Document:

EXHIBIT 10.8

 

 

ANNUAL INCENTIVE PLAN (AIP)

2015 Plan Year

Guidelines

KIRBY CORPORATION

January 2015

 

TABLE OF CONTENTS

	
Introduction

	
2

	 	 
	
The Annual Incentive Plan

	
3

	 	 
	
Plan Objectives

	
3

	 	 
	
Performance Period

	
3

	 	 
	
Eligibility

	
3

	 	 
	
Individual Bonus Targets

	
4

	 	 
	
Aggregate Payment Amount

	
4

	 	 
	
Section 162(m) Performance Goal and Maximum Awards

	
4

	 	 
	
Performance Measures

	
5

	 	 
	
Business Group Designations and Weightings

	
5

	 	 
	
Performance Standards for Interim Incentive Payment Calculations

	
6

	 	 
	
Administration

	
8

 

1

Introduction

Kirby Corporation (together with its subsidiaries, “Kirby” or the “Company”) established the 2015 Annual Incentive Plan (the “Plan”) to focus employees on identifying and achieving business strategies that lead to increased stockholder value. The Plan is also intended to reward superior performance by employees and their contribution to achieving Kirby’s objectives. This program may be offered, in whole or in part, to wholly owned subsidiaries of the Company, at the Company’s discretion.

Certain aspects of this Plan are complex. Although these guidelines establish rules for Plan operation, those rules may not work in all circumstances. Therefore, the Compensation Committee of the Kirby Board of Directors has discretion to interpret these guidelines to assure the awards are consistent with the Plan’s purposes and the Company’s interests. All decisions by the Compensation Committee shall be final and binding.

Unless resolutions of the Compensation Committee expressly provide otherwise, awards granted under the Plan shall constitute performance awards granted under Article IV of the Kirby Corporation 2005 Stock and Incentive Plan (as amended from time to time, the “Stock Plan”) and are subject to the terms and provisions of the Stock Plan that apply to such performance awards.

This Plan or any part thereof may be amended, modified, or terminated at any time without prior notice, by written authorization of (i) the Compensation Committee or (ii) the Chief Executive Officer of the Company; provided that the Plan may not be amended or modified in a manner that would cause an award that is intended to satisfy the performance-based compensation exception under Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”) to fail to satisfy the exception.

 

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The Annual Incentive Plan

Each award granted under the Plan is an award for total Company and designated Business Group performance. Awards are generally based on achieving the Company Performance Goal as well as additional Company, Business Group and individual performance measures and objectives. Once the Performance Goal is reached participants in the Plan become eligible for a bonus.

Plan Objectives

The Plan key objectives are:

		·	Provide an annual incentive plan that drives performance toward objectives critical to creating stockholder value.

		·	Offer competitive cash compensation opportunities to key Kirby employees.

		·	Award outstanding achievement by employees who directly affect Kirby’s results.

		·	Assist Kirby in attracting and retaining high quality employees.

		·	Reflect both quantitative and qualitative performance factors in actual bonus payouts.

		·	Ensure that incentive payments made by the Company are fully deductible by the Company.

Performance Period

Performance is measured on a calendar year basis for the Plan. The Performance Period begins on January 1, 2015 and ends on December 31, 2015.

Eligibility

	·	Generally, managerial employees and Kirby Inland Marine Wheelhouse employees classified as Captain, Relief Captain or Pilot, are eligible for participation. Selection for participation in the Plan is based upon each position’s ability to impact long-term financial results of the Company and designation by management. Some employees in managerial positions might not be included in the Plan.

	·	In order to be eligible to receive an incentive payment under the Plan, participants must be employed on the last day of the Performance Period and on the date bonuses are actually paid for the Performance Period, unless their earlier termination is due to death, normal retirement1 or disability1. If a participant’s employment is terminated prior to the last day of the Performance Period, or prior to the date of payment, for any reason other than death, normal retirement1 or disability1, any bonus the participant may otherwise have received will be forfeited and the participant will have no right to any incentive payment under the Plan.

 

___________________________

1 Normal retirement or disability as defined for shore based employees in the Company’s Profit Sharing Plan, and as defined for wheelhouse employees in the Vessel Pension Plan

3

	·	Participation in the Plan in 2015 does not guarantee participation in similar plans in future years. Participants in the Plan or in similar plans in future years will be notified annually of their selection for participation.

Individual Bonus Targets

On or before March 31, 2015, each participant will be assigned a target bonus level defined as a percentage of base salary earned during the Performance Period. This bonus target is based on competitive market practices, as well as the employee’s ability to impact long-term Company performance. Market practices will be determined using data from either general industry, the marine transportation industry, or the diesel engine services industry, depending upon the individual position being considered.

Aggregate Payment Amount

An interim incentive payment amount will be determined as of December 31, 2015 for each participant in the Plan based on the target incentive level for such participant and the calculation formulas described in the Plan under the headings Performance Measures, Business Group Designations and Weightings, and Performance Standards for Interim Incentive Payment Calculations. The Aggregate Payment Amount shall equal the sum of all of such interim incentive payment amounts.

The Company will be obligated to pay out the full Aggregate Payment Amount to eligible participants, subject to the discretion of the Compensation Committee, with respect to the allocation of the Aggregate Payment Amount among individual participants. Therefore, the Company’s obligation to pay out the Aggregate Payment Amount becomes fixed on the last day of the Performance Period.

The Compensation Committee may determine the amount of the bonus paid to any participant based on the performance measures described in the Plan or any other criteria deemed appropriate in its discretion, provided that in no event will the aggregate incentive payments made pursuant to the Plan exceed the Aggregate Payment Amount.

Section 162(m) Performance Goal and Maximum Awards

The performance goal (the “Performance Goal”) that must be attained in order for any Plan participant to receive a bonus under the Plan is the achievement by the Company of net earnings attributable to Kirby for 2015 (as shown in Kirby’s audited Consolidated Statements of Earnings for 2015) greater than $1,000,000. If the Company achieves the Performance Goal, the maximum bonus that any participant may receive under the Plan will be equal to 200% of the individual bonus target established for such participant (for each participant, the “Maximum Award”). The Compensation Committee in its discretion may reduce the bonus paid to any participant to an amount less than the Maximum Award.

 

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Performance Measures

In addition to the Performance Goal, performance measures used under the Plan are:

		·	EBITDA

		·	Return on Total Capital

		·	Earnings per share

Annual performance targets will be established for each measure based on Kirby’s projected budget and each of the performance measures will have equal weight in calculating the interim incentive payment amount for each participant.

	
Measure

	 	
Weight

	 
	
EBITDA

 

(Earnings before Interest, Taxes, Depreciation and Amortization)

	 	 	
33.33

	
%

	
Return on Total Capital

 

(Earnings before interest and taxes divided by average beginning and ending stockholders' equity plus long-term debt)

	 	 	
33.33

	
%

	
Earnings per Share

	 	 	
33.33

	
%

	 	 	 	
100

	
%

Business Group Designations and Weightings

The following business groups are designated for purposes of the Plan:

		·	Kirby Inland Marine

		·	Kirby Engine Systems

		·	United Holdings

		·	Kirby Offshore Marine

Note: Kirby Ocean Transport Company and Osprey Line, LLC are considered part of the Kirby Inland Marine business group for purposes of the Plan.

 

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In calculating actual versus target performance against the performance measures, the recommended award for Business Group employees will be primarily based on Business Group performance with a defined portion based on Company performance. The award for Corporate employees will be based on total Kirby performance. Specific weightings are defined in the following table:

	
Calculation of Incentive Payments

	 
	 	 		 	 		 
	 	 	
Incentive Bonus Calculation

	 
	 	 	
Kirby (Company)

	 	 	
Business Group

	 
	
Eligible Corporate Employees

	 	 	
100

	
%

	 	 	
0

	
%

	
Business Group Presidents

(KIM, KOM, KES, United Holdings. KMTG President 50% company, 35% KIM 15%KOM)

	 	 	
50

	
%

	 	 	
50

	
%

	
Officers with responsibilities for both KIM and KOM (30% corporate, 50% KIM, 20% KOM)

	 	 	
30

	
%

	 	 	
70

	
%

	
Other Business Group Employees

	 	 	
30

	
%

	 	 	
70

	
%

	 	 	 	 	 	 	 	 	 

Performance Standards for Incentive Payment Calculations

	
Performance Level

	
Definition

	
Relationship to Budget*

	
% of Target Used for Calculation

	
Below Threshold

	
Performance did not meet minimum metric

	
less than 80% of Budget

	
0%

	
Threshold

	
Minimal acceptable performance for payout

	
80% of Budget

	
50%

	
Target

	
Expected performance at stretch level

	
100% of Budget

	
100%

	
Maximum

	
Outstanding performance

	
120% of Budget

	
200%

*budget and target are measured on an incremental basis (example: 90% of budget results in 75% of target used for calculation)

		·	As shown in the tables, actual performance against each performance measure results in a corresponding percentage of target amount.

		·	The target amount determined for each performance measure is then multiplied by the weight for the performance measure (33.33%) and the results are added together to produce a total corporate or business payout percentage of the target incentive that is applied to each individual participant.

		·	The Compensation Committee shall in its discretion allocate the Aggregate Payment Amount among eligible participants. In allocating the Aggregate Payment Amount, the Compensation Committee may consider, but shall not be bound by, the interim incentive payment calculation for each participant.

 

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		·	The Compensation Committee has discretion to modify the performance measures or adjust the calculation of the interim incentive amounts to adjust for acquisitions, divestures, and other material business events.

		·	Notwithstanding the foregoing or any provision of the Plan to the contrary, no participant who is a covered employee as defined in the Section 162(m) of the Internal Revenue Code of 1986, as amended (a "Covered Employee”), may receive an amount in excess of the participant’s Maximum Award and the aggregate amount of incentive payments made to participants in the Plan must equal the Aggregate Payment Amount.

 

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Administration

Award Payout

A participant’s final bonus payment is paid out in cash within 90 days following the end of the Company’s fiscal year, based on audited financial statements of the Company. No payment shall be made to a participant who is a Covered Employee until the Compensation Committee certifies that the Performance Goal and other material terms of the Plan resulting in such payment have been achieved.

Eligibility Limitation

Participants must be employed by the Company on the last day of the Performance Period and on the date bonuses are actually paid in order to receive a bonus, unless otherwise provided for in the Plan.

Special Circumstances

The Compensation Committee will have the sole authority to resolve disputes related to Plan administration. Decisions made by the Compensation Committee will be final and binding on all participants. The Compensation Committee has the sole discretion to determine the bonuses for newly hired, terminated, transferred and promoted employees, but will generally award bonuses based on the following provisions.

New Employees

New employees hired after the beginning of a Performance Period who are selected for participation in the Plan, will receive prorated bonuses for the current Performance Period, subject to the Termination of Employment restrictions.

Termination of Employment

If employment terminates prior to the last day of the Performance Period or prior to the date bonuses are actually paid for the Performance Period, for any reason other then death, normal retirement2, or disability2, the participant will be ineligible to receive a bonus.

If employment terminates before the end of the full Performance Period or before the date bonuses are actually paid for the Performance Period as a result of death, normal retirement2, or disability2, the participant (or the participant’s heirs) will be entitled to receive a prorated bonus at the end of the Performance Period based upon actual performance and base wages earned while employed during the Performance Period.

Transfer

A participant who is transferred between business units of the Company will be eligible to receive a weighted bonus based upon the time spent at each of the units3.

Promotions

A participant who is promoted or reassigned during any Performance Period and whose bonus target is subsequently increased or decreased will be eligible to receive a weighted bonus, based on the service before and after the promotion or reassignment.

 

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Compensation Committee

The Compensation Committee has the responsibility for governance and administration of the Plan. In fulfilling its duties the Compensation Committee will be responsible for interpreting the Plan and will rely on these guidelines in making all determinations necessary.

In administering the Plan the Compensation Committee will, on an annual basis:

		·	Approve the designation of Business Groups within the Company

		·	Approve the Performance Goal

		·	Approve the performance measures and the Threshold, Target and Maximum budget performance levels for all participants for purposes of calculating interim incentive payments

		·	Approve linkage for participants to Company and Business Group performance

		·	Approve the individual bonus targets for all participants whose salaries are at or above $100,000

		·	Determine at its discretion the final incentive payments for participants

		·	Approve the Aggregate Payment Amount to be paid to participants in the Plan

		·	Certify whether the Performance Goal and other material terms that result in payments under the Plan have been satisfied prior to payment of an award to a Covered Employee.

The Compensation Committee may deviate from the guidelines for the Plan, but in no event will a bonus paid pursuant to the Plan exceed the Maximum Award for any Covered Employee. The Compensation Committee may decrease the bonus to be paid to any participant below the Maximum Award based on such objective or subjective criteria as the Compensation Committee deems appropriate.

The total amount of the bonuses paid to participants pursuant to the Plan may not exceed the Aggregate Payment Amount.

The performance objectives of Covered Employees may only be adjusted as permitted under Section 162(m) or the regulations thereunder.

___________________________

2 Normal retirement or disability as defined for shore-based employees in the Company’s Profit Sharing Plan, and as defined for wheelhouse employees in the Vessel Pension Plan.

3 Company and Business Group performance factors are calculated using performance for the entire Performance Period.

 

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Chief Executive Officer (CEO)

The CEO has primary responsibility for recommending Plan guidelines to the Committee and for delegating administrative duties associated with the plan. The Compensation Committee may delegate additional administrative duties to the CEO or any Company officer. The CEO may make recommendations subject to Compensation Committee approval, with respect to the incentive payment to any participant.

Chief Financial Officer (CFO)

The CFO is responsible for calculating performance under the Plan and recommending adjustments to the performance objectives. The CFO will:

		·	Provide annual reports to the Compensation Committee and the CEO on each Business Group’s performance at the end of the fiscal year

		·	Maintain a financial information system that reports results on an estimated quarterly and annual basis

		·	Coordinate with the Company’s auditors to properly recognize any accounting expense associated with incentive payments under the Plan

		·	Provide the VP of Human Resources with the performance results of each Business Group as well as overall Company performance

		·	Calculate new Threshold, Target and Maximum performance objectives as required by the Plan

VP of Human Resources

The VP of HR has responsibility for administration of the Plan and will:

		·	Develop and recommend Target Award Guidelines and eligible participants for each Performance Period to the CEO for approval

		·	Coordinate communications with participants, including materials to facilitate understanding the Plan’s objectives and goals

		·	Calculate participants’ interim incentive amounts, using the performance factors provided by the CFO

		·	Process paperwork approving individual incentive payments

Business Group Presidents and Vice Presidents will:

		·	Recommend participants in the Plan

		·	Coordinate with the CFO to determine any significant changes in business conditions for purposes of reviewing the Threshold, Target and Maximum performance objectives

		·	Assure that participants are informed of the actual incentive payment to be made for the Performance Period

 

 

10EXHIBIT 10.9

 

KIRBY CORPORATION

2000 NONEMPLOYEE DIRECTOR STOCK PLAN

ARTICLE I

GENERAL

Section 1.1.           Purpose. The purpose of this Plan is to advance the interests of Kirby Corporation, a Nevada corporation (the “Company”), by providing an additional incentive to attract and retain qualified and competent directors, upon whose efforts and judgment the success of the Company is largely dependent, through the encouragement of stock ownership in the Company by such persons.

Section 1.2.           Definitions. As used herein, the following terms shall have the meaning indicated:

(a)           “Award” means a grant under this Plan in the form of an Option or Restricted Stock.

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

(c)           “Change in Control” means the occurrence of any of the following events:

(i)           Any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) becomes the beneficial owner, directly or indirectly, of voting securities representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding voting securities or, if a person is the beneficial owner, directly or indirectly, of voting securities representing thirty percent (30%) or more of the combined voting power of the Company’s outstanding voting securities as of the date a particular Award is granted, such person becomes the beneficial owner, directly or indirectly, of additional voting securities representing ten percent (10%) or more of the combined voting power of the Company’s then outstanding voting securities;

(ii)           During any period of twelve (12) months, individuals who at the beginning of such period constitute the Board cease for any reason to constitute a majority of the Directors unless the election, or the nomination for election by the Company’s stockholders, of each new Director was approved by a vote of at least a majority of the Directors then still in office who were Directors at the beginning of the period;

(iii)           (A) Any consolidation or merger of the Company or any Subsidiary that results in the holders of the Company’s voting securities immediately prior to the consolidation or merger having (directly or indirectly) less than a majority ownership interest in the outstanding voting securities of the surviving entity immediately after the consolidation or merger, (B) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company or (C) the liquidation or dissolution of the Company;

 

(iv)           The stockholders of the Company accept a share exchange, with the result that stockholders of the Company immediately before such share exchange do not own, immediately following such share exchange, at least a majority of the voting securities of the entity resulting from such share exchange in substantially the same proportion as their ownership of the voting securities outstanding immediately before such share exchange; or

(v)           Any tender or exchange offer is made to acquire thirty percent (30%) or more of the voting securities of the Company, other than an offer made by the Company, and shares are acquired pursuant to that offer.

For purposes of this definition, the term “voting securities” means equity securities, or securities that are convertible or exchangeable into equity securities, that have the right to vote generally in the election of Directors.

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

(e)           “Committee” means the Compensation Committee, if any, appointed by the Board.

(f)           “Compensation Plan” means the written plan or program in effect from time to time, as approved by the Board, which sets forth the compensation to be paid to Eligible Directors.

(g)           “Date of Grant” means the date on which an Option or Restricted Stock is granted to an Eligible Director.

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

(i)           “Eligible Director” means a Director who is not an employee of the Company or a Subsidiary.

(j)           “Existing Plan” means the 2000 Nonemployee Director Stock Option Plan as adopted by the Board on September 22, 2000 and as amended through April 24, 2012.

(k)           “Fair Market Value” of a Share means the closing price on the New York Stock Exchange on the day of reference. If the Shares are not listed for trading on the New York Stock Exchange, the Fair Market Value on the date of reference shall be determined by any fair and reasonable means prescribed by the Committee.

(l)           “Nonincentive Stock Option” means an option that is not an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended.

(m)           “Option” means any option granted under this Plan.

 

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(n)           “Optionee” means a person to whom a stock option is granted under this Plan or any successor to the rights of such person under this Plan by reason of the death of such person.

(o)           “Payment Date” means the last day of a calendar quarter.

(p)           “Plan” means this 2000 Nonemployee Director Stock Plan for Kirby Corporation.

(q)           “Restricted Stock” means Shares granted under this Plan that are subject to restrictions described in Article III and the Compensation Plan.

(r)           “Share” means a share of the common stock, par value ten cents ($0.10) per share, of the Company.

(s)           “Subsidiary” means any corporation (other than the Company) in any unbroken chain of corporations beginning with the Company if, at the time of the granting of the Option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

Section 1.3.           Total Shares and Limitations.

(a)           The maximum number of Shares that may be issued under this Plan shall be One Million Five Hundred Thousand (1,500,000) Shares, which may be from Shares held in the Company’s treasury or from authorized and unissued Shares. If any Award granted under the Plan shall terminate, expire or be cancelled or surrendered as to any Shares, new Options may thereafter be granted covering such Shares or such Shares may thereafter be issued as Restricted Stock. All Share numbers in the Plan reflect the 2-for-1 split of the common stock of the Company effected on May 31, 2006.

(b)           The maximum aggregate number of Shares that may be issued upon the exercise of Options granted pursuant to Section 2.3 or as Restricted Stock pursuant to Section 3.3 shall be Ten Thousand (10,000) Shares.

ARTICLE II

STOCK OPTIONS

Section 2.1.           Grant of Options. Options shall be granted to Eligible Directors as provided in Section 2.2 and may be granted in the discretion of the Committee as provided in Section 2.3. All Options shall be Nonincentive Stock Options. Each Option shall be evidenced by an option agreement containing such terms deemed necessary or desirable by the Committee that are not inconsistent with the Plan or any applicable law. Neither the Plan nor any Option shall confer upon any person any right to continue to serve as a Director.

Section 2.2.           Election to Receive Options. If the Compensation Plan permits Eligible Directors to elect to receive an Option in lieu of all or part of Director fees otherwise payable in cash, each Eligible Director who has properly and timely made such election as provided in the Compensation Plan shall be granted an Option for a number of Shares equal to (i) the amount of the fee such Eligible Director elects to receive in the form of an Option divided by (ii) the Fair Market Value of a Share on the Date of Grant multiplied by (iii) 3, with the result rounded to the nearest whole Share.

 

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Section 2.3.           Discretionary Grant of Options. The Committee may in its discretion grant Options to Eligible Directors in addition to the Options granted pursuant to Section 2.2.

Section 2.4.           Option Price. The option price per Share for any Option shall be the Fair Market Value on the Date of Grant.

Section 2.5.           Date of Grant.

(a)           The Date of Grant of an Option granted under Section 2.2 shall be the date of the next annual meeting of stockholders after the election by the Eligible Director pursuant to the Compensation Plan to receive the Option in lieu of cash fees, except that, for an Eligible Director elected between annual stockholder meetings, the Date of Grant shall be the date of his or her election as a Director.

(b)           The Date of Grant of an Option granted under Section 2.3 shall be the date on which the Committee takes formal action to grant the Option or such later date as may be specified by the Committee when granting the Option.

Section 2.6.           Vesting.

(a)           An Option granted under Section 2.2 shall become exercisable on the Payment Date(s) following the Date of Grant as provided in this Section 2.6(a). The number of Shares as to which an Option granted under Section 2.2 will become exercisable on each Payment Date after the Date of Grant shall equal the number of Shares subject to the Option divided by the number of Payment Dates occurring after the Date of Grant and before the first anniversary of the most recent annual meeting of stockholders of the Company.

(b)           An Option granted under Section 2.3 shall become exercisable six months after the Date of Grant.

(c)           Notwithstanding the other provisions of this Section 2.6, (i) an Option shall only become exercisable as provided in this Section 2.6 if the Optionee is a Director at the time the Option would otherwise become exercisable and (ii) upon the occurrence of a Change in Control, all Options outstanding at the time of the Change in Control shall become immediately exercisable.

Section 2.7.           Term of Options. The portion of an Option that is exercisable shall automatically and without notice terminate upon the earlier of (a) one (1) year after the Optionee ceases to be a Director for any reason or (b) ten (10) years after the Date of Grant of the Option. The portion of an Option that is not exercisable shall automatically and without notice terminate at the time the Optionee ceases to be a Director for any reason.

 

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Section 2.8.           Exercise of Options. Any Option may be exercised in whole or in part to the extent exercisable in accordance with Section 2.6. An Option shall be deemed exercised when (i) the Company has received written notice of such exercise in accordance with the terms of the Option and (ii) full payment of the aggregate option price of the Shares as to which the Option is exercised has been made. Unless further limited by the Committee in any Option, the option price of any Shares purchased shall be paid solely in cash, by certified or cashier’s check, by money order, by personal check or with Shares owned by the Optionee for at least six months, or by a combination of the foregoing. If the option price is paid in whole or in part with Shares, the value of the Shares surrendered shall be their Fair Market Value on the date received by the Company.

Section 2.9.           Adjustment of Shares.

(a)           If at any time while the Plan is in effect or unexercised Options are outstanding, there shall be any increase or decrease in the number of issued and outstanding Shares through the declaration of a stock dividend or through any recapitalization resulting in a stock split, combination or exchange of Shares, then and in such event:

(i)           appropriate adjustment shall be made in the maximum number of Shares then subject to being optioned under the Plan, and the numbers of Options to be granted under Sections 2.2 and 2.3, so that the same proportion of the Company’s issued and outstanding Shares shall continue to be subject to being so optioned, and

(ii)           appropriate adjustment shall be made in the number of Shares and the exercise price per Share thereof then subject to any outstanding Option, so that the same proportion of the Company’s issued and outstanding Shares shall remain subject to purchase at the same aggregate exercise price.

(b)           In the event of a merger, consolidation or other reorganization of the Company in which the Company is not the surviving entity, the Board or the Committee may provide for any or all of the following alternatives: (i) for Options to become immediately exercisable, (ii) for exercisable Options to be cancelled immediately prior to such transaction, (iii) for the assumption by the surviving entity of the Plan and the Options, with appropriate adjustments in the number and kind of shares and exercise prices or (iv) for payment in cash or stock in lieu of and in complete satisfaction of Options.

(c)           Any fractional shares resulting from any adjustment under this Section 2.9 shall be disregarded and each Option shall cover only the number of full shares resulting from such adjustment.

(d)           Except as otherwise expressly provided herein, the issuance by the Company of shares of its capital stock of any class, or securities convertible into shares of capital stock of any class, either in connection with direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of or exercise price of Shares then subject to outstanding Options granted under the Plan.

 

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(e)           Without limiting the generality of the foregoing, the existence of outstanding Options granted under the Plan shall not affect in any manner the right or power of the Company to make, authorize or consummate (i) any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business; (ii) any merger or consolidation of the Company; (iii) any issue by the Company of debt securities, or preferred or preference stock that would rank above the Shares subject to outstanding Options; (iv) the dissolution or liquidation of the Company; (v) any sale, transfer or assignment of all or any part of the assets or business of the Company; or (vi) any other corporate act or proceeding, whether of a similar character or otherwise.

Section 2.10.           Transferability of Options. Each Option shall provide that such Option shall not be transferable by the Optionee otherwise than by will or the laws of descent and distribution and that so long as an Optionee lives, only such Optionee or his guardian or legal representative shall have the right to exercise such Option.

Section 2.11.           Issuance of Shares. No person shall be, or have any of the rights or privileges of, a stockholder of the Company with respect to any of the Shares subject to any Option unless and until such Shares (whether in certificated or in book entry or other electronic form) shall have been issued and delivered to such person. As a condition of any transfer of Shares, the Committee may obtain such agreements or undertakings, if any, as it may deem necessary or advisable to assure compliance with any provision of the Plan, any agreement or any law or regulation including, but not limited to, the following:

(a)           a representation, warranty or agreement by the Optionee to the Company, at the time any Option is exercised, that the Optionee is acquiring the Shares for investment and not with a view to, or for sale in connection with, the distribution of any such Shares; and

(b)           a representation, warranty or agreement to be bound by any restrictions that are, in the opinion of the Committee, necessary or appropriate to comply with the provisions of any securities law deemed by the Committee to be applicable to the issuance of the Shares.

ARTICLE III

RESTRICTED STOCK

Section 3.1.           Grants of Restricted Stock. Restricted Stock shall be granted to Eligible Directors as provided in Sections 3.2 and 3.3 and may be granted in the discretion of the Committee as provided in Section 3.4. Each Restricted Stock grant shall be evidenced by an agreement containing such terms deemed necessary or desirable by the Committee that are not inconsistent with the Plan or any applicable law. No grant of Restricted Stock shall confer upon any person any right to continue to serve as a Director.

Section 3.2.           Automatic Annual Grants. Immediately after each annual meeting of stockholders of the Company, each Eligible Director shall automatically be granted $167,500 in value of Restricted Stock. The number of shares of Restricted Stock granted will be equal to (a) $167,500 divided by (b) the Fair Market Value on the Date of Grant multiplied by (c) 1.2, with the result then rounded to the nearest whole share.

 

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Section 3.3.           Election to Receive Restricted Stock. If the Compensation Plan permits Eligible Directors to elect to receive Restricted Stock in lieu of all or part of Director fees otherwise payable in cash, each Eligible Director who has properly and timely made such election as provided in the Compensation Plan shall automatically be granted a number of Shares of Restricted Stock equal to (i) the amount of the fee such Eligible Director elects to receive in the form of Restricted Stock divided by (ii) the Fair Market Value of a Share on the Date of Grant multiplied by (iii) 1.2, with the result rounded to the nearest whole Share.

Section 3.4.           Discretionary Grant of Restricted Stock. The Committee may in its discretion grant Restricted Stock to Eligible Directors in addition to Restricted Stock granted pursuant to Sections 3.2 and 3.3.

Section 3.5.           Date of Grant.

(a)           The Date of Grant of Restricted Stock granted under Section 3.2 shall be the date of the annual meeting of stockholders of the Company to which the grant relates.

(b)           The Date of Grant of Restricted Stock granted under Section 3.3 shall be the date of the next annual meeting of stockholders after the election by the Eligible Director pursuant to the Compensation Plan to receive the Restricted Stock in lieu of cash fees, except that, for an Eligible Director elected between annual stockholder meetings, the Date of Grant shall be the date of his or her election as a Director.

(c)           The Date of Grant of Restricted Stock granted under Section 3.4 shall be the date on which the Committee takes formal action to grant the Restricted Stock.

Section 3.6.           Vesting.

(a)           Restricted Stock granted under Section 3.2 shall vest six months after the Date of Grant.

(b)           Restricted Stock granted under Section 3.3 shall vest on the Payment Date(s) following the Date of Grant as provided in this Section 3.6(b). The number of Shares of Restricted Stock granted under Section 3.3 that will vest on each Payment Date after the Date of Grant shall equal the number of Shares of Restricted Stock granted divided by the number of Payment Dates occurring after the Date of Grant and before the first anniversary of the most recent annual meeting of stockholders of the Company.

(c)           Restricted Stock granted under Section 3.4 shall vest six months after the Date of Grant.

(d)           Notwithstanding the other provisions of this Section 3.6, (i) Restricted Stock shall only vest as provided in this Section 3.6 if the holder is a Director at the time the Restricted Stock would otherwise vest and (ii) upon the occurrence of a Change in Control, all Restricted Stock issued under the Plan that is outstanding at the time of the Change in Control shall immediately vest.

 

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(e)           Notwithstanding the vesting conditions set forth in the Plan or the Compensation Plan, the Committee may in its discretion at any time accelerate the vesting of Restricted Stock or otherwise waive or amend any conditions of a grant of Restricted Stock under the Plan.

Section 3.7.           Restrictions on Transfer. Restricted Stock granted to an Eligible Director under the Plan (whether represented by stock certificates or in book entry or other electronic form) shall be registered in the Director’s name or, at the option of the Committee, not issued until such time as the Restricted Stock shall become vested or as otherwise determined by the Committee. If certificates are issued prior to the Shares of Restricted Stock becoming vested, such certificates shall either be held by the Company on behalf of the Director, or delivered to the Director bearing a legend to restrict transfer of the certificate until the Restricted Stock has vested, as determined by the Committee. The Director shall have the right to vote and receive dividends on the Restricted Stock before it has vested. Except as may otherwise be expressly permitted by the Committee, no Share of Restricted Stock may be sold, transferred, assigned or pledged by the Director until such Share has vested. In the event that a Director ceases to be a Director before all the Director’s Restricted Stock has vested, the Shares of Restricted Stock that have not vested shall be forfeited. At the time Restricted Stock vests (and, if the Director has been issued legended certificates for Restricted Stock, upon the return of such certificates to the Company), such vested Shares shall be issued to the Director, in certificated or book entry or other electronic form, free of restrictions.

Section 3.8.           Issuance of Shares. As a condition of the issuance of any Shares of Restricted Stock, the Committee may obtain such agreements or undertakings, if any, as it may deem necessary or advisable to assure compliance with any provision of the Plan, any agreement or any law or regulation including, but not limited to, the following:

(a)           a representation, warranty or agreement by the Eligible Director to the Company that the Eligible Director is acquiring the Shares for investment and not with a view to, or for sale in connection with, the distribution of any such Shares; and

(b)           a representation, warranty or agreement to be bound by any restrictions that are, in the opinion of the Committee, necessary or appropriate to comply with the provisions of any securities law deemed by the Committee to be applicable to the issuance of the Shares.

Section 3.9.           Section 83(b) Election. If a Director receives Restricted Stock that is subject to a “substantial risk of forfeiture,” the Director may elect under Section 83(b) of the Code to include in his or her gross income, for the taxable year in which the Restricted Stock is received, the Fair Market Value of such Restricted Stock on the Date of Grant. If the Director makes the Section 83(b) election, the Director shall (a) make such election in a manner that is satisfactory to the Committee, (b) provide the Company with a copy of such election and (c) agree to promptly notify the Company if any Internal Revenue Service or state tax agent, on audit or otherwise, questions the validity or correctness of such election or of the amount of income reportable on account of such election.

 

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ARTICLE IV

ADDITIONAL PROVISIONS

Section 4.1.           Administration of the Plan. The Plan shall be administered by the Committee. The Committee shall have the authority to interpret the provisions of the Plan, to adopt such rules and regulations for carrying out the Plan as it may deem advisable, to decide conclusively all questions arising with respect to the Plan and to make all other determinations and take all other actions necessary or desirable for the administration of the Plan. All decisions and acts of the Committee shall be final and binding upon all affected Optionees and holders of Restricted Stock. If there is no Committee, the Board shall administer the Plan and in such case all references to the Committee shall be deemed to be references to the Board.

Section 4.2.           Adjustment of Shares. If at any time while the Plan is in effect, there shall be any increase or decrease in the number of issued and outstanding Shares through the declaration of a stock dividend or through any recapitalization resulting in a stock split, combination or exchange of Shares, the Committee shall make an appropriate adjustment in the number and kind of Shares then subject to being issued under the Plan, so that the same proportion of the Company’s issued and outstanding Shares shall continue to be subject to issuance under the Plan upon the exercise of Options or as Restricted Stock.

Section 4.3.           Amendment. The Board may amend or modify the Plan in any respect at any time, subject to stockholder approval if required by applicable law or regulation or by applicable stock exchange rules.

Section 4.4.           Duration and Termination. The Plan shall be of unlimited duration. The Board may suspend, discontinue or terminate the Plan at any time. Such action shall not impair any of the rights of any holder of any Option or Restricted Stock outstanding on the date of the Plan’s suspension, discontinuance or termination without the holder’s written consent.

Section 4.5.           Effective Date. The Plan amends and restates the Existing Plan in its entirety, effective April 28, 2015.

 

 

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