in no way affect the remainder of the provision, and the remainder of such provision, together with all other provisions of this Agreement shall continue in full force and effect to the full extent consistent with law.

 

7.12      Headings.  The headings of sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

 

7.13      Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or registered mail, return receipt requested, with postage prepaid. If the communication is to the Bank, it should be 

directed to the Bank’s Chief Executive Officer and addressed to the Bank’s corporate office. If the communication is to the Executive, it should be addressed to the most recent address provided by the Executive to the Bank.

 

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7.14      IRC § 1035 Exchanges.  The Executive recognizes and agrees that after this Agreement is adopted the Bank may wish to purchase or exchange a policy of life insurance on the Executive’s life, to be used to fund the benefit under Article 2 of this Agreement for another contract of life insurance insuring the Executive’s life. Provided that the policy is replaced (or intended to be replaced) with a comparable policy of life insurance, the Executive agrees to provide medical information and cooperate with medical insurance-related testing required by a prospective insurer for implementing the policy or, if necessary, for modifying or updating to a comparable insurer.

 

7.15      Entire Agreement.  This Agreement constitutes the entire agreement between the Bank and the Executive concerning the subject matter hereof.  No rights are granted to the Executive under this Agreement other than those specifically set forth herein. 

 

ARTICLE 8

409A

 

8.1        409A Delay in Commencement of Payments.  Notwithstanding any provision to the contrary, if, at the time of Executive’s termination, he or she is a Specified Employee, then to the extent necessary to avoid subjecting the Executive to the imposition of any additional income tax under Code section 409A(a), amounts that would otherwise be payable hereunder during the six-month period immediately following Executive’s Separation from Service shall not be paid to the Executive during such period, but shall instead be accumulated and paid to the Executive (or, in the event of the Executive’s death, the Executive’s estate) in a lump sum on the first business day after the earlier of the date that is six (6) months and one (1) day following the Executive’s Separation from Service or the Executive’s death; provided, further, that any amount payable hereunder that is subject to the foregoing restrictions on Specified Employees may not be paid before the later of (a) the date that is eighteen months following the effective date of the Compensation Modification Agreement dated December 31, 2010, or (b) the date provided in the previous sentence, with suspended payments accumulated and paid in a lump sum on the first business day after the date that is six (or eighteen, if applicable) months and one (1) day following the Executive’s Separation from Service.  

 

            8.2        Changing the Time or Form of Distribution.  This Agreement does not permit the Executive to change the time or form of any distribution.  If this Agreement is amended to permit such changes, the time and form of payment elected cannot be changed by the Executive except as follows: (a) for a scheduled distribution, his change must filed with the Bank no later than the last day of the plan year that ends at least 12 months before the payment commencement date; (b) his change cannot take effect earlier than twelve months after the change is requested; and (c) except where related to death or disability, the payment under the newly elected form of payment cannot be made sooner than five years after the payment commencement date for the form of payment that the Executive has elected to change.  The payment commencement date for a series of installment payments is treated as the date on which the first of such installment payments would be made under the terms of this agreement.  Where the payment commencement date is stated as a period of time (e.g., a 90-day period following a distribution event), the payment commencement date for purposes of this section is the first day of such period.

 

11

 

 

IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer have signed this Agreement the day and year first written above.

 

 

THE EXECUTIVE:                                                      THE BANK:

                                                                                    PREMIERWEST BANK

 

 

___________________________________              By: ________________________________

T Joe Danelson                                                             Its: ________________________________

 

 

                                                                        BANCORP:

                                                                        PremierWest Bancorp

 

 

                                                                        By:________________________________

                                                                        Its: ________________________________

 

 

Agreement to Cooperate with Insurance Underwriting Incident to I.R.C. § 1035 Exchange

 

I acknowledge that I have read this Agreement and agree to be bound by its terms, particularly the covenant on my part set forth in Section 7.14 to provide medical information and cooperate with medical insurance-related testing required by an insurer to issue a comparable insurance policy to cover the benefit provided under Article 2 of this Agreement.

 

 

_________________________________                  __________________________________

Witness                                                                                    T. Joe Danelson

 

 

12

 

 

BENEFICIARY DESIGNATION

PREMIERWEST BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT

(SERP)

 

 

I designate the following as beneficiary of any death benefits under this Supplemental Executive Retirement Plan Agreement:

 

 

Primary: _____________________________________________________

 

Contingent: ___________________________________________________

 

Note:   To name a trust as beneficiary, please provide the name of the trustee(s) and the exact  name and date of the trust agreement.

 

I understand that I may change these beneficiary designations by filing a new written designation with the Bank. I further understand that the designations will be automatically revoked if the beneficiary predeceases me, or if I have named my spouse as beneficiary and our marriage is subsequently dissolved.

 

 

Signature: ____________________________________________

                        T. Joe Danelson

 

Date: ________________________________________________

 

 

Accepted by the Bank this ________ day of ________________, 2011.

 

 

By: _________________________________

 

Title: ________________________________

 

13

 

 

EXHIBIT A

 

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT

 

 

The following schedule sets forth the applicable percentage for purposes of calculating the annual benefits, as referenced in Article 2 of the SERP Agreement.

 

 

 

 

 

	

   Plan Year
	

   Year ended December 31,
	

   Executive’s Age at End of Period
	

   Applicable Percentage %

	

   1
	

   2011
	

   53
	

   14

	

   2
	

   2012
	

   54
	

   16

	

   3
	

   2013
	

   55
	

   18

	

   4
	

   2014
	

   56
	

   20

	

   5
	

   2015
	

   57
	

   22

	

   6
	

   2016
	

   58
	

   24

	

   7
	

   2017
	

   59
	

   26

	

   8
	

   2018
	

   60
	

   28

	

   9
	

   2019
	

   61
	

   30

	

   10
	

   2020
	

   62
	

   32

	

   11
	

   2021
	

   63
	

   34

	

   12
	

   2022
	

   64
	

   36

	

   13
	

   2023
	

   65
	

   38

 

 

14

 

 

EXHIBIT B

 

1          Definitions. As used in this Exhibit B, the following terms have the meanings specified: 

 

            (a)        “ARRA” means the American Recovery and Reinvestment Act of 2009;

 

            (b)        “CPP” means the Capital Purchase Program component of the TARP;

 

            (c)        “EESA” means the Emergency Economic Stabilization Act of 2008;

 

            (d)        “TARP” means the Troubled Asset Relief Program established by the Treasury pursuant to the EESA;

 

            (e)        “TARP Compensation Standards” means provisions of the EESA and the ARRA governing compensation and associated regulations, interpretations and guidance that are now, or may in the future be, issued, including the Treasury’s Interim Final Rule under 31 CFR Part 30; and

 

            (f)        “Treasury” means the United States Department of the Treasury.

 

Capitalized terms used but not defined in this Exhibit B have the meanings set forth in the TARP Compensation Standards.

 

2          TARP Compensation Standards. As a participant in the CPP, PremierWest is subject to various executive compensation restrictions under the TARP Compensation Standards. Among other requirements, the TARP Compensation Standards:

 

            (a)        prohibit PremierWest from making any Golden Parachute Payment to its Senior Executive Officers or any of the next five Most Highly-Compensated Employees;

 

            (b)        prohibit PremierWest from paying or accruing any Bonus Payment to the five Most Highly-Compensated Employees, except as permitted by the TARP Compensation Standards;

 

            (c)        require PremierWest to recover or “clawback” any Bonus Payment to its Senior Executive Officers or any of the next 20 Most Highly-Compensated Employees if payment was based on materially inaccurate financial statements or performance metric criteria;

 

            (d)        prohibit PremierWest from maintaining any Employee Compensation Plan that would encourage the manipulation of reported earnings to enhance the compensation of any employee;

 

            (e)        prohibit PremierWest from maintaining any Compensation Plan that encourages Senior Executive Officers to take unnecessary and excessive risks that threaten the value of PremierWest; and

 

            (f)        prohibit PremierWest from providing Gross-Ups to its Senior Executive Officers or the next 20 Most Highly-Compensated Employees.

 

15

 

 

This Exhibit B evidences Executive’s and PremierWest’s intent to comply with the TARP Compensation Standards.

 

3          Amendment and Modification. In the event that all or any portion of this Agreement is found to be in conflict with the requirements of the TARP Compensation Standards, this Agreement shall be automatically amended or modified to the extent necessary to comply with the TARP Compensation Standards, and this Agreement shall be interpreted and administered accordingly. To the extent that future revisions of this Agreement are required to give effect to or for PremierWest to comply with the TARP Compensation Standards, Executive shall accept such revisions promptly.

 

4          Golden Parachute Restriction. In the event Executive’s employment terminates and at such time (a) Executive is one of the Senior Executive Officers or employees that PremierWest is prohibited from making a Golden Parachute Payment to under the TARP Compensation Standards and (b) any payment under this Agreement is a Golden Parachute Payment under the TARP Compensation Standards, Executive shall not be entitled to receive such payment only to the extent such payment is prohibited by the TARP Compensation Standards.

 

5          Bonus Payment Restriction. In the event that any payment or accrual under this Agreement is a Bonus Payment under the TARP Compensation Standards and at the time such Bonus Payment is to be paid or accrual is to be made Executive is one of the employees that PremierWest is prohibited from making a Bonus Payment to under the TARP Compensation Standards, Executive shall not be entitled to receive such payment or accrual only to the extent such payment or accrual is prohibited by the TARP Compensation Standards.

 

6          Clawback. Notwithstanding any provision in this Agreement to the contrary, if it is later determined that payments under this Agreement were based on materially inaccurate financial statements or performance metric criteria, the full amount of any and all payment(s) that have been made to Executive under this Agreement shall become immediately due and owing to PremierWest, and Executive shall repay the full amount of such payment(s) to PremierWest in accordance with and in a manner that complies with the requirements of the TARP Compensation Standards. Notwithstanding the foregoing, any such recovery shall be required hereunder only to the minimum extent necessary to comply with the applicable requirements of the TARP Compensation Standards.

 

7          Waiver.  In consideration for the benefits Executive will receive as a result of PremierWest Bancorp’s participation in the United States Department of the Treasury’s TARP Capital Purchase Program, Executive hereby voluntarily waives any claim against the United States or PremierWest for any changes to my compensation or benefits that are required to comply with regulations issued by the Department of the Treasury.  Executive acknowledges that such regulations may require modification of the compensation, bonus, incentive and other benefit plans, arrangements, policies and agreements that Executive has with PremierWest or in which Executive participate as they relate to the period the United States holds any equity securities of Executive acquired through the TARP Capital Purchase Program.  This waiver includes all claims Executive may have under the laws of the United States or any state related to the requirements imposed by the aforementioned regulation, including without limitation a claim for any compensation or other payments Executive would otherwise receive, any challenge to the process by which this regulation was adopted and any tort or constitutional claim about the effect of these regulations on Executive’s employment relationship.

 

8          Miscellaneous. This Exhibit B shall remain in force and effect only during the TARP Period. This Exhibit B is not determinative of Executive’s status as a Senior Executive Officer or as an employee affected by the TARP Compensation Standards, and Executive reserves the right to contest his designation as such now or in the future. Executive shall not be deemed to waive any right to contest the 

determination of PremierWest or the Treasury as to the amounts owed to Executive by PremierWest pursuant to this Agreement. In the event that any of the TARP Compensation Standards are overturned by a non-appealable determination of a court of competent jurisdiction or otherwise rescinded or revised, with the effect that all or any portion of any formerly withheld or recovered payment could be made to Executive, such amount shall become immediately due and payable to Executive.

 

16ex10-1_051911.htm

Exhibit 10.1

 

2011 AMENDED AND RESTATED

ACCO BRANDS CORPORATION

INCENTIVE PLAN

 

1.     Purpose of Plan.

 

The purpose of this 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (the “Plan”) is to amend and fully restate the previously amended and restated ACCO Brands Corporation 2005 Incentive Plan to aid ACCO Brands Corporation (“ACCO”) and its Subsidiaries (with ACCO, collectively, the “Company”) in achieving superior long-term performance through attracting, retaining and motivating the best available Key Employees and Non-Employee Directors.  The Plan seeks to achieve this purpose through providing incentives linked to value creation for shareholders and achievement of certain long-term strategic and financial goals.

 

2.     Definitions.

 

As used in the Plan, the following words shall have the following meanings:

 

(a) “Award” means an award granted to a Participant pursuant to the Plan including, without limitation, an award of an Option, SAR, Restricted Stock, Restricted Stock Unit, Performance Award, Cash-Based Award or Other Stock-Based Award, or any combination of the foregoing.

 

(b) “Board of Directors” means the Board of Directors of ACCO.

 

(c) “Cash-Based Award” means an Award granted pursuant to Section 9(b).

 

(d) “Change in Control” has the meaning set forth in Section 13(b)(i).

 

(e) “Code” means the Internal Revenue Code of 1986, as amended.

 

(f) “Committee” means the Compensation Committee of the Board of Directors.  References to the Committee under the Plan shall, for all purposes respecting Director Awards, mean exclusively the Board of Directors.

 

(g) “Common Stock” means common stock, par value $.01 per share, of ACCO.

 

(h) “Covered Employee” means any Key Employee who is or is reasonably expected to be a “covered employee” under Section 162(m) of the Code.

 

(i) “Covered Employee Performance Objectives” has the meaning set forth in Section 8.

 

(j) “Director Award” means an Award, other than an Incentive Stock Option Award, made to a Non-Employee Director pursuant to the Plan.

 

 

  

  

  

 

(k) “Disability” means totally and permanently disabled as from time to time defined under the long-term disability plan of the Company or a Subsidiary applicable to the Participant or, in the case in which there is no applicable plan, a total and permanent disability as defined in Section 22(e)(3) of the Code (or any successor Section); provided, however, that to the extent an amount payable under this Plan which constitutes a deferral of compensation pursuant to Section 409A of the Code would become payable upon Disability, “Disability” for purposes of such payment shall not be deemed to have occurred unless the disability also satisfies the requirements of Treasury Regulation Section 1.409A-3.  Subject to the approval of the Committee, a different definition of Disability may be applicable to a Participant employed outside the United States who is subject to local disability laws and programs and as set forth in the Participant’s Award.

 

(l) “Effective Date” has the meaning set forth in Section 18.

 

(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(n) “Fair Market Value” means the average of the high and low sales prices of a Share on the New York Stock Exchange, Inc. composite tape (or if Common Stock is not then traded on the New York Stock Exchange, on the stock exchange or over-the-counter market on which Common Stock is principally trading) on the date of measurement, and if there were no trades on such measurement date, on the first day on which a trade occurred next succeeding such measurement date.

 

(o) “Incentive Stock Option” means a stock option to purchase Shares which qualifies as an incentive stock option under Section 422 of the Code.

 

(p) “Key Employee” means any employee of the Company, including an officer, selected by the Committee for a grant of an Award.

 

(q) “Non-Employee Director” means any member of the Board of Directors who is not an employee of ACCO or a Subsidiary.

 

(r) “Nonqualified Stock Option” means a stock option to purchase Shares which does not qualify as an Incentive Stock Option.

 

(s) “Option” means an Incentive Stock Option, a Nonqualified Stock Option or an option granted to a Participant pursuant to Section 16.

 

(t) “Other Stock-Based Award” means an Award granted to a Participant pursuant to Section 9(a).

 

(u) “Participant” means a Key Employee or a Non-Employee Director who is a participant under the Plan.

 

(v) “Performance Award” means an Award of Performance Stock, Performance Stock Units and other Awards granted to a Participant pursuant to Section 8.

 

 

  

2

  

 

(w) “Performance Period” means the period specified with respect to a Performance Award during which specified performance criteria are to be measured.

 

(x) “Performance Stock” means Shares granted to a Participant pursuant to Section 8 subject to the attainment of performance objectives and other restrictions on transfer and the incidents of ownership as the Committee may determine.

 

(y) “Performance Stock Unit” means an Award granted to a Participant pursuant to Section 8 that entitles a Participant to receive payment of a Share, or of a cash amount equal to the Fair Market Value of a Share, subject to the attainment of performance objectives and other terms and conditions as the Committee may determine.

 

(z) “Restricted Stock” means Shares granted to a Participant pursuant to Section 7 subject to restrictions on transfer and such other restrictions on incidents of ownership as the Committee may determine.

 

(aa) “Restricted Stock Unit” means an Award granted to a Participant pursuant to Section 7 that entitles a Participant to receive payment of a Share, or of a cash amount equal to the Fair Market Value of a Share, subject to forfeiture and other terms and conditions as the Committee may determine.

 

(bb) “Restriction Period” has the meaning set forth in Section 7(d).

 

(cc) “Retirement” means (i) the Participant’s termination of employment on or after attaining age 55 and completion of at least five years of service with the Company, provided that Retirement shall not include termination of employment by reason of failure to maintain work performance standards, violation of Company policies or dishonesty or other misconduct prejudicial to the Company, or (ii) retirement from service as a member of the Board of Directors by a Non-Employee Director after five or more years of service as a Non-Employee Director of ACCO.  For this purpose, “employment” and “service” shall include employment as an employee with, or service as a member of the Board of Directors of, any Company (or its predecessor) prior to August 17, 2005.

 

(dd) “SAR” means a stock appreciation right, granted pursuant to Section 6, to receive Shares having an aggregate Fair Market Value, on the date of exercise of such stock appreciation right, equal to (i) the amount by which the Fair Market Value of all Shares, whether or not subject to an Option (or part thereof), in respect of which such stock appreciation right was granted exceeds (ii) the exercise price of said stock appreciation right per Share, or Option (or part thereof) if awarded in connection with an Option.  In lieu of payment in Shares, the Committee may determine at the time of grant as set forth in the Award for the Company to pay such excess in cash or a combination of such Shares and cash.  “SAR” shall also mean a stock appreciation right granted pursuant to Section 16.

 

(ee) “Share” means one share of the Common Stock.

 

 

  

3

  

 

(ff) “Subsidiary” means any corporation or entity, other than ACCO, in an unbroken chain of corporations or other entities beginning with ACCO, if each of the corporations or other entities other than the last corporation or entity in the unbroken chain owns 50% or more of the voting stock in one of the other corporations in such chain, except that with respect to Incentive Stock Options, “Subsidiary” means “subsidiary corporation” as defined in Section 424(f) of the Code.

 

3.   Administration of Plan.

 

(a) The Committee may from time to time grant such Awards under the Plan to such Key Employees and in such form and having such terms, conditions and limitations as the Committee may determine, as provided under the Plan.  The provisions of Awards need not be the same with respect to each Participant.

 

(b) The Plan shall be administered by the Committee whose members shall be appointed by the Board of Directors and be comprised of at least three members of the Board of Directors.  The members of the Committee shall qualify to administer the Plan for purposes of Rule 16b-3 (and any other applicable rule) promulgated under Section 16(b) of the Exchange Act, shall be independent directors under the New York Stock Exchange rules and shall be outside directors for purposes of Section 162(m) of the Code.  The Committee may adopt its own rules of procedure, and the action of a majority of the Committee, taken at a meeting, or taken without a meeting by unanimous written consent of the members of the Committee, shall constitute action by the Committee.  The Committee shall have the power and authority to administer, construe and interpret the Plan, to make rules for carrying it out and to make changes in such rules, and to correct any defect, supply any omission and reconcile any inconsistency in the Plan.  The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among eligible persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated.  The Committee may delegate to an officer the right to designate Key Employees of the Company (other than the delegate or officers of ACCO) to be granted Awards and the number of Shares or cash subject to such Awards granted to each such Key Employee, provided that the aggregate number of Shares to be so granted and their terms and conditions shall be determined by the Committee.  The Committee may delegate to ACCO employees certain administrative, reporting and other similar tasks.  Notwithstanding the foregoing, Director Awards shall be granted by, and shall be administered by, the Board of Directors in accordance with Section 5.

 

4.   Limitations and Conditions.

 

(a) The total number of Shares that may be issued pursuant to Awards made under the Plan, including Incentive Stock Options, is 5,265,000 Shares.  Awards under the Plan shall reduce the number of Shares thereafter available for Awards on the basis of: (i) one Share for each such Share issued as an Award of SARs or Options and (ii) 1.58 Shares for each such Share issued as an Award other than SARs and Options (such Awards other than SARs and Options being “Full Value Awards”).  To the extent Shares subject to a Full Value Award again become available for issuance for reasons

 

 

  

4

  

 

described in Section 4(c), such Shares shall be available for issuance as Full Value Awards.

 

(b) Not more than 500,000 Shares may be made subject to Options, and not more than 500,000 Shares may be made subject to SARs, under the Plan annually to any Key Employee.  No Performance Award shall be granted during any Performance Period to any Key Employee having an aggregate maximum dollar value in excess of $10,000,000 or an aggregate maximum amount in excess of 500,000 Shares.  Not more than 750,000 Shares may be made subject to Restricted Stock and Restricted Stock Unit Awards under the Plan annually to any Key Employee.  The foregoing limitations on Option, SAR, Restricted Stock, Restricted Stock Unit and Performance Awards shall be applied in a manner consistent with the requirements of Section 162(m) of the Code.  The number of Shares, and the limitations thereon, which may be issued pursuant to this Section 4 shall be subject to adjustment by the events set forth in Section 13(a).

 

(c) Any Shares that have been made subject to an Award that are not issued or are cancelled by reason of the failure to achieve applicable performance objectives under, or the forfeiture, termination, surrender, cancellation or expiration of, such Award shall again be available for award and shall not be considered as having been theretofore made subject to award.  Shares shall not again be available for award if such Shares are surrendered or withheld as payment of either the exercise price of an Option or SAR or of withholding taxes in respect of any Award.  The exercise or settlement of an SAR Award shall reduce the Shares available under the Plan by the total number of Shares to which the exercise or settlement of the SAR Award relates, not just the net amount of Shares actually issued upon exercise or settlement; Shares not issued upon exercise or settlement under such Award shall not again be available for award under the Plan.   Awards settled solely in cash shall not reduce the number of Shares available for issuance under the Plan.  Any Shares subject to an Option Award (or part thereof) that is cancelled upon exercise of an SAR when settled wholly or partially in Shares shall to the extent of such settlement in Shares be treated as if the Option itself had been exercised and such Shares received in settlement of the SAR shall no longer be available for award.

 

(d) In the event that the Company makes an acquisition or is a party to a merger or consolidation and ACCO assumes the options or other awards consistent with the purpose of this Plan of the company acquired, merged or consolidated which are administered pursuant to this Plan, Shares subject to the assumed options or other award shall not reduce the total number of Shares that may be made subject to Awards under this Plan pursuant to Section 4(a).

 

(e) No Award shall be made or granted under the Plan after the tenth anniversary of the Effective Date, but the terms of Awards granted on or before the expiration thereof may extend beyond such expiration.  At the time an Award is granted or amended or the terms or conditions of an Award are changed, the Committee may provide for limitations or conditions on such Award.  The terms of the Plan as in effect prior to the Effective Date shall govern all awards granted under the Plan prior to the Effective Date.

 

 

  

5

  

 

(f) No Award or portion thereof shall be transferable by the Participant otherwise than by will or by the laws of descent and distribution, except that an Option and related SAR may be transferred pursuant to a domestic relations order or by gift to a family member of the holder to the extent permitted in the applicable Award.  An SAR that is granted in respect of an Option shall never be transferred except to the transferee of such Option.  During the lifetime of the Participant, an Option or SAR shall be exercisable only by the Participant unless it has been transferred to an immediate family member of the holder or to a trust for the benefit of such immediate family members, in which case it shall be exercisable only by such transferee.  For the purpose of this provision, a “family member” shall have the meaning set forth in the General Instructions to Form S-8 Registration Statement under the Securities Act of 1933.

 

(g) No person who receives an Award under the Plan which includes Shares or the right to acquire Shares shall have any rights of a stockholder (i) as to Shares to be delivered under an Option until, after proper exercise of the Option and such Shares have been recorded on ACCO’s official stockholder records as having been issued or transferred, (ii) as to Shares to be delivered following exercise of an SAR until, after proper exercise of the SAR and determination by the Committee to make payment therefor in Shares, such Shares shall have been recorded on ACCO’s official stockholder records as having been issued or transferred, or (iii) as to Shares to be delivered pursuant to Awards of Restricted Stock or Restricted Stock Units, Performance Awards or Other Stock-Based Awards, until such Shares shall have been recorded on ACCO’s official stockholder records as having been issued or transferred.

 

(h) No fractional Shares shall be issued or delivered pursuant to this Plan or any Award.  The Committee shall determine whether cash, Awards or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

 

(i) Nothing contained herein shall affect the authority of the Company to terminate any Key Employee’s employment at any time for any reason.

 

(j) Nothing contained herein shall be deemed to create the right in any Non-Employee Director to remain a member of the Board of Directors, to be nominated for reelection or to be reelected as such or, after claiming to be such a member, to receive any Director Award under the Plan to which he or she is not already entitled with respect to any year.

 

(k) An Award may provide, in the sole discretion of the Committee, for a Participant’s elective or mandatory deferral of payment thereunder pursuant to the terms and conditions of any deferred compensation plan or program adopted by ACCO (or applicable Subsidiary) and such other terms and conditions as the Committee shall determine.  Any such deferral and payment of an Award thereunder, or the payment of any Award hereunder, shall be made at such time (or times) and on such basis as satisfies the provisions of Section 409A of the Code and regulations thereunder.

 

 

  

6

  

 

5.   Director Awards.

 

At such times as the Board may determine, the Board may, in its sole discretion, grant to each Non-Employee Director, or to one or more designated Non-Employee Directors, a Director Award which may be an Award of Nonqualified Stock Options (and not Incentive Stock Options), SARs, Restricted Stock, Restricted Stock Units, Performance Awards, Other Stock-Based Awards or Cash-Based Awards, or any combination thereof.  The terms and conditions of Director Awards shall be as provided in the Director Award which shall be consistent with the provisions of this Plan.  The Board of Directors shall have the exclusive authority to administer and interpret Director Awards and the Plan with respect to Director Awards.

 

6.   Awards of Options and SARs.

 

The terms and conditions with respect to each Award of Options and SARs under the Plan shall be subject to such terms and conditions as are determined by the Committee, consistent with the following:

 

(a) With respect to an Award of Options:

 

(i) The Option exercise price per Share shall not be less than the Fair Market Value prevailing on the date that the Option is granted.

 

(ii) The Option shall be exercisable in whole or in part from time to time during the period beginning at the completion of the required employment period, or service period for a Non-Employee Director, and the satisfaction of any performance objectives as specified, in the discretion of the Committee, in the Option Award, and ending at the expiration of seven years from the date of grant of the Option, unless an earlier expiration date shall be stated in the Option Award or the Option shall cease to be exercisable pursuant to Section 6(d) or Section 6(e). Except as otherwise determined by the Committee, the period of required employment of a Key Employee for an Award of Options shall be three years, during which period the Award shall become exercisable as to one-third of the Award on each of the first three anniversaries of the date the Award.

 

(iii) The agreement evidencing the Award shall indicate whether the Option is intended to be an Incentive Stock Option or a Nonqualified Stock Option.  To the extent that the aggregate Fair Market Value of Shares with respect to which Incentive Stock Options are exercisable for the first time by any Key Employee during any calendar year exceeds $100,000, such Options shall be treated as Nonqualified Stock Options.  The foregoing limitation shall be applied by taking Options into account in the order in which they were granted.  For purposes of the foregoing, the Fair Market Value of any Share shall be determined on the date of the Award of the Option.  In the event the foregoing results in a portion of an Incentive Stock Option exceeding the $100,000 limitation, only such excess shall be treated as a Nonqualified Stock Option.

 

 

  

7

  

 

(iv) Payment in full of the Option exercise price shall be made upon exercise of each Option and may be made in cash, by the delivery of Shares having a Fair Market Value equal to the Option price, or by a combination of cash and such Shares whose Fair Market Value together with such cash shall equal the Option price.  The Committee may also permit Participants, either on a selective or aggregate basis, simultaneously to exercise Options and sell the Shares thereby acquired pursuant to a brokerage or similar arrangement, approved in advance by the Committee, and use the proceeds from such sale as payment of the purchase price of such Shares.

 

(b) With respect to an Award of SARs, such SAR may be granted either (x) at the time of grant of an Option or at any time prior to the expiration of the Option term, in respect of all or part of such Option to the Participant who has been granted the Option or (y) as a stand-alone Award to a Participant, provided that, at the time of Award of SARs, the Participant is a Key Employee or a Non-Employee Director, and have such other terms and conditions as are consistent with the following:

 

(i) The SAR exercise price per Share shall not be less than the Fair Market Value prevailing on the date that the SAR is granted.

 

(ii) The SAR shall be exercisable in whole or in part from time to time during the period beginning at the completion of the required employment period, or service period for a Non-Employee Director, and the satisfaction of any performance objectives as specified, in the discretion of the Committee, in the SAR Award, and ending at the expiration of seven years from the date of grant of the SAR, unless an earlier expiration date shall be stated in the SAR Award or the SAR shall cease to be exercisable pursuant to Section 6(d) or Section 6(e).  Except as otherwise determined by the Committee, the period of required employment of a Key Employee for an Award of SARs shall be three years, during which period the Award shall become exercisable as to one-third of the Award on each of the first three anniversaries of the date the Award.

 

(iii) To the extent an Option is exercised in whole or in part, any SAR granted in respect of such Option (or part thereof) shall terminate and cease to be exercisable.  To the extent an SAR is exercised in whole or in part, an Option (or part thereof) in respect of which such SAR was granted shall terminate and cease to be exercisable.

 

(iv) An SAR granted in respect of an accompanying Option shall be exercisable only during the period in which such Option (or part thereof) is exercisable.

 

(v) To the extent that an SAR may be settled in cash pursuant to the terms of the Award, the Committee shall have sole discretion to determine the form in which payment will be made following exercise of an SAR from one of:

 

 

  

8

  

 

(A) by payment in Shares having an aggregate Fair Market Value equal to the amount of cash that otherwise would have been paid;

 

(B) by payment in cash; or

 

(C) by payment in a combination of such Shares and cash.

 

(vi) To the extent that any SAR that shall have become exercisable, and shall not have been exercised or thereafter cancelled or, by reason of any termination of employment of a Key Employee or cessation of service of a Non-Employee Director, become non-exercisable, the SAR shall be deemed to have been exercised automatically without any notice of exercise on the last day on which its related Option is exercisable or, if not issued in respect of an Option, the date of expiration set forth in the SAR Award, provided that any conditions or limitations on its exercise (other than notice of exercise) are satisfied and the SAR shall then have value.  Such exercise shall be deemed to specify that, subject to determination by the Committee as provided in Section 6(b)(v) and the SAR being authorized to be settled in cash, the holder elects to receive cash and that such exercise of an SAR shall be effective as of the time of the exercise.

 

(c) The holder of an Option or SAR shall exercise the Option or SAR in whole or in part by notice to the Secretary of ACCO or his delegate, in writing (including electronic) on a form approved by the Committee or its delegate, in accordance with the terms of the Award.  Any exercise shall be effective as of the date specified in the notice of exercise, but not earlier than the date the notice of exercise, together with, in the case of exercise of an Option, payment in full of the Option exercise price, is actually received and in the hands of the Secretary of ACCO or his delegate (except as otherwise may be permitted pursuant to Section 6(a)(iv)).

 

(d) Except as otherwise determined by the Committee, if a Participant’s employment with the Company or a status as a Non-Employee Director ceases, the Participant’s Options and SARs, to the extent then exercisable, shall terminate and cease to be exercisable ninety days following the date of such termination or cessation of service.  All Options and SARs that are not exercisable upon such a termination of employment or cessation of status as a Non-Employee Director shall thereupon be forfeited and terminate.

 

(e) If a Participant’s employment with the Company or status as a Non-Employee Director terminates by reason of death, Disability or Retirement, the Participant’s Options and SARs shall, to the extent then exercisable, shall continue to be exercisable for five years following the date of death, Disability or Retirement, unless the Committee shall determine that a longer such exercise period shall apply, but not after the expiration date stated in the Option or SAR Award and shall cease to be exercisable thereafter; provided, a Nonqualified Stock Option and an SAR may be exercised within one year following the date of death even if later than such expiration date.

 

 

  

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(f) In the case of a Participant whose principal employer is a Subsidiary, such Participant’s employment shall be deemed to be terminated for purposes of this Section 6 as of the date on which such principal employer is no longer a Subsidiary.

 

(g) Repricing of Options and SARs shall not be permitted except as provided under Section 13.  For this purpose, a “repricing” means any of the following (or any other action that has the same effect as any of the following):  (A) changing the terms of an Option or SAR to lower its Option or SAR exercise price; (B) any other action that is treated as a “repricing” under generally accepted accounting principles or applicable shareholder approval listing requirements under the New York Stock Exchange (or any other exchange or over-the-counter market on which Common Stock is principally traded); and (C) clause (B) to the contrary notwithstanding, canceling an Option or SAR at a time when its Option or SAR price is equal to or less than the Fair Market Value of the underlying stock in exchange for another Option or SAR, restricted stock or other equity award, whether voluntary or involuntary.

 

7.   Awards of Restricted Stock and Restricted Stock Units.

 

The terms and conditions with respect to each Award of Restricted Stock and Restricted Stock Units under the Plan shall be consistent with the following:

 

(a) Restricted Stock and Restricted Stock Unit Awards shall be subject to such restrictions and other terms and conditions and, respecting Restricted Stock Unit Awards, conditions on payment, as are determined by the Committee.

 

(b) Awards of Restricted Stock shall be registered in the name of the Participant and shall be held in book-entry form subject to ACCO’s instructions until the terms, conditions and restrictions applicable to such Award lapse.  The Committee may require that, as a condition of any Award of Restricted Stock, the Participant shall have delivered a stock power, endorsed in blank, relating to the Common Stock covered by such Award.  Subject to Section 4(g) and Section 11, and except as otherwise provided in this Section 7(b), the Participant shall have, with respect to Shares of Restricted Stock issued to such Participant under the Plan, all of the rights of a holder of Common Stock of ACCO.

 

(c) Awards of Restricted Stock and Restricted Stock Units shall be subject to the following restrictions:

 

(i) For purposes of an Award of Restricted Stock, the “Restriction Period” shall be the period commencing on the date of such Award and ending on the date that all restrictions under the Award lapse.  For the purpose of an Award of Restricted Stock Units, the “Restriction Period” shall be the period commencing on the date of the Award and ending on the date that the Award Participant satisfies all terms and conditions for which the Award becomes nonforfeitable (in whole or in part).  Notwithstanding the foregoing, the Restriction Period for Awards of Restricted Stock and Restricted Stock Units shall be for a period ending not earlier than the third anniversary of the date of the

 

 

  

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Award, except (A) for Awards, in the aggregate, for such number of Shares not exceeding 5% of the available Shares for Award under the Plan at the time of the Award, and (B) as otherwise specifically provided in the following subsections of this Section 7(c) of the Plan.

 

(ii) Subject to the provisions of the Plan and the applicable Restricted Stock Award, during the Restriction Period, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber such Shares of Restricted Stock.  Upon the lapse of the Restriction Period with respect to any Restricted Stock without a forfeiture thereof (in whole or in part), ACCO’s transfer agent will be notified that the transfer of such Restricted Stock shall no longer be subject to the terms, conditions and restrictions under the Award.

 

(iii) Unless otherwise provided in the Award, payment in respect of Restricted Stock Units shall be made not later than the fifteenth day of the third month of the fiscal year of the Company following the fiscal year in which the Restriction Period lapses without forfeiture of Restricted Stock Units in whole or in part.  Payment may be made in cash (valued at the Fair Market Value on the date that the Award becomes payable), in Shares, or partly in cash and partly in Shares, as provided in the applicable Award.

 

(iv) Except to the extent otherwise determined by the Committee, upon termination of a Participant’s employment or service with the Company during the Restriction Period for any reason other than death, Disability or Retirement, all Shares of Restricted Stock or Shares represented by Restricted Stock Units under the Award during the Restriction Period and that are then still subject to restriction or forfeiture shall be forfeited by the Participant and shall terminate.

 

(v) Except as otherwise determined by the Committee, upon termination of a Participant’s employment or service with the Company during the Restriction Period by reason of the Participant’s death, Disability or Retirement, a prorated portion of the Shares of Restricted Stock under each such Award shall become unrestricted, and a prorated portion of the Shares represented by Restricted Stock Units under each such Award shall become nonforfeitable and payable, with such proration to be based on the portion of the Restriction Period elapsed through the date of such termination; as of such termination, the remaining portion of such Award that does not become unrestricted or nonforfeitable pursuant to this Section 7(d)(v) shall be forfeited and terminate.

 

8.   Performance Awards.

 

The terms and conditions with respect to each Performance Award under the Plan shall be consistent with the following:

 

(a) Performance Awards may be granted as Performance Stock, Performance Stock Units payable in Shares or cash, or a combination thereof, subject to the attainment of performance objectives and such other terms and conditions as the Committee shall

 

 

  

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determine. The Committee shall determine the nature, length and starting date of the Performance Period for each Performance Award, which shall be at least one year, the performance objectives to be used in valuing the amount earned under Performance Awards, the range of dollar values or the number of Shares, or combination thereof, to be received by the Participant at the end of the Performance Period if and to the extent that the performance objectives have been achieved, and shall certify the extent to which Performance Awards have been earned. The performance objectives shall include a minimum performance standard below which no payment shall be made and a maximum performance level above which no further amount of payment shall be made. Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Awards that are subject to different Performance Periods and different performance objectives. Performance objectives, and other terms of the Award, may vary from Participant to Participant and between groups of Participants.  Performance Awards to Covered Employees that are intended to satisfy Section 162(m) of the Code shall be based upon one or more of the following strategic, financial, net asset or share price performance goals: revenues; operating income; operating company contribution; cash flow; cash flow from operations; earnings before one or more of interest, taxes, depreciation and amortization; income from continuing operations; net asset turnover; net income; earnings per share; earnings per share from continuing operations; economic value added; operating margin; return on equity, assets, net assets or net tangible assets; return on invested capital; return on capital employed; return on total capital; economic profit; working capital efficiency; cost reductions; improvement in cost of goods sold; inventory sales ratio; earnings growth; revenue growth, gross margin, total return to stockholders, cost reduction, economic value added – or EVA® (net operating profit after tax minus the sum of capital multiplied by the cost of capital) or leverage ratio (each and collectively, “Covered Employee Performance Objectives”), whether applicable to the Company or any relevant Subsidiary or business unit, or any combination thereof, as the Committee may deem appropriate. Unless the Committee shall otherwise provide in the Performance Award, to the extent that the performance objectives under an Award have been satisfied, the Award shall be paid not later than the fifteenth day of the third month of the fiscal year of the Company following the fiscal year in which the end of the Performance Period occurs.

 

(b) The Committee may adjust the performance objectives and measurements applicable to Performance Awards to take into account changes in law and accounting and tax rules and to make such adjustments as the Committee deems necessary or appropriate to reflect the inclusion or exclusion of the impact of extraordinary or unusual items, events or circumstances, provided that no adjustment shall be made which would result in an increase in the compensation of any Covered Employee for the applicable year.  The Committee also may adjust the performance objectives and measurements applicable to Performance Awards and thereby reduce the amount to be received by any Participant pursuant to such Awards if and to the extent that the Committee deems it appropriate, provided that no such reduction shall be made on or after the date of a Change in Control.

 

(c) Except as otherwise determined by the Committee, if prior to the end of a Performance Period a Participant’s employment or service with the Company terminates

 

 

  

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other than by reason of the Participant’s death, Disability or Retirement, then such Participant shall not be entitled to any payment with respect to the outstanding Performance Awards relating to such Performance Period.

 

(d) Except as otherwise determined by the Committee, upon termination of a Participant’s employment or service with the Company during the Performance Period by reason of the Participant’s death, Disability or Retirement, subject to the attainment of the performance objectives set forth in the Award, a prorated portion of the Shares of Performance Stock under each such Award shall become unrestricted, and a prorated portion of the Shares represented by Performance Stock Units under each such Award shall become nonforfeitable and payable, with such proration to be based on the portion of the Performance Period elapsed through the date of such termination; as of such termination, the remaining portion of such Award that does not become unrestricted or nonforfeitable pursuant to this Section 8(d) shall be forfeited and terminate.

 

9.   Other Stock-Based Awards and Cash-Based Awards.

 

(a) The Committee may grant other Awards under the Plan to Participants pursuant to which Shares are or may in the future be acquired, or Awards denominated in stock units payable in Shares, including Awards valued using measures other than the Fair Market Value of Shares.  Such Other Stock-Based Awards may be granted alone, in addition to or in tandem with any Award of any other type provided for grant under the Plan and shall be consistent with the purposes of the Plan.

 

(b) The Committee may grant Cash-Based Awards to Participants in such amounts and upon such terms, including the satisfaction of specific performance objectives pursuant to Section 8 (including, Covered Employee Performance Objectives pursuant to Awards to Covered Employees intended to satisfy the provisions of Section 162(m) of the Code), as the Committee may determine.  Each Cash-Based Award shall specify a payment amount or payment range, to the extent earned or otherwise payable, as determined by the Committee.

 

(c) The Committee shall determine the extent to which the Participant shall be entitled to payment of an Other Stock-Based Award or Cash-Based Award upon a termination of employment or termination of service as a Non-Employee Director, which provisions reflected in an Award Agreement need not be uniform among all such Awards.

 

(d) Except as otherwise determined by the Committee, any Other Stock-Based Award and Cash-Based Award that becomes payable in accordance with its terms shall be paid not later than the fifteenth day of the third month of the fiscal year of the Company following the fiscal year in which the Award becomes nonforfeitable.

 

10.   Covered Employee Annual Incentive Awards.

 

(a) The Committee may designate Covered Employees and other Key Employees to be eligible to receive an annual incentive Award, payable in cash, Shares or a combination of cash and Shares, which shall be earned and payable based on the

 

 

  

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satisfaction of Covered Employee Performance Objectives (and such other performance objectives as may be applicable to Key Employees other than Covered Employees) designated by the Committee in such Award.  The Covered Employee Performance Objectives shall be established by the Committee on or before the ninetieth day of the annual performance period to which such Award relates, and may include the establishment of an incentive pool to be allocable, to the extent earned, among Covered Employees and other participating Key Employees.  The Award may include such other terms and conditions as the Committee determines, including, without limitation, the Covered Employee’s eligibility for a payment upon a termination of employment prior to the last day of the annual performance period or prior to the day when such Awards are paid. No Covered Employee shall receive an annual incentive Award under this Section 10 in excess of the lesser of (i) 50% of any incentive pool established by the Committee hereunder and (ii) $3,000,000.

 

(b) As soon as practicable after the end of the annual performance period, with respect to each Covered Employee, the Committee shall certify the amount payable to the Covered Employee pursuant to the Awards under this Section 10 based on the attainment of the applicable Covered Employee Performance Objectives set forth in the Award (including a determination of the amount of any incentive pool).  The Committee shall not have discretion to increase the amount earned and payable to a Covered Employee over the amount determined pursuant to the terms of any incentive pool and the applicable Award.  The Committee shall have the authority to exercise negative discretion to reduce the amount otherwise earned and payable under any such incentive pool and the Award.  Unless the Committee otherwise determines in the Award, annual incentive Awards shall be payable not later than the fifteenth day of the third month following the last day of the annual performance period.

 

11.   Dividends; Dividend Equivalents.

 

(a) Any Award under the Plan (other than Awards of Options, SARs or pursuant to Section 10) which is outstanding on a dividend record date for Common Stock may, in the discretion of the Committee, earn (i) dividends in the case of Restricted Stock Awards, Performance Stock Awards or Other Stock-Based Awards or (ii) dividend equivalents in the case of all other such Awards in an amount equal to the cash or stock dividends or other distributions that would have been paid on the Shares covered by such Award had such covered Shares been issued and outstanding on such dividend record date.  Any such dividends and dividend equivalents shall be paid on terms and conditions as determined by the Committee.

 

(b) Without limiting the foregoing, the Committee may provide in a Restricted Stock, Performance Stock Award or Other Stock-Based Award that cash dividends shall be deemed paid and immediately automatically reinvested in additional Shares which shall be treated as Restricted Stock, Performance Stock or Shares under an Other Stock-Based Award, and dividends payable in Common Stock (or other property) shall be treated as additional Shares of Restricted Stock, Performance Stock or Shares under an Other Stock-Based Award (or other such property), subject to the same 

 

 

  

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restrictions and other terms and conditions that apply to the Shares under the Award with respect to which such dividends are issued.

 

(c) Without limiting the foregoing, the Committee may provide in any Award (other than Restricted Stock, Performance Stock and Other Stock-Based Awards) that any dividend equivalents or other distributions payable with respect to the Award while subject to any restriction or condition on payment of the Award shall be accumulated and payment of such dividends deferred, with or without interest, and held subject to the same restrictions or conditions as the Award, and such other terms and conditions as the Committee may determine.

 

(d) The Committee shall establish such rules and procedures governing the crediting of dividend equivalents, including the timing, form of payment and payment contingencies of such dividend equivalents, as it deems are appropriate or necessary.

 

(e) For purposes of Section 409A of the Code, unless the Committee shall otherwise determine, such rights to dividends and dividend equivalents shall be considered separate rights apart from the Award to which they relate.

 

12.   Transfers and Leaves of Absence.

 

For purposes of the Plan:  (a) a transfer of a Key Employee’s employment without an intervening period from ACCO to a Subsidiary or vice versa, or from one Subsidiary to another Subsidiary, shall not be deemed a termination of employment and such Key Employee shall be deemed to remain in the employ of the Company, and (b) a Key Employee who is granted in writing a leave of absence shall be deemed to have remained in the employ of the Company during such leave of absence; provided, for the purposes of any Incentive Stock Option, such leave of absence shall not exceed three months or, if such leave of absence exceeds three months the Key Employee’s right to reemployment thereafter is provided in accordance with applicable federal or state statute or by a contract.

 

13.   Stock Adjustments; Change in Control; Divestitures.

 

(a) In the event of any merger, consolidation, stock or other non-cash dividend, extraordinary cash dividend, split-up, spin-off, combination or exchange of shares, reorganization or recapitalization or change in capitalization, or any other similar corporate event, the Committee may make such adjustments as it deems appropriate in (i) the aggregate number of shares subject to the Plan and the number of shares that may be made subject to Awards to any individual Participant as set forth in Section 4(a) as well as the aggregate number of shares that may be made subject to any type of Award, (ii) the number and kind of shares that are subject to any Option or SAR (including any such Award outstanding after termination of employment or cessation of service as a member of the Board of Directors) and the price per share without any change in the aggregate price for such Award to be paid therefor upon exercise of such Award, (iii) the number and kind of shares of outstanding Restricted Stock, (iv) the number and kind of shares covered by a Performance Stock Unit Award (or other applicable Performance

 

 

  

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Award), Restricted Stock Unit Award or Other Stock-Based Award, and (v) the number or dollar amount of outstanding dividend equivalents.  Any adjustment of any Options or SARs under this Section 13(a) shall be made in a manner so as not to constitute a modification within the meaning of Section 424(h)(3) and Section 409A of the Code and the regulations applicable thereunder.  The determination by the Committee as to the terms of any of the foregoing adjustments shall be conclusive and binding.

 

(b) Change in Control.

 

(i) A “Change in Control” shall be deemed to have occurred if:

 

(A) Any person (as that term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as that term is used in Section 13(d) of the Exchange Act, and the rules and regulations promulgated thereunder), of 30% or more of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors (“Voting Securities”) of ACCO, excluding, however, any acquisition of Voting Securities:  (1) directly from ACCO, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from ACCO, (2) by ACCO or a Subsidiary of ACCO, (3) by an employee benefit plan (or related trust) sponsored or maintained by ACCO or entity controlled by ACCO, or (4) pursuant to a transaction that complies with clauses (1), (2) and (3) of Section 13(b)(i)(C);

 

(B) Individuals who, as of the Effective Date, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors, provided that any individual becoming a director subsequent to such Effective Date whose election, or nomination for election by ACCO’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election or removal of the directors of ACCO or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the ACCO Board of Directors;

 

(C) ACCO shall be merged or consolidated with, or, in any transaction or series of transactions, substantially all of the business or assets of ACCO shall be sold or otherwise acquired by, another corporation or entity unless, as a result thereof, (1) the stockholders of ACCO immediately prior thereto shall beneficially own, directly or indirectly, at least 60% of the combined Voting Securities of the surviving, resulting or transferee corporation or entity (including, without limitation, a corporation that as a result of such transaction owns ACCO or

 

 

  

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all or substantially all of ACCO’s assets either directly or through one or more subsidiaries) (“Newco”) immediately thereafter in substantially the same proportions as their ownership immediately prior to such corporate transaction, (2) no person beneficially owns (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, and the rules and regulations promulgated thereunder), directly or indirectly, 30% or more, of the combined Voting Securities of Newco immediately after such corporate transaction except to the extent that such ownership of ACCO existed prior to such corporate transaction and (3) more than 50% of the members of the Board of Directors of Newco shall be Incumbent Directors; or

 

(D) The stockholders of ACCO approve a complete liquidation or dissolution of ACCO.

 

(ii) In the event of a Change in Control, each Option and SAR held by a Participant that is not then exercisable shall become immediately fully exercisable and shall remain exercisable as provided in Section 6; provided, Section 6 to the contrary notwithstanding, any Option or SAR outstanding after a Change of Control shall be exercisable for not less than ninety days following any termination of employment of a Key Employee or of service of a Non-Employee Director or such shorter period as corresponds to the expiration of the term of the Option or SAR under in accordance with the Award.

 

(iii) Unless otherwise determined by the Committee in connection with the granting of the Award, or except to the extent that a Replacement Award is issued to the Participant in cancellation of, and exchange for, an outstanding Award (“Replaced Award”) of the same type in connection with the occurrence of a Change in Control:

 

(A) All of the Shares of Restricted Stock under each such Award shall become immediately unrestricted, and all of the Shares represented by Restricted Stock Units under each such Award shall become immediately nonforfeitable and payable, and for this purpose any performance objectives applicable to such Award shall be deemed satisfied at the maximum level of performance; and

 

(B) Each Participant shall be entitled to immediate payment in full of each Performance Award, and the performance objectives applicable to such Award shall be deemed satisfied at the maximum level of performance.

 

(iv) An Award shall constitute a “Replacement Award” if: (A) it has a value at least equal to the value of the Replaced Award as determined by the Committee in its sole discretion; (B) it relates to publicly traded equity securities of ACCO or its successor in the Change in Control or another entity that is affiliated with ACCO or its successor following the Change in Control; and (C)

 

 

  

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its other terms and conditions are not less favorable to the Participant than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change of Control). Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the preceding sentence are satisfied. The determination of whether an Award constitutes a “Replacement Award” shall be made by the Committee, as constituted immediately before the Change of Control, in its sole discretion.

 

(c) In the case of a Key Employee whose principal employer is a Subsidiary, then such Participant’s employment shall be deemed to be terminated for purposes of Sections 7 through 9 as of the date on which such principal employer ceases to be a Subsidiary (the “Divestiture Date”) and, except to the extent otherwise determined by the Committee and set forth in the applicable Award:

 

(i) A prorated portion of the Shares of Restricted Stock under each such Award shall become unrestricted, and a prorated portion of the Shares represented by Restricted Stock Units under each such Award shall become nonforfeitable and payable, with such proration to be based on the portion of the Restriction Period elapsed through the Divestiture Date, and for this purpose any performance objectives applicable to such Award shall be deemed satisfied at the target level of performance; as of the Divestiture Date, the portion of such Award which is not unrestricted or nonforfeitable, after application of this Section 13(c)(i), shall be forfeited and canceled; and

 

(ii) A prorated portion of each Performance Award shall become earned and payable with such proration to be based on the portion of the Performance Period elapsed through the Divestiture Date, and for this purpose the performance objectives applicable to such Award shall be deemed satisfied at the target level of performance; as of the Divestiture Date, the portion of such Award which is not earned and payable, after application of this Section 13(c)(ii), shall be forfeited and canceled.

 

(d) The provisions of Section 13(b) and Section 13(c) shall control over any inconsistent provision that is less favorable to Participants in Sections 6 through 9.  Payment of any Award becoming immediately payable under this Section 13 shall be deferred as may be necessary to satisfy Section 409A of the Code.

 

14.   Detrimental Activity.

 

If a Participant engages in detrimental activity at any time (whether before or after termination of employment), any Award that has not been paid (including, without limitation, lapse of restrictions on Restricted Stock and exercise of an Option or SAR) to such Participant prior to the date such activity has been determined by the Committee to constitute detrimental activity shall be forfeited and shall never become payable.  Unless otherwise provided under the Award, for purposes of this Section 14, “detrimental activity” shall mean willful, reckless or grossly negligent activity that is determined by

 

 

  

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the Committee, on a case-by-case basis, to be detrimental to or destructive of the business or property of ACCO or any Subsidiary.  Any such determination shall be conclusive and binding for the purposes of the Plan.  Notwithstanding the foregoing, no Award shall be forfeited or become not payable by virtue of this Section 14 on or after the date of a Change in Control; provided, any covenant or restriction on Participant conduct, and the consequences for a breach thereof, set forth in an Award shall control over any inconsistent forgoing provision of this Section 14.

 

15.   Amendment and Termination.

 

The Board of Directors shall have the authority to amend, suspend or terminate the Plan at any time, including the authority to change the amount of the aggregate Fair Market Value of the Shares subject to Incentive Stock Options first exercisable in any calendar year under Section 6 to the extent provided in Section 422, or any successor provision, of the Code.  Except as otherwise provided in the Plan, the Board of Directors shall not, without approval of the stockholders of ACCO, increase the maximum number of Shares authorized for the Plan, nor change the class of eligible employees to other than Key Employees, nor change the class of eligible recipients of Director Awards to other than Non-Employee Directors, nor reduce the basis upon which the minimum Option or SAR price is determined, nor extend the period within which Awards under the Plan may be granted under Section 4(e), nor provide for an Option or SAR that is exercisable more than seven years from the date it is granted except in the event of death, nor amend Section 6(g).  In the event of any such amendment, suspension or termination, the Board of Directors shall have no power to change the terms of any Award theretofore granted under the Plan so as to adversely affect the rights of a Participant without the written consent of the Participant whose rights would be affected by such change except to the extent, if any, provided in the Award.

 

16.   Foreign Awards.

 

(a) The Committee or its delegate authorized pursuant to Section 3 may grant Awards to Key Employees who are subject to the tax laws of nations other than the United States, which Awards may have terms and conditions that differ from the terms thereof as provided elsewhere in the Plan for the purpose of complying with the foreign tax laws.  Awards of Options and SARs may have terms and conditions that differ from Incentive Stock Options, Nonqualified Stock Options and SARs for the purposes of complying with the foreign tax laws, provided that the Committee and not its delegate shall determine the terms and conditions thereof.

 

(b) The terms and conditions of Options and SARs granted under Section 16(a) may differ from the terms and conditions which the Plan would require to be imposed upon Incentive Stock Options, Nonqualified Stock Options and SARs if the Committee determines that the grants are desirable to promote the purposes of the Plan for the Key Employees identified in Section 16(a) and Section 16(b); provided that the Committee may not grant such Options or SARs that do not comply with the limitations of Section 16(a).

 

 

  

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17.   Taxes.

 

ACCO shall have the right to deduct from any cash payment made under the Plan any federal, state or local income or other taxes required by law to be withheld with respect to such payment.  It shall be a condition to the obligation of ACCO to deliver Shares upon the exercise of an Option or SAR, upon payment of a Performance Award, upon delivery of Restricted Stock or upon exercise, settlement or payment of Restricted Stock Units or any Other Stock-Based Award that the Participant pay to ACCO such amount as may be requested by ACCO for the purpose of satisfying any liability for such withholding taxes.  Unless otherwise determined by the Committee, under any Award the Participant may elect, in accordance with any conditions set forth in such Award, to pay any withholding taxes in Shares.

 

18.   Effective Date.

 

This amendment and restatement of the Plan shall be effective on and as of the date on which it is approved by a majority of the voting stockholders of ACCO (“Effective Date”).

 

 

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