Document:

Exhibit 10.3(b)(3)

		

			Exhibit 10.3(b)(3)

		

		

			 

		

		
			BROWN SHOE COMPANY, INC.
		

		
			INCENTIVE AND STOCK COMPENSATION PLAN OF 2011
		

		
			PERFORMANCE AWARD AGREEMENT
		

		
			
		

		
			THIS AWARD AGREEMENT, effective March 14, 2013, represents the grant of both Performance Units ("Performance Units") and a Cash-Based Award ("Cash-Based Award") (collectively, the "Award") by Brown Shoe Company, Inc. ("Company") to the Participant named below, who has been selected by the Compensation Committee of the Company's Board of Directors (the "Committee") to receive the Award with respect to the Performance Periods set forth below under the Company’s Incentive and Stock Compensation Plan of 2011 (the "Plan").  Subject to the key terms set forth below and the attached General Terms and Conditions (dated as of March 14, 2013), all of which constitute part of this Agreement, this Award provides:
		

		
			 
		

		
			Participant:
		

		
			 
		

		
			Performance Award, being a combination of the 
		

		
			Number of Performance Units:
		

		
			Form of Payment:    cash equivalent of the mark-to-market value of Company stock upon payout
		

		
			Amount of Cash-Based Award:    $
		

		
			Form of Payment: cash
		

		
			Performance Cycle:   The Company’s Fiscal Years 2013 through 2015
		

		
			Performance Periods:    Four distinct performance periods:  fiscal 2013, fiscal 2014, fiscal 2015 and the three-year period of fiscal 2013 - 2015 with one-fourth of the target award allocated to each of fiscal 2013, fiscal 2014, fiscal 2015 and the three-year period of fiscal 2013 - 2015
		

		
			Performance:    As approved by the Committee
		

		
			Minimum Performance Level:    As approved by the Committee
		

		
			Maximum Award Value:  200% of Target Award
		

		
			
		

		
			IN WITNESS WHEREOF, the parties have caused this Agreement to be executed effective as of the last date written below.
		

		
			 
		

			
					
						 

				
	
					
						 

					
					
						BROWN SHOE COMPANY, INC.

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						Sarah E. Stephenson

				
	
					
						 

					
					
						Vice President, Total Rewards

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						Date:

				

		
			Accepted: ___________________
		

		
			Participant Signature
		

		
			
		

		 

		

			 

		

 

		

			

		

		
		

		
			Brown Shoe Company, Inc.
		

		
			 
		

		
			PERFORMANCE AWARD 2013 to 2015
		

		
			General Terms and Conditions (as of March 14, 2013)  
		

		
			 
		

		
			 
		

		
			The parties hereto agree as follows:
		

		
			 
		

		
			1.        Performance Period(s).  The Performance Period(s) shall be as specified on the executed cover page of this Award.
		

		
			 
		

		
			2.        Value of Award.  The Award shall represent and have a Maximum Award Value as specified on the executed cover page of this Award.
		

		
			 
		

		
			3.        Earning the Award; Certification of Performance and Percent Earned.  The Award shall be “earned” following the end of the Performance Period, as of the date the Committee shall determine and certify: (a) whether the Minimum Performance Level (as set forth on Attachment A) has been satisfied; (b) and if so, the percent of the Award that has been earned in accordance with the Performance Payoff Profile (as set forth on Attachment A) (the “Percent Earned”), but in no event  more than the Maximum Award Value; and provided that the determinations pursuant to (a) and (b) shall be subject to the Committee’s right to exercise its discretion to reduce the Company’s level of performance based on the quality of earnings.  All calculations as to the Performance Measures shall be subject to the Committee’s right, pursuant to Section 14.2 of the Plan, to make adjustments for unusual or nonrecurring events.  
		

		
			 
		

		
			4.        Amount Payable and Payment of the Award.  
		

		
			(a)      Unless this Award is sooner terminated in accordance with Section 5, an earned Award (as provided in Section 3) shall be payable within sixty (60) days following completion of the Performance Cycle.  Subject to Section 5(b) and in accordance with Section 5(c), this Award shall not be payable and shall be forfeited if Participant terminates employment with the Company prior to the date that the Award payment is made to the Participant.  
		

		
			 
		

		
			(b)     The amount payable to the Participant shall be determined by multiplying the Percent Earned by the Target Award specified on Attachment A, subject to the Committee’s right to exercise discretion as provided in Section 3.  
		

		
			 
		

		
			(c)    Unless otherwise specified on the executed cover page of this Award, payment of the earned Performance Units shall be made in cash equivalent to the Fair Market Value of a number of the Company’s Shares equal to the number of Performance Units at time of payout, and payment of the earned Cash-Based Award shall be made in cash.  
		

		
			 
		

		
			5.        Termination Provisions.  
		

		
			(a)  If, pursuant to Section 3, the Committee certifies that the Minimum Performance Level has not been achieved, this Award shall immediately terminate and no longer be of any effect.  
		

		
			 
		

		
			(b)    If Participant’s employment is terminated during the Performance Period by reason of death, Disability, Retirement or Early Retirement, the Committee, in its sole discretion, shall determine whether the Participant (or Participant’s beneficiary in the event of death) shall be eligible to receive any payment under this Award.  If payment of this Award is approved by the Committee, such payment shall be pro-rated based on the number of full months of continued active employment by Participant during the Performance Cycle as a percent of the total number of months in the Performance Cycle; the amount payable shall be based on the Percent Earned; and payment shall be made pursuant to Section 4 at the same time as payment of other awards for the same Performance Cycle are made to other eligible participants who did not terminate employment during the Performance Cycle.  Notwithstanding the 
		

		 

		

			 

		

		

			            

		

 

		

			

		

		foregoing, in the event of Participant’s termination due to death or Disability, if approved by the Committee, such pro-rated payment may be made prior to expiration of the Performance Cycle, with calculation of and timing of the payment amount to be determined by the Committee.
		

		
			 
		

		
			(c)   Except as provided in subsection 5(b), a Participant shall be eligible for payment of the earned Award, as specified in Section 3, only if the Participant remains continuously employed by the Company from the date of this Agreement, through the end of the Performance Cycle and continuing thereafter until the date the Awards is actually paid.
		

		
			 
		

		
			6.       Dividends.  The Participant shall have no right to any dividends that may be paid with respect to Shares until any such shares are vested.
		

		
			 
		

		
			7.      Change in Control.  If a Participant is employed by the Company on the date of a Change in Control, subject to Article 13 of the Plan, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchange, the Award shall be deemed to have been fully earned for the entire Performance Cycle and fully vested as of the effective date of the Change in Control; and based upon an assumed achievement of all relevant targeted performance goals, the Award shall be payable in the amounts or at the level provided by the above-referenced provisions of the Plan within thirty (30) days following the effective date of the Change in Control  
		

		
			 
		

		
			8.      Recapitalization.  Subject to Section 4.2 of the Plan, in the event that there is any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Code 368) or any partial or complete liquidation of the Company, such adjustment shall be made in the number and class and/or price of the Company’s Shares subject to this Award, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights; provided, however, that the number of Performance Units subject to this Award shall always be a whole number.
		

		
			 
		

		
			9.      Tax Withholding.  The Committee shall have the power and the right to deduct or withhold, or require the Participant or beneficiary to remit to the Company, an amount sufficient to satisfy Federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Award.  In satisfaction of such requirements, subject to the approval of the Committee, the Participant may elect, within an election period specified by the Company, to satisfy the withholding requirement, in whole or in part, by having the Company withhold from the payment of the Award: (a) Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be withheld on the transaction (“Withholding Amount”) from that portion of the Award that is payable in Shares, if any; and/or (b) cash equal to the Withholding Amount from that portion of the Award that is payable in cash, if any;  or (c) a combination of (a) and (b).  All such elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.
		

		
			10.      Clawback.  Any payouts will be subject to recovery if it is determined that the Participant personally and knowingly engaged in practices that materially contributed to the circumstances that led to the restatement of the Company’s financial statements.  
		

		
			 
		

		
			11.       Nontransferability.  This Agreement as well as the rights granted thereunder may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.  
		

		
			 
		

		

		

		 

		

			 

		

		

			            

		

 

		

			

		

		
		

		
			12.        Administration.  
		

		
			 
		

		
			(a)      This Award and the rights of the Participant hereunder are subject to all terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan.  It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which shall be binding upon the Participant.  
		

		
			 
		

		
			(b)      If there is any inconsistency between the terms of this Award and the terms of the Plan, the Plan’s terms shall completely supersede and replace the conflicting terms of this Agreement.  All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein.  
		

		
			 
		

		
			13.         Miscellaneous
		

		
			 
		

		
			This Agreement shall not confer upon the Participant any right to continuation of employment by the Company, nor shall this Agreement interfere in any way with the Company’s right to terminate his or her employment at any time.
		

		
			 
		

		
			(a)      This Agreement shall not confer upon the Participant any right to continuation of employment by the Company, nor shall this Agreement interfere in any way with the Company’s right to terminate his or her employment at any time.
		

		
			 
		

		
			(b)      The Committee and/or the Company’s Board of Directors may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification of the Plan may in any way adversely affect the Participant’s rights under this Agreement without the Participant’s written consent.
		

		
			 
		

		
			(c)      This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
		

		
			 
		

		
			(d)      To the extent not preempted by Federal law, this Agreement shall be construed in accordance with and governed by the substantive laws of the State of Missouri without regard to conflicts of laws principles, which might otherwise apply.  Any litigation arising out of, in connection with, or concerning any aspect of the Plan or this Agreement shall be conducted exclusively in the State or Federal courts in Missouri.exhibit10-1.htm

EXHIBIT 10.1

URS CORPORATION

Restated Incentive Compensation Plan

2013 Plan Year Summary

	
I.  

	
Plan Objectives

 

The URS Corporation Restated Incentive Compensation Plan (the “Plan”) is intended to provide rewards to individuals who make a significant contribution to the financial performance of URS Corporation and its Infrastructure & Environment, Federal Services, Energy & Construction and Oil & Gas Divisions (collectively, the “Company”) during each fiscal year (a “Plan Year”).  Among other things, the Plan is intended to:

	
·  

	
Help key employees to focus on achieving specific financial targets;

	
·  

	
Reinforce teamwork;

	
·  

	
Provide significant award potential for achieving outstanding performance; and

	
·  

	
Enhance the Company’s ability to attract and retain highly talented and competent people.

This document is only a summary regarding the application of the Plan with respect to the 2013 Plan Year.  For complete information regarding the Plan (including defined terms not defined in this Summary document), participants should refer to the Plan document.  Each Award provided by the Plan constitutes a Performance Cash Award (as defined in the URS Corporation 2008 Equity Incentive Plan, as amended from time to time (the “EIP”)) and will be governed by the provisions of the EIP, the Plan, and any documents regarding the application of the Plan with respect to a particular Plan Year (including this summary).  In the event of any conflict between the provisions of the EIP, the Plan and any such documents, the provisions of the EIP will control.  In the event of any conflict between the provisions of the EIP, the Plan or any such documents and the provisions of a Designated Participant’s employment agreement, the provisions of the Designated Participant’s employment agreement will control.

	
II.  

	
General Plan Description

 

	
A.  

	
Eligibility

 

The Plan provides an opportunity for employees to earn cash Awards based on achievement of Company and individual Performance Goals during a Plan Year.  Eligible participants are classified in one of two categories:

	
  

	
1.

	
“Designated Participants” are key employees who have the potential to significantly impact the Company’s success; or

 

 

  

1

  

 

	
  

	
2.

	
“Non-Designated Participants” are employees who demonstrate outstanding individual effort and results during the year.  Awards to this group of employees are paid from a discretionary bonus pool.

Except as noted in this paragraph, to be eligible to receive an Award under the Plan, participants must be employed by the Company at the end of the Plan Year.  However, if the employment of a Designated Participant is terminated prior to the end of a Plan Year due to the Designated Participant’s death, Disability or Retirement (as such terms are defined in the EIP), other than the Retirement of a Covered Employee (as defined in the Plan), the Designated Participant (or the Designated Participant’s heirs in the case of death) will be eligible to receive a pro-rata Award based on the time the Designated Participant was employed by the Company and the Performance Goals achieved.  If a Designated Participant’s employment is terminated for any other reason prior to the end of a Plan Year (whether voluntary or involuntary), the Designated Participant will not receive an Award.

New hires (employees who join the Company during a Plan Year after the Performance Goals for the Plan Year have been established) who are identified as Designated Participants must have at least three months of service and be employed by the Company at the end of the Plan Year to be eligible to receive a pro-rata Award based on the time the Designated Participant was employed by the Company and the Performance Goals achieved (except in the case of death, Disability or Retirement, as described above).  New hires who are Covered Employees are subject to certain additional requirements set forth in the Plan.  Notwithstanding the foregoing, the terms of a Designated Participant’s employment agreement will supersede the terms and conditions of the Plan. 

 

Pursuant to the administrative authority provided to the Compensation Committee of the Board of Directors (the “Committee”) under the Plan, the Committee has determined that an employee who is identified as a Designated Participant for the Plan Year after the Performance Goals for the Plan Year have been established, but who joined the Company prior to the Plan Year, shall be treated as a new hire for purposes of the Plan and shall be subject to the requirements described above with respect to new hires.

	
B.  

	
Performance Goals

 

Each Plan Year, the Committee establishes, or authorizes the establishment within specified parameters of, specific Performance Goals for the Company and for Designated Participants, including weightings of the Performance Goals, by the business unit or units in which the Designated Participant is expected to have the most direct impact.  The Performance Goals may be based on any one of, or combination of, or any ratio between two or more of the Performance Criteria set forth in the Plan, as they may be specifically defined by the Committee for each Plan Year.

In addition, the Committee shall make appropriate adjustments in the method of calculating the attainment of Performance Goals for the Plan Year, as authorized under the EIP and set forth in the Plan.

 

 

  

2

  

 

	
C.  

	
Target Bonus Pool

 

Each Plan Year, the Committee identifies a Target Bonus Pool as part of the Company’s financial planning process.  The Target Bonus Pool is the sum of all anticipated Awards for Designated Participants and Non-Designated Participants, and is further subdivided into Target Bonus Pools for the corporate-level participants, for the participants in each of the Company’s Divisions, and further for the participants in each business unit(s) for which Performance Goals are established.  The Actual Bonus Pool may be greater or less than the Target Bonus Pool depending on the Company’s actual performance relative to the Performance Goals established for a Plan Year.

 

	
D.  

	
Target Award Percentage

 

Each Plan Year, the Committee assigns to, or authorizes the assignment to, each Designated Participant a Target Award Percentage, expressed as a percentage of Base Salary, based on his or her anticipated contributions to the Company.

	
III.  

	
2013 Plan Year

 

	
A.  

	
Performance Criteria Definitions

 

The Committee selected and defined Performance Criteria as follows for the 2013 Plan Year for application to the Company-wide and Division Performance Goals and the Performance Goals established for the Section 16 Officers (as defined in the Plan):

	
  

	
1.

	
Net Income.  “Net Income” shall mean the consolidated net income of the Company for the 2013 fiscal year as determined under generally accepted accounting principles, as adjusted for any other material and objectively determinable impacts of the items specified in the Plan that were not reflected in the 2013 financial plan approved by the Board.  Net Income will be calculated after all bonuses are accrued and assumed to have been paid in full.

 

	
  

	
2.

	
Operating Income.  “Operating Income” shall mean the operating income of the Division or other business unit(s) for which a Designated Participant has accountability as determined under generally accepted accounting principles, as adjusted to exclude the pre-tax impacts of any non-controlling minority interests, and as also adjusted for any material and objectively determinable impacts of the items specified in the Plan that were not reflected in the 2013 financial plan approved by the Board.  Operating Income for a Division or other business unit will be calculated after all bonuses measured by the performance of that Division or unit are accrued and assumed to have been paid in full.

 

The Committee also selected and defined additional Performance Criteria for the 2013 Plan Year for application to, in addition to or in lieu of the Performance Criteria specified above, the Performance Goals established for Designated Participants other than the Section 16 Officers, including the following:

 

 

  

3

  

 

	
  

	
3.

	
Average Day Sales Outstanding. “Average Day Sales Outstanding” shall mean the average of the twelve (12) months of Day Sales Outstanding.  “Day Sales Outstanding” or “DSOs” shall mean ninety (90) multiplied by a fraction, the numerator of which is the sum of billed accounts receivable plus unbilled accounts receivable minus billings in excess of cost, and the denominator of which is the sum of the last three (3) months of revenues, with respect to the business unit(s) for which a Designated Participant has accountability.  DSOs shall be calculated monthly.

 

	
  

	
4.

	
Working Capital Days Outstanding (WCDO).  “Working Capital Days Outstanding” or “WCDO” shall mean the average of the four quarterly WCDOs with respect to the business unit(s) for which a Designated Participant has accountability. The quarterly WCDOs shall be calculated by dividing the average Working Capital of the business unit(s) for the quarter (the sum of the Working Capital of the business unit(s) at the end of each of the three months during the quarter divided by 3) by the annualized daily Revenue for the business unit(s) (Revenue for the business unit(s) during the quarter times 4 divided by 365).  Working Capital is defined as current assets (excluding foreign cash, corporate unrestricted cash and deferred taxes) less current liabilities (excluding costs to complete, deferred taxes and the restructuring reserve).

 

	
  

	
5.

	
Revenues.  “Revenues” shall mean the consolidated revenue of the Company, or of the relevant business unit(s) for which a Designated Participant has accountability, as determined under generally accepted accounting principles.

 

	
  

	
6.

	
New Sales.  “New Sales” shall mean gross additions to backlog with respect to the business unit(s) for which a Designated Participant has accountability.

 

	
  

	
7.

	
New Work Margin.  “New Work Margin” shall mean the margin target established by the relevant business unit(s) for which a Designated Participant has accountability for New Sales.  A volume hurdle will be established for those units using this criterion.  This criterion excludes small change orders and extensions on existing work.

 

	
  

	
8.

	
Safety Record.  “Safety Record” shall mean the total reportable incident rate as defined by the Occupational Safety and Health Administration (OSHA).

 

	
  

	
9.

	
Consolidated Division Operating Income.  “Consolidated Division Operating Income” shall mean the consolidated total of the Operating Income, as defined above, of each of the Infrastructure & Environment, Federal Services, Energy & Construction, and Oil& Gas Divisions.

 

 

  

4

  

 

	
B.  

	
Performance Goals

 

For the 2013 Plan Year, the Committee established as a prerequisite to all bonus payments under the Plan that the Company meet a minimum Net Income threshold after accruing for all bonuses, and as a prerequisite to bonus payments calculated on the basis of Division Performance Goals that the respective Division meet a minimum Operating Income threshold after accruing for all such Division bonuses.  Bonuses otherwise payable are reduced pro rata to the extent necessary, down to zero, to satisfy the minimum Net Income and respective Division Operating Income thresholds (as adjusted), with the result that Designated Participants and non-Designated Participants may only receive bonuses if and to the extent that the Company and the respective Divisions earn Net Income and the respective Division Operating Income in excess of the thresholds (as adjusted).

In addition, the Committee established, or authorized the establishment of, primary business unit Performance Goals and individual Performance Goals for Designated Participants by the business unit where the Designated Participant is expected to have the most direct impact as follows:

 

	
Business Unit

 

	
Performance Goals

	
URS Corporation

 

	
Net Income, before bonus accrual (as adjusted)

	
Infrastructure & Environment

 

	
Infrastructure & Environment Operating Income,

before bonus accrual

	
Federal Services

	
Federal Services Operating Income,

before bonus accrual

 

	
Energy & Construction

	
Energy & Construction Operating Income,

before bonus accrual

 

	
Oil & Gas

	
Oil & Gas Operating Income,

before bonus accrual

In addition, for Designated Participants in the Infrastructure & Environment, Federal Services, Energy & Construction, and Oil & Gas businesses, the Committee established, or authorized the establishment of, various secondary individual Performance Goals consisting of Average Day Sales Outstanding, Working Capital Days Outstanding, Safety Record, Revenues, New Sales, New Work Margin, Consolidated Division Operating Income as well as other Performance Goals set forth in the Plan, and established, or authorized the establishment of, relative weighting to be allocated among all such Performance Goals.

 

 

  

5

  

 

	
C.  

	
Target Bonus Pool

 

For the 2013 Plan Year, the Committee established Target Bonus Pools for the Company and for each of the Company’s Divisions, which will be funded based on achievement of the Performance Goals by the Designated Participants and Non-Designated Participants in each respective Pool as follows:

	
Performance Results

	 	
2013 Award Pool Funding

	 
	
For URS Corporation:

	 	 	 
	
115% of Performance Goal

	 	 	200	%
	
100% of Performance Goal

	 	 	100	%
	
98% of Performance Goal, or below

	 	 	0	%
	
For Infrastructure & Environment – Americas and Asia Pacific:

	 	 	 	 
	
115% of Performance Goal

	 	 	200	%
	
100% of Performance Goal

	 	 	100	%
	
90% of Performance Goal, or below

	 	 	0	%
	
For Infrastructure & Environment – Europe, Middle East and India:

	 	 	 	 
	
115% of Performance Goal

	 	 	200	%
	
100% of Performance Goal

	 	 	100	%
	
85% of Performance Goal, or below

	 	 	0	%
	
For Federal Services:

	 	 	 	 
	
115% of Performance Goal

	 	 	200	%
	
100% of Performance Goal

	 	 	100	%
	
94% of Performance Goal, or below

	 	 	0	%
	
For Energy & Construction:

	 	 	 	 
	
115% of Performance Goal

	 	 	150	%
	
100% of Performance Goal

	 	 	100	%
	
90% of Performance Goal, or below

	 	 	0	%
	
For Oil & Gas

	 	 	 	 
	
115% of Performance Goal

	 	 	200	%
	
100% of Performance Goal

	 	 	100	%
	
88% of Performance Goal, or below

	 	 	0	%

 

 

  

6

  

 

	
D.  

	
Target Award Percentage

 

For the 2013 Plan Year, the Committee established the following Target Award Percentages for the Company’s Section 16 Officers:

 

	
Name

	 	
2013 Target Award Percentage

(as a percentage of base salary)

	 
	
Martin M. Koffel

	 	 	150	%
	
H. Thomas Hicks

	 	 	100	%
	
Thomas W. Bishop

	 	 	75	%
	
Reed N. Brimhall

	 	 	75	%
	
Gary V. Jandegian

	 	 	100	%
	
Joseph Masters

	 	 	75	%
	
Randall A. Wotring

	 	 	100	%
	
Susan B. Kilgannon

	 	 	45	%
	
Robert Zaist

	 	 	100	%
	
W. J. (Bill) Lingard

	 	 	100	%

	
IV.  

	
Determination of Awards

 

Awards to Designated Participants will be dependent upon satisfying one or more of the following criteria: (1) the Company achieving its Net Income threshold (as adjusted); (2) the Division achieving its minimum Division Operating Income threshold; (3) the relevant business unit(s) achieving its minimum Performance Goals, and (3) the Designated Participant achieving his/her individual Performance Goal(s).

A Designated Participant’s Award will be calculated based on the percentage of his/her Performance Goal(s) achieved, multiplied by his/her Target Award Percentage and by his/her Base Salary earned during the Plan Year.  Pursuant to the administrative authority provided to the Committee under the Plan, the Committee has determined that a Designated Participant’s Base Salary for the Plan Year shall (i) be interpreted to mean the Designated Participant’s Base Salary for the calendar year corresponding to the Plan Year and (ii) any salary changes which occur during the month of January of a calendar year will be deemed to have occurred on January 1 of the calendar year.

  

7

  

As described above, certain Designated Participants (or a Designated Participant’s heirs in the case of death) may be eligible to receive pro-rata Awards.  Pursuant to the administrative authority provided to the Committee under the Plan, the Committee has determined that for purposes of prorating Awards under the Plan, any formula that incorporates a fraction where the denominator is 365 days (or 12 months) shall be interpreted to mean a fraction where the denominator is the actual number of days (or months) in the Plan Year.

Determinations of Awards to Non-Designated Participants (from the discretionary pool) will be made by the Committee or the CEO at the end of a Plan Year.

	
V.  

	
Other Plan Provisions

 

	
A.  

	
Payment of Awards

 

Assessment of actual performance and payout of Awards will be subject to completion of the Company’s fiscal year-end independent audit and certification by the Committee that the applicable Performance Goals and other material terms of the Plan have been met.

The Actual Award earned will be paid to Designated Participants (or the Designated Participant’s heirs in the case of death) in cash within 30 days following completion of both the independent audit and the above-referenced certification by the Committee.  Awards to Non-Designated Participants will be paid concurrently to the extent practicable, but in any case within thirty (30) days following the payment of Awards to Designated Participants.  Payroll and other taxes will be withheld as required by law.

	
B.  

	
Plan Accrual

 

Estimated payouts for the Plan will accrue monthly during each Plan Year.  At the end of each fiscal quarter, the estimated Actual Awards for the Plan Year will be evaluated based on actual performance to date and the monthly accrual rate will be adjusted so that the cost of the Plan is fully accrued at Plan Year-end.   Accrual of estimated payouts does not imply vesting of any individual Awards to Designated Participants.

	
C.  

	
Administration

 

The Plan will be administered by the Committee and the CEO, except that the Committee retains final authority regarding all aspects of Plan administration, the resolution of any disputes, and application of the Plan in any respect to a Covered Employee.  The Committee may, without notice, amend, suspend or revoke the Plan at any time.

	
D.  

	
Assignment of Employee Rights

 

No employee has a claim or right to be a participant, to continue as a participant or to be granted an Award under the Plan.  Participation in the Plan does not give an employee the right to be retained in the employment of the Company or its affiliates, nor does it imply or confer any other employment rights.

  

8

  

Nothing contained in the Plan shall be construed to create a contract of employment with any participant.  The Company and its Affiliates reserve the right to elect any person to its offices and to remove any employees in any manner and upon any basis permitted by law.

Nothing contained in the Plan shall be deemed to require the Company or its Affiliates to deposit, invest or set aside amounts for the payment of any Awards.  Participation in the Plan does not give a participant any ownership, security or other rights in any assets of the Company or any of its Affiliates.

	
E.  

	
Validity

 

In the event that any provision of the Plan is held invalid, void or unenforceable, such provision shall not affect, in any respect, the validity of any other provision of the Plan.

	
F.  

	
Governing Law

 

The Plan will be governed by, and construed in accordance with, the laws of the State of California.

  

9

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