Document:

Exhibit 10.9

 

 

Rouse Properties, Inc.

2012 Equity Incentive Plan

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE 1.
    	
ESTABLISHMENT &   PURPOSE
    	
1
    
	
 
    	
 
    	
 
    
	
1.1
    	
Establishment
    	
1
    
	
1.2
    	
Purpose   of the Plan
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE 2.
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE 3.
    	
ADMINISTRATION
    	
4
    
	
 
    	
 
    	
 
    
	
3.1
    	
Authority   of the Committee
    	
4
    
	
3.2
    	
Delegation
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE 4.
    	
ELIGIBILITY   AND PARTICIPATION
    	
5
    
	
 
    	
 
    	
 
    
	
4.1
    	
Eligibility
    	
5
    
	
4.2
    	
Type   of Awards
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE 5.
    	
SHARES   SUBJECT TO THE PLAN AND MAXIMUM AWARDS
    	
5
    
	
 
    	
 
    	
 
    
	
5.1
    	
General
    	
5
    
	
5.2
    	
Annual   Award Limits
    	
5
    
	
5.3
    	
Additional   Shares
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE 6.
    	
STOCK   OPTIONS
    	
5
    
	
 
    	
 
    	
 
    
	
6.1
    	
Grant   of Options
    	
5
    
	
6.2
    	
Terms   of Option Grant
    	
6
    
	
6.3
    	
Option   Term
    	
6
    
	
6.4
    	
Method   of Exercise
    	
6
    
	
6.5
    	
Limitations   on Incentive Stock Options
    	
6
    
	
6.6
    	
Performance   Goals
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE 7.
    	
STOCK   APPRECIATION RIGHTS
    	
7
    
	
 
    	
 
    	
 
    
	
7.1
    	
Grant   of Stock Appreciation Rights
    	
7
    
	
7.2
    	
Terms   of Stock Appreciation Right
    	
7
    
	
7.3
    	
Tandem   Stock Appreciation Rights and Options
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE 8.
    	
RESTRICTED   STOCK
    	
7
    
	
 
    	
 
    	
 
    
	
8.1
    	
Grant   of Restricted Stock
    	
7
    
	
8.2
    	
Terms   of Restricted Stock Awards
    	
7
    
	
8.3
    	
Voting   and Dividend Rights
    	
8
    
	
8.4
    	
Performance   Goals
    	
8
    
	
8.5
    	
Section 83(b) Election
    	
8
    

 

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TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE 9.
    	
OTHER   STOCK-BASED AWARDS
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE 10.
    	
PERFORMANCE-BASED   COMPENSATION
    	
8
    
	
 
    	
 
    	
 
    
	
10.1
    	
Grant   of Performance-Based Compensation
    	
8
    
	
10.2
    	
Performance   Measures
    	
8
    
	
10.3
    	
Establishment   of Performance Goals for Covered Employees
    	
9
    
	
10.4
    	
Adjustment   of Performance-Based Compensation
    	
9
    
	
10.5
    	
Certification   of Performance
    	
9
    
	
10.6
    	
Interpretation
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE 11.
    	
COMPLIANCE   WITH SECTION 409A OF THE CODE AND SECTION 457A OF THE CODE
    	
9
    
	
 
    	
 
    	
 
    
	
11.1
    	
General
    	
9
    
	
11.2
    	
Payments   to Specified Employees
    	
10
    
	
11.3
    	
Separation   from Service
    	
10
    
	
11.4
    	
Section 457A
    	
10
    
	
 
    	
 
    	
 
    
	
ARTICLE 12.
    	
ADJUSTMENTS
    	
10
    
	
 
    	
 
    	
 
    
	
12.1
    	
Adjustments   in Authorized Shares
    	
10
    
	
12.2
    	
Change   of Control
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE 13.
    	
FORFEITURE   OF AWARDS UPON TERMINATION OF SERVICE
    	
11
    
	
 
    	
 
    	
 
    
	
13.1
    	
Termination   of Service for Cause
    	
11
    
	
13.2
    	
Termination   of Service Due to Death or Disability
    	
11
    
	
13.3
    	
Termination   of Service for Reason Other Than Cause, Death or Disability
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE 14.
    	
DURATION,   AMENDMENT, MODIFICATION, SUSPENSION AND TERMINATION
    	
11
    
	
 
    	
 
    	
 
    
	
14.1
    	
Duration   of the Plan
    	
11
    
	
14.2
    	
Amendment,   Modification, Suspension and Termination of Plan
    	
12
    
	
 
    	
 
    	
 
    
	
ARTICLE 15.
    	
GENERAL   PROVISIONS
    	
12
    
	
 
    	
 
    	
 
    
	
15.1
    	
No   Right to Service
    	
12
    
	
15.2
    	
Settlement   of Awards; Fractional Shares
    	
12
    
	
15.3
    	
Tax   Withholding
    	
12
    
	
15.4
    	
No   Guarantees Regarding Tax Treatment
    	
12
    
	
15.5
    	
Non-Transferability   of Awards
    	
13
    
	
15.6
    	
Conditions   and Restrictions on Shares
    	
13
    

 

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TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
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15.7
    	
Compliance   with Law
    	
13
    
	
15.8
    	
Rights   as a Shareholder
    	
13
    
	
15.9
    	
Severability
    	
13
    
	
15.10
    	
Unfunded   Plan
    	
14
    
	
15.11
    	
No   Constraint on Corporate Action
    	
14
    
	
15.12
    	
Successors
    	
14
    
	
15.13
    	
Governing   Law
    	
14
    
	
15.14
    	
Data   Protection
    	
14
    
	
15.15
    	
Effective   Date
    	
14
    

 

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Rouse Properties, Inc.

 

2012 Equity Incentive Plan

 

Article 1.               Establishment & Purpose

 

1.1          Establishment.  Rouse Properties, Inc., a Delaware corporation  hereby establishes the Rouse Properties, Inc. 2012 Equity Incentive Plan (hereinafter referred to as the “Plan”) as set forth in this document.

 

1.2          Purpose of the Plan.  The purpose of the Plan is to attract, retain and motivate officers, employees, non-employee directors and consultants providing services to the Company and its Subsidiaries and Affiliates and to promote the success of the Company’s business by providing participants with appropriate incentives.

 

Article 2.               Definitions

 

Whenever capitalized in the Plan, the following terms shall have the meanings set forth below.

 

2.1          “Affiliate” means any entity that the Company, either directly or indirectly, is in common control with, is controlled by or controls, or any entity in which the Company has a substantial equity interest, direct or indirect; provided, however, to the extent that Awards must cover “service recipient stock” in order to comply with Section 409A of the Code, “Affiliate” shall be limited to those entities which could qualify as an “eligible issuer” under Section 409A of the Code.

 

2.2          “Annual Award Limit” shall have the meaning set forth in Section 5.2.

 

2.3          “Award” means any Option, Stock Appreciation Right, Restricted Stock, Other Stock-Based Award, or Performance-Based Compensation Award that is granted under the Plan.

 

2.4          “Award Agreement” means either (a) a written agreement entered into by the Company and a Participant setting forth the terms and conditions applicable to an Award, or (b) a written statement issued by the Company to a Participant describing the terms and conditions applicable to an Award.

 

2.5          “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

 

2.6          “Board” means the Board of Directors of the Company.

 

2.7          “Cause” unless otherwise specified in the Award Agreement, means occurrence of any of the following:  (a) indictment for a felony or crime of dishonesty or moral turpitude, (b) insubordination, gross negligence or willful misconduct in the performance of the Participant’s duties, (c) illegal use of controlled substances during the performance of Participant’s duties or that adversely affects the reputation or best interests of the Company or an Affiliate, (d) commission of fraud, embezzlement, misappropriation of funds, breach of fiduciary duty or a material act of dishonesty against the Company or any Affiliate, (e) material breach of any written employment, non-competition, non-solicitation, confidentiality or similar agreement with the Company or any Affiliate, (f) noncompliance with Company policy or code of conduct, (g) persistent neglect of duty or chronic unapproved absenteeism, or (h) willful and deliberate failure in the performance of the Participant’s duties in any material respect, in each case, as determined in good faith by the Committee in its sole discretion.  Notwithstanding the foregoing, with

 

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respect to any Participant who has an employment agreements that defines “Cause” or a like term, “Cause” shall have the meaning set forth in such employment agreement.

 

2.8          “Change of Control” unless otherwise specified in the Award Agreement, means the occurrence of any of the following events:

 

(a)                                  any consolidation, amalgamation, or merger of the Company with or into any other Person, or any other corporate reorganization, business combination, transaction or transfer of securities of the Company by its stockholders, or a series of transactions (including the acquisition of capital stock of the Company, but excluding the Rights Offering), whether or not the Company is a party thereto, in which the stockholders of the Company immediately prior to such consolidation, merger, reorganization, business combination or transaction, collectively have Beneficial Ownership, directly or indirectly, of capital stock representing directly, or indirectly through one or more entities, less than fifty percent of the equity measured by economic value or voting power (by contract, share ownership or otherwise) of the Company or other surviving entity immediately after such consolidation, merger, reorganization, business combination or transaction;

 

(b)                                 the sale or disposition, in one transaction or a series of related transactions, of all or substantially all of the assets of the Company to any Person;

 

(c)                                  during any period of twelve consecutive months commencing on or after the Effective Date, individuals who as of the beginning of such period constituted the entire Board (together with any new directors whose election by such Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the directors of the Company, then still in office, who were directors at the beginning of the period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority thereof; or

 

(d)                                 approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

 

2.9          “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.

 

2.10        “Committee” means the Compensation Committee of the Board or any other committee designated by the Board to administer the Plan.

 

2.11        “Consultant” means any person who provides bona fide services to the Company or any Subsidiary or Affiliate as a consultant or advisor, excluding any Employee or Director.

 

2.12        “Company” means Rouse Properties, Inc., a Delaware corporation, and any successor thereto.

 

2.13        “Covered Employee” means for any Plan Year, a Participant designated by the Company as a potential “covered employee” as such term is defined in Section 162(m) of the Code.

 

2.14        “Director” means a member of the Board who is not an Employee.

 

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2.15        “Disability” unless otherwise specified in the Award Agreement, means permanent and total disability, as determined by the Committee in its sole discretion.  Notwithstanding the foregoing, with respect to any Participant who has an employment agreements that defines “Disability” or a like term, “Disability” shall have the meaning set forth in such employment agreement.

 

2.16        “Effective Date” means the date set forth in Section 15.15.

 

2.17        “Employee” means an officer or other employee of the Company, a Subsidiary or Affiliate, including a member of the Board who is an employee of the Company, a Subsidiary or Affiliate and individuals who have accepted a written offer of employment with the Company, a Subsidiary or Affiliate.

 

2.18        “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

 

2.19        “Fair Market Value” means, as of any date, the per Share value determined as follows, in accordance with applicable provisions of Section 409A of the Code:

 

(a)                                  The closing price of a Share on a recognized national exchange or any established over-the-counter trading system on which dealings take place, or if no trades were made on any such day, the immediately preceding day on which trades were made; or

 

(b)                                 In the absence of an established market for the Shares of the type described in (a) above, the per Share Fair Market Value thereof shall be determined by the Committee in good faith.

 

2.20        “Incentive Stock Option” means an Option intended to meet the requirements of an incentive stock option as defined in Section 422 of the Code and designated as an Incentive Stock Option.

 

2.21        “Nonqualified Stock Option” means an Option that is not an Incentive Stock Option.

 

2.22        “Other Stock-Based Award” means any right granted under Article 9 of the Plan.

 

2.23        “Option” means any stock option granted under Article 6 of the Plan.

 

2.24        “Option Price” means the purchase price per Share subject to an Option, as determined pursuant to Section 6.2 of the Plan.

 

2.25        “Participant” means any eligible person as set forth in Section 4.1 to whom an Award is granted.

 

2.26        “Performance-Based Compensation” means compensation under an Award that is intended to constitute “qualified performance-based compensation” within the meaning of the regulations promulgated under Section 162(m) of Code or any successor provision.

 

2.27        “Performance Measures” means measures as described in Section 10.2 on which the performance goals are based in order to qualify Awards as Performance-Based Compensation.

 

2.28        “Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.

 

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2.29        “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

 

2.30        “Plan” means the Rouse Properties, Inc. 2012 Equity Incentive Plan.

 

2.31        “Plan Year” means the applicable fiscal year of the Company.

 

2.32        “Restricted Stock” means any Award granted under Article 8 of the Plan.

 

2.33        “Restriction Period” means the period during which Restricted Stock awarded under Article 8 of the Plan is subject to forfeiture.

 

2.34        “Rights Offering” means the proposed issuance to holders of Shares of rights to purchase additional Shares at a price to be determined by the Board, as more fully described in the Form S-11 filed by the Company with the SEC on October 21, 2011, as such registration statement may be amended or supplemented from time to time.

 

2.35        “Service” means service as an Employee, Director or Consultant.

 

2.36        “Share” means a share of common stock of the Company, par value $0.01 per share, or such other class or kind of shares or other securities resulting from the application of Article 12 hereof.

 

2.37        “Stock Appreciation Right” means any right granted under Article 7 of the Plan.

 

2.38        “Subsidiary” means any corporation, partnership, limited liability company or other legal entity of which the Company, directly or indirectly, owns stock or other equity interests possessing fifty percent or more of the total combined voting power of all classes of stock or other equity interests (as determined in a manner consistent with Section 409A of the Code).

 

2.39        “Ten Percent Shareholder” means a person who on any given date owns, either directly or indirectly (taking into account the attribution rules contained in Section 424(d) of the Code), stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or a Subsidiary or Affiliate.

 

Article 3.               Administration

 

3.1          Authority of the Committee.  The Plan shall be administered by the Committee, which shall have full power to interpret and administer the Plan and Award Agreements and full authority to select the Employees, Directors and Consultants to whom Awards will be granted, and to determine the type and amount of Awards to be granted to each such Employee, Director or Consultant, and the terms and conditions of Awards and Award Agreements.  Without limiting the generality of the foregoing, the Committee may, in its sole discretion but subject to the limitations in Article 14, clarify, construe or resolve any ambiguity in any provision of the Plan or any Award Agreement, extend the term or period of exercisability of any Awards, or waive any terms or conditions applicable to any Award.  Awards may, in the discretion of the Committee, be made under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or any of its Subsidiaries or Affiliates or a company acquired by the Company or with which the Company combines.  The Committee shall have full and exclusive discretionary power to adopt rules, forms, instruments, and guidelines for administering the Plan as the Committee deems necessary or proper.  All actions taken and all interpretations and determinations made by the Committee or by the Board (or any other committee or sub-committee

 

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thereof), as applicable, shall be final and binding upon the Participants, the Company, and all other interested individuals.

 

3.2          Delegation.  The Committee may delegate to one or more of its members or one or more executive officers of the Company such administrative duties or powers as it may deem advisable; provided that no delegation shall be permitted under the Plan that is prohibited by applicable law.

 

Article 4.               Eligibility and Participation

 

4.1          Eligibility.  Participants will consist of such Employees, Directors and Consultants as the Committee in its sole discretion determines and whom the Committee may designate from time to time to receive Awards.  Designation of a Participant in any year shall not require the Committee to designate such person to receive an Award in any other year or, once designated, to receive the same type or amount of Award as granted to the Participant in any other year.

 

4.2          Type of Awards.  Awards under the Plan may be granted in any one or a combination of:  (a) Options, (b) Stock Appreciation Rights, (c) Restricted Stock, (d) Other Stock-Based Awards, and (e) Performance-Based Compensation Awards.  The Plan sets forth the types of performance goals and sets forth procedural requirements to permit the Company to design Awards that qualify as Performance-Based Compensation, as described in Article 10 hereof.  Awards granted under the Plan shall be evidenced by Award Agreements (which need not be identical) that provide additional terms and conditions associated with such Awards, as determined by the Committee in its sole discretion; provided, however, that in the event of any conflict between the provisions of the Plan and any such Award Agreement, the provisions of the Plan shall prevail.

 

Article 5.               Shares Subject to the Plan and Maximum Awards

 

5.1          General.  Subject to adjustment as provided in Article 12 hereof, the maximum number of Shares available for issuance to Participants pursuant to Awards under the Plan shall be 4,887,997 Shares.  The Shares available for issuance under the Plan may consist, in whole or in part, of authorized and unissued Shares or treasury Shares.

 

5.2          Annual Award Limits.  The maximum number of Shares with respect to Awards denominated in Shares that may be granted to any Participant in any Plan Year shall be 2,500,000 Shares (or the equivalent dollar value), subject to adjustments made in accordance with Article 12 hereof (the “Annual Award Limit”).

 

5.3          Additional Shares.  In the event that any outstanding Award expires, is forfeited, cancelled or otherwise terminated without the issuance of Shares or is otherwise settled for cash, the Shares subject to such Award, to the extent of any such forfeiture, cancellation, expiration, termination or settlement for cash, shall again be available for Awards.  If the Committee authorizes the assumption under the Plan, in connection with any merger, consolidation, acquisition of property or stock, or reorganization, of awards granted under another plan, such assumption shall not (a) reduce the maximum number of Shares available for issuance under the Plan or (b) be subject to or counted against a Participant’s Annual Award Limit.

 

Article 6.               Stock Options

 

6.1          Grant of Options.  The Committee is hereby authorized to grant Options to Participants.  Each Option shall permit a Participant to purchase from the Company a stated number of Shares at an Option Price established by the Committee, subject to the terms and conditions described in this Article 6

 

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and to such additional terms and conditions, as established by the Committee, in its sole discretion, that are consistent with the provisions of the Plan.  Options shall be designated as either Incentive Stock Options or Nonqualified Stock Options, provided that Options granted to Directors and Consultants shall be Nonqualified Stock Options.  An Option granted as an Incentive Stock Option shall, to the extent it fails to qualify as an Incentive Stock Option, be treated as a Nonqualified Stock Option.  Neither the Committee, the Company, any of its Subsidiaries or Affiliates, nor any of their employees and representatives shall be liable to any Participant or to any other Person if it is determined that an Option intended to be an Incentive Stock Option does not qualify as an Incentive Stock Option.  Each option shall be evidenced by Award Agreements which shall state the number of Shares covered by such Option.  Such agreements shall conform to the requirements of the Plan, and may contain such other provisions, as the Committee shall deem advisable.

 

6.2          Terms of Option Grant.  The Option Price shall be determined by the Committee at the time of grant, but shall not be less than one-hundred percent of the Fair Market Value of a Share on the trading day immediately preceding the date of grant.  In the case of any Incentive Stock Option granted to a Ten Percent Shareholder, the Option Price shall not be less than one-hundred-ten percent of the Fair Market Value of a Share on the date of grant.

 

6.3          Option Term.  The term of each Option shall be determined by the Committee at the time of grant and shall be stated in the Award Agreement, but in no event shall such term be greater than ten years (or, in the case on an Incentive Stock Option granted to a Ten Percent Shareholder, five years).

 

6.4          Method of Exercise.  Except as otherwise provided in the Plan or in an Award Agreement, an Option may be exercised for all, or from time to time any part, of the Shares for which it is then exercisable.  For purposes of this Article 6, the exercise date of an Option shall be the later of the date a notice of exercise is received by the Company and, if applicable, the date payment is received by the Company pursuant to clauses (a), (b), (c) or (d) of the following sentence and pursuant to Section 15.3 hereof.  The aggregate Option Price for the Shares as to which an Option is exercised shall be paid to the Company in full at the time of exercise at the election of the Participant (a) in cash or its equivalent (e.g., by cashier’s check), (b) to the extent permitted by the Committee, in Shares (whether or not previously owned by the Participant) having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and satisfying such other requirements as may be imposed by the Committee, (c) partly in cash and, to the extent permitted by the Committee, partly in such Shares (as described in (b) above) or (d) if there is a public market for the Shares at such time, subject to such requirements as may be imposed by the Committee, through the delivery of irrevocable instructions to a broker to sell Shares obtained upon the exercise of the Option and to deliver promptly to the Company an amount out of the proceeds of such sale equal to the aggregate Option Price for the Shares being purchased.  The Committee may prescribe any other method of payment that it determines to be consistent with applicable law and the purpose of the Plan.

 

6.5          Limitations on Incentive Stock Options.  Incentive Stock Options may be granted only to employees of the Company or of a “parent corporation” or “subsidiary corporation” (as such terms are defined in Section 424 of the Code) at the date of grant.  The aggregate Fair Market Value (generally determined as of the time the Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year under all plans of the Company and of any “parent corporation” or “subsidiary corporation” shall not exceed one hundred thousand dollars, or the Option shall be treated as a Nonqualified Stock Option.  For purposes of the preceding sentence, Incentive Stock Options will be taken into account generally in the order in which they are granted.  Each provision of the Plan and each Award Agreement relating to an Incentive Stock Option shall be construed so that each Incentive Stock Option shall be an incentive stock option as

 

6

 

defined in Section 422 of the Code, and any provisions of the Award Agreement thereof that cannot be so construed shall be disregarded.

 

6.6          Performance Goals.  The Committee may condition the grant of Options or the vesting of Options upon the Participant’s achievement of one or more performance goal(s) (including the Participant’s provision of Services for a designated time period), as specified in the Award Agreement.  If the Participant fails to achieve the specified performance goal(s), the Committee shall not grant the Option to such Participant or the Option shall not vest, as applicable.

 

Article 7.               Stock Appreciation Rights

 

7.1          Grant of Stock Appreciation Rights.  The Committee is hereby authorized to grant Stock Appreciation Rights to Participants, including a grant of Stock Appreciation Rights in tandem with any Option at the same time such Option is granted (a “Tandem SAR”).  Stock Appreciation Rights shall be evidenced by Award Agreements that shall conform to the requirements of the Plan and may contain such other provisions, as the Committee shall deem advisable.  Subject to the terms of the Plan and any applicable Award Agreement, a Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of (a) the Fair Market Value of a specified number of Shares on the date of exercise over (b) the grant price of the right as specified by the Committee on the date of the grant.  Such payment may be in the form of cash, Shares, or any combination thereof, as the Committee shall determine in its sole discretion.

 

7.2          Terms of Stock Appreciation Right.  Subject to the terms of the Plan and any applicable Award Agreement, the grant price (which shall not be less than one hundred percent of the Fair Market Value of a Share on the date of grant), term, methods of exercise, methods of settlement, and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee.  The Committee may impose such other conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate.  No Stock Appreciation Right shall have a term of more than ten years from the date of grant.

 

7.3          Tandem Stock Appreciation Rights and Options.  A Tandem SAR shall be exercisable only to the extent that the related Option is exercisable and shall expire no later than the expiration of the related Option.  Upon the exercise of all or a portion of a Tandem SAR, a Participant shall be required to forfeit the right to purchase an equivalent portion of the related Option (and, when a Share is purchased under the related Option, the Participant shall be required to forfeit an equivalent portion of the Stock Appreciation Right).

 

Article 8.               Restricted Stock

 

8.1          Grant of Restricted Stock.  An Award of Restricted Stock is a grant by the Committee of a specified number of Shares to the Participant, which Shares are subject to forfeiture upon the occurrence of specified events.  Restricted Stock shall be evidenced by an Award Agreement, which shall conform to the requirements of the Plan and may contain such other provisions, as the Committee shall deem advisable.

 

8.2          Terms of Restricted Stock Awards.  Each Award Agreement evidencing a Restricted Stock grant shall specify the period(s) of restriction, the number of Shares of Restricted Stock subject to the Award, the performance, employment or other conditions (including the termination of a Participant’s Service whether due to death, disability or other reason) under which the Restricted Stock may be forfeited to the Company and such other provisions as the Committee shall determine.  At the end of the Restriction Period, the restrictions imposed hereunder and under the Award Agreement shall lapse with

 

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respect to the number of Shares of Restricted Stock as determined by the Committee, and the legend shall be removed and such number of Shares delivered to the Participant (or, where appropriate, the Participant’s legal representative).

 

8.3          Voting and Dividend Rights.  Unless otherwise provided in an Award Agreement, Participants shall have none of the rights of a stockholder of the Company with respect to Restricted Stock until the end of the Restricted Period; provided, that, Participants shall have the right to vote and receive dividends on Restricted Stock during the Restriction Period.  Dividends shall be paid to Participants at the same time that other shareholders of common stock of the Company receive such dividends.

 

8.4          Performance Goals.  The Committee may condition the grant of Restricted Stock or the expiration of the Restriction Period upon the Participant’s achievement of one or more performance goal(s) (including the Participant’s provision of Services for a designated time period), as specified in the Award Agreement.  If the Participant fails to achieve the specified performance goal(s), the Committee shall not grant the Restricted Stock to such Participant or the Participant shall forfeit the Award of Restricted Stock to the Company, as applicable.

 

8.5          Section 83(b) Election.  The Committee may permit Participants to make elections pursuant to Section 83(b) of the Code with respect to Awards of Restricted Stock.  If a Participant makes an election pursuant to Section 83(b) of the Code concerning Restricted Stock, the Participant shall be required to file promptly a copy of such election with the Company.

 

Article 9.               Other Stock-Based Awards

 

The Committee, in its sole discretion, may grant Awards of Shares and Awards that are valued, in whole or in part, by reference to, or are otherwise based on the Fair Market Value of Shares (the “Other Stock-Based Awards”), including without limitation, restricted stock units and other phantom awards.  Such Other Stock-Based Awards shall be in such form, and dependent on such conditions, as the Committee shall determine, including, without limitation, the right to receive one or more Shares (or the equivalent cash value of such Shares) upon the completion of a specified period of Service, the occurrence of an event and/or the attainment of performance objectives.  Other Stock-Based Awards may be granted alone or in addition to any other Awards granted under the Plan.  Subject to the provisions of the Plan, the Committee shall determine to whom and when Other Stock-Based Awards will be made, the number of Shares to be awarded under (or otherwise related to) such Other Stock-Based Awards, whether such Other Stock-Based Awards shall be settled in cash, Shares or a combination of cash and Shares, and all other terms and conditions of such Awards (including, without limitation, the vesting provisions thereof and provisions ensuring that all Shares so awarded and issued shall be fully paid and non-assessable).

 

Article 10.            Performance-Based Compensation

 

10.1        Grant of Performance-Based Compensation.  To the extent permitted by Section 162(m) of the Code, the Committee is authorized to design any Award so that the amounts or Shares payable or distributed pursuant to such Award are treated as “qualified performance-based compensation” within the meaning of Section 162(m) of the Code and related regulations.

 

10.2        Performance Measures.  The vesting, crediting and/or payment of Performance-Based Compensation shall be based on the achievement of objective performance goals based on one or more of the following Performance Measures:  (a) consolidated earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization); (b) net income before or after taxes; (c) operating income; (d) earnings per Share; (e) book value per Share; (f) return on shareholders’ equity; (g) expense

 

8

 

management; (h) return on investment; (i) improvements in capital structure; (j) profitability of an identifiable business unit or product; (k) maintenance or improvement of profit margins or rental or occupancy levels; (l) stock price; (m) market share; (n) revenues or sales; (o) costs; (p) cash flow (including, but not limited to, operating cash flow and free cash flow); (q) working capital; (r) return on assets; (s) store openings or refurbishment or redevelopment plans; (t) staff training; (u) corporate social responsibility policy implementation; (v) economic value added; (w) debt reduction or reduction in the cost of capital; (x) completion of acquisitions or divestitures or (y) operating efficiency.

 

Any Performance Measure may be (i) used to measure the performance of the Company and/or any of its Subsidiaries or Affiliates as a whole, any business unit thereof or any combination thereof against any goal including past performance or (ii) compared to the performance of a group of comparable companies, or a published or special index, in each case that the Committee, in its sole discretion, deems appropriate.  Subject to Section 162(m) of the Code, the Committee may adjust the performance goals (including to prorate goals and payments for a partial Plan Year) in the event of the following occurrences:  (A) non-recurring events, including divestitures, spin-offs, or changes in accounting standards or policies; (B) mergers and acquisitions; and (C) financing transactions, including selling accounts receivable.

 

10.3        Establishment of Performance Goals for Covered Employees.  No later than ninety days after the commencement of a Performance Period (but in no event after twenty-five percent of such Performance Period has elapsed), the Committee shall establish in writing:  (a) the performance goals applicable to the Performance Period; (b) the Performance Measures to be used to measure the performance goals in terms of an objective formula or standard; (c) the formula for computing the amount of compensation payable to the Participant if such performance goals are obtained; and (d) the Participants or class of Participants to which such performance goals apply.  The outcome of such performance goals must be substantially uncertain when the Committee establishes the goals.

 

10.4        Adjustment of Performance-Based Compensation.  Awards that are designed to qualify as Performance-Based Compensation may not be adjusted upward.  The Committee shall retain the discretion to adjust such Awards downward, either on a formula or discretionary basis or any combination, as the Committee determines.

 

10.5        Certification of Performance.  Except for Awards that pay compensation attributable solely to an increase in the value of Shares, no Award designed to qualify as Performance-Based Compensation shall be vested, credited or paid, as applicable, with respect to any Participant until the Committee certifies in writing that the performance goals and any other material terms applicable to such Performance Period have been satisfied.

 

10.6        Interpretation.  Each provision of the Plan and each Award Agreement relating to Performance-Based Compensation shall be construed so that each such Award  shall be “qualified performance-based compensation” within the meaning of Section 162(m) of the Code and related regulations, and any provisions of the Award Agreement thereof that cannot be so construed shall be disregarded.

 

Article 11.            Compliance with Section 409A of the Code and Section 457A of the Code

 

11.1        General.  The Company intends that all Awards be structured in compliance with, or to satisfy an exemption from, Section 409A of the Code and all regulations, guidance, compliance programs and other interpretative authority thereunder (“Section 409A”), such that there are no adverse tax consequences, interest, or penalties as a result of the Awards.  Notwithstanding the Company’s intention, in the event any Award is subject to Section 409A, the Committee may, in its sole discretion and without

 

9

 

a Participant’s prior consent, amend the Plan and/or Awards, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and actions with retroactive effect) as are necessary or appropriate to (a) exempt the Plan and/or any Award from the application of Section 409A, (b) preserve the intended tax treatment of any such Award, or (c) comply with the requirements of Section 409A, including without limitation any such regulations guidance, compliance programs and other interpretative authority that may be issued after the date of grant of an Award.

 

11.2        Payments to Specified Employees.  Notwithstanding any contrary provision in the Plan or Award Agreement, any payment(s) of nonqualified deferred compensation (within the meaning of Section 409A) that are otherwise required to be made under the Plan to a “specified employee” (as defined under Section 409A) as a result of his or her separation from service (other than a payment that is not subject to Section 409A) shall be delayed for the first six months following such separation from service (or, if earlier, the date of death of the specified employee) and shall instead be paid (in a manner set forth in the Award Agreement) on the payment date that immediately follows the end of such six-month period or as soon as administratively practicable within 90 days thereafter, but in no event later than the end of the applicable taxable year.

 

11.3        Separation from Service.  A termination of employment shall not be deemed to have occurred for purposes of any provision of the Plan or any Award Agreement providing for the payment of any amounts or benefits that are considered nonqualified deferred compensation under Section 409A upon or following a termination of employment, unless such termination is also a “separation from service” within the meaning of Section 409A and the payment thereof prior to a “separation from service” would violate Section 409A.  For purposes of any such provision of the Plan or any Award Agreement relating to any such payments or benefits, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”

 

11.4        Section 457A.  In the event any Award is subject to Section 457A of the Code (“Section 457A”), the Committee may, in its sole discretion and without a Participant’s prior consent, amend the Plan and/or Awards, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and actions with retroactive effect) as are necessary or appropriate to (a) exempt the Plan and/or any Award from the application of Section 457A, (b) preserve the intended tax treatment of any such Award, or (c) comply with the requirements of Section 457A, including without limitation any such regulations, guidance, compliance programs and other interpretative authority that may be issued after the date of the grant.

 

Article 12.            Adjustments

 

12.1        Adjustments in Authorized Shares.  In the event of any corporate event or transaction involving the Company, a Subsidiary and/or an Affiliate (including, but not limited to, a change in the Shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, extraordinary stock dividend, stock split, reverse stock split, split up, spin-off, combination of Shares, exchange of Shares, dividend in kind, amalgamation, or other like change in capital structure (other than regular cash or stock dividends to shareholders of the Company), or any similar corporate event or transaction, the Committee, to prevent dilution or enlargement of Participants’ rights under the Plan, shall substitute or adjust, in its sole discretion, the number and kind of Shares or other property that may be issued under the Plan or under particular forms of Awards, the number and kind of Shares or other property subject to outstanding Awards, the Option Price, grant price or purchase price applicable to outstanding Awards, the Annual Award Limits, and/or other value determinations applicable to the Plan or outstanding Awards.

 

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12.2        Change of Control.  Upon the occurrence of a Change of Control after the Effective Date, unless otherwise specifically prohibited under applicable laws or by the rules and regulations of any governing governmental agencies or national securities exchanges, or unless the Committee shall determine otherwise in the Award Agreement, the Committee shall make one or more of the following adjustments to the terms and conditions of outstanding Awards:  (a) continuation or assumption of such outstanding Awards under the Plan by the Company (if it is the surviving company or corporation) or by the surviving company or corporation or its parent; (b) substitution by the surviving company or corporation or its parent of awards with substantially the same terms for such outstanding Awards; (c) accelerated exercisability, vesting and/or lapse of restrictions under outstanding Awards immediately prior to the occurrence of such event; (d) upon written notice, provide that any outstanding Awards must be exercised, to the extent then exercisable, during a reasonable period of time immediately prior to the scheduled consummation of the event, or such other period as determined by the Committee (contingent upon the consummation of the event), and at the end of such period, such Awards shall terminate to the extent not so exercised within the relevant period; and (e) cancellation of all or any portion of outstanding Awards for fair value (as determined in the sole discretion of the Committee and which may be zero) which, in the case of Options and Stock Appreciation Rights or similar Awards, if the Committee so determines, may equal the excess, if any, of the value of the consideration to be paid in the Change of Control transaction to holders of the same number of Shares subject to such Awards (or, if no such consideration is paid, Fair Market Value of the Shares subject to such outstanding Awards or portion thereof being canceled) over the aggregate Option Price or grant price, as applicable, with respect to such Awards or portion thereof being canceled (which may be zero).

 

Article 13.            Forfeiture of Awards Upon Termination of Service

 

13.1        Termination of Service for Cause.  Unless otherwise provided in an Award Agreement, in the event (a) a Participant’s Service is terminated for Cause or (b) the Committee determines that a Participant’s acts or omissions constitute Cause, all outstanding Awards held by the Participant shall terminate and be forfeited without consideration, effective as of the date the Participant’s Service is terminated for Cause or the date the act or omission constituting Cause is determined to have occurred, as applicable.

 

13.2        Termination of Service Due to Death or Disability.  Unless otherwise provided in an Award Agreement, in the event a Participant’s Service is terminated due to death or Disability (and Cause does not exist as of such date): (a) all unvested Awards held by the Participant shall terminate and be forfeited without consideration, effective as of the date the Participant’s Service is terminated and (b) all vested Options and Stock Appreciation Rights shall terminate on the earlier of (i) one year following the termination of Service and (ii) the expiration of the term of such Options and Stock Appreciation Rights.

 

13.3        Termination of Service for Reason Other than Cause, Death or Disability.  Unless otherwise provided in an Award Agreement, in the event a Participant’s Service is terminated for any reason other pursuant to Section 13.1 and Section 13.2 above (and Cause does not exist as of such date): (a) all unvested Awards held by the Participant shall terminate and be forfeited without consideration, effective as of the date the Participant’s Service is terminated and (b) all vested Options and Stock Appreciation Rights shall terminate on the earlier of (i) ninety days following the termination of Service and (ii) the expiration of the term of such Options and Stock Appreciation Rights.

 

Article 14.            Duration, Amendment, Modification, Suspension and Termination

 

14.1        Duration of the Plan.  Unless sooner terminated as provided in Section 14.2, the Plan shall terminate on the tenth anniversary of the Effective Date.

 

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14.2        Amendment, Modification, Suspension and Termination of Plan.  The Committee may amend, alter, suspend, discontinue, or terminate (for purposes of this Section 14.2, an “Action”) the Plan or any portion thereof or any Award (or Award Agreement) thereunder at any time; provided that no such Action shall be made, other than as permitted under Article 11 or 12, (a) without shareholder approval (i) if such approval is necessary to comply with any tax or regulatory requirement applicable to the Plan, (ii) if such Action increases the number of Shares available under the Plan (other than an increase permitted under Article 5 absent shareholder approval), (iii) if such Action results in a material increase in benefits permitted under the Plan (but excluding increases that are immaterial or that are minor and to benefit the administration of the Plan, to take account of any changes in applicable law, or to obtain or maintain favorable tax, exchange, or regulatory treatment for the Company, a Subsidiary, and/or an Affiliate) or a change in eligibility requirements under the Plan, or (iv) for any Action that results in a reduction of the Option Price or grant price per Share, as applicable, of any outstanding Options or Stock Appreciation Rights or cancellation of any outstanding Options or Stock Appreciation Rights in exchange for cash, or for other Awards, such as other Options or Stock Appreciation Rights, with an Option Price or grant price per Share, as applicable, that is less than such price of the original Options or Stock Appreciation Rights, and (b) without the written consent of the affected Participant, if such Action would materially diminish the rights of any Participant under any Award theretofore granted to such Participant; provided, further, that the Committee may amend the Plan, any Award or any Award Agreement without such consent of the Participant in such manner as it deems necessary to comply with applicable laws, including without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

Article 15.            General Provisions

 

15.1        No Right to Service.  The granting of an Award under the Plan shall impose no obligation on the Company, any Subsidiary or any Affiliate to continue the Service of a Participant and shall not lessen or affect any right that the Company, any Subsidiary or any Affiliate may have to terminate the Service of such Participant.  No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards.  The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).

 

15.2        Settlement of Awards; Fractional Shares.  Each Award Agreement shall establish the form in which the Award shall be settled.  The Committee shall determine whether cash, Awards, other securities or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be rounded, forfeited or otherwise eliminated.

 

15.3        Tax Withholding.  The Company shall have the power and the right to deduct or withhold automatically from any amount deliverable under the Award or otherwise, or require a Participant to remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan.  With respect to required withholding, Participants may elect (subject to the Company’s automatic withholding right set out above), subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction.

 

15.4        No Guarantees Regarding Tax Treatment.  Participants (or their beneficiaries) shall be responsible for all taxes with respect to any Awards under the Plan.  The Committee and the Company make no guarantees to any Person regarding the tax treatment of Awards or payments made under the Plan.  Neither the Committee nor the Company has any obligation to take any action to prevent the

 

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assessment of any tax on any Person with respect to any Award under Section 409A of the Code or Section 457A of the Code or otherwise and none of the Company, any of its Subsidiaries or Affiliates, or any of their employees or representatives shall have any liability to a Participant with respect thereto.

 

15.5        Non-Transferability of Awards.  Unless otherwise determined by the Committee, an Award shall not be transferable or assignable by the Participant except in the event of his death (subject to the applicable laws of descent and distribution) and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate.  No transfer shall be permitted for value or consideration.  An award exercisable after the death of a Participant may be exercised by the heirs, legatees, personal representatives or distributees of the Participant.  Any permitted transfer of the Awards to heirs, legatees, personal representatives or distributees of the Participant shall not be effective to bind the Company unless the Committee shall have been furnished with written notice thereof and a copy of such evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions hereof.

 

15.6        Conditions and Restrictions on Shares.  The Committee may impose such other conditions or restrictions on any Shares received in connection with an Award as it may deem advisable or desirable.  These restrictions may include, but shall not be limited to, a requirement that the Participant hold the Shares received for a specified period of time or a requirement that a Participant represent and warrant in writing that the Participant is acquiring the Shares for investment and without any present intention to sell or distribute such Shares.  The certificates for Shares may include any legend which the Committee deems appropriate to reflect any conditions and restrictions applicable to such Shares.

 

15.7        Compliance with Law.  The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies, or any stock exchanges on which the Shares are admitted to trading or listed, as may be required.  The Company shall have no obligation to issue or deliver evidence of title for Shares issued under the Plan prior to:  (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and (b) completion of any registration or other qualification of the Shares under any applicable national, state or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.  The restrictions contained in this Section 15.7 shall be in addition to any conditions or restrictions that the Committee may impose pursuant to Section 15.6.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company, its Subsidiaries and Affiliates, and all of their employees and representatives of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

15.8        Rights as a Shareholder.  Except as otherwise provided herein or in the applicable Award Agreement, a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.

 

15.9        Severability.  If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.

 

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15.10      Unfunded Plan.  Participants shall have no right, title, or interest whatsoever in or to any investments that the Company or any of its Subsidiaries or Affiliates may make to aid it in meeting its obligations under the Plan.  Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other Person.  To the extent that any Person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company.  All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts.  The Plan is not subject to the U.S. Employee Retirement Income Security Act of 1974, as amended from time to time.

 

15.11      No Constraint on Corporate Action.  Nothing in the Plan shall be construed to (a) limit, impair, or otherwise affect the Company’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets, or (b) limit the right or power of the Company to take any action which such entity deems to be necessary or appropriate.

 

15.12      Successors.  All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company.

 

15.13      Governing Law.  The Plan and each Award Agreement shall be governed by the laws of the State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction.

 

15.14      Data Protection.  By participating in the Plan, the Participant consents to the collection, processing, transmission and storage by the Company in any form whatsoever, of any data of a professional or personal nature which is necessary for the purposes of introducing and administering the Plan.  The Company may share such information with any Subsidiary or Affiliate, the trustee of any employee benefit trust, its registrars, trustees, brokers, other third party administrator or any Person who obtains control of the Company or acquires the Company, undertaking or part-undertaking which employs the Participant, wherever situated.

 

15.15      Effective Date.  The Plan shall be effective as of January 12, 2012 (the “Effective Date”).

 

*              *              *

 

14ies_2012sevbenplanex10-1.htm

EXHIBIT 10.1

 

 

 

 

INTEGRATED ELECTRICAL SERVICES, INC.

EXECUTIVE OFFICER

SEVERANCE BENEFIT PLAN

 

1.   PURPOSE AND TERM.  The purpose of the Integrated Electrical Services, Inc. Executive Officer Severance Benefit Plan (“Plan”) is to provide severance benefits to certain senior executives of Integrated Electrical Services, Inc. (“Company”) and its adopting Affiliates (as defined below) in the event the executive incurs a Qualifying Termination.

 

2.    COVERED EXECUTIVES.

 

	
2.01  

	
 

 

	
   

	
      (a)   Automatic Coverage.  Subject to Section 2.02, each employee who is a Senior Vice President or above of the Company automatically shall be a Covered Executive under this Plan.

 

      (b)   Additional Coverage.  Subject to Section 2.02, any other employee of the Company or a Participating Affiliate who is an officer and is designated as covered under the Plan by the Human Resources and Compensation Committee (the “Committee”) of the Board of Directors of
the Company (the “Board”) also shall be a Covered Executive under this Plan.

 

	

2.02  

	
 

 

	
   

	
    (a)    he is covered pursuant to Section 2.01(a) above and subsequently, without a termination of employment, ceases to be a Senior Vice President or above of the Company;

 

    (b)    he is covered pursuant to Section 2.01(b) above and subsequently, without a termination of employment, ceases to be an officer of the Company or a Participating Affiliate;

 

    (c)    the Covered Executive’s employment terminates for any reason other than due to a Qualifying Termination; or

 

    (d)    the Covered Executive has or enters into an individual employment or severance agreement with the Company or an Affiliate that may provide severance benefits to him or her upon termination of employment.

 

For purposes of coverage under this Plan, a transfer of a Covered Executive’s employment to a non-Participating Affiliate shall not be deemed effective to terminate his or her coverage hereunder until thirty (30) days after written notice of such transfer has been furnished to the Covered Executive.

 

3.   QUALIFICATION FOR SEVERANCE BENEFITS.

 

	

3.01  

	
 
    Qualifying Terminations.  In the event that a Covered Executive has a Qualifying Termination, or in the event of a Covered Executive’s termination of employment due to his or her death or Disability, then, subject to Section 3.02, the Company or Participating Affiliate, whichever is the employer, shall provide to, or on behalf of, such terminated Covered Executive the severance benefits set forth in Section 4.01, 4.02 or 4.04 of this Plan, as applicable.

 

	

3.02  

	
 
    Release and Waiver.  Notwithstanding any other provisions of this Plan to the contrary, unless waived by the Committee with respect to the Covered Executive, in its sole discretion, the Company or Participating Affiliate, as
the case may be, shall not provide, or have any obligation to provide, to a Covered Executive any severance payments or benefits under Section 4, other than the Accrued Rights, upon or following such Covered Executive’s Qualifying Termination or termination of employment due to his or her Disability, unless (i) within fifty (50) days from the date of such termination of employment, the Covered Executive timely executes and delivers to the Company the Release, which shall be provided to the Covered Executive by the Company not later than five (5) days following the Covered Executive’s termination, and (ii) the Covered Executive does not revoke the Release within any applicable revocation period therefor following the Covered Executive’s delivery of the executed Release to the Company.  If the requirements of this Section 3.02 are satisfied,
then, subject to Section 5 below, the severance payments and benefits to which the Covered Executive is otherwise entitled to receive under Section 4 shall begin or be made, as applicable, as provided in Section 5.  If the Release requirements of this Section 3.02 are not timely satisfied by the Covered Executive, then no severance payments or benefits, other than the Accrued Rights, shall be due the Covered Executive under this Plan.

 

4.   SEVERANCE BENEFITS.

 

	

4.01  

	
 
    Qualifying Termination prior to a Change in Control.  If a Covered Executive has a Qualifying Termination prior to a Change in Control (defined below) and satisfies the Release conditions under Section 3.02, then,
subject to Section 5, the Covered Executive shall receive the following severance benefits:

   

	
   

	
       (a)   Accrued Rights.  Without regard to Section 3.02, the Covered Executive’s Accrued Rights.

 

	
   

	
       (b)   Severance Pay.  Continued payment of the Covered Executive’s Base Pay for twelve (12) months following the date of such termination, payable monthly in accordance with the Company’s normal payroll practices as in effect on the date of termination, but not later than the last business day of each calendar month.

 

	
   

	
       (c)   Annual Bonus.  Any unpaid Annual Bonus that has been “earned” for the immediately preceding fiscal year plus an Annual Bonus for the current fiscal year, pro rated based on the percentage of the current fiscal year that shall have elapsed through the date of termination.  The amount of any such Annual Bonus(es) shall be as determined by the Committee, including its determination of the extent the performance objectives, if any, for such fiscal year have been achieved.  Such Annual Bonus(es) shall be payable (i) at the same time(s) that the annual
bonus(es) for such respective fiscal year(s) are paid to other similar executives of the Company (or Participating Affiliates) or (ii) on the date immediately following the date the Release provided in Section 3.02 becomes irrevocable, whichever shall later occur.

 

	
   

	
       (d)   Incentive/Equity Awards.  A prorated amount of the Covered Executive’s then outstanding unvested cash incentive  awards  and equity-based awards, other than an Annual Bonus or Performance Award (defined below), shall vest and payment made thereon, if applicable, on the date immediately following the date the Release provided in Section 3.02 becomes irrevocable.  Prior to such date, any unvested award(s) shall not be forfeited due to the
Covered Executive’s termination of employment, notwithstanding anything in the applicable grant agreement(s) to the contrary.  The applicable prorated vested percentage for such an award(s) shall be the percentage of the full vesting period for such award(s) in which the Covered Executive was actively employed by the Company (or Participating Affiliate).  Payment of such prorated vested awards, if any, shall be made on the date immediately following the date the Release provided in Section 3.02 becomes irrevocable.

 

          A prorated portion of each of the Covered Executive’s then outstanding cash incentive awards or equity-based awards, the payment of which is dependent upon the achievement of performance objectives during a performance period that has not ended as of the Covered Executive’s date of Qualifying Termination (a “Performance Award”), shall vest at the end of the performance period applicable to such award, but only if and to the extent the performance objectives for such performance period have been achieved, as determined by the Compensation Committee (the
“Performance Amount Achieved”), and the Release provided in Section 3.02 has become irrevocable.  The applicable prorated vested percentage for any such Performance Award shall be the product of the percentage of the full performance period for such Performance Award in which the Covered Executive was actively employed by the Company (or Participating Affiliate) and the Performance Amount Achieved, if any.  Payment(s) of such Performance Award(s) that become vested, if any, shall be made (i) at the same time(s) the performance award(s) for such performance period(s) are paid to other similar executives of the Company (or Participating Affiliates) or (ii) on the date immediately following the date the Release provided in Section 3.02 becomes irrevocable, whichever shall later occur.

 

     (e) COBRA.  An amount, paid on the first business day of each month, equal to 100% of the applicable monthly COBRA premium under the Company’s (or Participating Affiliate’s) group health plan for the coverage elected by the Covered Executive and his or her eligible dependents, continued for the lesser of (i) twelve (12) months or (ii) until such COBRA coverage for the Covered Executive (and his or her dependents) terminates.

 

     (f) Outplacement. The Covered Executive shall be entitled to receive outplacement services from a service provider selected or approved by the Company for twelve (12) months following his or her Qualifying Termination, in an amount not to exceed $20,000.

 

 

	

4.02  

	
 
    Qualifying Termination on or within twelve (12) months following a Change in Control.  If a Covered Executive has a Qualifying Termination on or within twelve (12)
months following a Change in Control (defined below) and satisfies the Release conditions under Section 3.02, then, subject to Section 5, the Covered Executive shall receive the following severance benefits:

 

	
   

	
     (a)   Accrued Rights.  The Covered Executive’s Accrued
Rights. 
 

     (b) Severance Pay.  In a lump sum, an amount equal to two (2) times the Covered Executive’s annual base pay, payable on the date immediately following the date the Release provided in Section 3.02 becomes.

 

     (c) Annual Bonus.  In a lump sum, an amount equal to two (2) times the greater of the most recent (i) Annual Bonus paid to the Covered Executive or (ii) Annual Bonus Opportunity of the Covered Executive, payable on the date immediately following the date the Release provided in
Section 3.02 becomes irrevocable.

 

     (d) Awards.  All of the Covered Executive’s then outstanding unvested incentive, performance and equity-based awards (including, but not limited to, any unvested options, restricted stock, performance and phantom share units and stock appreciation
rights then outstanding under the LTIP or any other equity plan subsequently adopted by the Company) shall vest in full and payment made thereon, if applicable, on the date immediately following the date the Release provided in Section 3.02 becomes irrevocable.

 

     (e) COBRA.  An amount, paid on the first business day of each month, equal to 100% of the applicable monthly COBRA premium under the Company’s (or Participating Affiliate’s) group health plan for the coverage elected by the Covered Executive and his or her eligible
dependents, continued for the lesser of (i) twelve (12) months or (ii) until such COBRA coverage for the Covered Executive (and his or her dependents) terminates.

 

     (f) Outplacement. The Covered Executive shall be entitled to receive outplacement services from a service provider selected or approved by the Company for twelve (12) months following his or her Qualifying Termination, in an amount not to exceed
$20,000.

 

	

4.03  

	
 
    Change in Control.  For purposes of the Plan, a Change in Control shall mean any of the following:

   

	
   

	
       (a)    Any person or any persons acting together which would constitute a “group” for purposes of
Section 13(d) of the Exchange Act, other than Tontine Capital Partners L.P. and its affiliates, the Company or any subsidiary, shall “beneficially own” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended from time to time), directly or indirectly, more than fifty percent (50%) of the ordinary voting power of all classes of capital stock of the Company entitled to vote generally in the election of the Board; or

 

	
   

	
       (b)    Current Directors (as defined below) shall cease for any reason to constitute at least a majority of the members
of the Board (for these purposes, a “Current Director” means, as of the date of determination, any person who (1) was a member of the Board on the date that the Company’s Joint Plan of Reorganization under Chapter 11 of the United States Bankruptcy Code became effective or (2) was nominated for election or elected to the Board with the affirmative vote  of  a  majority  of  the  current  directors who were members of the Board at the time of such nomination or election), or at any meeting of the stockholders of the Company called for the purpose of electing directors, a majority of the persons nominated by the Board for election as directors shall fail to be elected;
or

 

	
   

	
       (c)    The consummation of a sale, lease, exchange or other disposition (in one transaction or a series of
transactions) of all or substantially all of the assets of the Company; provided, however, a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.

 

  Notwithstanding the above definition, with respect to any payment or acceleration hereunder that is subject to Section 409A of the Code, Change in Control shall mean a “change in control event” within the meaning of Section 409A and the Treasury Regulations thereunder.

 

	

4.04  

	
 
    Death or Disability.  If a Covered Executive’s employment terminates by reason of death or Disability, the Covered Executive or his or her estate (as the case may be) shall be entitled to receive the
following:

 

	
   

	
       (a)   Accrued Rights.  Without regard to
Section 3.02, the Covered Executive’s Accrued Rights.

 

	
   

	
       (b)   Annual Bonus.  Any unpaid Annual Bonus that
has been “earned” for the immediately preceding fiscal year plus an Annual Bonus for the current fiscal year, pro rated based on the percentage of the current fiscal year that shall have elapsed through the date of termination.  The amount of any such Annual Bonus(es) shall be as determined by the Compensation Committee, including its determination of the extent the performance objectives, if any, for such fiscal year have been achieved.  Such Annual Bonus(es) shall be payable (i) at the same time(s) that the annual bonus(es) for such respective fiscal year(s) are paid to other similar executives of the Company (or Participating Affiliates) or (ii) on the date immediately following the date the Release provided in Section 3.02 becomes irrevocable, whichever shall later occur.

 

	
   

	
       (c)   Awards.  All of the Covered
Executive’s then outstanding unvested incentive, performance and equity-based awards (including, but not limited to, any unvested options, restricted stock, performance and phantom share units and stock appreciation rights then outstanding under the LTIP or any other equity plan subsequently adopted by the Company) shall vest in full and payment made thereon, if applicable, on the date immediately following the date the Release provided in Section 3.02 becomes irrevocable.  Prior to such date, any unvested award(s) shall not be forfeited due to the Covered Executive’s termination of employment, notwithstanding anything in the applicable grant agreement(s) to the contrary; provided, however, any stock options or stock appreciation rights shall continue to be exercisable for the lesser of (i) twelve (12) months following the Covered Executive’s termination or
(ii) the term of such awards.

 

	
   

	
       (d)   COBRA.  An amount, paid on the
first business day of each month, equal to 100% of the applicable monthly COBRA premium under the Company’s (or Participating Affiliate’s) group health plan for the coverage elected by the Covered Executive and his or her eligible dependents, continued for the lesser of (i) twelve (12) months or (ii) until such COBRA coverage for the Covered Executive (and his or her dependents) terminates.

 

	
   

	
       (e)    Any question as to the existence of the Disability of the Covered Executive as to which the Covered Executive and
the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Covered Executive and the Company.  If the Covered Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing.  The determination of Disability made in writing to the Company and the Covered Executive shall be final and conclusive for all purposes of the Agreement.

 

	
   

	
       (f)    If a Covered Executive dies after his or her Qualifying Termination and prior to the payment of all
severance payments and benefits due under this Plan (the Covered Executive shall be deemed to have complied with Section 3.02 if his or her death occurs prior to the end of the period for executing the Release), the remaining payments shall be paid to his or her estate and the COBRA benefits shall continue as provided above.

 

 

	

4.05  

	
 
    Parachute Tax Cut-Back.  Notwithstanding anything in this Plan to the contrary, if the Covered Executive is a “disqualified individual” (as defined in Section 280G(c) of the Code), and the payments and
benefits to be provided to Covered Executive under this Plan, together with any other payments and benefits to which the Covered Executive has the right to receive from the Company or any other person, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the payments and benefits to be provided under this Plan either (a) shall be reduced (but not below zero) so that the present value of such total amounts and benefits received by the Covered Executive under the Plan will be $1.00 less than three times the Covered Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code), so that no portion of the amounts to be received will be subject to the excise tax imposed by Section 4999 of the Code or (b) shall be paid in full, whichever result produces the better “net after-tax” benefit to the Covered
Executive (taking into account all applicable taxes, including excise tax under Section 4999 of the Code).  The reduction of payments and benefits hereunder, if applicable, shall be made by reducing, first, payments to be paid in cash hereunder (beginning with such payment that would be made last in time and continuing, to the extent necessary, through to such payment that would be made first in time) and, then, reducing any benefits to be provided hereunder in-kind in a similar order.  The determination as to whether any such reduction in the amount of the payments and benefits provided hereunder is necessary shall be made by the Company in good faith.

 

5.   TIME OF PAYMENT/SECTION 409A COMPLIANCE.

 

	

5.01  

	
 
    Payment.  Subject to Section 5.02, the payments due, if any, pursuant to Sections 4.01 and 4.02 hereof shall be made as provided therein.

   

	

5.02  

	
 
    409A Compliance.

 

	
   

	
       (a)   Required Delay.  Notwithstanding
anything in the Plan to the contrary concerning the time of payment of any severance benefit, if the Covered Executive is a “specified employee,” as defined in Treas. Reg. § 1.409A-1(i), as of his or her Qualifying Termination, then to the extent an amount payable under the Plan to such Covered Executive upon or as a result of his or her “separation from service” would be subject to the additional tax provided by Section 409A of the Code, such amount shall not be paid to the Covered Executive until the date that is six (6) months after the date of his or her Qualifying Termination (or, if earlier, his or her date of death).  Such delayed payment shall be made in a lump sum on such delayed payment date and shall bear interest at the rate of 6% per annum from the date payment was otherwise to be made under Section 4 and the date the
delayed amount is actually paid.  Severance payments and benefits that are not subject to such Section 409A additional tax shall not be subject to this delay.

 

	
   

	
       (b)   Separate Payments.  To the extent
permitted under Section 409A and the applicable Treasury Regulations thereunder, each payment to a Covered Executive under the Plan shall be treated as a “separate payment.”

 

	
   

	
       (c)   Reimbursements.  Any severance
payment or benefit under this Plan to which Code Section 409A applies that constitutes a reimbursement or the in-kind benefit shall be subject to the following:  (i) the amount of expenses eligible for reimbursement or in-kind benefits provided during the Covered Executive’s taxable year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year (this requirement shall not apply to an arrangement that provides for the reimbursement of expenses referred to in Code Section 105(b)); (ii) the reimbursement of an eligible expense shall be made on or before the last day of the Covered Executive’s taxable year following the taxable year in which the expense was incurred; and (iii) the right to reimbursement or to receive an in-kind benefit shall not be subject to liquidation or exchange by the
Covered Executive for other payment or benefit.

 

	
   

	
       (d)   Timing of Certain
Payments.  Notwithstanding anything in the Plan to the contrary (i) if it is determined that the payment under Section 4.02 (b) is a “substitution” payment under Code Section 409A, such payment will be made in the same form and at the same time as the “substituted payment” would have been made and (ii) with respect to any payment that is conditioned on the Release becoming irrevocable, in the event the potential period for the Release’s irrevocable date straddles two calendar years, the earliest date on which such payment will be made is January 1st of the year following the Covered Executive’s termination.

 

	
   

	
       (e)   409A Compliance.  The Plan shall
be construed to comply with Section 409A of the Code, to the extent applicable, and, in this regard, a "termination of employment" shall mean, and must be, a "separation from service" for purposes of Section 409A of the Code.

 

6.  ADMINISTRATION.

 

	
   

	
The Company shall be responsible for the administration of this Plan and shall serve as the Plan’s administrator.  The Company may appoint or employ such persons as it deems necessary to render advice with respect to any responsibility of the Company under this Plan.  The Company shall have the discretionary authority to decide all questions concerning the eligibility of any person to participate
in this Plan, the right to and amount of any benefit payable under this Plan to any individual and the date on which any individual ceases to be a Plan participant.  The Company may allocate to any one or more of its employees any responsibility it may have under this Plan.  Any such person who receives full-time pay from the Company or an Affiliate shall receive no compensation from this Plan for his or her services in such capacity (other than expense reimbursements).  Any such person shall not have any fiduciary responsibilities under this Plan.  As Plan administrator, the Company shall maintain records of the Plan’s administration and shall be responsible for the handling, processing and payment of claims for benefits under this Plan.

 

7.  CLAIMS PROCEDURE.

 

	

7.01  

	
 
    Notification of Benefit Determination and Initiation of Claims.

 

	
   

	
       (a)   The Company shall notify each Covered Executive who the Company determines is entitled to benefits under this
Plan of his or her entitlement to receive such benefits and shall provide any forms required in connection with the application for such benefits.

 

	
   

	
       (b)   If any such Covered Executive disagrees with the determination of his or her benefits, he or she may submit a
written statement describing the basis of his or her claim for benefits, together with any forms required in connection with the application for such benefits.

 

	
   

	
       (c)   Any Covered Executive who is not so notified but believes that he or she is entitled to benefits under this
Plan may submit a written statement describing the basis of his or her claim for benefits and requesting any forms required in connection with the application for such benefits.

 

	
   

	
       (d)   Each Covered Executive claiming a benefit under this Plan must complete and file with the Company any
required application forms.

  

     7.02   Claim Denial.  If the claim of a Covered Executive is wholly or partially denied after he or she has completed the required documents as described above, he or she shall be notified by registered mail within ninety (90) days after the written claims statement is submitted, or within ninety (90) days after any required application forms are filed, if later (except that in special circumstances the Company may take an additional ninety (90) days to consider its decision, in which case the Covered Executive will be notified of the extension).  Such notification shall set forth:

 

        (a)   the specific reasons for the
denial (including reference to any pertinent Plan provisions on which the denial is based);

 

        (b)   if applicable, a description of
any additional material or information necessary for the claimant to perfect the claim, and an explanation of why such material or information is necessary; and,

 

       (c)   the claims review procedure and the time limits applicable to such procedures, including a statement of the right to institute an arbitration proceeding under Section 12.07.

 

     7.03 Review of Claim Denials.

 

        (a)   The Company will review such
claim denials.  Any Covered Executive who has filed a claim for benefits may make a written request to the Company, within sixty (60) days after denial of his or her claim, for a review of such claim.  Any such request may include a statement by the Covered Executive of any relevant issues and comments and may include a request for an opportunity to review this Plan and any other pertinent documents (which will be made available to him or her within thirty (30) days after such request is received at a convenient location during business hours).

 

            (b)   The Covered Executive claiming benefits shall be notified of the final decision of the Company within sixty (60) days after his or her request for a review is received.  However, if the Company finds it necessary due to special circumstances (such as, for
example, the need to hold a hearing), to extend this period and so notifies the claimant in writing, the decision shall be rendered as soon as practicable, but in no event later than one hundred and twenty (120) days after the claimant’s request for review.  The decision shall be in writing and shall set forth the specific reasons for the denial (including reference to any pertinent Plan provisions on which the denial is based).  Such decision shall be final and conclusive on all persons claiming benefits under this Plan, subject to applicable law.

8.   FUNDING.

 

This Plan shall not be funded through a trust, an insurance contact or otherwise and all benefit payments due under this Plan shall be payable solely from the general assets of the Company.  A Covered Executive shall not have any claim against any specific assets of the Company and shall be only an unsecured general creditor of the Company with respect to any rights he or she may have under this Plan.

 

9.   AMENDMENT AND TERMINATION.

 

This Plan may be amended or terminated, in whole or in part, at any time by a written instrument signed by the President of the Company and approved by the Committee; provided, however, a copy of such action must be furnished to each Covered Executive at least thirty (30) days prior to its effective date or such action shall be deemed null and void for all purposes as to such Covered Executive.

 

10.   ADOPTION AND WITHDRAWAL BY AFFILIATES.

 

     10.01     Adoption by Affiliates.  Subject to the prior approval of the Committee, an Affiliate of the Company may adopt this Plan pursuant to appropriate written resolutions of its board of directors and by executing and delivering to the Company an adoption agreement in which the adopting Affiliate agrees to be bound by all of the terms of this Plan with respect to its Covered Executives (each a “Participating Affiliate”).  The adoption agreement shall become, as to such adopting Affiliate and its employees, a part of this Plan as then amended or thereafter amended.  It shall not be necessary for the adopting Affiliate to sign or execute the original or amended Plan document.  The effective date of this Plan for any such adopting
Affiliate shall be that stated in the adoption agreement, and from and after such effective date, the adopting Affiliate shall assume all the rights, obligations, and liabilities under this Plan. The administrative powers and control of the Company, as provided in this Plan, including the sole right to amend, shall not be diminished by reason of participation of any such Affiliate in this Plan.

 

     10.02     Special Provisions by Affiliates.  With the approval of the Company, an adopting Affiliate may elect to have special provisions apply with respect to its Covered Executives.  Such special provisions, which may differ from the provisions of this Plan which are applicable to employees of other Affiliates, shall be stated in this Plan text or in an Appendix to this Plan.

 

     10.03     Withdrawal.  Any Affiliate of the Company participating in this Plan may withdraw from this Plan at any time without affecting other Affiliates of the Company by complying with the provisions of this Plan.  The Committee may, in its absolute discretion, terminate an adopting Affiliate’s participation at any time.

 

11.   MISCELLANEOUS.

 

    11.01     Other Benefits.  The payment of
severance benefits under this Plan shall not be taken into account to increase any benefits provided (or continued coverage) under any other plan or policy of the Company or any Affiliate, except as otherwise specifically provided in such other plan or policy.

 

  11.02      No Assignments.  No benefit payable under this Plan may be assigned, transferred, pledged as a security for indebtedness or otherwise encumbered, or subjected to any legal process for the payment of any claim against a Covered Executive.

 

  11.03     At-Will
Employment.  This Plan does not create a contract of employment or give any Covered Executive the right to continued employment or change the at-will nature of any employee’s employment with the Company or an Affiliate.

 

11.04      Savings Clause.  If any provision of this Plan should
be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision of this Plan, and this Plan shall be construed and enforced as if such provisions had not been included.

 

11.05   Construction.

 

(a) Whenever appropriate in this Plan, words used in the singular may be read in the plural; words used in the plural may be read in
the  singular;  and  words  importing

 

the masculine gender shall be deemed equally to refer to the feminine or be neutral.  Any reference to a Section shall refer to a Section of this Plan, unless otherwise indicated.

 

(b) The headings of sections are included solely for convenience of reference, and if there be any conflict between such headings and the text of this Plan, the text shall control.

 

11.06    Choice of Law.  Except to the extent preempted by federal law, this Plan shall be construed, administered and enforced according to the laws of the state of Texas without regard to conflict of laws principles.

 

11.07    Arbitration of Disputes.  Any controversy, dispute or claim arising out of or relating, in any way, to this Plan or a purported breach of the Plan shall be settled through arbitration proceedings conducted in Houston, Texas in accordance with the Commercial Arbitration Rules of the American Arbitration Association.  The matter shall be heard and decided, and awards rendered by, a panel of three arbitrators.  An Employer and the Covered Executive shall each select one arbitrator and the American Arbitration Association shall select the third arbitrator, each of whom shall be on the American Arbitration Association’s national panel of commercial arbitrators.  The award rendered by this arbitration panel shall be final and binding as between the parties hereto and their heirs, executors, administrators, successors and assigns,
and judgment on the award may be entered by any court having jurisdiction.  The Covered Executive’s Employer shall pay all arbitration fees, unless the panel makes a factual finding or conclusion that the Covered Executive’s claim in the matter was frivolous.  Likewise, the Covered Executive’s Employer shall pay his or her legal fees in all disputes, other than those deemed frivolous.  The Covered Executive shall be responsible for all of his or her fees and costs along with 50% of all arbitration fees in any matter the arbitrators find frivolous.

 

11.08    Successors.  The Company shall require any successor or any entity acquiring substantially all of the assets of the Company to assume the Plan in writing and agree to honor all terms of this Plan.

 

11.09    Required Clawbacks.  Notwithstanding anything in this Plan to the contrary, in the event that the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Act”) requires a Covered Executive to repay the Company, or for the Company to recoup from the Covered Executive, any “erroneously awarded” amounts of incentive compensation, then the Company may recoup any such “erroneously awarded” incentive compensation that it has made to the Covered Executive by reducing any severance pay or benefit otherwise due the Covered Executive under this Plan.

 

11.10     No Mitigation.  A Covered Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Plan by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in Plan be reduced by any compensation or benefit earned by the Covered Executive as the result of employment by another employer.  Subject to the foregoing, the benefits under the Plan are in addition to any other benefits to which a Covered Executive is
otherwise entitled.

 

11.11    Survival.  All obligations of the Company and a Participating Affiliate under the Plan with respect to a Qualifying Termination occurring before the termination or any amendment of the Plan shall continue and survive such Plan termination or amendment.

 

12. ADMINISTRATIVE INFORMATION.

 

12.01    Plan Year.  Each plan year begins on January 1 and ends on December 31 of the same year.  Records concerning this Plan are to be kept on a plan year basis.

 

12.02    Legal Notices.  The person designated to receive any legal notices concerning this Plan is:

 

        Integrated Electrical Services, Inc.

        c/o Chairman, Human Resources and Compensation

        Committee of the Board of Directors

       4801 Woodway Drive, Suite 200-E

       Houston, TX  77056

 

 

13.    DEFINITIONS.  For purposes of this Plan, the following terms are defined as follows:

 

(a)   “Accrued Rights” means a Covered Executive’s (i)  earned, but unpaid, annual base salary up to the date of his or her Qualifying Termination, (ii) any accrued, but untaken, vacation time or paid-time off, and (iii) the reimbursement, within sixty (60)
days following submission to the Company or Participating Affiliate of appropriate supporting documentation, for any unreimbursed reasonable business expenses properly incurred by the Covered Executive in the performance of his or her duties in accordance with the Company’s or Participating Affiliate’s expense policy prior to the Covered Executive’s Qualifying Termination, provided claims for such reimbursement (accompanied by appropriate supporting documentation) are submitted to the Company or Participating Affiliate within ninety (90) days following the date such expenses were incurred and within thirty (30) days following the Covered Executive’s Qualifying Termination, and (iv) such employee benefits, if any, as to which the Covered Executive may be entitled under the terms of the employee benefit plans of the Company or Participating
Affiliate.

 

(b)   “Affiliate” means, with respect to any person or entity, any person or entity, directly or indirectly, controlled by, controlling or under common control with such person or entity.

 

(c)   “Annual Bonus” means incentive compensation payable to a Covered Executive dependent upon the achievement of performance objectives established by the Compensation Committee for each fiscal year during such Covered Executive’s employment with the Company or
Participating Affiliate.

 

(d)   “Annual Bonus Opportunity” means the target annual bonus opportunity for each fiscal year ending during a Covered Executive’s employment with the Company or Participating Affiliate as set by the Compensation Committee, in its sole
discretion.

 

(e)   “Base Pay” means a Covered Executive’s annual rate of base salary at his or her Qualifying Termination or, if greater, his or her annual base pay for the fiscal year preceding his or her Qualifying Termination.

 

(f)   “Cause” means (i) the Covered Executive’s gross negligence in the performance or intentional nonperformance of any of the Covered Executive’s material duties and responsibilities to the Company or a Participating Affiliate; (ii) the Covered
Executive’s dishonesty, theft, embezzlement or fraud with respect to the business, property, reputation or affairs of the Company or a Participating Affiliate; (iii) the Covered Executive’s conviction of, or a plea of other than not guilty to, a felony or a misdemeanor involving moral turpitude; (iv) the Covered Executive’s confirmed drug or alcohol abuse that materially affects the Covered Executive’s service or violates the Company’s or a Participating Affiliate’s drug or alcohol abuse policy; (v) the Covered Executive’s violation of a material Company or a Participating Affiliate’s personnel or similar policy, such policy having been made available to the Covered Executive by the Company or a Participating Affiliate; or (vi) the Covered Executive’s having committed any material violation of any federal or state
law regulating securities (without having relied on the advice of the Company’s attorney) or having been the subject of any final order, judicial or administrative, obtained or issued by the Securities and Exchange Commission, for any securities violation involving fraud, including, without limitation, any such order consented to by the Covered Executive in which findings of facts or any legal conclusions establishing liability are neither admitted nor denied.

 

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

 

(h)   “Disability” means a physical or mental condition that renders the Covered Executive incapacitated and unable for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period to substantially perform (with
such accommodation, if any, required by applicable law) the Covered Executive’s duties.

 

(i)   “Qualifying Termination” means any termination of the Covered Executive’s employment with the Company or an Affiliate (if applicable) either:

 

(i) by the Company or the Affiliate other than for Cause; or

 

(ii) by the Covered Executive due to, and within thirty (30) days following, the occurrence of:

                     

                      (1) a material reduction in his or her duties or responsibilities;

 

                      (2) a material reduction in the Covered Executive’s annual rate of base cash compensation;

 

                      (3) a change in the location of a Covered Executive’s principal place of employment by more than fifty (50) miles from Houston, Texas;

 

                  (4) the receipt of a written notice of termination of this Plan or of any amendment to the Plan that would adversely reduce the Covered Executive’s potential severance payments or benefits or his or her coverage under the Plan; or 

 

                      (5) a demotion or transfer of the Covered Executive’s employment that results or would result in him or her no longer being a Covered Executive under this Plan.

 

(j)   “Release” means a general release and waiver, prepared or approved by the Company, in which the Covered Executive releases the Company, its Affiliates and their respective directors, officers, employees and agents from any and all employment-related claims and cause of
actions of the Covered Executive.

 

IN WITNESS WHEREOF, the Company has adopted this Plan effective as of January 23, 2012.

 

                                  INTEGRATED ELECTRICAL SERVICES, INC.

 

                                  By:     ___________________________________

 

                                  Title:   ___________________________________

 

--

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