Document:

Exhibit 10.8

 

JOHNSON CONTROLS INTERNATIONAL PLC

 

38,447,427 Shares

 

Ordinary Shares

 

JOHNSON CONTROLS INTERNATIONAL PLC 2000 STOCK OPTION PLAN

 

Original Effective Date:  January 1, 2000

 

(Adjusted to reflect 3-for-1 stock split effective September 14, 2007)

 

This document sets forth information relating to participation in the Johnson Controls International plc 2000 Stock Option Plan (the “Plan”) and to our ordinary shares that we are offering under the Plan.  We are offering participation in the Plan to our officers and other key employees and those of our subsidiaries.

 

This document will be accompanied or preceded by our latest Annual Report to Shareholders.  If you have previously received a copy of our Annual Report to Shareholders but wish to have another copy, then we will furnish an additional copy without charge upon written or oral request to us.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities offered pursuant to the Plan or determined if this prospectus is truthful and complete.  Any representation to the contrary is a criminal offense.

 

You should rely only on the information contained in this document or to which we have referred you.  We have not authorized anyone to provide you with information that is different.  The information in this document may only be accurate on the date of the document.  This document may only be used where it is legal to sell these securities.

 

This document may not be used for resales of shares acquired under the Plan.

 

 

1.                                      Establishment.  JOHNSON CONTROLS INTERNATIONAL PLC (the “Company”) has established a stock option plan for certain officers and other key employees, as described herein, known as the JOHNSON CONTROLS INTERNATIONAL PLC 2000 STOCK OPTION PLAN (the “Plan”).  It is intended that certain of the options issued pursuant to the Plan may constitute incentive stock options within the meaning of Section 422 of the Internal Revenue Code (“Incentive Shares Options”) and the remainder of the options issued pursuant to the Plan shall constitute nonqualified options.  Incentive Share Options and nonqualified share options are hereinafter jointly referred to as “Options.” The Committee may also award share appreciation rights apart from Options issued pursuant to the Plan.

 

2.                                      Purpose.  The purpose of the Plan is to induce certain officers and other key employees to remain in the employ of the Company or its subsidiaries and to encourage such employees to secure or increase on reasonable terms their share ownership in the Company.  The Board of Directors of the Company (the “Board of Directors”) believes that the Plan will promote continuity of management and increased incentive and personal interest in the welfare of the Company by those who are responsible for shaping and carrying out the long-range plans of the Company and securing its continued growth and financial success.

 

3.                                      Effective Date and History of the Plan.  The Plan was adopted by the Board of Directors on November 17, 1999, and was amended effective January 1, 2009.  The Plan was approved by the shareholders of the Johnson Controls, Inc. within twelve months of the effective date of the Plan, January 1, 2000.  Any and all Options granted prior such adoption were granted subject to shareholder approval.  The Plan terminated on December 31, 2009, and no new awards could be granted under the Plan following such termination date; provided that the Plan continued to govern awards outstanding as of such termination date and such awards shall continue in force and effect until fully distributed or terminated pursuant to their terms.  The Plan is being amended and restated in connection with, and effective immediately after the closing of, the merger (the “Merger”) being consummated on September 2, 2016 pursuant to the Agreement and Plan of Merger, dated as of January 24, 2016, by and among the Company, Johnson Controls, Inc. and Jagara Merger Sub LLC (the “Merger Agreement”).  The amendment and restatement reflects, as provided in Section 2.3 of the Merger Agreement, (i) the Company’s assumption of all rights and obligations in respect of the Plan, (ii) the amendment of all references in the Plan to a number of shares of Johnson Controls, Inc. common stock to refer instead to a number of ordinary shares of the Company and (iii) the succession of the Company’s Board of Directors or a committee thereof to the authority and responsibility of the Johnson Controls, Inc. Board of Directors or committee thereof with respect to the administration of the Plan.

 

4.                                      Shares Subject to the Plan.  Subject to adjustment in accordance with the provisions of this paragraph and paragraph 17, the total number of ordinary shares of the Company (“Shares”) available for awards during the term of the Plan shall be an amount calculated as follows:  (a) fifteen percent (15%) of the number of Shares outstanding upon the effective date of the Plan minus (b) the number of Shares subject to awards made under any prior share option plan of the Company (a “Prior Plan”) and outstanding upon the effective date of the Plan (“Prior Plan Awards”).  Shares to be delivered upon exercise of Options or settlement of share appreciation rights under the Plan shall be made available from presently authorized but unissued Shares or authorized and issued Shares reacquired and held as treasury shares, or a

 

 

combination thereof.  If any Option or share appreciation right shall be canceled, expire or terminate without having been exercised in full, or to the extent a share appreciation right is settled in cash, the Shares allocable to the unexercised, canceled, forfeited portion of such Option or share appreciation right, or portion of such share appreciation right which is settled in cash, shall again be available for the purpose of the Plan.  The surrender of any Options (and the surrender of any related share appreciation rights granted under paragraph 16) in connection with the receipt of share appreciation rights as provided in paragraph 16 shall, as to such Options, have the same effect under this paragraph 4 as the cancellation or termination of such Options without having been exercised.  If any share appreciation rights are granted under the Plan (including any grant in connection with the surrender of outstanding Options), as provided in paragraph 16, and Shares may be issuable in connection with such share appreciation rights, then the grant of such share appreciation rights shall be deemed to have the same effect under this paragraph 4 as the grant of Options; provided, however, if any such share appreciation rights shall be canceled, expire or terminate without having been exercised in full, or to the extent a share appreciation right is settled in cash, the Shares allocable to the unexercised, canceled, forfeited portion of such share appreciation right, or portion of such share appreciation right which is settled in cash, shall again be available for the purpose of the Plan.  If the exercise price of any Option granted under the Plan is satisfied by tendering Shares to the Company (by either actual delivery or by attestation), only the number of Shares issued net of the Shares tendered shall be deemed delivered for purposes of determining the maximum number of Shares available for delivery under the Plan.  If any Participant satisfies the Company’s withholding tax requirements upon the exercise of an Option by properly electing to have the Company withhold Shares, then the Shares so withheld shall again be available for the purpose of the Plan, except that such shares shall not be available for the granting of Incentive Stock Options.  After the effective date of the Plan, if any event occurs as a result of which Shares subject to Prior Plan Awards would again become available for the purpose of the relevant Prior Plan if the Prior Plan were still in effect and the Company could grant awards under the Prior Plan, then such shares shall be available for the purpose of the Plan rather than such Prior Plan (subject to any applicable limitation on the use of such shares for the granting of Incentive Stock Options) and thereby increase the shares available under the Plan as determined under the first sentence of this paragraph.

 

5.                                      Administration.

 

(a)                                 The Plan shall be administered by the Compensation and Human Resources Committee (the “Committee”) consisting of not less than three members of the Board of Directors appointed from time to time by the Board of Directors.  No member of the Committee shall be, nor at any time during the preceding one-year period have been, eligible to receive shares, shares options or share appreciation rights of the Company or of its subsidiaries pursuant to the Plan or any other plan of the Company or its subsidiaries, other than a plan for directors of the Company who are not officers or employees of the Company which provides for automatic grants without exercise of discretion by any member of the Board of Directors, or by any officer or employee of the Company.

 

(b)                                 Subject to the express provisions of the Plan, the Committee shall have authority to establish such rules and regulations as it deems necessary or advisable for the

 

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proper administration of the Plan, and in its discretion, to determine the individuals (the “Participants”) to whom, and the time or times at which, Options and share appreciation rights shall be granted, the type of Options, the periods of Options or share appreciation rights, limitations on exercise of Options or share appreciation rights, and the number of shares to be subject to each Option or award of share appreciation rights.  In making such determinations, the Committee may take into account the nature of the services rendered by the respective employees, their present and potential contributions to the success of the Company or its subsidiaries, and such other factors as the Committee, in its discretion, shall deem relevant.

 

(c)                                  Subject to the express provisions of the Plan, the Committee shall also have complete authority to interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to it, to determine the terms and provisions of the respective Option Agreements (which need not be identical) and to make all other determinations necessary or advisable for the administration of the Plan.  The Committee’s determinations on the matters referred to in this paragraph 5 shall be conclusive and binding upon all parties.

 

(d)                                 Neither the Committee nor any member thereof shall be liable for any act, omission, interpretation, construction or determination made in connection with the Plan in good faith, and the members of the Committee shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including attorneys fees) arising therefrom to the full extent permitted by law and under any directors and officers liability insurance that may be in effect from time to time.

 

(e)                                  A majority of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the Committee without a meeting, shall be the acts of the Committee.

 

(f)                                   The Chief Executive Officer of the Company shall have the same authority as the Committee with respect to the grant and administration of awards of options and share appreciation rights made to (or to be made to) individuals eligible for the Plan, excluding officers and employees who are subject to the provisions of Section 16 of the Exchange Act or who are covered by Section 162(m) of the Code at the time in question.

 

6.                                      Eligibility.  Options and share appreciation rights may be granted to officers and other key employees of the Company and of any of its present and future subsidiaries.  The maximum number of Shares covered by Options which may be granted to any Participant within any two consecutive calendar year periods shall not exceed 1.5 million shares in the aggregate.  No Option or share appreciation right shall be granted to any person who owns, directly or indirectly, shares possessing more than 10% of the total combined voting power of all classes of shares of the Company.  A director of the Company or of a subsidiary who is not also an

 

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employee of the Company or of a subsidiary will not be eligible to receive any Option or share appreciation right hereunder.

 

7.                                      Rights of Employees.  Nothing in this Plan or in any Option or share appreciation right shall interfere with or limit in any way the right of the Company and any of its subsidiaries to terminate any Participant’s or employee’s employment at any time, nor confer upon any Participant or employee any right to continue in the employ of the Company and its subsidiaries.  No employee shall have any right to be granted an award under this Plan, even if an award was granted to such employee at any prior time, or if a similarly-situated employee is or was granted an award under similar circumstances.

 

8.                                      Option Agreements.  All Options and share appreciation rights granted under the Plan shall be evidenced by written agreements (an “Option Agreement”) in such form or forms as the Committee shall determine.

 

9.                                      Option Price.  The per share Option price for Options and the per share grant price for share appreciation rights granted under paragraph 16, as determined by the Committee, shall be an amount not less than 100% of the fair market value of the stock on the date such Options or share appreciation rights are granted (or, if the Committee so determines, in the case of any share appreciation right granted under paragraph 16 upon the surrender of any outstanding Option, on the date of grant of such Option).  Effective January 1, 2009, fair market value means, per share on a particular date, the closing sales price on such date on the New York Stock Exchange, or if no sales of stock occur on the date in question, on the last preceding date on which there was a sale on such market.  If the shares are not listed on the New York Stock Exchange, but are traded on a national securities exchange or in an over-the-counter market, the closing sales price (or if there is no closing sales price reported, the average of the closing bid and asked prices) for the shares on the particular date, or on the last preceding date on which there was a sale of shares on that exchange or market, will be used.  If the shares are neither listed on a national securities exchange nor traded in an over-the-counter market, the price determined by the Committee, in its discretion, will be used.  However, in connection with an exercise of Options, to the extent the Participant sells any shares acquired upon such exercise in a market transaction on the date of exercise, the sale price(s) for any such shares shall be the fair market value of such shares.

 

10.                               Option Period.  The term of each Option and share appreciation right shall be as determined by the Committee but in no event shall the term of an Option or share appreciation right exceed a period of ten (10) years from the date of its grant.  Each Option and share appreciation right granted hereunder may granted at any time on or after the effective date of the Plan, and prior to its termination, provided that no Option or share appreciation right may be granted later than ten years after the date this Plan is adopted.  The Committee shall determine whether any Option or share appreciation right shall become exercisable in cumulative or non-cumulative installments or in full at any time.  An exercisable Stock Option or share appreciation right, or portion thereof, may be exercised in whole or in part only with respect to whole Shares.

 

11.                               Maximum Value of Incentive Share Options.  The aggregate fair market value (as defined in paragraph 9) of the Shares for which any Incentive Share Options are exercisable for the first time by a Participant during any calendar year under the Plan or any other plan of the

 

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Company or any subsidiary shall not exceed $100,000.  To the extent the fair market value of the Shares attributable to Incentive Share Options first exercisable in any calendar year exceeds $100,000, the excess portion of the Incentive Share Options shall be treated as nonqualified options.

 

12.                               Transferability of Option or Share Appreciation Right.  No Option or share appreciation right granted hereunder shall be transferable other than options specifically designated by the Compensation Committee as such and meeting the following requirements of transfer:

 

(a)                                 by will or by the laws of descent and distribution; or

 

(b)                                 in the case of a nonqualified option:

 

(i)                                     pursuant to a “Qualified Domestic Relations Order” as defined in Section 414(p) of the Internal Revenue Code; or

 

(ii)                                  to (A) his or her spouse, children or grandchildren (“Immediate Family Members”), (B) a partnership in which the only partners are the Participant’s Immediate Family Members, or (C) a trust or trusts established solely for the benefit of one or more of the Participant’s Immediate Family Members (collectively, the Permitted Transferees), provided that there may be no consideration for any such transfer by a Participant.

 

Following transfer (if applicable), such Options and share appreciation rights shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that such Options and share appreciation rights may be exercised during the life of the Participant only by the Participant or, if applicable, by the alternate payee designated under a Qualified Domestic Relations Order or the Participant’s Permitted Transferees.

 

13.                               Exercise of Option.  The Committee shall prescribe the manner in which a Participant may exercise an Option which is not inconsistent with the provisions of this Plan.  However, no Option shall be exercisable, in whole or in part, for a period of at least six months commencing on the date of grant, except as provided in paragraph 20 in the event of a Change in Control.  An Option may be exercised, subject to limitations on its exercise contained in the Option Agreement and in this Plan, in full, at any time, or in part, from time to time, only by (A) written notice of intent to exercise the Option with respect to a specified number of shares, and (B) by payment in full to the Company at the time of exercise of the Option, of the option price of the shares being purchased.  Payment of the Option price may be made (i) in cash, (ii) if permitted by the applicable Option Agreement, by tendering of Shares equivalent in fair market value (as defined in paragraph 9), or (iii) if permitted by the applicable Option Agreement, partly in cash and partly in Shares.  Shares may be tendered either by actual delivery of Shares or by attestation.

 

14.                               Withholding.  If permitted by the applicable Option Agreement, a Participant may be permitted to satisfy the Company’s withholding tax requirements by electing (i) to have the Company withhold Shares of the Company, or (ii) to deliver to the Company Shares of the Company having a fair market value on the date income is recognized on the exercise of a

 

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nonqualified option equal to the minimum amount required to be withheld.  The election shall be made in writing and according to such rules and in such form as the Committee shall determine.

 

Notwithstanding the foregoing, the election and satisfaction of any withholding requirement through the withholding of Shares or the tender of shares of Company Stock may be made only at such times as are permitted, without incurring liabilities, by Rule 16b-3 of the Securities Exchange Act of 1934, as amended, or such other securities laws, rules or regulations as may be applicable.

 

15.                               Termination of Employment.

 

(a)                                 In the event a Participant’s employment with the Company or any of its subsidiaries shall be terminated for any reason, except early or normal retirement, death or total and permanent disability, then (i) effective for grants made prior to March 23, 2005, all rights to exercise an Option or share appreciation right shall terminate immediately, and (ii) effective for grants made on or after March 23, 2005, a Participant may exercise his or her Options and share appreciation rights (to the extent vested and exercisable as of the date of the Participant’s termination of employment) for a period of thirty (30) days after the date of the Participant’s termination of employment, unless such Option or share appreciation right expires earlier under the terms of the award agreement.  Thereafter, in the case of grants made on or after March 23, 2005, all rights to exercise an Option or share appreciation right shall terminate.

 

(b)                                 If the Participant should die while employed by the Company or any subsidiary prior to the expiration of the term of the Option or share appreciation right, the Option or share appreciation right shall be exercisable immediately to the extent it would have been exercisable had the Participant remained employed for twelve months after the date of death and may be exercised by the person to whom it is transferred by will or by the applicable laws of descent and distribution by giving notice as provided in paragraph 13, at any time within twelve months after the date of death unless such Option or share appreciation right expires earlier under the terms of the Option Agreement.  For purposes of this paragraph, the six-month limitation imposed pursuant to paragraph 13 shall not be applicable.

 

(c)                                  In the event of a Participant’s termination of employment with the Company due to early or normal retirement, or due to total and permanent disability, prior to the expiration of the term of an Option or share appreciation right, the Option or share appreciation right (i) shall be exercisable in full without regard to any vesting requirement; provided that, effective for grants made on or after March 23, 2005, an Option or share appreciation right of a Participant who retires shall be exercisable in full only if the Participant retires on or after the last day of the calendar year following the calendar year in which such Option or share appreciation right was granted, unless the Committee determines otherwise, and (ii) may be exercised by the Participant at any time within thirty-six months (except that grants of Incentive Share Options made prior to March 23, 2005 may be exercised only within three months) after the date of such early or normal

 

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retirement or termination due to total and permanent disability, as the case may be, unless such Option or share appreciation right expires earlier under the terms of the award agreement.  Provided, however, that for certain participants who are officers of the Company or who are selected by the Compensation Committee of the Board, nonqualified share options may be exercised by the Participant for up to ten (10) years after the date of such early or normal retirement, or for five (5) years after the date of such total and permanent disability, as the case may be, in the event of termination of employment with the Company due to early or normal retirement, or due to total and permanent disability, prior to the expiration of the term of the Option or share appreciation right, unless such Option or share appreciation right expires earlier under the terms of the Option Agreement.  For purposes hereof, a Participant’s employment shall be deemed to have terminated due to (a) early or normal retirement if such Participant is then eligible to receive immediate early or normal retirement benefits under the provisions of any of the Company’s or its subsidiaries defined benefit pension plans; or, in the absence of a defined benefit plan, provided such Participant retires with ten years of service and is at least 55 years old or retires with five years of service and is at least 65 years old and (b) total and permanent disability if he is permanently disabled within the meaning of Section 22(e)(3) of the Internal Revenue Code, as in effect from time to time.

 

For purposes of this Plan:  (a) a transfer of an employee from the Company to a 50% or more owned subsidiary, partnership, joint venture or other affiliate (whether or not incorporated) or vice versa, or from one subsidiary, partnership, joint venture or other affiliate to another or (b) a leave of absence duly authorized in writing by the Company, provided the employee’s right to re-employment is guaranteed either by statute or by contract, shall not be deemed a termination of employment under the Plan, notwithstanding the foregoing, from and after a Change of Control, as defined in paragraph 20, Options and share appreciation rights shall continue to be exercisable for three months after a Participant’s termination of employment.

 

16.                               Share Appreciation Rights.  Share appreciation rights may be granted separate from any Option granted under the Plan to any Participant.  Such share appreciation rights may be exercised by a Participant by written notice of intent to exercise the share appreciation rights delivered to the Committee, which notice shall state the number of shares in respect of which the share appreciation rights are being exercised.  Upon such exercise, the Participant shall be entitled to receive the economic value of such share appreciation rights determined in the manner described in subparagraph (b) of this paragraph 16 and in the form prescribed in subparagraph (c) of this paragraph 16.

 

Share appreciation rights shall be subject to terms and conditions not inconsistent with other provisions of the Plan as shall be determined by the Committee, which shall include the following:

 

(a)                                 Share appreciation rights granted in connection with the surrender of an Option shall be exercisable or transferable at such time or times and only to the extent

 

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that the Option to which they related was exercisable or transferable.  The Committee shall have complete authority to determine the terms and conditions applicable to other share appreciation rights, including the periods applicable to such rights, limitations on exercise and the number of shares in respect to which such share appreciation rights are exercisable.

 

(b)                                 Upon the exercise of share appreciation rights, a Participant shall be entitled to receive the economic value thereof, which value shall be equal to the excess of the fair market value of one Share on the date of exercise over the grant price per share, multiplied by the number of shares in respect of which the share appreciation rights shall have been exercised.  Share appreciation rights which have been so exercised shall no longer be exercisable in respect of such number of shares.

 

(c)                                  The Committee shall have the sole discretion either (i) to determine the form in which payment of such economic value will be made (i.e., cash, shares, or any combination thereof) or (ii) to consent to or disapprove the election of the Participant to receive cash in full or partial payment of such economic value.

 

(d)                                 The exercise of share appreciation rights by a Participant pursuant to the Plan may be made only at such times as are permitted by Rule 16b-3 of the Securities Exchange Act of 1934, without liabilities, or such other securities laws or rules as may be applicable.

 

(e)                                  Share appreciation rights shall be exercisable only when the fair market value of the Shares to which the share appreciation rights relate exceeds the grant price of such share appreciation rights.

 

17.                               Adjustment Provisions.  In the event of any change in the Shares by reason of a declaration of a share dividend (other than a share dividend declared in lieu of an ordinary cash dividend), spin-off, merger, consolidation recapitalization, or split-up, combination or exchange of shares, or otherwise, the aggregate number and class of shares available under this Plan (including the per Participant limit on awards in Section 6), the number and class of shares subject to each outstanding Option and share appreciation right, the option price for shares subject to each outstanding Option, and the option price or grant price and economic value of any share appreciation rights shall be appropriately adjusted by the Committee, whose determination shall be conclusive.  Unless the Committee determines otherwise, any such adjustment to an award that is exempt from Code Section 409A shall be made in manner that permits the award to continue to be so exempt, and any adjustment to an award that is subject to Code Section 409A shall be made in a manner that complies with the provisions thereof.  Notwithstanding the foregoing, in the case of a share dividend (other than a share dividend declared in lieu of an ordinary cash dividend) or split-up (including a reverse share split), if no action is taken by the Committee, adjustments contemplated by this subsection that are proportionate shall nevertheless automatically be made as of the date of such share dividend or split-up.

 

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18.                               Termination and Amendment of Plan.  The Plan shall terminate on December 31, 2009, unless sooner terminated as hereinafter provided.  The Board of Directors may at any time terminate the Plan, or amend the Plan as it shall deem advisable including (without limiting the generality of the foregoing) any amendments deemed by the Board of Directors to be necessary or advisable to assure conformity of the Plan and any Incentive Share Options granted thereunder to the requirements of Section 422 of the Internal Revenue Code as now or hereafter in effect and to assure conformity with any requirements of other state and federal laws or regulations now or hereafter in effect; provided, however, that the Board of Directors may not, without further approval by the shareholders of the Company, amend paragraph 24 or make any modifications to the Plan which, by applicable law, require such approval.  No termination or amendment of the Plan may, without the consent of the Participant to whom any Option or share appreciation rights shall have been granted, adversely affect the rights of such Participant under such Option or share appreciation rights.  The Board of Directors may also, in its discretion, permit any Option or share appreciation right to be exercised prior to the earliest date fixed for exercise thereof under the Option Agreement.  Notwithstanding the foregoing, the Board specifically reserves the right to amend the provisions of Sections 20 and 21 prior to the effective date of a Change of Control without the need to obtain the consent of the Participants or any other individual with a right to an award granted hereunder.  Notwithstanding the foregoing, unless determined otherwise by the Board or Committee, any such amendment shall be made in a manner that will enable an award intended to be exempt from Code Section 409A to continue to be so exempt, or to enable an award intended to comply with Code Section 409A to continue to so comply.

 

19.                               Rights of a Shareholder.  A Participant shall have no rights as a shareholder with respect to shares covered by his or her Option until the date of issuance of the share to the participant and only after such shares are fully paid or with respect to share appreciation rights.  No adjustment will be made for dividends or other rights for which the record date is prior to the date such shares are issued.

 

20.                               Change of Control.  Notwithstanding the foregoing, upon Change of Control, all previously granted Options and share appreciation rights shall immediately become exercisable to the full extent of the original grant.  For purposes of this Plan, a “Change of Control” means any of the following events subsequent to the Merger:  (i) the acquisition, other than from the Company, by any individual, entity or group (within the meaning of Section 13(d) or 14(d)(2) of the Securities Exchange Act of 1934, as amended from time to time) (the “Exchange Act”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of the Company (the “Outstanding Company Shares”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Company Voting Securities”), provided, however, that any acquisition by (x) the Company of any of its subsidiaries, or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (y) any corporation with respect to which, following such acquisition, more than 60% of respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Shares and Company Voting

 

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Securities immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition of the Outstanding Company Shares and Company Voting Securities, as the case may be, shall not constitute a change in control of the Company; or (ii) individuals who, as of immediately following the Merger, constitute the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to September 28, 1994, whose election or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or (iii) approval by the shareholders of the Company of consummation of a reorganization, merger or consolidation (a “Business Combination”), in each case, with respect to which all or substantially all of the of the individuals and entities who were the respective beneficial owners of the Outstanding Company Shares and Company Voting Securities immediately prior to such Business Combination do not, following such Business Combination, beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporations resulting from such Business Combination in substantially the same proportion as their ownership immediately prior to such Business Combination or the Outstanding Company Shares and Company Voting Securities, as the case may be; or (iv) (A) a complete liquidation or dissolution of the company or a (B) sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect to which, following such sale or disposition, more than 60% of, respectively, the then outstanding shares and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors is then owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Shares and Company Voting Securities immediately prior to such sale or disposition in substantially the same proportion as their ownership of the Outstanding Company Shares and Company Voting Securities, as the case may be, immediately prior to such sale or disposition.  For the avoidance of doubt, notwithstanding anything to the contrary herein, the Merger was deemed to have constituted a Change of Control to the extent provided in the Merger Agreement.

 

21.                               Termination of Awards.  Notwithstanding the foregoing, upon a Change in Control, the Committee may in its discretion, commencing at the time of a Change in Control and continuing for a period of sixty days thereafter, cancel each outstanding Option or share appreciation right in exchange for a cash payment to the holder thereof in an amount equal to the number of Options or share appreciation rights that have not been exercised multiplied by the excess of the fair market value per Share on the date of the Change in Control (or, if the Change in Control is the result of a transaction or a series of transactions described in paragraphs (i) or (ii) of the definition of Change in Control and the Option or share appreciation right is cancelled on the date of the Change in Control, the highest price per Share paid in such transaction or series of transactions on the date of the Change in Control) over the exercise price of the Option or the grant price of the share appreciation right, as the case may be.

 

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22.                               Governing Law and Arbitration.  The Plan, and all awards hereunder, and all determinations made and actions taken pursuant to the Plan, shall be governed by the internal laws of the State of Wisconsin (without reference to conflict of law principles thereof) and construed  in accordance therewith, to the extent not otherwise governed by the laws of the United States or as otherwise provided hereinafter.  Notwithstanding anything to the contrary herein, if any individual brings a claim that relates to benefits under this Plan, regardless of the basis of the claim (including but not limited to wrongful discharge or Title VII discrimination), such claim shall be settled by final binding arbitration in accordance with the rules of the American Arbitration Association (“AAA”) and the following provisions, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

 

(a)                                 Initiation of Action.  Arbitration must be initiated by serving or mailing a written notice of the complaint to the other party.  Normally, such written notice should be provided to the other party within one year (365 days) after the day the complaining party first knew or should have known of the events giving rise to the complaint.  However, this time frame may be extended if the applicable statute of limitation provides for a longer period of time.  If the complaint is not properly submitted within the appropriate time frame, all rights and claims that the complaining party has or may have against the other party shall be waived and void.  Any notice sent to the Company shall be delivered to:

 

Office of General Counsel

Johnson Controls International plc

5757 North Green Bay Avenue

P.O. Box 591

Milwaukee, WI  53201-0591

 

The notice must identify and describe the nature of all complaints asserted and the facts upon which such complaints are based.  Notice will be deemed given according to the date of any postmark or the date of time of any personal delivery.

 

(b)                                 Compliance with Personnel Policies.  Before proceeding to arbitration on a complaint, the claimant must initiate and participate in any complaint resolution procedure identified in the Company’s or subsidiary’s personnel policies.  If the claimant has not initiated the complaint resolution procedure before initiating arbitration on a complaint, the initiation of the arbitration shall be deemed to begin the complaint resolution procedure.  No arbitration hearing shall be held on a complaint until any applicable Company or subsidiary complaint resolution procedure has been completed.

 

(c)                                  Rules of Arbitration.  All arbitration will be conducted by a single arbitrator according to the Employment Dispute Arbitration Rules of the AAA.  The arbitrator will have authority to award any remedy or relief that a court of competent jurisdiction could order or grant including, without limitation, specific performance of any obligation created under the award or policy, the awarding of punitive damages, the issuance of any injunction, costs and attorney’s fees to the extent permitted by law, or the imposition of sanctions for abuse of the arbitration

 

11

 

process.  The arbitrator’s award must be rendered in a writing that sets forth the essential findings and conclusions on which the arbitrator’s award is based.

 

(d)                                 Representation and Costs.  Each party may be represented in the arbitration by an attorney or other representative selected by the party.  The Company or subsidiary shall be responsible for its own costs, the AAA filing fee and all other fees, costs and expenses of the arbitrator and AAA for administering the arbitration.  The claimant shall be responsible for his attorney’s or representative’s fees, if any.  However, if any party prevails on a statutory claim which allows the prevailing party costs and/or attorneys’ fees, the arbitrator may award costs and reasonable attorneys’ fees as provided by such statute.

 

(e)                                  Discovery; Location; Rules of Evidence.  Discovery will be allowed to the same extent afforded under the Federal Rules of Civil Procedure.  Arbitration will be held at a location selected by the Company.  AAA rules notwithstanding, the admissibility of evidence offered at the arbitration shall be determined by the arbitrator who shall be the judge of its materiality and relevance.  Legal rules of evidence will not be controlling, and the standard for admissibility of evidence will generally be whether it is the type of information that responsible people rely upon in making important decisions.

 

(f)                                   Confidentiality.  The existence, content or results of any arbitration may not be disclosed by a party or arbitrator without the prior written consent of both parties.  Witnesses who are not a party to the arbitration shall be excluded from the hearing except to testify.

 

23.                               Unfunded Plan.  This Plan shall be unfunded.  No person shall have any rights greater than those of a general creditor of the Company.

 

24.                               Repricing.  Except for adjustments pursuant to paragraph 17, neither the per share Option price for any outstanding Option granted under the Plan nor the per share grant price for share appreciation rights granted under the Plan may be decreased after the date of grant nor may an outstanding Option or share appreciation right granted under the Plan or a Prior Plan be surrendered to the Company as consideration for the grant of a new Option or share appreciation right with a lower exercise or grant price.

 

25.                               Termination for Cause or Inimical Conduct.  Notwithstanding any provisions of the Plan or an award agreement to the contrary, a Participant’s Option or share appreciation right shall be immediately cancelled and forfeited, regardless of vesting, and any pending exercises shall be cancelled, on the date that:  (a) the Company or subsidiary terminates the Participant’s employment for Cause, (b) the date that the Committee determines that the Participant’s employment could have been terminated for Cause if the Company or subsidiary had all relevant facts in its possession as of the date of the Participant’s termination, or (c) the Committee determines the Participant has engaged in Inimical Conduct.   The Committee may suspend all exercises or delivery of cash or shares (without liability for interest thereon) pending its determination of whether the Participant has been or should have been terminated for Cause or has engaged in Inimical Conduct.  For purposes hereof:

 

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(a)                                 “Cause” means:  (1) if the Participant is subject to an employment agreement that contains a definition of “cause,” such definition, or (2) otherwise, any of the following as determined by the Committee:  (a) violation of the provisions of any employment agreement, non-competition agreement, confidentiality agreement, or similar agreement with the Company or subsidiary, or the Company’s or subsidiary’s code of ethics, as then in effect, (b) conduct rising to the level of gross negligence or willful misconduct in the course of employment with the Company or subsidiary, (c) commission of an act of dishonesty or disloyalty involving the Company or subsidiary, (d) violation of any federal, state or local law in connection with the Participant’s employment, or (e) breach of any fiduciary duty to the Company or a subsidiary.

 

(b)                                 “Inimical Conduct” means any act or omission that is inimical to the best of interests of the Company or any subsidiary, as determined by the Committee in its sole discretion, including but not limited to:  (1) violation of any employment, noncompete, confidentiality or other agreement in effect with the Company or any subsidiary, (2) taking any steps or doing anything which would damage or negatively reflect on the reputation of the Company or a subsidiary, or (3) failure to comply with applicable laws relating to trade secrets, confidential information or unfair competition.

 

26.                               Offset.  The Company shall have the right to offset, from any amount payable or shares deliverable hereunder, any amount that the Participant owes to the Company or any subsidiary without the consent of the Participant or any individual with a right to the Participant’s award.

 

27.                               Severability.  In the event any provision of the Plan or any award agreement is held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan or such award agreement, and the Plan or award agreement shall be construed and enforced as if the said illegal or invalid provision had not been included.

 

28.                               Code Section 409A.  The provisions of Code Section 409A are incorporated herein by reference to the extent necessary for any award that is subject to Code Section 409A to comply therewith.  Notwithstanding any provisions of the Plan, the Company does not guarantee to any Participant or any other person with an interest in an award that any award intended to be exempt from Code Section 409A shall be so exempt, nor that any award intended to comply with Code Section 409A shall so comply, nor will the Company or any affiliate indemnify, defend or hold harmless any individual with respect to the tax consequences of any such failure.

 

13layn-ex41_143.htm

Exhibit 4.1

FIRST AMENDMENT AND CONSENT TO AMENDED AND RESTATED CREDIT AGREEMENT

This First Amendment and Consent to Amended and Restated Credit Agreement, dated June 9, 2016, by and among Layne Christensen Company, a Delaware corporation (the “Administrative Borrower”), each Co-Borrower (as defined in the Credit Agreement (as defined below)), the Guarantors (as defined in the Credit Agreement), the Required Lenders (as defined in the Credit Agreement) and PNC Bank, National Association, as administrative agent for the Lenders (in such capacity, the “Agent”) (the “First Amendment”).

W I T N E S S E T H:

WHEREAS, the Administrative Borrower, each Co-Borrower, the Guarantors, the Lenders (as defined in the Credit Agreement) party thereto, the Co-Collateral Agents (as defined in the Credit Agreement), the Agent, the Swingline Lender (as defined in the Credit Agreement), the Issuing Bank (as defined in the Credit Agreement), the Arranger (as defined in the Credit Agreement) and the Syndication Agent (as defined in the Credit Agreement) entered into that certain Amended and Restated Credit Agreement, dated as of August 17, 2015 (as amended, modified, supplemented or restated from time to time, the “Credit Agreement”), pursuant to which, among other things, the Lenders, the Swingline Lender and the Issuing Bank, as applicable, agreed to extend credit to Borrowers (as defined in the Credit Agreement); 

WHEREAS, the Borrowers have requested that the Required Lenders consent to the voluntary repurchase by the Administrative Borrower of a portion of the Senior Secured Notes, and the Required Lenders have agreed to consent to the foregoing, on the terms and subject to the satisfaction of the conditions set forth herein; and

WHEREAS, the Borrowers and the Guarantors desire to amend certain provisions of the Credit Agreement and the Agent and the Required Lenders desire to permit such amendments on the terms and subject to the satisfaction of the conditions set forth herein.

NOW, THEREFORE, in consideration of the premises contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

1.Capitalized Terms.  All capitalized terms used herein which are defined in the Credit Agreement shall have the same meaning herein as in the Credit Agreement unless the context clearly indicates otherwise.

2.Consent to Repurchase of Senior Notes.

(a)Notwithstanding anything to the contrary contained in the Credit Agreement, including, but not limited to, Section 6.11(a) thereof, and subject to the satisfaction of the conditions set forth in Section 4 hereof, the Required Lenders hereby consent to the voluntary repurchase by the Administrative Borrower of the Senior Secured Notes, in an aggregate amount not to exceed $10,000,000 (the “2016 Senior Notes Repurchase”); provided that, prior to and 

 

 

 

after giving effect to the 2016 Senior Notes Repurchase, no Default or Event of Default has occurred or would occur under the Credit Agreement. 

(b)The consent in Section 2(a) above is only effective as to the 2016 Senior Notes Repurchase.  The consent will not be deemed a consent to the departure by the Borrowers from the requirements set forth in any other covenants or agreements contained in the Credit Agreement and the Loan Documents with respect to any other transaction or matter.  The Borrowers agree that the consent set forth in Section 2(a) is limited to the precise meaning of the words as written therein and will not be deemed (i) to be a consent to, or any waiver or modification of, any other term or condition of the Credit Agreement or any Loan Document, or (ii) prejudice any right or remedy that Agent or Lenders may now have or may in the future have under or in connection with the Credit Agreement and the Loan Documents other than with respect to the matters for which the consent in the preceding paragraph has provided.  Other than as described in this First Amendment, the consent in the preceding paragraph shall not alter, affect, release or prejudice in any way any of the Borrowers’ Obligations under the Credit Agreement and the Loan Documents.  The consent shall not be construed as establishing a course of conduct on the part of Agent or Lenders upon which the Borrowers may rely at any time in the future.  The Borrowers expressly waive any right to assert any claim to such effect at any time.  

3.Amendments.  The effective date of this First Amendment shall be the date on which this First Amendment becomes effective in accordance with Section 4 below (the “Effective Date”).  As of the Effective Date, the Credit Agreement is amended as follows1:

(a)Section 1.01 of the Credit Agreement is hereby amended by adding the following new definition in the appropriate alphabetical order:

“First Amendment Closing Date” shall mean June 9, 2016.

 

(b)Section 5.13 of the Credit Agreement is hereby amended and restated in its entirety as follows:

(a)The Borrowers agree that the Co-Collateral Agents (including their agents, representatives and consultants) shall be permitted to conduct from time to time collateral field examinations with respect to the assets included in the Borrowing Base (and related assets); provided, that, (i) each collateral field examination shall be conducted by the Co-Collateral Agents, (ii) so long as no Event of Default shall exist or have occurred and be continuing, the Co-Collateral Agents shall only be permitted to conduct two (2) collateral field examinations at the Borrowers’ expense in any twelve (12) consecutive month period (which expense shall include a fee separately charged by the Co-Collateral Agents not to exceed $1,000 per day, per examiner, plus reasonable out-of-pocket expenses (including travel, meals, and lodging) for each field examination of any Borrower performed by 

	
	 

	
1 
	
 Certain language has been italicized in this First Amendment solely for purposes of indicating new language in this First Amendment.  Deletions are not reflected.

2

 

 

personnel respectively employed by the Co-Collateral Agents); except, that, during a Cash Dominion Period that continues for more than forty-five (45) consecutive days, one (1) additional collateral field examination may be conducted during such twelve (12) consecutive month period at the cost and expense of Borrowers; and (iii) the person(s) conducting such collateral field examinations shall be reasonably satisfactory to the Co-Collateral Agents.  None of the Agent, the Co-Collateral Agents nor any Lender shall have any duty to any Borrower to make any inspection, nor to share any results of any inspection or report with any Borrower.  Each of the Borrowers acknowledges that all inspections and reports are prepared by the Agent, the Co-Collateral Agents and the Lenders for their purposes and the Borrowers shall not be entitled to rely upon them. 

 

(b)Upon Co-Collateral Agents’ request, Borrowers shall, at their expense, deliver or cause to be delivered to Co-Collateral Agents an Equipment Appraisal, but so long as no Event of Default shall exist or have occurred and be continuing, no more than two (2) such Equipment Appraisals shall be at the cost and expense of Borrowers in any twelve (12) consecutive month period; provided, that (i) during a Cash Dominion Period that continues for more than forty-five (45) consecutive days, one (1) additional Equipment Appraisal may be conducted during such twelve (12) consecutive month period at the cost and expense of Borrowers. 

 

4.Conditions to Effectiveness.  The provisions of Sections 2 and 3 of this First Amendment shall not become effective until the Agent has received the following, each in form and substance acceptable to the Agent:

(a)this First Amendment, duly executed by the Borrowers, the Guarantors, the Required Lenders and the Agent;

(b)the Fee Letter, dated as of the date hereof, duly executed by Borrowers and Wells Fargo Bank, N.A.; 

(c)the Fee Letter, dated as of the date hereof, duly executed by Borrowers and PNC Bank, National Association;

(d)Lenders, the Agent and Agent’s counsel shall have received payment of all fees and expenses owed to the Lenders, the Agent and the Agent's counsel, respectively, in connection with this First Amendment, including pursuant to the Fee Letters described in clauses (b) and (c) above; and

(e)such other documents as may be reasonably requested by the Agent.    

3

 

 

The authorization of the Agent and the Lenders to release their executed signature page for this First Amendment shall constitute their acknowledgment that all of the above conditions have been satisfied.

 

5.Reaffirmation.  The Loan Parties hereby reconfirm and reaffirm that each of the representations and warranties made by any Loan Party set forth in Article III of the Credit Agreement or in any other Loan Document are true and correct in all material respects (or true and correct in all respects in the case of representations and warranties qualified by materiality or Material Adverse Effect) as of the date of this First Amendment (or, to the extent any such representations or warranties relate to an earlier date, such representations and warranties shall have been true and correct in all material respects (or true and correct in all respects in the case of representations and warranties qualified by materiality or Material Adverse Effect) on and as of such earlier date).

6.Security Grant.  The Loan Parties acknowledge and agree that at all times the Security Documents continue to secure prompt payment when due of the Obligations and the Guarantees remain in full force and effect.

7.Representations and Warranties.  Each Loan Party hereby represents and warrants to the Lenders and the Agent that (i) this First Amendment and the transactions to be entered into by each Loan Party in connection herewith are within such Loan Party's powers and have been duly authorized by all necessary corporate or other organizational action on the part of such Loan Party; (ii) the execution and delivery hereof by the Loan Parties and the performance and observance by the Loan Parties of the provisions hereof and of the Credit Agreement and all documents executed or to be executed therewith, do not violate the Organizational Documents of any Loan Party or any material Legal Requirement in any material respect; and (iii) this First Amendment, the Credit Agreement and the other Loan Documents executed or to be executed by the Loan Parties in connection herewith or therewith, when executed by such Loan Party, will constitute a legal, valid and binding obligation of such Loan Party, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.  The Loan Parties represent and warrant that (i) no Default or Event of Default exists under the Credit Agreement, nor will any occur as a result of the execution and delivery and effectiveness of this First Amendment or the performance or observance of any provision hereof and (ii) they presently have no claims or actions of any kind at law or in equity against the Lenders or the Agent arising out of or in any way relating to the Credit Agreement or the Loan Documents.

8.Miscellaneous.  

(a)Each reference to the Credit Agreement that is made in the Credit Agreement or any other document executed or to be executed in connection therewith shall hereafter be construed as a reference to the Credit Agreement as amended hereby.

(b)The agreements contained in this First Amendment are limited to the specific agreements contained herein.  Except as amended hereby, all of the terms and conditions of the 

4

 

 

Credit Agreement and the Loan Documents shall remain in full force and effect.  This First Amendment amends the Credit Agreement and is not a novation thereof. 

(c)The headings of any paragraph of this First Amendment are for convenience only and shall not be used to interpret any provision hereof. 

(d)This First Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts each of which, when so executed, shall be deemed to be an original, but all such counterparts shall constitute but one and the same instrument.

(e)This First Amendment shall be governed by, and shall be construed and enforced in accordance with, the laws of the State of New York.  This First Amendment is a Loan Document.

 

 

[INTENTIONALLY LEFT BLANK]

5

 

 

IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto, have caused this First Amendment to be duly executed by their duly authorized officers on the day and year first above written.

ADMINISTRATIVE BORROWER

 

LAYNE CHRISTENSEN COMPANY

 

By:  /s/ Keith Verville

Name:   Keith Verville

Title:   Vice President – Finance and Treasurer

 

CO-BORROWERS

 

LAYNE GEO, INC.

COLLECTOR WELLS INTERNATIONAL, INC.

FENIX SUPPLY LLC

INLINER TECHNOLOGIES, LLC

INTERNATIONAL DIRECTIONAL SERVICES, L.L.C.

LAYNE HEAVY CIVIL, INC.

LAYNE INLINER, LLC

LAYNE TRANSPORT CO.

LINER PRODUCTS, LLC

REYNOLDS WATER ISLAMORADA, LLC

LAYNE VTI, INC.

W.L. HAILEY & COMPANY, INC.

 

 

By:  /s/ Keith Verville

Name:   Keith Verville

Title:   Vice President – Finance and Treasurer

 

GUARANTORS

 

BOYLES BROS. DRILLING COMPANY

CHRISTENSEN BOYLES CORPORATION

LAYNE INTERNATIONAL, LLC

LAYNE SOUTHWEST, INC.

MEADORS CONSTRUCTION CO., INC.

MID-CONTINENT DRILLING COMPANY

 

By:  /s/ Keith Verville

Name:   Keith Verville

Title:   Vice President – Finance and Treasurer

 

 

 

PNC BANK, NATIONAL ASSOCIATION,
as Agent and as a Lender 

 

 

 

By:  /s/ Victor Alarcon

Name:   Victor Alarcon

Title:   Senior Vice President

 

WELLS FARGO BANK, N.A.,
as a Lender

 

 

 

By:  /s/ Michael P. Henry

Name:   Michael P. Henry

Title:   Duly Authorized Signatory

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