Document:

Exhibit 10.24

 

FTS INTERNATIONAL, INC.

 

2017 EQUITY AND INCENTIVE COMPENSATION PLAN

 

 

1.                                      Purpose.  The purpose of the 2017 Equity and Incentive Compensation Plan is to attract and retain non-employee Directors, officers and other key employees of the Company and its Subsidiaries and to provide to such persons incentives and rewards for performance.

 

2.                                      Definitions.  As used in this Plan:

 

(a)                                 “Affiliate” means any Person that directly or indirectly controls, is controlled by, or is under common control with the Company.  The term “control” (including, with the correlative meaning, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting or other securities, by contract, or otherwise.

 

(b)                                 “Appreciation Right” means a right granted pursuant to Section 7 of this Plan.

 

(c)                                  “Base Price” means the price to be used as the basis for determining the Spread upon the exercise of an Appreciation Right.

 

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

 

(e)                                  “Cash Incentive Award” means a cash award granted pursuant to Section 8 of this Plan.

 

(f)                                   “Change in Control” has the meaning set forth in Section 12 of this Plan.

 

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

 

(h)                                 “Committee” means the Compensation Committee of the Board (or its successor(s)), or any other committee of the Board designated by the Board to administer the Plan pursuant to Section 10 of this Plan, and to the extent of any delegation by the Committee to a subcommittee pursuant to Section 10 of this Plan, such subcommittee.

 

(i)                                     “Common Stock” means the common stock, par value $0.01 per share, of the Company or any security into which such common stock may be changed by reason of any transaction or event of the type referred to in Section 11 of this Plan.

 

(j)                                    “Company” means FTS International, Inc., a Delaware corporation, and its successors.

 

(k)                                 “Covered Employee” means a Participant who is, or is determined by the Committee likely to become, a “covered employee” within the meaning of Section 162(m) of the Code (or any successor provision).

 

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(l)                                     “Date of Grant” means the date specified by the Committee on which a grant of Restricted Stock Units, Restricted Stock, Option Rights, Appreciation Rights, Cash Incentive Awards, Performance Shares, Performance Units, or other awards contemplated by Section 9 of this Plan, or a grant or sale of Restricted Stock Units, Restricted Stock, or other awards contemplated by Section 9 of this Plan, will become effective (which date will not be earlier than the date on which the Committee takes action with respect thereto).

 

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

 

(n)                                 “Effective Date” means March [•], 2017.

 

(o)                                 “Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Committee that sets forth the terms and conditions of the awards granted under the Plan.  An Evidence of Award may be in an electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the Committee, need not be signed by a representative of the Company or a Participant.

 

(p)                                 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time.

 

(q)                                 “Incentive Stock Option” means an Option Right that is intended to qualify as an “incentive stock option” under Section 422 of the Code or any successor provision.

 

(r)                                    “Management Objectives” means the measurable performance objective or objectives established pursuant to this Plan for Participants who have received grants of Performance Shares, Performance Units or Cash Incentive Awards or, when so determined by the Committee, Restricted Stock Units, Restricted Stock, Option Rights, Appreciation Rights, dividend equivalents or other awards pursuant to this Plan.  Management Objectives may be described in terms of Company-wide objectives or objectives that are related to the performance of the individual Participant or of one or more of the Subsidiaries, divisions, departments, regions, functions or other organizational units within the Company or its Subsidiaries.  The Management Objectives may be made relative to the performance of other companies or subsidiaries, divisions, departments, regions, functions or other organizational units within such other companies, and may be made relative to an index or one or more of the performance objectives themselves.  The Committee may grant awards subject to Management Objectives that are either Qualified Performance-Based Awards or are not Qualified Performance-Based Awards.  The Management Objectives applicable to any Qualified Performance-Based Award to a Covered Employee will be based on one or more, or a combination, of the following metrics (including relative or growth achievement regarding such metrics):

 

(i)                                     Profits (e.g., gross profit, gross profit growth, operating income, earnings before or after deduction for all or any portion of interest, taxes, depreciation or amortization, net income (before or after taxes), consolidated net income, net earnings, net revenue, cost of revenue, basic or diluted earnings per share (before or after taxes), residual or economic earnings, net operating profit (before or after

 

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taxes), economic profit — Management Objectives that are financial metrics may be determined in accordance with United States Generally Accepted Accounting Principles (“GAAP”) or financial metrics that are based on, or able to be derived from GAAP, and may be adjusted when established (or to the extent permitted under Section 162(m) of the Code, at any time thereafter) to include or exclude any items otherwise includable or excludable under GAAP);

 

(ii)                                  EBITDA and Cash Flow (e.g., actual or adjusted earnings before or after interest, taxes, depreciation and/or amortization (including EBIT and EBITDA), free cash flow, free cash flow with or without specific capital expenditure target or range, including or excluding divestments and/or acquisitions, operating cash flow, total cash flow, cash flow in excess of cost of capital or residual cash flow, or cash flow return on investment);

 

(iii)                               Returns (e.g., profits or cash flow returns on: assets, investment, capital, invested capital, net capital employed, equity, or sales);

 

(iv)                              Working Capital (e.g., working capital targets, working capital divided by revenue);

 

(v)                                 Profit Margins (e.g., profits divided by revenues or gross margins and material margins divided by revenues);

 

(vi)                              Liquidity Measures (e.g., debt-to-capital, debt-to-EBITDA, total debt ratio, cash on hand);

 

(vii)                           Revenue Growth, Gross Margin Growth, Cost Initiative and Stock Price Metrics (e.g., revenue, net revenue, revenue growth, net revenue growth, revenue growth outside the United States, gross margin and gross margin growth, material margin and material margin growth, stock price appreciation, total return to stockholders, sales and administrative costs divided by revenue, or sales and administrative costs divided by profits);

 

(viii)                        Performance and Efficiency (e.g., stages, pumping days, customer profitability);

 

(ix)                              Safety Performance (e.g., total recordable incident rate (TRIR), lost time incident rate (LTIR)); and

 

(x)                                 Strategic Initiatives consisting of one or more of the following: product development, strategic partnering, research and development, vitality index, market penetration, market share, geographic business expansion goals, expense targets or cost reduction goals, general and administrative expense savings,

 

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selling, general and administrative expenses, objective measures of customer satisfaction, employee satisfaction, employee retention, management of employment practices and employee benefits, supervision of litigation and information technology, economic value added (or another measure of profitability that considers the cost of capital employed), product quality, or goals relating to acquisitions or divestitures of subsidiaries, affiliates and joint ventures.

 

In the case of a Qualified Performance-Based Award, each Management Objective will be objectively determinable to the extent required under Section 162(m) of the Code, and, unless otherwise determined by the Committee and to the extent consistent with Code Section 162(m), will exclude the effects of certain designated items identified at the time of grant.  If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the Management Objectives unsuitable, the Committee may in its discretion modify such Management Objectives or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable, except in the case of a Qualified Performance-Based Award (other than in connection with a Change in Control) where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.  In such case, the Committee will not make any modification of the Management Objectives or minimum acceptable level of achievement with respect to such Covered Employee.

 

(s)                                   “Market Value per Share” means, as of any particular date, the closing price of a share of Common Stock as reported for that date on the New York Stock Exchange or, if the shares of Common Stock are not then listed on the New York Stock Exchange, on any other national securities exchange on which the shares of Common Stock are listed, or if there are no sales on such date, on the next preceding trading day during which a sale occurred; provided, however, as to any award with a Date of Grant of the Pricing Date, “Market Value per Share” will be equal to the per share price at which the shares of Common Stock are initially offered to the public in connection with the initial public offering of the Company registered on Form S-1 (or any successor form under the Securities Act of 1933, as amended).  If there is no regular public trading market for the shares of Common Stock, then the Market Value per Share shall be the fair market value as determined in good faith by the Committee.

 

(t)                                    “Nonstatutory Stock Option” means an Option Right that does not qualify as an Incentive Stock Option.

 

(u)                                 “Optionee” means the optionee named in an Evidence of Award evidencing an outstanding Option Right.

 

(v)                                 “Option Price” means the purchase price payable on exercise of an Option Right.

 

(w)                               “Option Right” means the right to purchase shares of Common Stock upon exercise of an award granted pursuant to Section 6 of this Plan.

 

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(x)                                 “Participant” means a person who is selected by the Committee to receive benefits under this Plan and who is at the time (i) an officer or other key employee of the Company or any Subsidiary, including a person who has agreed to commence serving in such capacity within 90 days of the Date of Grant, (ii) a person who provides services to the Company or any Subsidiary that are equivalent to those typically provided by an employee (provided that such person satisfies the Form S-8 definition of an “employee”), or (iii) a non-employee Director.

 

(y)                                 “Performance Period” means, in respect of a Cash Incentive Award, Performance Share or Performance Unit, a period of time established pursuant to Section 8 of this Plan within which the Management Objectives relating to such Cash Incentive Award, Performance Share or Performance Unit are to be achieved.

 

(z)                                  “Performance Share” means a bookkeeping entry that records the equivalent of one share of Common Stock awarded pursuant to Section 8 of this Plan.

 

(aa)                          “Performance Unit” means a bookkeeping entry awarded pursuant to Section 8 of this Plan that records a unit equivalent to $1.00 or such other value as is determined by the Committee.

 

(bb)                          “Person” means any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).

 

(cc)                            “Plan” means this FTS International, Inc. 2017 Equity and Incentive Compensation Plan, as amended from time to time.

 

(dd)                          “Pricing Date” means the date of the underwriting agreement between the Company and the underwriters managing the initial public offering of the shares of Common Stock pursuant to which the shares of Common Stock are priced for the initial public offering.

 

(ee)                            “Qualified Performance-Based Award” means any award of Restricted Stock Units, Restricted Stock, Performance Shares, Performance Units or any Cash Incentive Award or awards contemplated under Section 9 of this Plan, or portion of such award, to a Covered Employee that is intended to satisfy the requirements for “qualified performance-based compensation” under Section 162(m) of the Code.

 

(ff)                              “Restricted Stock” means shares of Common Stock granted or sold pursuant to Section 5 of this Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfers has expired.

 

(gg)                            “Restricted Stock Unit” means an award made pursuant to Section 4 of this Plan of the right to receive shares of Common Stock, cash or a combination thereof at the end of a specified period.

 

(hh)                          “Restriction Period” means the period of time during which Restricted Stock Units are subject to restrictions, as provided in Section 4 of this Plan.

 

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(ii)                                  “Spread” means the excess of the Market Value per Share on the date when an Option Right or Appreciation Right is exercised over the Option Price or Base Price provided for in the related Option Right or Appreciation Right, respectively.

 

(jj)                                “Stockholder” means an individual or entity that owns one or more shares of Common Stock.

 

(kk)                          “Subsidiary” means a corporation, company or other entity (i) more than 50 percent of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture, limited liability company, unincorporated association or other similar entity), but more than 50 percent of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company; provided, however, that for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary” means any corporation in which at the time the Company owns or controls, directly or indirectly, more than 50 percent of the total combined Voting Power represented by all classes of stock issued by such corporation.

 

(ll)                                  “Voting Power” means, at any time, the combined voting power of the then-outstanding securities entitled to vote generally in the election of Directors in the case of the Company, or members of the board of directors or similar body in the case of another entity.

 

3.                                      Shares Available Under the Plan.

 

(a)                                 Maximum Shares Available Under Plan.

 

(i)                                     Subject to adjustment as provided in Section 11 of this Plan and the share counting rules set forth in Section 3(b) of this Plan, the number of shares of Common Stock available under the Plan for awards of (A) Restricted Stock Units, (B) Restricted Stock, (C) Option Rights or Appreciation Rights, (D) Performance Shares or Performance Units, (E) awards contemplated by Section 9 of this Plan, or (F) dividend equivalents paid with respect to awards made under the Plan will not exceed in the aggregate [•] shares of Common Stock.  Such shares may be shares of original issuance or treasury shares or a combination of the foregoing.

 

(ii)                                  The aggregate number of shares of Common Stock available under Section 3(a)(i) of this Plan will be reduced by one share of Common Stock for every one share of Common Stock subject to an award granted under this Plan.

 

(b)                                 Share Counting Rules.

 

(i)                                     Except as provided in Section 22, if any award granted under this Plan is cancelled or forfeited, expires or is settled for cash (in whole or in part), the shares of Common Stock subject to such

 

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award will, to the extent of such cancellation, forfeiture, expiration, or cash settlement, again be available under Section 3(a)(i) above.

 

(ii)                                  Except as provided in Section 22:  (A) shares of Common Stock withheld by the Company, tendered or otherwise used in payment of the Option Price of an Option Right will be added (or added back, as applicable) to the aggregate number of shares of Common Stock available under Section 3(a)(i) above; (B) shares of Common Stock withheld by the Company, tendered or otherwise used to satisfy a tax withholding obligation will be added (or added back, as applicable) to the aggregate number of shares of Common Stock available under Section 3(a)(i) above, provided, however, that with respect to Restricted Stock, this Section 3(b)(ii)(B) shall only be in effect until the 10 year anniversary of the Effective Date; and (C) shares of Common Stock subject to an Appreciation Right that are not actually issued in connection with the settlement of such Appreciation Right on the exercise thereof, will be added to the aggregate number of shares of Common Stock available under Section 3(a)(i) above.

 

(iii)                               Notwithstanding anything to the contrary contained herein, shares of Common Stock reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of Option Rights will not be added to the aggregate number of shares of Common Stock available under Section 3(a)(i) above.

 

(iv)                              If, under this Plan, a Participant has elected to give up the right to receive compensation in exchange for shares of Common Stock based on fair market value, such shares of Common Stock will not count against the aggregate limit under Section 3(a)(i) above.

 

(c)                                  Limit on Incentive Stock Options.  Notwithstanding anything in this Section 3 or elsewhere in this Plan to the contrary, and subject to adjustment as provided in Section 11 of this Plan, the aggregate number of shares of Common Stock actually issued or transferred by the Company upon the exercise of Incentive Stock Options will not exceed [•] shares of Common Stock. If the aggregate fair market value (determined as of the time of grant) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an eligible Participant during any fiscal year (under all such plans of the Company and of any Subsidiary or parent corporation of the Company) exceeds $100,000 (or such other limit established in the Code), the portion of the Incentive Stock Options that exceeds such limit (according to the order in which they were granted) will be treated as Nonstatutory Stock Options.

 

(d)                                 Individual Participant Limits.  Notwithstanding anything in this Section 3 or elsewhere in this Plan to the contrary, and subject to adjustment as provided in Section 11 of this Plan:

 

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(i)                                     In no event will any Participant in any calendar year be granted Option Rights and/or Appreciation Rights, in the aggregate, for more than [•] shares of Common Stock.

 

(ii)                                  In no event will any Participant in any calendar year be granted Qualified Performance-Based Awards of Restricted Stock Units, Restricted Stock, Performance Shares and/or other awards under Section 9 of this Plan, in the aggregate, for more than [•] shares of Common Stock.

 

(iii)                               In no event will any Participant in any calendar year receive Qualified Performance-Based Awards of Performance Units and/or other awards payable in cash under Section 9 of this Plan having an aggregate maximum value as of their respective Dates of Grant in excess of $[•].

 

(iv)                              In no event will any Participant in any calendar year receive Qualified Performance-Based Awards that are Cash Incentive Awards having an aggregate maximum value in excess of $[•].

 

(v)                                 No non-employee Director will be granted, in any period of one calendar year, awards under the Plan having an aggregate maximum value at the Date of Grant (calculating the value of any such awards based on the grant date fair value for financial reporting purposes), taken together with any cash fees payable to such non-employee Director during the fiscal year, in excess of $[•].

 

4.                                      Restricted Stock Units.  The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting or sale of Restricted Stock Units to Participants.  Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

 

(a)                                 Each such grant or sale will constitute the agreement by the Company to deliver shares of Common Stock or cash, or a combination thereof, to the Participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions (which may include the achievement of Management Objectives) during the Restriction Period as the Committee may specify.

 

(b)                                 Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant.

 

(c)                                  Notwithstanding anything to the contrary contained in this Plan, any grant or sale of Restricted Stock Units may provide for the earlier lapse or other modification of the Restriction Period, including in the event of the retirement, death or disability of a Participant or in the event of a Change in Control; provided, however, that no award of Restricted Stock Units intended to be a Qualified Performance-Based Award will provide for such early lapse or

 

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modification of the Restriction Period (other than in connection with the death or disability of the Participant or a Change in Control) to the extent such provisions would cause such award to fail to be a Qualified Performance-Based Award.

 

(d)                                 During the Restriction Period, the Participant will have no right to transfer any rights under his or her award and will have no rights of ownership in the shares of Common Stock deliverable upon payment of the Restricted Stock Units and will have no right to vote them, but the Committee may, at or after the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a current or deferred or contingent basis, either in cash or in additional shares of Common Stock; provided, however, that dividend equivalents or other distributions on shares of Common Stock underlying Restricted Stock Units with restrictions that lapse as a result of the achievement of Management Objectives will be deferred until and paid contingent upon the achievement of the applicable Management Objectives.

 

(e)                                  Each grant or sale of Restricted Stock Units will specify the time and manner of payment of the Restricted Stock Units that have been earned.  Each grant or sale will specify that the amount payable with respect thereto will be paid by the Company in shares of Common Stock or cash, or a combination thereof.

 

(f)                                   Each grant or sale of Restricted Stock Units will be evidenced by an Evidence of Award.  Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.

 

5.                                      Restricted Stock.  The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the grant or sale of Restricted Stock to Participants.  Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

 

(a)                                 Each such grant or sale will constitute an immediate transfer of the ownership of shares of Common Stock to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend and other ownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to.

 

(b)                                 Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant.

 

(c)                                  Each such grant or sale will provide that the Restricted Stock covered by such grant or sale will be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a period to be determined by the Committee at the Date of Grant or until achievement of Management Objectives.

 

(d)                                 Each such grant or sale will provide that during or after the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Stock will be prohibited or restricted in the manner and to the extent prescribed by the Committee at the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first

 

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refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee).

 

(e)                                  Notwithstanding anything to the contrary contained in this Plan, any grant or sale of Restricted Stock may provide for the earlier termination of restrictions on such Restricted Stock, including in the event of the retirement, death or disability of a Participant or in the event of a Change in Control; provided, however, that no award of Restricted Stock intended to be a Qualified Performance-Based Award will provide for such early termination of restrictions (other than in connection with the death or disability of the Participant or a Change in Control) to the extent such provisions would cause such award to fail to be a Qualified Performance-Based Award.

 

(f)                                   Any such grant or sale of Restricted Stock may require that any or all dividends or other distributions paid thereon during the period of such restrictions be automatically deferred and/or reinvested in additional Restricted Stock, which may be subject to the same restrictions as the underlying award; provided, however, that dividends or other distributions on Restricted Stock with restrictions that lapse as a result of the achievement of Management Objectives will be deferred until and paid contingent upon the achievement of the applicable Management Objectives.

 

(g)                                  Each grant or sale of Restricted Stock will be evidenced by an Evidence of Award.  Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.  Unless otherwise directed by the Committee, (i) all certificates representing Restricted Stock will be held in custody by the Company until all restrictions thereon will have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such shares or (ii) all Restricted Stock will be held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such Restricted Stock.

 

6.                                      Option Rights.  The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting to Participants of Option Rights.  Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

 

(a)                                 Each grant will specify the number of shares of Common Stock to which it pertains subject to the limitations set forth in Section 3 of this Plan.

 

(b)                                 Each grant will specify an Option Price per share, which (except with respect to awards under Section 22 of this Plan) may not be less than the Market Value per Share on the Date of Grant.

 

(c)                                  Each grant will specify whether the Option Price will be payable (i) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of shares of Common Stock owned by the Optionee having a value at the time of exercise equal to the total Option Price, (iii) subject to any conditions or limitations established by the Committee, by the Company’s withholding of shares of Common Stock otherwise issuable upon exercise of an Option Right pursuant to a “net exercise” arrangement (it being understood that, solely for purposes of determining the number

 

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of treasury shares held by the Company, the shares of Common Stock so withheld will not be treated as issued and acquired by the Company upon such exercise), (iv) by a combination of such methods of payment, or (v) by such other methods as may be approved by the Committee.

 

(d)                                 To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates.

 

(e)                                  Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant remain unexercised.

 

(f)                                   Each grant will specify the period or periods of continuous service by the Optionee with the Company or any Subsidiary that is necessary before the Option Rights or installments thereof will become exercisable.  A grant of Option Rights may provide for the earlier exercise of such Option Rights, including in the event of the retirement, death or disability of a Participant or in the event of a Change in Control.

 

(g)                                  Any grant of Option Rights may specify Management Objectives that must be achieved as a condition to the exercise of such rights.

 

(h)                                 Option Rights granted under this Plan may be (i) options, including, without limitation, Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii) options that are not intended to so qualify, or (iii) combinations of the foregoing.  Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code.

 

(i)                                     No Option Right will be exercisable more than 10 years from the Date of Grant.  The Committee may provide in any Evidence of Award for the automatic exercise of an Option Right upon such terms and conditions as established by the Committee.

 

(j)                                    Option Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.

 

(k)                                 Each grant of Option Rights will be evidenced by an Evidence of Award.  Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.

 

7.                                      Appreciation Rights.

 

(a)                                 The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting to any Participant of Appreciation Rights.   An Appreciation Right will be a right of the Participant to receive from the Company an amount determined by the Committee, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise.

 

(b)                                 Each grant of Appreciation Rights may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

 

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(i)                                     Each grant may specify that the amount payable on exercise of an Appreciation Right will be paid by the Company in cash, shares of Common Stock or any combination thereof.

 

(ii)                                  Any grant may specify that the amount payable on exercise of an Appreciation Right may not exceed a maximum specified by the Committee at the Date of Grant.

 

(iii)                               Any grant may specify waiting periods before exercise and permissible exercise dates or periods.

 

(iv)                              Each grant will specify the period or periods of continuous service by the Participant with the Company or any Subsidiary that is necessary before the Appreciation Rights or installments thereof will become exercisable.  A grant of Appreciation Rights may provide for the earlier exercise of such Appreciation Rights, including in the event of the retirement, death or disability of a Participant or in the event of a Change in Control.

 

(v)                                 Any grant of Appreciation Rights may specify Management Objectives that must be achieved as a condition of the exercise of such Appreciation Rights.

 

(vi)                              Appreciation Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.

 

(vii)                           Successive grants of Appreciation Rights may be made to the same Participant regardless of whether any Appreciation Rights previously granted to the Participant remain unexercised.

 

(viii)                        Each grant of Appreciation Rights will be evidenced by an Evidence of Award.  Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.

 

(c)                                  Also, regarding Appreciation Rights:

 

(i)                                     Each grant will specify in respect of each Appreciation Right a Base Price, which (except with respect to awards under Section 22 of this Plan) may not be less than the Market Value per Share on the Date of Grant; and

 

(ii)                                  No Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant.  The Committee may provide in any Evidence of Award for the automatic exercise of an Appreciation Right upon such terms and conditions as established by the Committee.

 

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8.                                      Cash Incentive Awards, Performance Shares and Performance Units.  The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting of Cash Incentive Awards, Performance Shares and Performance Units.  Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

 

(a)                                 Each grant will specify the number or amount of Performance Shares or Performance Units, or amount payable with respect to Cash Incentive Awards, to which it pertains, which number or amount may be subject to adjustment to reflect changes in compensation or other factors; provided, however, that no such adjustment will be made in the case of a Qualified Performance-Based Award (other than in connection with the death or disability of the Participant or a Change in Control) where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.

 

(b)                                 The Performance Period with respect to each Cash Incentive Award, Performance Share or Performance Unit will be such period of time as will be determined by the Committee at the time of grant, which may be subject to earlier lapse or other modification, including in the event of the retirement, death or disability of a Participant or in the event of a Change in Control; provided, however, that no such adjustment will be made in the case of a Qualified Performance-Based Award (other than in connection with the death or disability of the Participant or a Change in Control) where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.  In such event, the Evidence of Award will specify the time and terms of delivery.

 

(c)                                  Each grant of Cash Incentive Awards, Performance Shares or Performance Units will specify Management Objectives which, if achieved, will result in payment or early payment of the award, and each grant may specify in respect of such specified Management Objectives a minimum acceptable level or levels of achievement and may set forth a formula for determining the number of Performance Shares or Performance Units, or amount payable with respect to Cash Incentive Awards, that will be earned if performance is at or above the minimum or threshold level or levels, or is at or above the target level or levels, but falls short of maximum achievement of the specified Management Objectives.

 

(d)                                 Each grant will specify the time and manner of payment of Cash Incentive Awards, Performance Shares or Performance Units that have been earned.  Any grant may specify that the amount payable with respect thereto may be paid by the Company in cash, in shares of Common Stock, in Restricted Stock Units or Restricted Stock or in any combination thereof.

 

(e)                                  Any grant of Cash Incentive Awards, Performance Shares or Performance Units may specify that the amount payable or the number of shares of Common Stock, Restricted Stock Units or Restricted Stock payable with respect thereto may not exceed a maximum specified by the Committee at the Date of Grant.

 

(f)                                   The Committee may, at the Date of Grant of Performance Shares, provide for the payment of dividend equivalents to the holder thereof either in cash or in additional shares of Common Stock, subject in all cases to deferral and payment on a contingent basis

 

13

 

based on the Participant’s earning of the Performance Shares with respect to which such dividend equivalents are paid.

 

(g)                                  Each grant of Cash Incentive Awards, Performance Shares or Performance Units will be evidenced by an Evidence of Award.  Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.

 

9.                                      Other Awards.

 

(a)                                 Subject to applicable law and the applicable limits set forth in Section 3 of this Plan, the Committee may grant to any Participant shares of Common Stock or such other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares of Common Stock or factors that may influence the value of such shares, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into shares of Common Stock, purchase rights for shares of Common Stock, awards with value and payment contingent upon performance of the Company or specified Subsidiaries, Affiliates or other business units thereof or any other factors designated by the Committee, and awards valued by reference to the book value of the shares of Common Stock or the value of securities of, or the performance of specified Subsidiaries or Affiliates or other business units of the Company.  The Committee will determine the terms and conditions of such awards.  Shares of Common Stock delivered pursuant to an award in the nature of a purchase right granted under this Section 9 will be purchased for such consideration, paid for at such time, by such methods, and in such forms, including, without limitation, shares of Common Stock, other awards, notes or other property, as the Committee determines.

 

(b)                                 Cash awards, as an element of or supplement to any other award granted under this Plan, may also be granted pursuant to this Section 9.

 

(c)                                  The Committee may grant shares of Common Stock as a bonus, or may grant other awards in lieu of obligations of the Company or a Subsidiary to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, subject to such terms as will be determined by the Committee in a manner that complies with Section 409A of the Code.

 

(d)                                 Notwithstanding anything to the contrary contained in this Plan, any grant of an award under this Section 9 may provide for the earning or vesting of, or earlier elimination of restrictions applicable to, such award, including in the event of the retirement, death or disability of a Participant or in the event of a Change in Control; provided, however, that no such adjustment will be made in the case of a Qualified Performance-Based Award (other than in connection with the death or disability of the Participant or a Change in Control) where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.  In such event, the Evidence of Award will specify the time and terms of delivery.

 

(e)                                  The Committee may, at or after the Date of Grant, authorize the payment of dividends or dividend equivalents on awards granted under this Section 9 on a deferred and contingent basis, either in cash or in additional shares of Common Stock; provided, however,

 

14

 

that dividend equivalents or other distributions on shares of Common Stock underlying awards granted under this Section 9 will be deferred until and paid contingent upon the earning of such awards.

 

10.                               Administration of this Plan.

 

(a)                                 This Plan will be administered by the Committee.  The Committee may from time to time delegate all or any part of its authority under this Plan to a subcommittee thereof.  To the extent of any such delegation, references in this Plan to the Committee will be deemed to be references to such subcommittee.

 

(b)                                 The interpretation and construction by the Committee of any provision of this Plan or of any Evidence of Award (or related documents) and any determination by the Committee pursuant to any provision of this Plan or of any such agreement, notification or document will be final and conclusive.  No member of the Committee shall be liable for any such action or determination made in good faith.  In addition, the Committee is authorized to take any action it determines in its sole discretion to be appropriate subject only to the express limitations contained in this Plan, and no authorization in any Plan Section or other provision of this Plan is intended or may be deemed to constitute a limitation on the authority of the Committee.

 

(c)                                  To the extent permitted by law, the Committee may delegate to one or more of its members or to one or more officers of the Company, or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Committee, the subcommittee, or any person to whom duties or powers have been delegated as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Committee, the subcommittee or such person may have under the Plan.  The Committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as the Committee:  (i) designate employees to be recipients of awards under this Plan; and (ii) determine the size of any such awards; provided, however, that (A) the Committee will not delegate such responsibilities to any such officer for awards granted to an employee who is an officer, Director, or more than 10% “beneficial owner” (as such term is defined in Rule 13-d promulgated under the Exchange Act) of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Committee in accordance with Section 16 of the Exchange Act, or any Covered Employee; (B) the resolution providing for such authorization shall set forth the total number of shares of Common Stock such officer(s) may grant; and (C) the officer(s) will report periodically to the Committee regarding the nature and scope of the awards granted pursuant to the authority delegated.

 

11.                               Adjustments.  The Committee shall make or provide for such adjustments in the numbers of shares of Common Stock covered by outstanding Restricted Stock Units, Restricted Stock, Option Rights, Appreciation Rights, Performance Shares and Performance Units granted hereunder and, if applicable, in the number of shares of Common Stock covered by other awards granted pursuant to Section 9 hereof, in the Option Price and Base Price provided in outstanding Option Rights and Appreciation Rights, respectively, in the kind of shares covered thereby, in Cash Incentive Awards, and in other award terms, as the Committee, in its sole discretion, exercised in good faith, determines is equitably required to prevent dilution or enlargement of the rights of Participants that otherwise would result from (a) any extraordinary cash dividend, stock

 

15

 

dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing.  Moreover, in the event of any such transaction or event or in the event of a Change in Control, the Committee may provide in substitution for any or all outstanding awards under this Plan such alternative consideration (including cash), if any, as it, in good faith, may determine to be equitable in the circumstances and shall require in connection therewith the surrender of all awards so replaced in a manner that complies with Section 409A of the Code.  In addition, for each Option Right or Appreciation Right with an Option Price or Base Price, respectively, greater than the consideration offered in connection with any such transaction or event or Change in Control, the Committee may in its discretion elect to cancel such Option Right or Appreciation Right without any payment to the Person holding such Option Right or Appreciation Right.  The Committee shall also make or provide for such adjustments in the number of shares of Common Stock specified in Section 3 of this Plan as the Committee in its sole discretion, exercised in good faith, determines is appropriate to reflect any transaction or event described in this Section 11; provided, however, that any such adjustment to the number specified in Section 3(c) will be made only if and to the extent that such adjustment would not cause any Option Right intended to qualify as an Incentive Stock Option to fail to so qualify.

 

12.                               Change in Control.  For purposes of this Plan, except as may be otherwise prescribed by the Committee in an Evidence of Award made under this Plan, a “Change in Control” will be deemed to have occurred upon the occurrence (after the Pricing Date) of any of the following events:

 

(a)                                 any Person is or becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing 35% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a beneficial owner in connection with a transaction described in clause (i) of Section 12(c) of this Plan;

 

(b)                                 the following individuals cease for any reason to constitute a majority of the number of Directors then serving on the Board: individuals who, on the Effective Date, constitute the Board and any new Director (other than a Director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of Directors) whose appointment or election by the Board or nomination for election by the Stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the Directors then still in office who either were Directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended (the “Incumbent Board”); provided, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened election contest (an “Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest;

 

16

 

(c)                                  there is consummated a merger, consolidation, wind-up, reorganization or restructuring of the Company with or into any other entity, or a similar event or series of such events, other than (i) any such event or series of events which results in (A) the voting securities of the Company outstanding immediately prior to such event or series of events continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 51% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation and (B) the individuals who comprise the Board immediately prior thereto constituting immediately thereafter at least a majority of the board of directors of the Company, the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger is then a subsidiary, the ultimate parent thereof, or (ii) any such event or series of events effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing 35% or more of the combined voting power of the Company’s then outstanding securities; or

 

(d)                                 the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (it being conclusively presumed that any sale or disposition is a sale or disposition by the Company of all or substantially all of its assets if the consummation of the sale or disposition is contingent upon approval by the Stockholders unless the Board expressly determines in writing that such approval is required solely by reason of any relationship between the Company and any other Person or an affiliate of the Company and any other Person), other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity (i) at least 51% of the combined voting power of the voting securities of which are owned by Stockholders in substantially the same proportions as their ownership of the Company immediately prior to such sale or disposition and (ii) the majority of whose board of directors immediately following such sale or disposition consists of individuals who comprise the Board immediately prior thereto.

 

13.                               Detrimental Activity and Recapture Provisions.  Any Evidence of Award may provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and conditions as may be determined by the Committee from time to time, if a Participant, either (a) during employment or other service with the Company or a Subsidiary, or (b) within a specified period after termination of such employment or service, engages in any detrimental activity.  In addition, notwithstanding anything in this Plan to the contrary, any Evidence of Award may also provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and conditions as may be required by the Committee or under Section 10D of the Exchange Act and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the shares of Common Stock may be traded.

 

17

 

14.                               Non U.S. Participants.  In order to facilitate the making of any grant or combination of grants under this Plan, the Committee may provide for such special terms for awards to Participants who are foreign nationals or who are employed by the Company or any Subsidiary outside of the United States of America or who provide services to the Company or any Subsidiary under an agreement with a foreign nation or agency, as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom.  Moreover, the Committee may approve such supplements to or amendments, restatements or alternative versions of this Plan (including, without limitation, sub-plans) as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and the secretary or other appropriate officer of the Company may certify any such document as having been approved and adopted in the same manner as this Plan.  No such special terms, supplements, amendments or restatements, however, will include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the Stockholders.

 

15.                               Transferability.

 

(a)                                 Except as otherwise determined by the Committee, no Restricted Stock Unit, Restricted Stock, Option Right, Appreciation Right, Cash Incentive Award, Performance Share, Performance Unit, award contemplated by Section 9 of this Plan or dividend equivalents paid with respect to awards made under this Plan will be transferable by the Participant except (i) if it is made by the Participant for no consideration to Immediate Family Members or to a bona fide trust, partnership or other entity controlled by and for the benefit of one or more Immediate Family Members (“Immediate Family Members” mean the Participant’s spouse, children, stepchildren, parents, stepparents, siblings (including half brothers and sisters), in-laws, and other individuals who have a relationship to the Participant arising because of legal adoption; however, no transfer may be made to the extent that transferability would cause Form S-8 or any successor form thereto not to be able to register shares of Common Stock related to an award) or (ii) by will or the laws of descent and distribution.  In no event will any such award granted under the Plan be transferred for value.  Except as otherwise determined by the Committee, Option Rights and Appreciation Rights will be exercisable during the Participant’s lifetime only by him or her or, in the event of the Participant’s legal incapacity to do so, by his or her guardian or legal representative acting on behalf of the Participant in a fiduciary capacity under state law or court supervision.

 

(b)                                 The Committee may specify at the Date of Grant that part or all of the shares of Common Stock that are (i) to be issued or transferred by the Company upon the exercise of Option Rights or Appreciation Rights, upon the termination of the Restriction Period applicable to Restricted Stock Units or upon payment under any grant of Performance Shares or Performance Units or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 5 of this Plan, will be subject to further restrictions on transfer.

 

16.                               Withholding Taxes.  To the extent that the Company is required to withhold federal, state, local or foreign taxes or other amounts in connection with any payment made or benefit realized by a Participant or other Person under this Plan, and the amounts available to the Company for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other Person make

 

18

 

arrangements satisfactory to the Company for payment of the balance of such taxes or other amounts required to be withheld, which arrangements (in the discretion of the Committee) may include relinquishment of a portion of such benefit.  If a Participant’s benefit is to be received in the form of shares of Common Stock, then, unless otherwise determined by the Committee, the Company will withhold shares of Common Stock having a value equal to the amount required to be withheld.  Notwithstanding the foregoing, when a Participant is required to pay the Company an amount required to be withheld under applicable income, employment, tax or other laws, the Participant may elect, if permitted by the Committee in its discretion, to satisfy the obligation, in whole or in part, by having withheld, from the shares required to be delivered to the Participant, shares of Common Stock having a value equal to the amount required to be withheld or by delivering to the Company other shares of Common Stock held by such Participant.  The shares used for tax or other withholding will be valued at an amount equal to the market value of such shares of Common Stock on the date the benefit is to be included in Participant’s income.  In no event will the market value of the shares of Common Stock to be withheld and delivered pursuant to this Section to satisfy applicable withholding taxes or other amounts in connection with the benefit exceed the minimum amount required to be withheld, unless (i) an additional amount can be withheld and not result in adverse accounting consequences and (ii) is permitted by the Committee.  Participants will also make such arrangements as the Company may require for the payment of any withholding tax or other obligation that may arise in connection with the disposition of shares of Common Stock acquired upon the exercise of Option Rights.

 

17.                               Compliance with Section 409A of the Code.

 

(a)                                 To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Participants.  With respect to any award that constitutes nonqualified deferred compensation subject to Section 409A of the Code, if the award includes a ‘series of installment payments’ (within the meaning of Section 1.409A-2(b)(2)(iii) of the regulations promulgated under the Code by the United States Treasury Department, as amended), the Participant’s right to the series of installment payments will be treated as a right to a series of separate payments and not as a right to a single payment. This Plan and any grants made hereunder will be administered in a manner consistent with this intent.  Any reference in this Plan to Section 409A of the Code will also include any regulations or any other formal guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

 

(b)                                 Neither a Participant nor any of a Participant’s creditors or beneficiaries will have the right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment.  Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company or any of its Subsidiaries.

 

(c)                                  If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant will be a specified employee (within

 

19

 

the meaning of Section 409A of the Code and using the identification methodology selected by the Company from time to time) and (ii) the Company makes a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Company will not pay such amount on the otherwise scheduled payment date but will instead pay it, without interest, on or about the fifth business day of the seventh month after such separation from service.

 

(d)                                 Solely with respect to any award that constitutes nonqualified deferred compensation subject to Section 409A of the Code and that is payable on account of a Change in Control (including any installments or stream of payments that are accelerated on account of a Change in Control), a Change in Control shall occur only if such event also constitutes a “change in the ownership,” “change in effective control,” and/or a “change in the ownership of a substantial portion of assets” of the Company as those terms are defined under Treasury Regulation §1.409A-3(i)(5), but only to the extent necessary to establish a time and form of payment that complies with Section 409A of the Code, without altering the definition of Change in Control for any purpose in respect of such award.

 

(e)                                  Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Company reserves the right to make amendments to this Plan and grants hereunder as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code.  In any case, a Participant will be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for a Participant’s account in connection with this Plan and grants hereunder (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its affiliates will have any obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes or penalties.

 

18.                               Amendments.

 

(a)                                 The Board may at any time and from time to time amend this Plan in whole or in part; provided, however, that if an amendment to this Plan (i) would materially increase the benefits accruing to Participants under this Plan, (ii) would materially increase the number of securities which may be issued under this Plan, (iii) would materially modify the requirements for participation in this Plan, or (iv) must otherwise be approved by the Stockholders in order to comply with applicable law or the rules of the New York Stock Exchange or, if the shares of Common Stock are not traded on the New York Stock Exchange, the principal national securities exchange upon which the shares of Common Stock are traded or quoted, then, such amendment will be subject to Stockholder approval and will not be effective unless and until such approval has been obtained.

 

(b)                                 Except in connection with a corporate transaction or event described in Section 11 of this Plan or in connection with a Change in Control, the terms of outstanding awards may not be amended to reduce the Option Price of outstanding Option Rights or the Base Price of outstanding Appreciation Rights, or cancel outstanding “underwater” Option Rights or

 

20

 

Appreciation Rights in exchange for cash, other awards or Option Rights or Appreciation Rights with an Option Price or Base Price, as applicable, that is less than the Option Price of the original Option Rights or Base Price of the original Appreciation Rights, as applicable, without Stockholder approval.  This Section 18(b) is intended to prohibit the repricing of “underwater” Option Rights and Appreciation Rights and will not be construed to prohibit the adjustments provided for in Section 11 of this Plan.  Notwithstanding any provision of this Plan to the contrary, this Section 18(b) may not be amended without approval by the Stockholders.

 

(c)                                  If permitted by Section 409A of the Code and Section 162(m) of the Code, but subject to the paragraph that follows, and including in the case of termination of employment by reason of death, disability or retirement, or in the case of unforeseeable emergency or other special circumstances or in the event of a Change in Control, to the extent a Participant holds an Option Right or Appreciation Right not immediately exercisable in full, or any Restricted Stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Restricted Stock Units as to which the Restriction Period has not been completed, or any Cash Incentive Awards, Performance Shares or Performance Units which have not been fully earned, or any other awards made pursuant to Section 9 subject to any vesting schedule or transfer restriction, or who holds shares of Common Stock subject to any transfer restriction imposed pursuant to Section 15(b) of this Plan, the Committee may, in its sole discretion, accelerate the time at which such Option Right, Appreciation Right or other award may be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such Restriction Period will end or the time at which such Cash Incentive Awards, Performance Shares or Performance Units will be deemed to have been fully earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such award, except in the case of a Qualified Performance-Based Award where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.

 

(d)                                 Subject to Section 18(b) hereof, the Committee may amend the terms of any award theretofore granted under this Plan prospectively or retroactively, except in the case of a Qualified Performance-Based Award (other than in connection with the Participant’s death or disability, or a Change in Control) where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.  In such case, the Committee will not make any modification of the Management Objectives or the level or levels of achievement with respect to such Qualified Performance-Based Award.  Subject to Section 11 above, no such amendment will impair the rights of any Participant without his or her consent.  The Board may, in its discretion, terminate this Plan at any time.  Termination of this Plan will not affect the rights of Participants or their successors under any awards outstanding hereunder and not exercised in full on the date of termination.

 

19.                               Governing Law.  This Plan and all grants and awards and actions taken hereunder will be governed by and construed in accordance with the internal substantive laws of the State of Delaware.

 

20.                               Effective Date/Termination.  This Plan will be effective as of the Effective Date.  However, no grants will be made under this Plan prior to the Pricing Date.  No grant will be

 

21

 

made under this Plan after the tenth anniversary of the Effective Date, but all grants made on or prior to such date will continue in effect thereafter subject to the terms thereof and of this Plan.

 

21.                               Miscellaneous Provisions.

 

(a)                                 The Company will not be required to issue any fractional shares of Common Stock pursuant to this Plan.  The Committee may provide for the elimination of fractions or for the settlement of fractions in cash.

 

(b)                                 This Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate such Participant’s employment or other service at any time.

 

(c)                                  Except with respect to Section 21(e), to the extent that any provision of this Plan would prevent any Option Right that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision will be null and void with respect to such Option Right.  Such provision, however, will remain in effect for other Option Rights and there will be no further effect on any provision of this Plan.

 

(d)                                 No award under this Plan may be exercised by the holder thereof if such exercise, and the receipt of cash or stock thereunder, would be, in the opinion of counsel selected by the Company, contrary to law or the regulations of any duly constituted authority having jurisdiction over this Plan.

 

(e)                                  Absence on leave approved by a duly constituted officer of the Company or any of its Subsidiaries will not be considered interruption or termination of service of any employee for any purposes of this Plan or awards granted hereunder.

 

(f)                                   No Participant will have any rights as a Stockholder with respect to any shares of Common Stock subject to awards granted to him or her under this Plan prior to the date as of which he or she is actually recorded as the holder of such shares upon the stock records of the Company.

 

(g)                                  The Committee may condition the grant of any award or combination of awards authorized under this Plan on the surrender or deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Company or a Subsidiary to the Participant.

 

(h)                                 Except with respect to Option Rights and Appreciation Rights, the Committee may permit Participants to elect to defer the issuance of shares of Common Stock under the Plan pursuant to such rules, procedures or programs as it may establish for purposes of this Plan and which are intended to comply with the requirements of Section 409A of the Code.  The Committee also may provide that deferred issuances and settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts.

 

(i)                                     If any provision of this Plan is or becomes invalid or unenforceable in any jurisdiction, or would disqualify this Plan or any award under any law deemed applicable by the

 

22

 

Committee, such provision will be construed or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the Committee, it will be stricken and the remainder of this Plan will remain in full force and effect.

 

22.                               Stock-Based Awards in Substitution for Option Rights or Awards Granted by Other Company.  Notwithstanding anything in this Plan to the contrary:

 

(a)                                 Awards may be granted under this Plan in substitution for or in conversion of, or in connection with an assumption of, restricted stock units, restricted stock, stock options, stock appreciation rights, or other stock or stock-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with the Company or any Subsidiary.  Any conversion, substitution or assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner that complies with Section 409A of the Code. The awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of this Plan, and may account for shares of Common Stock substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the transaction.

 

(b)                                 In the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary merges has shares available under a pre-existing plan previously approved by stockholders and not adopted in contemplation of such acquisition or merger, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) may be used for awards made after such acquisition or merger under the Plan; provided, however, that awards using such available shares may not be made after the date awards or grants could have been made under the terms of the pre-existing plan absent the acquisition or merger, and may only be made to individuals who were not employees or directors of the Company or any Subsidiary prior to such acquisition or merger.

 

(c)                                  Any shares of Common Stock that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under Sections 22(a) or 22(b) above will not reduce the shares of Common Stock available for issuance or transfer under the Plan or otherwise count against the limits contained in Section 3 of the Plan.  In addition, no shares of Common Stock subject to an award that is granted by, or becomes an obligation, of the Company under Sections 22(a) or 22(b) above, will be added to the aggregate limit contained in Section 3(a)(i) in the following circumstances: (i) if such award is cancelled or forfeited, expires or is settled for cash (in whole or in part), (ii) if such shares of Common Stock are withheld by the Company, tendered or otherwise used in payment of the Option Price of an Option or to satisfy a tax withholding obligation with respect to any award or (iii) if such shares of Common Stock are not actually issued in connection with the settlement of an Appreciation Right on the exercise thereof.

 

23ex10-1.htm

EXHIBIT 10.1

 

 

 

TWELFTH AMENDED AND RESTATED
DCP HOLDING COMPANY
EMPLOYMENT AGREEMENT

 

This Agreement is entered into as of January 1, 2017 (the “Effective Date”), by and between DCP Holding Company, an Ohio corporation, with its principal offices at 100 Crowne Point Place, Cincinnati, Ohio 45241 (“Company”), and Anthony A. Cook (“Employee”).

 

In consideration of the mutual obligations and promises contained herein, and intending to be legally bound, the parties hereto agree as follows:

 

1.     EMPLOYMENT. Company hereby employs Employee as an employee of Company and Employee hereby accepts such exclusive employment under the terms and conditions of this Agreement.

 

2.     TERM. Subject to the provisions in Section 7 hereof, the term of employment shall continue after the Effective Date for a period of one (1) year ending on December 31, 2017, and shall be automatically extended for successive one (1) year periods on the same terms and conditions as stated herein, unless on or prior to November 15th of any year either party provides written notice to the other party of termination of this Agreement, effective upon the expiration of the current one-year term.

 

3.     OFFICE AND DUTIES. During the term of his employment hereunder, Employee shall serve in the capacity of President and Chief Executive Officer of the Company. In such capacity, Employee shall do all things necessary and incident to this position and otherwise shall perform such functions as the Board of Directors of the Company may establish from time to time commensurate with Employee’s skill, position and background as reasonably determined by the Board. The performance of the duties hereunder shall be performed at such reasonable time and places as shall be determined by the Board. The Employee shall report directly to the Board of Directors. A description of the current duties is attached hereto as Exhibit A.

 

4.     COMPENSATION AND BENEFITS. In consideration for Employee’s performance of services and the non-competition provisions as described below, and subject to modifications as may be approved from time to time by Company and Employee, Employee shall receive, during the term of this Agreement, compensation and benefits as follows:

 

(A)     Base Salary. Employee shall be paid a base annual salary in accordance with the regular payroll practices of the Company and Exhibit B of this Agreement. Employee’s base annual salary for 2017 and all subsequent years of the term of this Agreement shall not be less than $441,500.00 or such higher amount as is reflected on subsequent agreed revisions of Exhibit B.

 

(B)     Bonus. Employee will be eligible to receive an annual bonus equal to between 15% and 60% of annual base salary pursuant to the Annual Incentive Plan and a stock and cash award pursuant to the Long Term Incentive Plan in accordance with Exhibit B of this Agreement, as revised on an annual basis.

 

(C)     Employee Benefits. Employee will be eligible to participate in all health, welfare, insurance and other benefits available to all other employees of the Company.

 

(D)     Vacations. Employee shall be entitled to vacation and personal time in accordance with the Company’s PTO policy as it exists from time to time. Employee will not be permitted to receive cash in lieu of unused PTO hours except in the event of the employee’s termination.

 

 

 

 

 

(E)     Automobile Allowance. The Company will pay up to Five Hundred ($500.00) Dollars per month for the lease of an automobile of Employee’s choice and will reimburse Employee for all documented fuel, insurance, maintenance and other operational costs.

 

(F)     Payroll Withholdings. Employee authorizes the Company to deduct from any payment made pursuant to Section 4 hereof all amounts required to be withheld by federal, state and/or local taxing authorities.

 

(G)     Club Membership. The Company will pay up to Seven Thousand Two Hundred ($7,200) Dollars for 2017 for fees and expenses for a club membership at Four Bridges Country Club.

 

(H)     Annual Performance Review. The Employee’s performance of his duties under this Agreement shall be reviewed by the Board of Directors or a committee of the Board of Directors at least annually and finalized within thirty (30) days of the receipt of the annual audited financial statements. The Board of Directors or a committee of the Board of Directors shall additionally review the base salary, bonus and benefits provided to the Employee under this Agreement and may, in their discretion, adjust the same, as outlined in Addendum B of this Agreement, provided, however, that Employee’s annual base salary shall not be less than the base salary set forth in Section 4(A) hereof.

 

5.     EXPENSES. Company shall pay or reimburse Employee for all travel and out-of-pocket expenses reasonably incurred or paid by Employee in connection with the performance of his duties upon presentation of expense statements or receipts or such other supporting documentation as the Company may reasonably require.

 

6.     OUTSIDE EMPLOYMENT. Employee shall devote his full time and attention to the performance of the duties incident to his position with the Company, and shall not have any other employment with any other enterprise or substantial responsibility for any enterprise which would be inconsistent with Employee’s duty to devote his full time and attention to Company matters without the prior consent of the Board of Directors.

 

7.     TERMINATION AND SEVERANCE PAY.

 

(A)     Death. This Agreement shall be terminated on the death of Employee, effective as of the end of the month in which his death occurs.

 

(B)     Disability. This Agreement may be terminated, at the option of the Company, if, because of a disability, Employee is unable to perform his job responsibilities after reasonable accommodations. This section will be applied consistent with the Company’s obligations under applicable federal and state law, including the Americans with Disabilities Act Amendments Act.

 

(C)     Termination – Good Cause. Nothing in this Agreement shall be construed to prevent the Company from terminating Employee’s employment hereunder for good cause (“Good Cause”) at any time. For this purpose, Good Cause shall include the following: alcohol or other drug dependence or addiction; conviction for any crime involving moral turpitude, fraud or misrepresentation, material neglect of duty; misappropriation, embezzlement or theft of Company funds or property; conduct which is materially injurious to the reputation, business or business relationships of the Company; or material violation of Company policy or any of the provisions of this Agreement. The effective date of such termination for Good Cause shall be the date of receipt by Employee or his legal representative of written notice of the termination stating the full basis for such cause or such later date as may be specified in such notice. Termination of Employee’s employment for Good Cause shall not constitute a breach of this Agreement and Employee shall not be entitled to any compensation arising on or after the effective date of such termination. In the event the Company is sold, transferred and/or merged with or to another entity, it shall not be deemed an event of Good Cause to terminate Employee, and if the new entity elects to retain Employee, Employee may be terminated only in accordance with Section 7(D) of this Agreement, and the Employee may terminate this Agreement as provided in Section 7(F) of this Agreement.

 

 

 

 

 

(D)     Termination Without Good Cause – Severance Pay. The Company may, by action of the Board, terminate this Agreement without Good Cause upon the payment of the amounts described in this paragraph. If, and only if, the Company terminates this Agreement either (i) in accordance with the notice provision of Section 2, or (ii) at any time during the term of this Agreement without Good Cause, then the Employee shall be entitled to severance pay as determined herein. Employee shall receive the greater of (i) eight (8) months of severance pay, or (ii) one (1) month of severance pay for each month remaining under the initial or any renewal term of the Agreement. One (1) month of severance pay shall equal one month of the Employee’s base salary as in effect on the date of termination. The Company shall pay such severance pay consistent with the Company’s severance policy and practice, as it exists from time to time. All bonuses to which Employee would otherwise be eligible during the year in which an Employee’s employment is terminated shall be pro-rated through the date of termination, regardless of whether such benefit is deemed to accrue or be payable after the date of termination. Moreover, during the stated severance pay period, Employee shall continue to receive the stated benefits as described in Section 4(C), but not any other benefits described in Sections 4(E) or 4(G).

 

(E)     Termination – Good Reason. Employee’s employment with the Company may also be terminated by the Employee for Good Reason. “Good Reason” means (i) a material breach by the Company of any provision of this Agreement, which breach is not cured or offending conduct ceased by the Company within thirty (30) days after the Company receives written notice thereof from the Employee; or (ii) the assignment of duties or responsibilities to the Employee by the Board that are inconsistent with the Employee’s position with the Company as of the date of this Agreement or reflect a material diminution in the status of the Employee within the Company. In the event Employee terminates employment for Good Reason, he shall be entitled to severance pay and benefits as provided for in Section 7(D) above.

 

(F)     Change of Control. In the event that, at any time during the Employee’s employment under this Agreement, the Company experiences a Change of Control (as defined in the DCP Holding Company 2006 Dental Care Plus Management Equity Incentive Plan ), then, provided that Employee shall have executed a release in the form and substance acceptable to the Company and subject to the other terms and conditions contained in this Agreement, the Employee may terminate his employment hereunder within fifteen (15) days of the occurrence of the Change of Control and, if so timely elected, shall be entitled to receive severance benefits in accordance with and subject to the terms of Section 7(D) above.

 

(G)     Membership on Board. Employee’s membership on the Board of Directors shall cease concurrent with the effective date of termination (for any reason) of Employee’s employment.

 

 

 

 

 

8.     CONFIDENTIAL INFORMATION. Employee recognizes and acknowledges that information gained by Employee while employed by the Company, including without limitation that concerning the Company’s customers, suppliers and participating providers, and the methods, techniques, devices and operations of the Company, as they may exist from time to time, are of a confidential nature and are valuable, special and unique assets of the Company’s business. Employee shall not, during the term of or after the termination of employment, disclose in any way any such confidential information to any person, firm, corporation or any other operation or entity, or use the same on the Employee’s own behalf, for any reason or purpose. Upon termination of employment, the Employee shall deliver up to the Company all lists of the Company’s customers, suppliers and participating providers, and all copies thereof (including without limitation electronically stored information), and all notes, records, memoranda, complete correspondence files and other papers, and all copies thereof (including without limitation electronically stored information) relating to the methods, techniques, devices and operations of the Company, and the Employee does not have, nor can Employee acquire, any property right therein or claim thereto or in the underlying confidential information. The parties acknowledge that the Employee has substantial skills and experience as an executive which have been enhanced during the period of his employment by the Company. The intent of this Section 8 is not to preclude Employee from using such skills and experience in other permitted employment, but only to preclude the use of those methods, techniques, devices and operations which are unique or proprietary to the Company.

 

9.     DIVERSION OF BUSINESS. The Employee shall not, during the period of employment by the Company and for a period ending six months following termination of employment (for any reason), either for the Employee or on behalf of any person, firm, corporation or any other operation or entity, directly or indirectly:

 

(A)     Divert or attempt to divert from the Company any business whatsoever by influencing or attempting to influence, or soliciting or attempting to solicit any of the customers or participating providers of the Company with whom Employee may have dealt at any time or who were customers or participating providers of the Company on the date of termination of the Employee’s employment or had been customers or participating providers of the Company prior thereto; or

 

(B)     Divert or attempt to divert from the Company any person employed by the Company by influencing or attempting to influence such person to leave the Company’s employ.

 

10.     NON-COMPETITION AGREEMENT. For a period ending six (6) months from the termination of Employee’s employment with the Company for any reason, Employee hereby agrees that he will not, directly or indirectly render any services as an officer, director, employee, agent, consultant or in any other capacity to, or own any interest (other than an interest of less than five percent (5%) of the stock or a publicly held company), as an individual owner, stockholder, partner or in any other manner in any person, firm, corporation, partnership or other entity which is a competitive business (“Competitive Business”) in any standard metropolitan statistical area in which the Company has customers or participating providers or has a Certificate of Authority to do business at the time of such termination.

 

For the purpose of the Agreement, Competitive Business shall mean any business operation (including a sole proprietorship), which engages in, as all or a significant part of its business, the business of a dental insurance company or engages in any other business in competition with the Company in any geographic area in which the Company then operates.

 

11.     ACKNOWLEDGMENT. The Company and Employee each hereby acknowledge and agree as follows:

 

(A)     The covenants, restrictions, agreements and obligations set forth herein are founded upon valuable consideration, and with respect to the covenants, restrictions, agreements and obligations set forth in Sections 9 and 10 hereof, are reasonable in duration and geographic scope;

 

(B)     In the event of a breach or threatened breach by Employee of any of the covenants, restrictions, agreements and obligations set forth herein, monetary damages or the other remedies at law that may be available to the Company for such breach or threatened breach will be inadequate and, without prejudice to the Company’s right to pursue any remedies at law or in equity available to it for such breach or threatened breach, including, without limitation, the recovery of damages from Employee, the Company will be entitled to injunctive relief; and

 

 

 

 

 

(C)     In the event that the covenant not to compete contained in Section 10 is the subject of an arbitratable dispute pursuant to Section 15 and is found to be invalid or unenforceable as to such time period and/or geographical area, it will be valid and enforceable in such geographical area(s) and for such time period(s) which the arbitrator(s) determine to be reasonable and enforceable. Furthermore, any period of restriction or covenant herein stated shall not include any period of violation or period of time required for arbitration or litigation to enforce such restriction or covenant.

 

12.     INDEMNIFICATION. Company shall indemnify and defend Employee for acts or omissions performed by the Employee in the scope of his employment and in a manner reasonably believed to be lawful providing that Employee’s acts or omission do not constitute gross negligence, recklessness, willful misconduct, or the intentional infliction of harm.

 

13.     ASSIGNMENT, SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective legal representatives, successors and assigns. The Company shall assign or otherwise transfer its rights under this Agreement to any successor or affiliated business or corporation (whether by sale or stock, merger, consolidation, sale of assets or otherwise), but this Agreement may not be assigned, nor may the duties hereunder be delegated, by Employee. In the event that the Company assigns or otherwise transfers its rights under this Agreement to any successor or affiliated business or corporation (whether by sale of stock, merger, consolidation, sale of assets or otherwise), for all purposes of this Agreement, the “Company” shall then be deemed to include the successor or affiliated business or corporation to which the Company assigned or otherwise transferred its rights hereunder. Should an ownership transfer event as described above occur, the Company may choose to terminate this Agreement, in which case Section 7(D) (Termination Without Good Cause – Severance Pay) would apply. Such action will not be deemed a Termination for Good Cause.

 

14.     NOTICE. Any notice required or which may be given under the provisions of this Agreement shall be in writing and shall be personally delivered or sent by certified mail, return receipt requested. All notices shall be deemed to have been given on the date personally delivered or, if mailed, on the date received or three (3) business days after the date of mailing, whichever is earlier. If mailed to Company, such notice shall be mailed to its then principal office. If mailed to Employee, it shall be addressed to Employee’s home address then shown on Company’s records.

 

15.     GOVERNING LAW. This Agreement shall be subject to, governed by and interpreted in accordance with the laws of the State of Ohio without regard to its rules as to conflicts of laws.

 

16.     ARBITRATION OF DISPUTES. All disputes and controversies of every kind and nature between the Company and Employee arising out of or in connection with this Agreement, including, but not limited to, the existence, validity, interpretation or meaning, performance or nonperformance, breach, continuance, termination, or any claim of discrimination by the Employee, shall be submitted to arbitration with the American Arbitration Association in Hamilton County, Ohio in accordance with its procedures and guidelines. The parties hereby agree that the decision of such arbitration shall be a binding and final decision upon the parties.

 

17.     SEVERABILITY. Each of the provisions of this Agreement shall stand independently and severally, and the invalidity of any one Section or portion thereof shall not affect the validity of any other Section. In the event any Section or portion thereof shall be construed to be invalid, no other Section of this Agreement shall be affected thereby.

 

 

 

 

 

18.     SURVIVAL. Any provision of the Agreement which imposes an obligation after termination of employment under this Agreement shall survive the termination of employment hereunder and shall be binding upon the parties hereto.

 

19.     ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding between the Company and Employee and shall supersede all prior oral or written statements of any kind whatsoever made by the parties. No statement subsequent to this Agreement purporting to modify any of its terms and conditions shall be binding unless expressly agreed to in writing and signed by both the Company and Employee. The foregoing restrictions shall not apply with respect to any change by the Company of the Employee’s compensation or benefits pursuant to Section 4 or to any change in the Employee’s title or duties to which Employee has acquiesced or consented.

 

20.     WAIVER. No waiver by either party of any breach of this Agreement by the other party shall operate or be construed as a waiver of any subsequent breach of the same or any other provision. No waiver shall be effective unless in writing.

 

IN WITNESS WHEREOF, the parties have hereunto set their hands effective as of the date first above written.

 

	
EMPLOYEE: Anthony A. Cook

 

 

 

               /s/ Anthony A. Cook                            

               Anthony A. Cook

 

 

Date:                      May 3, 2017                             
	  	
COMPANY: DCP Holding Company

 

 

 

By:            /s/ Stephen T. Schuler, DMD                             

                  Stephen T. Schuler, DMD

                  Chairman of the Board

 

Date:                        May 3, 2017                                           

 

 

 

 

 

EXHIBIT “A”

 

DCP HOLDING COMPANY POSITION DESCRIPTION

 

	POSITION TITLE:   	President
	 	 
	REPORTS TO:	Board of Directors
	 	 
	
PURPOSE:
	
Responsible for the direction and administration of DCP Holding Company in accordance with Board policy, sound business practices, and the legal requirements of all states in which the Company is authorized to do business.

 

DUTIES AND RESPONSIBILITIES:

 

	
1.
	
ADMINISTRATIVE MANAGEMENT

 

	 	
A.
	
Direct all areas of staff and Human Resource Administration.

 

	 	
B.
	
Prescribe duties, limitations and responsibility of staff through effective position descriptions, encouraging success and ongoing communication.

 

	 	
C.
	
Maintain effective, responsive and cost-conscious daily operations.

 

	
2.
	
BOARD RELATIONS

 

	 	
A.
	
Develop and recommend corporate objectives, plans and policies to the Board.

 

	 	
B.
	
Implement corporate objectives, plans and policies approved by the Board.

 

	 	
C.
	
Plan and coordinate all Board and Board Committee meetings with the Board Chair or Committee Chair.

 

	 	
D.
	
Establish effective communication and rapport with all Board Members.

 

	
3.
	
PROVIDER RELATIONS

 

	 	
A.
	
Recognizing providers are the DCP Holding Company product - continually promote their skills, quality, cost-effectiveness and value to all public.

 

	 	
B.
	
Establish leadership, stability and effective communication with all DCP Holding Company providers.

 

	 	
C.
	
Continued awareness that the success of DCP Holding Company and their providers grow together.

 

	
4.
	
CUSTOMER RELATIONS

 

	 	
A.
	
Actively promote DCP Holding Company in all Marketing, Sales, Public Relations, and Community activity.

 

	 	
B.
	
Strategize that the DCP Holding Company product is placed effectively before the public with emphasis on “Agent/Broker”

 

 

 

 

 

	 	
C.
	
Continually monitor the success, quality and effectiveness of DCP Holding Company marketing

 

	
5.
	
CORPORATE PROFITABILITY

 

	 	
A.
	
Develop plans for future DCP Holding Company growth while ensuring the soundness of corporate finances and profitability.

 

JOB SPECIFICATIONS:

	 	-  	Degree in relevant field of study or related equal job experience.
	 	
-
	
Five to seven years of related experience in the health/dental insurance field in an executive management position, where budgetary, policy and operational decisions have been made.

 

 

 

 

 

EXHIBIT “B”

 

ADDENDUM TO DCP HOLDING COMPANY PRESIDENT EMPLOYMENT AGREEMENT

 

The salary range of the President shall be reviewed and adjusted annually as recommended by the Compensation and Benefits Committee and approved by the Board of Directors. The Base Compensation for 2017 shall be $441,500.00.

 

	
ANNUAL INCENTIVE PLAN
	
Value
	RSUs
	 	 	 	 	 
	  	
CASH AWARD
	  	  	  
	  	
Threshold 
	
15% of Base
	
 $66,225.00 
	  
	  	
Target
	
30% of Base
	
$132,450.00 
	  
	  	
Stretch
	
45% of Base
	
$198,675.00 
	  
	  	
Maximum
	
60% of Base
	
$264,900.00 
	  
	 	 	 	 	 
	
LONG TERM INCENTIVE PLAN
	  
	 	 
	  	
A) RSU AWARD
	
  5% of Base
	
$22,075.00 
	
20 RSUs

	  	
B) CASH AWARD
	  	  	  
	  	     Threshold	
10% of Base
	
 $44,150.00
	  
	  	     Target	
15% of Base
	
 $66,225.00 
	 
	  	      Maximum	
25% of Base
	
$110,375.00 
	 

 

 

 

 

 

2017 ANNUAL LONG TERM INCENTIVE BONUS DETAIL

 

A.     Restricted Share Unit (“RSU”) Award – Retention Based

 

The stock award for DCP’s President and CEO is authorized under the “DCP Holding Company Amended and Restated 2006 Dental Care Plus Management Equity Incentive Plan” (the “Management Incentive Plan”) and is subject to the “Dental Care Plus and DCP Holding Company Deferred Compensation Plan”. Stock RSUs are awarded in an amount equal to five percent (5%) of base salary and is considered “Long Term” as it vests incrementally over four years, 10% on December 31 of the first year, 20% at the end of the second year, 30% at the end of the third year and 40% at the end of the fourth year. There are no performance targets other than longevity with the Company.

 

RSU AWARD BASED ON 5% OF BASE SALARY OF $441,500.00          20 RSUs

 

B.     Cash Award – Performance Based

 

The Long Term Incentive (LTI) is a bonus designed to motivate the CEO to achieve long term success for the Company, as well as assist in the retention of the President and CEO over time. LTI bonus compensation is based on achieving sustainable growth in shareholder value over a period of three years, January 1, 2017 through December 31, 2019 and is measured by the average yearly increase in the “Adjusted Share Value” (ASV) of a Common Share.

 

ADJUSTED SHARE VALUE OF A COMMON SHARE AT 12/31/2016 = $1,109.56

 

BASE SALARY 2017: $441,500.00

 

	
Level
	Definition	
3yr Ave.
	Adjusted Share Value	
Cash          
	 
	  	  	  	On 12/31/2019	 	 
	
Threshold 
	
10% of Base
	
  8%  
	
$1,397.73 
	  $44,150.00	 
	
Target
	15% of Base	
  10%
	  $1,476.82	
 $66,225.00 
	 
	
Maximum
	
25% of Base
	
  14%
	
$1,643.86 
	
$110,375.00 
	 

 

 

Notes:

 

	1. 	The ASV of a Common Share at the end of any one year shall mean the total book value of the all classes of Common Shares of the Company, as determined from the audited financial statements of the Company on the last day of business in that year, increased by: (a) the aggregate amount of all provider withhold return payments paid in that year; (b) the aggregate amount of dividends on all classes of Common Shares paid in that year; and (c) the aggregate amount of Common Share redemptions paid in that year and decreased by: (a)the aggregate amount received from the sale of all classes of Common Shares in that year. This amount shall be divided by the total number of all classes of Common Shares outstanding on the first day of business of that year.
	
2.
	
Actual LTI compensation will be paid on a continuum between Threshold and Target levels and Target and Maximum levels.

	3.	No LTI compensation will be paid if the average increase in the ASV of a Common Share is less than eight percent (8%) and no additional LTI compensation will be paid if the average increase in the ASV of a Common Share is over fourteen percent (14%).

 

 

 

 

 

	 	
4.
	
With Board of Director approval, a new multi-year performance measurement period begins each new year.

 

	 	
5.
	
In the event of a Change of Control, as defined in the Management Equity Incentive Plan, the ASV of a Common Share as of December 31, 2019 shall be deemed to be the portion of the Enterprise Value of the Company, as defined in Article Fourth, Section 8(h)(ii)(C) of the Company’s Amended Articles of Incorporation allocated to the Common Shares divided by the total number of all classes of Common Shares outstanding as of the date on which the Change of Control occurs and the Long Term Incentive bonus shall be determined as of that date and paid within thirty (30) days thereafter.

 

 

2017 ANNUAL INCENTIVE SHORT TERM BONUS DETAIL

 

The Annual Incentive (Short Term Bonus) compensation is designed to motivate the CEO to meet and/or exceed goals for budget performance on 1) 2017 Operating Revenue (OR), 2) 2017 Adjusted Net Operating Income (ANOI), and 3) Discretion/MOB (MOB). The CEO’s individual goals are established by the Corporate Affairs Committee, and achievement of these goals is determined at the discretion of the Corporate Affairs Committee. Adjusted Net Operating Income is equal to Net Operating Income plus the amount of any provider withhold return approved by the Board of Directors during 2017. These performance criteria are weighted respectively as 30%, 50% and 20% of the total Annual Incentive Short Term Bonus.

 

TOTAL OPERATING REVENUE (2017 BUDGET OF $109,491,594)

	
Level
	
Definition
	
Performance
	
2017 OR
	
Bonus paid

	
Threshold
	
15% of Base
	
90% Budget
	
$ 98,542,435
	
$ 19,868.00

	
Target
	
30% of Base
	
100% Budget
	
$ 109,491,594
	
$ 39,735.00

	
Stretch
	
45% of Base
	
115% Budget
	
$ 125,915,333
	
$ 59,603.00

	
Maximum
	
60% of Base
	
130% Budget
	
$ 142,339,072
	
$ 79,470.00

 

ADJUSTED NET OPERATING INCOME (2017 BUDGET OF $4,261,198)

	
Level
	
Definition
	
Performance
	
2016 ANOI
	
Bonus paid

	
Threshold
	
15% of Base
	
75% Budget
	
$ 3,195,824.00
	
$ 33,113.00

	
Target
	
30% of Base
	
100% Budget
	
$ 4,261,098.00
	
$ 66,225.00

	
Stretch
	
45% of Base
	
115% Budget
	
$ 4,900,263.00
	
$ 99,338.00

	
Maximum
	
60% of Base
	
130% Budget
	
$ 5,539,427.00
	
$132,450.00

 

DISCRETION/MOB

	
Level
	
Definition
	
Achievement
	  	
Bonus paid

	
Threshold
	
15% of Base
	
90% of Goals
	  	
$ 13,245.00

	
Target
	
30% of Base
	
100% of Goals
	  	
$ 26,490.00

	
Stretch
	
45% of Base
	
115% of Goals
	  	
$ 39,735.00

	
Maximum
	
60% of Base
	
130% of Goals
	  	
$ 52,980.00

 

Notes:

	 	
1.
	
If performance is under Threshold Level in any criteria, no bonus is paid for that criteria.

 

	 	
2.
	
No additional Bonus is paid for performance beyond Maximum Level.

 

	 	
3.
	
Actual Bonus paid is calculated and paid on a continuum between any two performance levels.

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