Document:

EXHIBIT 4.5

 

NRG ENERGY, INC.

 

$800,000,000 7.625% Senior Notes Due 2019

$1,200,000,000 7.875% Senior Notes Due 2021

 

REGISTRATION RIGHTS AGREEMENT

 

 

NRG ENERGY, INC.

 

7.625% Senior Notes due 2019

7.875% Senior Notes due 2021

 

REGISTRATION RIGHTS AGREEMENT

 

May 24, 2011

 

Morgan Stanley & Co. Incorporated

1585 Broadway

New York, New York 10036

 

Merrill Lynch, Pierce, Fenner & Smith

Incorporated

One Bryant Park

New York, New York 10036

 

Barclays Capital Inc.

745 Seventh Avenue

New York, New York 10019

 

Citigroup Global Markets Inc.

390 Greenwich Street

New York, New York 10013

 

Credit Suisse Securities (USA) LLC

Eleven Madison Avenue

New York, New York 10010

 

Deutsche Bank Securities Inc.

60 Wall Street

New York, New York 10005

 

Goldman, Sachs & Co.

200 West Street

New York, New York 10282

 

J.P. Morgan Securities LLC

383 Madison Avenue

New York, New York 10019

 

RBS Securities Inc.

600 Washington Blvd.

Stamford CT 06901

 

 

Attn: High Yield Debt Capital Markets Syndicate

 

Ladies and Gentlemen:

 

NRG Energy, Inc., a corporation organized under the laws of Delaware (the “Company”), proposes to issue and sell to the several parties in Schedule I hereto (each, an “Initial Purchaser” and collectively, the “Initial Purchasers”) for whom you (the “Representatives”) are acting as representatives, its $800,000,000 principal amount of its 7.625% Senior Notes due 2019 (the “2019  Notes”) and $1,200,000,000 principal amount of its 7.875% Senior Notes due 2021 (the “2021 Notes,” and together with the 2019 Notes, the “Notes”), upon the terms set forth in a purchase agreement (the “Purchase Agreement”) dated as of May 10, 2011, among the Representatives, the Company and the guarantors listed on the signature pages thereto (the “Guarantors” and together with the Company, the “Issuers”) relating to the initial placement of the Notes (the “Initial Placement”).  The Company’s obligations under the Notes and the Indenture (as defined below) will be jointly and severally, unconditionally guaranteed (the “Guarantees”), on a senior basis, by the Guarantors.  The Notes and the Guarantees are herein referred to as the “Securities.” The Securities are to be issued under supplemental indentures, each dated the date hereof (the supplemental indenture governing the 2019 Notes, the “2019 Indenture;” the supplemental indenture governing the 2021 Notes, the “2021 Indenture;” and together, the “Supplemental Indentures”) to a base indenture, dated as of February 2, 2006,  in each case between the Company and Law Debenture Trust Company, as trustee (the “Trustee”); such Supplemental Indentures, together with such base indenture, is referred to herein as the “Indenture.”   To induce the Representatives to enter into the Purchase Agreement and to satisfy a condition of your obligations thereunder, the Issuers agree with you for your benefit and the benefit of the holders from time to time of the Securities and New Securities (including the Initial Purchasers) (each a “Holder” and, together, the “Holders”), as follows:

 

1.             Definitions.  Capitalized terms used herein without definition shall have their respective meanings set forth in the Purchase Agreement.  As used in this Agreement, the following capitalized defined terms shall have the following meanings:

 

“Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.

 

“Affiliate” shall have the meaning specified in Rule 405 under the Act and the terms “controlling” and “controlled” shall have meanings correlative thereto.

 

“Broker-Dealer” shall mean any broker or dealer registered as such under the Exchange Act.

 

“Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in New York City.

 

“Closing Date” shall mean the date of the first issuance of the Securities.

 

2

 

“Commission” shall mean the Securities and Exchange Commission.

 

“Deferral Period” shall have the meaning indicated in Section 4(k)(ii) hereof.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.

 

“Exchange Offer Registration Period” shall mean the one-year period following the consummation of the Registered Exchange Offer, exclusive of any period during which any stop order shall be in effect suspending the effectiveness of the Exchange Offer Registration Statement.

 

“Exchange Offer Registration Statement” shall mean a registration statement of the Issuers on an appropriate form under the Act with respect to the Registered Exchange Offer, all amendments and supplements to such registration statement, including post-effective amendments thereto, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein.

 

“Exchanging Dealer” shall mean any Holder (which may include any Initial Purchaser) that is a Broker-Dealer and elects to exchange for New Securities any Securities that  it acquired for its own account as a result of market-making activities or other trading activities (but not directly from any Issuer or any Affiliate of any Issuer) for New Securities.

 

“Final Memorandum” shall have the meaning set forth in the Purchase Agreement.

 

“Guarantees” shall have the meaning set forth in the preamble hereto.

 

“Guarantors” Shall have the meaning set forth in the preamble hereto.

 

“Holder” shall have the meaning set forth in the preamble hereto.

 

“Indenture” shall have the meaning set forth in the preamble hereto.

 

“Initial Placement” shall have the meaning set forth in the preamble hereto.

 

“Initial Purchasers” shall have the meaning set forth in the preamble hereto.

 

“Issuers” shall have the meaning set forth in the preamble hereto.

 

“Losses” shall have the meaning set forth in Section 6(d) hereof.

 

“Majority Holders” shall mean, the Holders of a majority of the aggregate principal amount of Securities and New Securities registered under a Registration Statement.

 

“Managing Underwriters” shall mean the investment banker or investment bankers and manager or managers that administer an underwritten offering, if any, under a Registration Statement.

 

3

 

“New Securities” shall mean debt securities of the Issuers identical in all material respects to the Securities (except that the transfer restrictions shall be modified or eliminated, as appropriate) to be issued under the New Securities Indenture.

 

“New Securities Indenture” shall mean an indenture among the Issuers and the New Securities Trustee, identical in all material respects to the Indenture (except that the transfer restrictions shall be modified or eliminated, as appropriate), which may be the Indenture if in the terms thereof appropriate provision is made for the New Securities.

 

“New Securities Trustee” shall mean a bank or trust company reasonably satisfactory to the Representatives, as trustee with respect to the New Securities under the New Securities Indenture.

 

“Notes” shall have the meaning set forth in the preamble hereto.

 

“Prospectus” shall mean the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Securities or the New Securities covered by such Registration Statement, and all amendments and supplements thereto, including any and all exhibits thereto and any information incorporated by reference therein.

 

“Purchase Agreement” shall have the meaning set forth in the preamble hereto.

 

“Registered Exchange Offer” shall mean the proposed offer of the Issuers to issue and deliver to the Holders of the Securities that are not prohibited by any law or policy of the Commission from participating in such offer, in exchange for the Securities, a like aggregate principal amount of the New Securities.

 

“Registrable Securities” shall mean each of the Notes (and the related Guarantee) until the earliest to occur of: (A) the date on which such Note (and the related Guarantee) has been exchanged by a Person other than a broker-dealer for a New Security in the Registered Exchange Offer; (B) following the exchange by a broker-dealer in the Registered Exchange Offer of a Note (and the related Guarantee) for a New Security, the date on which such New Security is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement;  (C) the date on which such Note (and the related Guarantee) has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement; or (D) the date on which such Note (and the related Guarantee) is actually sold pursuant to Rule 144 under the Securities Act; provided that a Note will not cease to be a Registrable Security for purposes of the Registered Exchange Offer by virtue of this clause (D).

 

“Representatives” shall have the meaning set forth in the preamble hereto.

 

“Special Interest” shall have the meaning set forth in Section 8 hereof.

 

4

 

“Registration Statement” shall mean any Exchange Offer Registration Statement or Shelf Registration Statement that covers any of the Securities or the New Securities pursuant to the provisions of this Agreement, any amendments and supplements to such registration statement, including post-effective amendments (in each case including the Prospectus contained therein), all exhibits thereto and all material incorporated by reference therein.

 

“Securities” shall have the meaning set forth in the preamble hereto.

 

“Shelf Registration” shall mean a registration effected pursuant to Section 3 hereof.

 

“Shelf Registration Period” shall have the meaning set forth in Section 3(b) hereof.

 

“Shelf Registration Statement” shall mean a “shelf” registration statement of the Issuers pursuant to the provisions of Section 3 hereof which covers some or all of the Securities or New Securities, as applicable, on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein.

 

“Trustee” shall have the meaning set forth in the preamble hereto.

 

“Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission promulgated thereunder.

 

“underwriter” shall mean any underwriter of Securities in connection with an offering thereof under a Shelf Registration Statement.

 

2.             Registered Exchange Offer.

 

(a)   Unless prohibited by applicable law or regulations of the Commission, the Issuers shall prepare and, not later than 180 days following the Closing Date, shall file with the Commission the Exchange Offer Registration Statement with respect to the Registered Exchange Offer.  The Issuers shall use all commercially reasonable efforts to have the Exchange Offer Registration Statement declared effective under the Act within 270 days of the Closing Date.

 

(b)   Upon the effectiveness of the Exchange Offer Registration Statement, unless the Registered Exchange Offer would not be permitted by applicable law or Commission policy, the Issuers shall promptly commence the Registered Exchange Offer and shall use all commercially reasonable efforts to issue on or prior to 30 Business Days, or longer, if required by applicable securities laws, after the date on which the Exchange Offer Registration Statement was declared effective by the Commission, New Securities in exchange for all Securities tendered prior thereto in the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Securities for New Securities (assuming that such Holder is not an Affiliate of any of the Issuers, acquires the New Securities in the ordinary course of such Holder’s business, has no arrangements with any person to

 

5

 

participate in the distribution of the New Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such New Securities from and after their receipt without any limitations or restrictions under the Act and without material restrictions under the securities laws of a substantial proportion of the several states of the United States.

 

(c)   In connection with the Registered Exchange Offer, the Issuers shall:

 

(i)            mail to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents;

 

(ii)           keep the Registered Exchange Offer open for not less than 20 Business Days and not more than 30 Business Days after the date notice thereof is mailed to the Holders (or, in each case, longer if required by applicable law);

 

(iii)          use their best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required, under the Act in order to ensure that it is available for sales of New Securities by Exchanging Dealers during the Exchange Offer Registration Period;

 

(iv)          utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan in New York City, which may be the Trustee, the New Securities Trustee or an Affiliate of either of them;

 

(v)           permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last Business Day on which the Registered Exchange Offer is open;

 

(vi)          prior to effectiveness of the Exchange Offer Registration Statement, provide a supplemental letter to the Commission (A) stating that the Issuers are conducting the Registered Exchange Offer in reliance on the position of the Commission in Exxon Capital Holdings Corporation (pub. avail. May 13, 1988) and Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991); and (B) including a representation that the Issuers have not entered into any arrangement or understanding with any person to distribute the New Securities to be received in the Registered Exchange Offer and that, to the best of the Issuers’ information and belief, each Holder participating in the Registered Exchange Offer is acquiring the New Securities in the ordinary course of business and has no arrangement or understanding with any person to participate in the distribution of the New Securities; and

 

(vii)         comply in all respects with all applicable laws.

 

(d)   As soon as practicable after the close of the Registered Exchange Offer, the Issuers shall:

 

6

 

(i)            accept for exchange all Securities tendered and not validly withdrawn pursuant to the Registered Exchange Offer;

 

(ii)           deliver to the Trustee for cancellation in accordance with Section 4(s) all Securities so accepted for exchange; and

 

(iii)          cause the New Securities Trustee promptly to authenticate and deliver to each Holder of Securities a principal amount of New Securities equal to the principal amount of the Securities of such Holder so accepted for exchange.

 

(e)   Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Registered Exchange Offer to participate in a distribution of the New Securities (x) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission in Exxon Capital Holdings Corporation (pub. avail. May 13, 1988) and Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991), as interpreted in the Commission’s letter to Shearman & Sterling dated July 2, 1993 and similar no-action letters; and (y) must comply with the registration and prospectus delivery requirements of the Act in connection with any secondary resale transaction, which must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K under the Act if the resales are of New Securities obtained by such Holder in exchange for Securities acquired by such Holder directly from any Issuer or one of its Affiliates.  Accordingly, each Holder participating in the Registered Exchange Offer shall be required to represent to the Issuers that, at the time of the consummation of the Registered Exchange Offer:

 

(i)            any New Securities received by such Holder will be acquired in the ordinary course of business;

 

(ii)           such Holder will have no arrangement or understanding with any person to participate in the distribution of the Securities or the New Securities within the meaning of the Act; and

 

(iii)          such Holder is not an Affiliate of any Issuer.

 

(f)    If any Initial Purchaser determines that it is not eligible to participate in the Registered Exchange Offer with respect to the exchange of Securities constituting any portion of an unsold allotment, at the request of such Initial Purchaser, the Issuers shall issue and deliver to such Initial Purchaser or the person purchasing New Securities registered under a Shelf Registration Statement as contemplated by Section 3 hereof from such Initial Purchaser, in exchange for such Securities, a like principal amount of New Securities.  The Issuers shall use their best efforts to cause the CUSIP Service Bureau to issue the same CUSIP number for such New Securities as for New Securities issued pursuant to the Registered Exchange Offer.

 

3.             Shelf Registration.

 

(a)   (i) If the Issuers are not (A) required to file the Exchange Offer Registration Statement or (B) permitted to consummate the Registered Exchange Offer because the Registered Exchange Offer is not permitted by applicable law or Commission policy or (ii) any

 

7

 

holder of Registrable Securities notifies the Company prior to the 20th Business Day following consummation of the Registered Exchange Offer that (A) it is prohibited by law or Commission policy from participating in the Registered Exchange Offer, (B) it may not resell the New Securities acquired by it in the Registered Exchange Offer to the public without delivering a prospectus and the prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales; or (C) it is a broker-dealer and owns Securities acquired directly from the Company or an Affiliate of the Company, the Issuers shall effect a Shelf Registration Statement in accordance with subsection (b) below.

 

(b)  If obligated to file the Shelf Registration Statement, as applicable, the Issuers shall use all commercially reasonable efforts to file the Shelf Registration Statement with the Commission on or prior to 30 days after such obligation arises and shall use all commercially reasonable efforts to cause the Shelf Registration Statement to be declared effective by the Commission on or prior to 90 days after such obligation arises; such Shelf Registration Statement shall relate to the offer and sale of the Securities or the New Securities, as applicable, by the Holders thereof from time to time in accordance with the methods of distribution elected by such Holders and set forth in such Shelf Registration Statement; provided, however, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all of the provisions of this Agreement applicable to such Holder; and provided further, that with respect to New Securities received by an Initial Purchaser in exchange for Securities constituting any portion of an unsold allotment, the Issuers may, if permitted by current interpretations by the Commission’s staff, file a post-effective amendment to the Exchange Offer Registration Statement containing the information required by Item 507 or 508 of Regulation S-K, as applicable, in satisfaction of their obligations under this subsection with respect thereto, and any such Exchange Offer Registration Statement, as so amended, shall be referred to herein as, and governed by the provisions herein applicable to, a Shelf Registration Statement.

 

(i)            The Issuers shall use their best efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended as required by the Act, in order to permit the Prospectus forming part thereof to be usable by Holders for a period (the “Shelf Registration Period”) from the date the Shelf Registration Statement is declared effective by the Commission until (A) the second anniversary thereof or (B) the date upon which all the Securities or New Securities, as applicable, covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement.  The Issuers shall be deemed not to have used their best efforts to keep the Shelf Registration Statement effective during the Shelf Registration Period if any of them voluntarily take any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities during the Shelf Registration Period, unless such action is (x) required by applicable law or otherwise undertaken by the Issuers in good faith and for valid business reasons (not including avoidance of such Issuer’s obligations hereunder), including the acquisition or divestiture of assets, and (y) permitted pursuant to Section 4(k)(ii) hereof.

 

(ii)           The Issuers shall cause the Shelf Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective

 

8

 

date of the Shelf Registration Statement or such amendment or supplement, (A) to comply in all material respects with the applicable requirements of the Act; and (B) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made), not misleading.

 

4.             Additional Registration Procedures.  In connection with any Shelf Registration Statement and, to the extent applicable, any Exchange Offer Registration Statement, the following provisions shall apply.

 

(a)   The Issuers shall:

 

(i)            furnish to each of the Representatives and to counsel for the Holders, not less than five Business Days prior to the filing thereof with the Commission, a copy of the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, and each amendment thereto and each amendment or supplement, if any, to the Prospectus included therein (including all documents incorporated by reference therein after the initial filing) and shall use their best efforts to reflect in each such document, when so filed with the Commission, such comments as the Representatives reasonably propose;

 

(ii)           include the information set forth in Annex A hereto on the facing page of the Exchange Offer Registration Statement, in Annex B hereto in the forepart of the Exchange Offer Registration Statement in a section setting forth details of the Registered Exchange Offer, in Annex C hereto in the underwriting or plan of distribution section of the Prospectus contained in the Exchange Offer Registration Statement, and in Annex D hereto in the letter of transmittal delivered pursuant to the Registered Exchange Offer;

 

(iii)          if requested by an Initial Purchaser, include the information required by Item 507 or 508 of Regulation S-K, as applicable, in the Prospectus contained in the Exchange Offer Registration Statement; and

 

(iv)          in the case of a Shelf Registration Statement, include the names of the Holders that propose to sell Securities pursuant to the Shelf Registration Statement as selling security holders.

 

(b)   The Issuers shall ensure that:

 

(i)            any Registration Statement, any amendment thereto, any Prospectus forming part thereof and any amendment or supplement thereto complies in all material respects with the Act; and

 

(ii)           any Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

 

9

 

(c)   The Issuers shall advise the Representatives, the Holders of Securities covered by any Shelf Registration Statement and any Exchanging Dealer under any Exchange Offer Registration Statement that has provided in writing to the Issuers a telephone or facsimile number and address for notices, and, if requested by any Representative or any such Holder or Exchanging Dealer, shall confirm such advice in writing (which notice pursuant to clauses (ii)-(v) of this Section 4(c) shall be accompanied by an instruction to suspend the use of the Prospectus until the Issuers shall have remedied the basis for such suspension):

 

(i)            when a Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective;

 

(ii)           of any request by the Commission for any amendment or supplement to the Registration Statement or the Prospectus or for additional information;

 

(iii)          of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation or threatening of any proceedings for that purpose;

 

(iv)          of the receipt by any Issuer of any notification with respect to the suspension of the qualification of the securities included therein for sale in any jurisdiction or the initiation or threatening of any proceedings for such purpose; and

 

(v)           of the happening of any event that requires any change in the Registration Statement or the Prospectus so that, as of such date, they (A) do not contain any untrue statement of a material fact and (B) do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading.

 

(d)   The Issuers shall use its best efforts to prevent the issuance of any order suspending the effectiveness of any Registration Statement or the qualification of the securities therein for sale in any jurisdiction and, if issued, to obtain as soon as possible the withdrawal thereof.

 

(e)   The Issuers shall furnish to each Holder of Securities covered by any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment thereto, including all material incorporated therein by reference, and, if the Holder so requests in writing, all exhibits thereto (including exhibits incorporated by reference therein).

 

(f)    The Issuers shall, during the Shelf Registration Period, deliver to each Holder of Securities covered by any Shelf Registration Statement, without charge, as many copies of the Prospectus (including the Preliminary Prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request.  The Issuers consent to the use of the Prospectus or any amendment or supplement thereto by each of the

 

10

 

selling Holders of Securities in connection with the offering and sale of the Securities covered by the Prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement.

 

(g)   The Issuers shall furnish to each Exchanging Dealer which so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including all material incorporated by reference therein, and, if the Exchanging Dealer so requests in writing, all exhibits thereto (including exhibits incorporated by reference therein).

 

(h)   The Issuers shall promptly deliver to each Initial Purchaser, each Exchanging Dealer and each other person required to deliver a Prospectus during the Exchange Offer Registration Period, without charge, as many copies of the Prospectus included in such Exchange Offer Registration Statement and any amendment or supplement thereto as any such person may reasonably request.  The Issuers consent to the use of the Prospectus or any amendment or supplement thereto by any Initial Purchaser, any Exchanging Dealer and any such other person that may be required to deliver a Prospectus following the Registered Exchange Offer in connection with the offering and sale of the New Securities covered by the Prospectus, or any amendment or supplement thereto, included in the Exchange Offer Registration Statement.

 

(i)    Prior to the Registered Exchange Offer or any other offering of Securities pursuant to any Registration Statement, the Issuers shall arrange, if necessary, for the qualification of the Securities or the New Securities for sale under the laws of such jurisdictions as any Holder shall reasonably request and shall maintain such qualification in effect so long as required; provided that in no event shall any issuer be obligated to qualify to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to service of process in suits, other than those arising out of the Initial Placement, the Registered Exchange Offer or any offering pursuant to a Shelf Registration Statement, in any such jurisdiction where it is not then so subject.

 

(j)    The Issuers shall cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing New Securities or Securities to be issued or sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as Holders may request.

 

(k)

 

(i)            Upon the occurrence of any event contemplated by subsections (c)(ii) through (v) above, the Issuers shall promptly  (or within the time period provided for by clause (ii) hereof, if applicable) prepare a post-effective amendment to the applicable Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to initial purchasers of the securities included therein, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.  In such circumstances, the period of effectiveness of the Exchange Offer Registration

 

11

 

Statement provided for in Section 2 shall be extended by the number of days from and including the date of the giving of a notice of suspension pursuant to Section 4(c) to and including the date when the Initial Purchasers, the Holders and any known Exchanging Dealer shall have received such amended or supplemented Prospectus pursuant to this Section 4.

 

(ii)           Upon the occurrence or existence of any pending corporate development or any other material event that, in the reasonable judgment of the any Issuer, makes it appropriate to suspend the availability of a Shelf Registration Statement and the related Prospectus, the Issuer’s shall give notice (without notice of the nature or details of such events) to the Holders that the availability of the Shelf Registration is suspended and, upon actual receipt of any such notice, each Holder agrees not to sell any Registrable Securities pursuant to the Shelf Registration until such Holder’s receipt of copies of the supplemented or amended Prospectus provided for in Section 3(i) hereof, or until it is advised in writing by any Issuer that the Prospectus may be used, and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus.  The period during which the availability of the Shelf Registration and any Prospectus is suspended (the “Deferral Period”) shall not exceed 45 days in any three-month period or 90 days in any twelve-month period.

 

(l)    Not later than the effective date of any Registration Statement, the Issuers shall provide a CUSIP number for the Securities or the New Securities, as the case may be, registered under such Registration Statement and provide the Trustee with printed certificates for such Securities or New Securities, in a form eligible for deposit with The Depository Trust Company.

 

(m)  The Issuers shall comply with all applicable rules and regulations of the Commission and shall make generally available to their security holders an earnings statement satisfying the provisions of Section 11(a) of the Act as soon as practicable after the effective date of the applicable Registration Statement and in any event no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the applicable Registration Statement.

 

(n)   The Issuers shall cause the Indenture or the New Securities Indenture, as the case may be, to be qualified under the Trust Indenture Act in a timely manner.

 

(o)   The Issuers may require each Holder of securities to be sold pursuant to any Shelf Registration Statement to furnish to the Issuers such information regarding the Holder and the distribution of such securities as the Issuers may from time to time reasonably require for inclusion in such Registration Statement.  The Issuers may exclude from such Shelf Registration Statement the Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request.

 

12

 

(p)   In the case of any Shelf Registration Statement, the Issuers shall enter into customary agreements (including if requested, an underwriting agreement in customary form) and take all other appropriate actions in order to expedite or facilitate the registration or the disposition of the Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less favorable than those set forth in Section 6 hereof.

 

(q)   In the case of any Shelf Registration Statement, the Issuers shall:

 

(i)            make reasonably available for inspection by the Holders of Securities to be registered thereunder, any underwriter participating in any disposition pursuant to such Shelf Registration Statement, and any attorney, accountant or other agent retained by the Holders or any such underwriter all relevant financial and other records and pertinent corporate documents of the Issuers and their subsidiaries;

 

(ii)           cause the officers, directors, employees, accountants and auditors of any Issuer to supply all relevant information reasonably requested by the Holders or any such underwriter, attorney, accountant or agent in connection with any such Shelf Registration Statement as is customary for similar due diligence examinations;

 

(iii)          make such representations and warranties to the Holders of Securities registered thereunder and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement;

 

(iv)          obtain opinions of counsel to the Issuers and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Managing Underwriters, if any) addressed to each selling Holder and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters;

 

(v)           obtain “comfort” letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Shelf Registration Statement), addressed to each selling Holder registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in “comfort” letters in connection with primary underwritten offerings; and

 

(vi)          deliver such documents and certificates as may be reasonably requested by the Majority Holders or the Managing Underwriters, if any,

 

13

 

including those to evidence compliance with Section 4(k) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Issuers.

 

The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 4(q) shall be performed at (A) the effectiveness of such Registration Statement and each post-effective amendment thereto; and (B) each closing under any underwriting or similar agreement as and to the extent required thereunder.

 

(r)    In the case of any Exchange Offer Registration Statement, the Issuers shall, if requested by an Initial Purchaser, or by a broker dealer that holds Securities that were acquired as a result of market making or other trading activities:

 

(i)            make reasonably available for inspection by the requesting party, and any attorney, accountant or other agent retained by the requesting party, all relevant financial and other records, pertinent corporate documents and properties of the Issuers and their subsidiaries;

 

(ii)           cause the officers, directors, employees, accountants and auditors of any Issuer to supply all relevant information reasonably requested by the requesting party or any such attorney, accountant or agent in connection with any such Registration Statement as is customary for similar due diligence examinations;

 

(iii)          make such representations and warranties to the requesting party, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement;

 

(iv)          obtain opinions of counsel to the Issuers and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the requesting party and its counsel), addressed to the requesting party, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by the requesting party or its counsel;

 

(v)           obtain “comfort” letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to the requesting party, in customary form and covering matters of the type customarily covered in “comfort” letters in connection with primary underwritten offerings, or if requested by the requesting party or its counsel in lieu of a “comfort” letter, an agreed-upon procedures letter under Statement on Auditing Standards No. 35, covering matters requested by the requesting party or its counsel; and

 

14

 

(vi)          deliver such documents and certificates as may be reasonably requested by the requesting party or its counsel, including those to evidence compliance with Section 4(k) and with conditions customarily contained in underwriting agreements.

 

The foregoing actions set forth in clauses (iii), (iv), (v), and (vi) of this Section 4(r) shall be performed at the close of the Registered Exchange Offer and the effective date of any post-effective amendment to the Exchange Offer Registration Statement.

 

(s)   If a Registered Exchange Offer is to be consummated, upon delivery of the Securities by Holders to the Issuers (or to such other person as directed by the Issuers) in exchange for the New Securities, the Issuers shall mark, or caused to be marked, on the Securities so exchanged that such Securities are being cancelled in exchange for the New Securities.  In no event shall the Securities be marked as paid or otherwise satisfied.

 

(t)    The Issuers shall use their best efforts if the Securities have been rated prior to the initial sale of such Securities, to confirm such ratings will apply to the Securities or the New Securities, as the case may be, covered by a Registration Statement.

 

(u)   In the event that any Broker-Dealer shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or “assist in the distribution” (within the meaning of the FINRA Rules) thereof, whether as a Holder or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Issuers shall assist such Broker-Dealer in complying with the FINRA Rules.

 

(v)   The Issuers shall use their best efforts to take all other steps necessary to effect the registration of the Securities or the New Securities, as the case may be, covered by a Registration Statement.

 

5.             Registration Expenses.  The Issuers shall bear all expenses incurred in connection with the performance of their obligations under Sections 2, 3 and 4 hereof and, in the event of any Shelf Registration Statement, will reimburse the Holders for the reasonable fees and disbursements of one firm or counsel designated by the Majority Holders to act as counsel for the Holders in connection therewith, and, in the case of any Exchange Offer Registration Statement, will reimburse the Initial Purchasers for the reasonable fees and disbursements of counsel acting in connection therewith.

 

6.             Indemnification and Contribution.

 

(a)   Each of the Issuers jointly and severally agrees to indemnify and hold harmless each Holder of Securities or New Securities, as the case may be, covered by any Registration Statement, each Initial Purchaser and, with respect to any Prospectus delivery as contemplated in Section 4(h) hereof, each Exchanging Dealer, and their respective affiliates and each person who controls any such Holder, Initial Purchaser, Exchanging Dealer or affiliate within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof)

 

15

 

arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement as originally filed or in any amendment thereof, or in any preliminary Prospectus or the Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any preliminary Prospectus or the Prospectus, in the light of the circumstances under which they were made) not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Issuers will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Issuers by or on behalf of the party claiming indemnification specifically for inclusion therein.  This indemnity agreement shall be in addition to any liability that the Issuers may otherwise have.

 

Each of the Issuers also jointly and severally agrees to indemnify as provided in this Section 6(a) or contribute as provided in Section 6(d) to Losses of each underwriter, if any, of Securities or New Securities, as the case may be, registered under a Shelf Registration Statement, their respective affiliates, and each person who controls such underwriter or affiliate on substantially the same basis as that of the indemnification of the Initial Purchasers and the selling Holders provided in this Section 6(a) and shall, if requested by any Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 4(p) hereof.

 

(b)   Each Holder of securities covered by a Registration Statement (including each Initial Purchaser that is a Holder, in such capacity) severally and not jointly agrees to indemnify and hold harmless the Issuers, each of their respective directors, each of their respective officers who signs such Registration Statement and each person who controls any Issuer within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Issuers to each such Holder, but only with reference to written information relating to such Holder furnished to the Issuers by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity.  This indemnity agreement will be in addition to any liability that any such Holder may otherwise have.

 

(c)   Promptly after receipt by an indemnified party under this Section 6 or notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses; and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above.  The indemnifying party shall be entitled to appoint counsel (including local counsel) of the indemnifying party’s choice at the indemnifying party’s expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel, other than local counsel if not appointed by the indemnifying party, retained by

 

16

 

the indemnified party or parties except as set forth below); provided, however, that such counsel shall be satisfactory to the indemnified party.  Notwithstanding the indemnifying party’s election to appoint counsel (including local counsel) to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the initiation of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party.  An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding.

 

(d)   In the event that the indemnity provided in paragraph (a) or (b) of this Section is unavailable to or insufficient to hold harmless an indemnified party for any reason, then each applicable indemnifying party shall have a joint and several obligation to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending any loss, claim, liability, damage or action) (collectively “Losses”) to which such indemnified party may be subject in such proportion as is appropriate to reflect the relative benefits received by such indemnifying party, on the one hand, and such indemnified party, on the other hand, from the Initial Placement and the Registration Statement which resulted in such Losses; provided, however, that in no case shall any Initial Purchaser be responsible, in the aggregate, for any amount in excess of the purchase discount or commission applicable to such Security, or in the case of a New Security, applicable to the Security that was exchangeable into such New Security, as set forth in the Final Memorandum, nor shall any underwriter be responsible for any amount in excess of the underwriting discount or commission applicable to the securities purchased by such underwriter under the Registration Statement which resulted in such Losses.  If the allocation provided by the immediately preceding sentence is unavailable for any reason, the indemnifying party and the indemnified party shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of such indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations.  Benefits received by the Issuers shall be deemed to be equal to the total net proceeds from the Initial Placement (before deducting expenses) as set forth in the Final Memorandum.  Benefits received by the Initial Purchasers shall be deemed to be equal to the total purchase discounts and commissions as set forth on the cover page of the Final Memorandum, and benefits received by any other Holders shall be deemed to be equal to the value of receiving Securities or New Securities, as applicable, registered under the Act.  Benefits received by any underwriter shall be deemed to be

 

17

 

equal to the total underwriting discounts and commissions, as set forth on the cover page of the Prospectus forming a part of the Registration Statement which resulted in such Losses.  Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information provided by the indemnifying party, on the one hand, or by the indemnified party, on the other hand, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission.   The parties agree that it would not be just and equitable if contribution were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or any other method of allocation which does not take account of the equitable considerations referred to above.  Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.  For purposes of this Section, each person who controls a Holder within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of such Holder shall have the same rights to contribution as such Holder, and each person who controls any Issuer within the meaning of either the Act or the Exchange Act, each officer of any Issuer who shall have signed the Registration Statement and each director of any Issuer shall have the same rights to contribution as the Issuers, subject in each case to the applicable terms and conditions of this paragraph (d).

 

(e)   The provisions of this Section will remain in full force and effect, regardless of any investigation made by or on behalf of any Holder or the Issuers or any of the indemnified persons referred to in this Section 6, and will survive the sale by a Holder of securities covered by a Registration Statement.

 

7.             Underwritten Registrations.

 

(a)   If any of the Securities or New Securities, as the case may be, covered by any Shelf Registration Statement are to be sold in an underwritten offering, the Managing Underwriters shall be selected by the Majority Holders.

 

(b)   No person may participate in any underwritten offering pursuant to any Shelf Registration Statement, unless such person (i) agrees to sell such person’s Securities or New Securities, as the case may be, on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements; and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

 

8.             Registration Defaults.  If any of the following events (each, a “Registration Default”) shall occur, then the Issuers shall pay liquidated damages (the “Special Interest”) to the Holders of Securities in respect of the Securities as follows:

 

(a)   if any Registration Statement required by this Agreement is not filed with the Commission on or prior to the date specified for such filing in this Agreement;

 

18

 

(b)   if any Registration Statement required by this Agreement is not declared effective by the Commission on or prior to the date specified to cause such effectiveness under this Agreement;

 

(c)   if the Issuers fail to consummate the Registered Exchange Offer within 30 Business Days of the date specified for such effectiveness with respect to the Exchange Offer Registration Statement; or

 

(d)   if the Shelf Registration Statement or the Exchange Offer Registration Statement is declared effective but thereafter ceases to be effective or usable in connection with resales of Registrable Securities during the periods specified in this Agreement,

 

then, in each case, as of the date any such event occurs, Special Interest shall accrue on the Registrable Securities at a rate of .25% per annum of the principal amount of Registrable Securities outstanding for the first 90 days from and including such date; thereafter, the Special Interest will increase by an additional .25% per annum with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of 1.0% per annum of the principal amount of the Registrable Securities outstanding.  All accrued Special Interest will be paid by the Issuer on the next scheduled interest payment date to DTC or its nominee by wire transfer of immediately available funds or by federal funds check and to holders of certificated notes by wire transfer to the accounts specified by them or by mailing checks to their registered addresses if no such accounts have been specified.  A Registration Default shall have been cured for purposes hereof (1) upon the filing of the Registration Statement (in the case of paragraph (a) above), (2) upon the effectiveness of the Registration Statement (in the case of paragraph (b) above), (3) upon consummation of the Registered Exchange Offer (in the case of paragraph (c) above), or (4) upon the effectiveness of the Registration Statement which had ceased to remain effective (in the case of paragraph (d) above).  Immediately upon the cure of all Registration Defaults, the accrual of Special Interest will cease.

 

9.             No Inconsistent Agreements.  No Issuer has, as of the date hereof, entered into, nor shall it, on or after the date hereof, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or that otherwise conflicts with the provisions hereof.

 

10.           Amendments and Waivers.  The provisions of this Agreement may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Issuers have obtained the written consent of the Majority Holders; provided that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the Issuers shall obtain the written consent of each such  Initial Purchaser against which such amendment, qualification, supplement, waiver or consent is to be effective; provided, further, that no amendment, qualification, supplement, waiver or consent with respect to Section 8 hereof shall be effective as against any Holder of Registered Securities unless consented to in writing by such Holder; and provided, further, that the provisions of this Article 10 may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Issuers have obtained the written consent of the Representatives and each Holder.  Notwithstanding the

 

19

 

foregoing (except the foregoing provisos), a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Securities or New Securities, as the case may be, are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by the Majority Holders, determined on the basis of Securities or New Securities, as the case may be, being sold rather than registered under such Registration Statement.

 

11.           Notices.  All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier or air courier guaranteeing overnight delivery:

 

(a)   if to a Holder, at the most current address given by such holder to the Issuers in accordance with the provisions of this Section 11, which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture;

 

(b)   if to the Representatives, initially at the address set forth in the Purchase Agreement; and

 

(c)   if to the Issuers, initially at the address of the Company set forth in the Purchase Agreement.

 

All such notices and communications shall be deemed to have been duly given when received.  The Representatives or the Issuers by notice to the other parties may designate additional or different addresses for subsequent notices or communications.

 

12.           Remedies.  Each Holder, in addition to being entitled to exercise all rights provided to it herein, in the Indenture  or in the Purchase Agreement or granted by law, including recovery of liquidated or other damages, will be entitled to specific performance of its rights under this Agreement. The Issuers agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive in any action for specific performance the defense that a remedy at law would be adequate.

 

13.           Successors.  This Agreement shall inure to the benefit of and be binding upon the parties hereto, their respective successors and assigns, including, without the need for an express assignment or any consent by the Issuers thereto, subsequent Holders of Securities and the New Securities, and the indemnified persons referred to in Section 6 hereof.  The Issuers hereby agree to extend the benefits of this Agreement to any Holder of Securities or the New Securities, and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto.

 

14.           Counterparts.  This Agreement may be in signed counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement.

 

15.           Headings.  The headings used herein are for convenience only and shall not affect the construction hereof.

 

20

 

16.           Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in the State of New York.  The parties hereto each hereby waive any right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement.

 

17.           Severability.  In the event that any one of more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law.

 

18.           Securities Held by the Issuers, etc.  Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities or New Securities is required hereunder, Securities or New Securities, as applicable, held by any Issuer or its Affiliates (other than subsequent Holders of Securities or New Securities if such subsequent Holders are deemed to be Affiliates solely by reason of their holdings of such Securities or New Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

 

21

 

If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this Agreement and your acceptance shall represent a binding agreement between the Issuers and the several Initial Purchasers.

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
NRG   ENERGY, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher Sotos
    
	
 
    	
 
    	
Name:   
    	
Christopher   Sotos
    
	
 
    	
 
    	
Title:
    	
Vice   President and Treasurer
    

 

	
 
    	
GUARANTORS:
    
	
 
    	
 
    
	
 
    	
ARTHUR   KILL POWER LLC
    
	
 
    	
ASTORIA   GAS TURBINE POWER LLC
    
	
 
    	
CABRILLO   POWER I LLC
    
	
 
    	
CABRILLO   POWER II LLC
    
	
 
    	
CARBON   MANAGEMENT SOLUTIONS LLC
    
	
 
    	
CLEAN   EDGE ENERGY LLC
    
	
 
    	
CONEMAUGH   POWER LLC
    
	
 
    	
CONNECTICUT   JET POWER LLC
    
	
 
    	
COTTONWOOD   DEVELOPMENT LLC
    
	
 
    	
COTTONWOOD   GENERATING PARTNERS I LLC
    
	
 
    	
COTTONWOOD   GENERATING PARTNERS II LLC
    
	
 
    	
COTTONWOOD   GENERATING PARTNERS III LLC
    
	
 
    	
COTTONWOOD   ENERGY COMPANY LP
    
	
 
    	
COTTONWOOD   TECHNOLOGY PARTNERS LP
    
	
 
    	
DEVON   POWER LLC
    
	
 
    	
DUNKIRK   POWER LLC
    
	
 
    	
EASTERN   SIERRA ENERGY COMPANY
    
	
 
    	
EL   SEGUNDO POWER, LLC
    
	
 
    	
EL   SEGUNDO POWER II LLC
    
	
 
    	
ENERGY   PROTECTION INSURANCE COMPANY
    

 

[Registration Rights Agreement]

 

 

	
 
    	
HUNTLEY   POWER LLC
    
	
 
    	
INDIAN   RIVER OPERATIONS INC.
    
	
 
    	
INDIAN   RIVER POWER LLC
    
	
 
    	
KEYSTONE   POWER LLC
    
	
 
    	
LANGFORD   WIND POWER, LLC
    
	
 
    	
LOUISIANA   GENERATING LLC
    
	
 
    	
MERIDEN   GAS TURBINES LLC
    
	
 
    	
MIDDLETOWN   POWER LLC
    
	
 
    	
MONTVILLE   POWER LLC
    
	
 
    	
NEO   CORPORATION
    
	
 
    	
NEO   FREEHOLD-GEN LLC
    
	
 
    	
NEO   POWER SERVICES INC.
    
	
 
    	
NEW GENCO   GP, LLC
    
	
 
    	
NORWALK   POWER LLC
    
	
 
    	
NRG   AFFILIATE SERVICES INC.
    
	
 
    	
NRG   ARTESIAN ENERGY LLC
    
	
 
    	
NRG   ARTHUR KILL OPERATIONS INC.
    
	
 
    	
NRG   ASTORIA GAS TURBINE OPERATIONS INC.
    
	
 
    	
NRG   BAYOU COVE LLC
    
	
 
    	
NRG   CABRILLO POWER OPERATIONS INC.
    
	
 
    	
NRG   CALIFORNIA PEAKER OPERATIONS LLC
    
	
 
    	
NRG   CEDAR BAYOU DEVELOPMENT COMPANY, LLC
    
	
 
    	
NRG   CLEANTECH INVESTMENTS LLC
    
	
 
    	
NRG   CONNECTICUT AFFILIATE SERVICES INC.
    
	
 
    	
NRG   DEVELOPMENT COMPANY INC.
    
	
 
    	
NRG   DEVON OPERATIONS INC.
    
	
 
    	
NRG   DUNKIRK OPERATIONS INC.
    
	
 
    	
NRG   EL SEGUNDO OPERATIONS INC.
    
	
 
    	
NRG   ENERGY SERVICES LLC
    
	
 
    	
NRG   ENERGY SERVICES GROUP LLC
    
	
 
    	
NRG   GENERATION HOLDINGS, INC.
    
	
 
    	
NRG   HUNTLEY OPERATIONS INC.
    
	
 
    	
NRG   ILION LP LLC
    
	
 
    	
NRG   INTERNATIONAL LLC
    
	
 
    	
NRG   MAINTENANCE SERVICES LLC
    
	
 
    	
NRG   MEXTRANS INC.
    

 

[Registration Rights Agreement]

 

 

	
 
    	
NRG   MIDATLANTIC AFFILIATE SERVICES INC.
    
	
 
    	
NRG   MIDDLETOWN OPERATIONS INC.
    
	
 
    	
NRG   MONTVILLE OPERATIONS INC.
    
	
 
    	
NRG   NEW JERSEY ENERGY SALES LLC
    
	
 
    	
NRG   NEW ROADS HOLDINGS LLC
    
	
 
    	
NRG   NORTH CENTRAL OPERATIONS INC.
    
	
 
    	
NRG   NORTHEAST AFFILIATE SERVICES INC.
    
	
 
    	
NRG   NORWALK HARBOR OPERATIONS INC.
    
	
 
    	
NRG   OPERATING SERVICES, INC.
    
	
 
    	
NRG   OSWEGO HARBOR POWER OPERATIONS INC.
    
	
 
    	
NRG   PACGEN INC.
    
	
 
    	
NRG   POWER MARKETING LLC
    
	
 
    	
NRG   ROCKFORD ACQUISITION LLC
    
	
 
    	
NRG   ROCKFORD EQUIPMENT LLC
    
	
 
    	
NRG   RETAIL LLC
    
	
 
    	
NRG   SAGUARO OPERATIONS INC.
    
	
 
    	
NRG   SERVICES CORPORATION
    
	
 
    	
NRG   SIMPLYSMART SOLUTIONS LLC
    
	
 
    	
NRG   SOUTH CENTRAL AFFILIATE SERVICES INC.
    
	
 
    	
NRG   SOUTH CENTRAL GENERATING LLC
    
	
 
    	
NRG   SOUTH CENTRAL OPERATIONS INC.
    
	
 
    	
NRG   TEXAS C&I SUPPLY LLC
    
	
 
    	
NRG   TEXAS HOLDING INC.
    
	
 
    	
NRG   TEXAS LLC
    
	
 
    	
NRG   TEXAS POWER LLC
    
	
 
    	
NRG   WEST COAST LLC
    
	
 
    	
NRG   WESTERN AFFILIATE SERVICES INC.
    
	
 
    	
NRG   WIND DEVELOPMENT COMPANY LLC
    
	
 
    	
O’BRIEN   COGENERATION, INC. II
    
	
 
    	
ONSITE   ENERGY, INC.
    
	
 
    	
OSWEGO   HARBOR POWER LLC
    
	
 
    	
PENNYWISE   POWER LLC
    

 

[Registration Rights Agreement]

 

 

	
 
    	
RE   RETAIL RECEIVABLES, LLC
    
	
 
    	
RELIANT   ENERGY NORTHEAST LLC
    
	
 
    	
RELIANT   ENERGY POWER SUPPLY, LLC
    
	
 
    	
RELIANT   ENERGY RETAIL HOLDINGS, LLC
    
	
 
    	
RELIANT   ENERGY RETAIL SERVICES, LLC
    
	
 
    	
RELIANT   ENERGY TEXAS RETAIL, LLC
    
	
 
    	
RERH   HOLDINGS, LLC
    
	
 
    	
SAGUARO   POWER LLC
    
	
 
    	
SOMERSET   OPERATIONS INC.
    
	
 
    	
SOMERSET   POWER LLC
    
	
 
    	
TEXAS   GENCO FINANCING CORP.
    
	
 
    	
TEXAS   GENCO GP, LLC
    
	
 
    	
TEXAS   GENCO HOLDINGS, INC.
    
	
 
    	
TEXAS   GENCO OPERATING SERVICES, LLC
    
	
 
    	
VIENNA   OPERATIONS INC.
    
	
 
    	
VIENNA   POWER LLC
    
	
 
    	
WCP   (GENERATION) HOLDINGS LLC
    
	
 
    	
WEST   COAST POWER LLC
    

 

 

	
 
    	
By:
    	
/s/   Christopher Sotos
    
	
 
    	
 
    	
Name:   
    	
Christopher   Sotos
    
	
 
    	
 
    	
Title:
    	
Treasurer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
ELBOW   CREEK WIND PROJECT LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher Sotos
    
	
 
    	
 
    	
Name:
    	
Christopher   Sotos
    
	
 
    	
 
    	
Title:
    	
Vice   President and Controller
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
GCP   FUNDING COMPANY, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher Sotos
    
	
 
    	
 
    	
Name:
    	
Christopher   Sotos
    
	
 
    	
 
    	
Title:
    	
Management   Board Member
    

 

[Registration Rights Agreement]

 

 

	
 
    	
GREEN   MOUNTAIN ENERGY COMPANY
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher Sotos
    
	
 
    	
 
    	
Name:
    	
Christopher   Sotos
    
	
 
    	
 
    	
Title:
    	
Vice   President and Treasury
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
NRG   CONSTRUCTION LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Rachel Smith
    
	
 
    	
 
    	
Name:
    	
Rachel   Smith
    
	
 
    	
 
    	
Title:
    	
Treasurer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
NRG   ENERGY LABOR SERVICES LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Gaetan Frotte
    
	
 
    	
 
    	
Name:
    	
Gaetan   Frotte
    
	
 
    	
 
    	
Title:
    	
Vice   President and Treasurer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
NRG   ILION LIMITED PARTNERSHIP
    
	
 
    	
By:
    	
NRG   Rockford Acquisition LLC,
   its General Partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher Sotos
    
	
 
    	
 
    	
Name:
    	
Christopher   Sotos
    
	
 
    	
 
    	
Title:
    	
Treasurer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
NRG   SOUTH TEXAS LP
    
	
 
    	
By:
    	
Texas   Genco GP, LLC,
   its General Partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher Sotos
    
	
 
    	
 
    	
Name:
    	
Christopher   Sotos
    
	
 
    	
 
    	
Title:
    	
Treasurer
    

 

[Registration Rights Agreement]

 

 

	
 
    	
TEXAS   GENCO LP, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher Sotos
    
	
 
    	
 
    	
Name:
    	
Christopher   Sotos
    
	
 
    	
 
    	
Title:
    	
Management   Committee Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
TEXAS   GENCO SERVICES, LP
    
	
 
    	
By:
    	
New   Genco GP, LLC,
   its General Partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher Sotos
    
	
 
    	
 
    	
Name:
    	
Christopher   Sotos
    
	
 
    	
 
    	
Title:
    	
Treasurer
    

 

[Registration Rights Agreement]

 

 

The foregoing Agreement is hereby confirmed and accepted as of the date first above written.

 

 

	
MORGAN STANLEY & CO.   INCORPORATED 
    
	
 
    
	
 
    
	
By:   
    	
/s/   William Graham
    	
 
    
	
 
    	
Name:
    	
William   Graham
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
MERRILL   LYNCH, PIERCE, FENNER & SMITH INCORPORATED
    
	
 
    
	
 
    
	
By:   
    	
/s/   Henrik Dahlback
    	
 
    
	
 
    	
Name:
    	
Henrik   Dahlback
    
	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
BARCLAYS   CAPITAL INC.
    
	
 
    
	
 
    
	
By:   
    	
/s/   Kevin Crealese
    	
 
    
	
 
    	
Name:
    	
Kevin   Crealese
    
	
 
    	
Title:
    	
Director
    
				

 

[Registration Rights Agreement]

 

 

	
CITIGROUP   GLOBAL MARKETS INC.
    
	
 
    
	
 
    
	
By:   
    	
/s/   Kirkwood Roland
    	
 
    
	
 
    	
Name:
    	
Kirkwood   Roland
    
	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
CREDIT   SUISSE SECURITIES (USA) LLC.
    
	
 
    
	
 
    
	
By:   
    	
/s/   John Cogan
    	
 
    
	
 
    	
Name:
    	
John   Cogan
    
	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
DEUTSCHE   BANK SECURITIES INC.
    
	
 
    
	
 
    
	
By:   
    	
/s/   William Frauen
    	
 
    
	
 
    	
Name:
    	
William   Frauen
    
	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:   
    	
/s/   David Lynch
    	
 
    
	
 
    	
Name:
    	
David   Lynch
    
	
 
    	
Title:
    	
Managing   Director
    
				

 

[Registration Rights Agreement]

 

 

	
GOLDMAN,   SACHS & CO.
    
	
 
    
	
 
    
	
/s/ Goldman, Sachs & Co.
    	
 
    
	
(Goldman, Sachs & Co.)
    
	
 
    
	
 
    
	
J.P.   MORGAN SECURITIES LLC
    
	
 
    
	
 
    
	
By:   
    	
/s/   Lawrence Landry
    	
 
    
	
 
    	
Name:
    	
Lawrence   Landry
    
	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
RBS   SECURITIES INC.
    
	
 
    
	
 
    
	
By:   
    	
/s/   Michael F. Newcomb II
    	
 
    
	
 
    	
Name:
    	
Michael   F. Newcomb II
    
	
 
    	
Title:
    	
Managing   Director
    
				

 

[Registration Rights Agreement]

 

 

SCHEDULE I

 

Initial Purchasers

 

	
Morgan   Stanley & Co. Incorporated
    
	
 
    
	
Merrill Lynch, Pierce, Fenner & Smith
   Incorporated
    
	
 
    
	
Barclays   Capital Inc.
    
	
 
    
	
Citigroup   Global Markets Inc.
    
	
 
    
	
Credit   Suisse Securities (USA) LLC
    
	
 
    
	
Deutsche   Bank Securities Inc.
    
	
 
    
	
Goldman,   Sachs & Co.
    
	
 
    
	
J.P.   Morgan Securities LLC
    
	
 
    
	
RBS   Securities Inc.
    
	
 
    
	
Mitsubishi   UFJ Securities (USA), Inc.
    
	
 
    
	
BNP   Paribas Securities Corp.
    
	
 
    
	
Credit   Agricole Securities (USA) Inc.
    
	
 
    
	
ING   Financial Markets LLC
    
	
 
    
	
Commerz   Markets LLC
    

 

 

ANNEX A

 

Each broker-dealer that receives new securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such new securities.  The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter”  within the meaning of the Act.  This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new securities received in exchange for securities where such securities were acquired by such broker-dealer as a result of market-making activities or other trading activities.  Each of the company and the guarantors has agreed that,  starting on the expiration date and ending on the close of business one year after the expiration date, it will make this prospectus available, as amended or supplemented, to any broker-dealer for use in connection with any such resale.  See “Plan of Distribution”.

 

A-1

 

ANNEX B

 

Each broker-dealer that receives new securities for its own account in exchange for securities, where such securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such new securities.  See “Plan of Distribution”.

 

B-1

 

ANNEX C

 

PLAN OF DISTRIBUTION

 

Each broker-dealer that receives new securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such new securities.  This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new securities received in exchange for securities where such securities were acquired as a result of market-making activities or other trading activities.  The Company and each of the guarantors has agreed that, starting on the expiration date and ending on the close of business one year after the expiration date, they will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale.  In addition, until                     , 20    , all dealers effecting transactions in the new securities may be required to deliver a prospectus.

 

The company and each of the guarantors will not receive any proceeds from any sale of new securities by brokers-dealers.  New securities received by broker-dealers for their own account pursuant to the Registered Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the new securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices.  Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such new securities.  Any broker-dealer that resells new securities that were received by it for its own account pursuant to the Registered Exchange Offer and any broker or dealer that participates in a distribution of such new securities may be deemed to be an “underwriter” within the meaning of the Act and any profit of any such resale of new securities and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Act.  The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Act.

 

For a period of one year  after the expiration date, each of the company and the guarantors will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the Letter of Transmittal.  Each of the company and the guarantors has agreed to pay all expenses incident to the Registered Exchange Offer (including the expenses of one counsel for the holders of the securities) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the securities (including any broker-dealers) against certain liabilities, including liabilities under the Act.

 

[If applicable, add information required by Regulation S-K Items 507 and/or 508.]

 

C-1

 

ANNEX D

 

Rider A

 

PLEASE FILL IN YOUR NAME AND ADDRESS BELOW IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

 

	
Name:
    	
 
    	
 
    
	
Address:
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

Rider B

 

If the undersigned is not a Broker-Dealer, the undersigned represents that it acquired the New Securities in the ordinary course of its business, it is not engaged  in, and does not intend to engage in, a distribution of New Securities and it has no arrangements or understandings with any person to participate in a distribution of the New Securities.  If the undersigned is a Broker-Dealer that will receive New Securities for its own account in exchange for Securities, it represents that the Securities to be exchanged for New Securities were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus in connection with any resale of such New Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Act.Exhibit 10.1

 

INCYTE CORPORATION

 

2010 STOCK INCENTIVE PLAN

 

(As Amended on March 8, 2011)

 

 

Table of Contents

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 1.
    	
 
    	
ESTABLISHMENT AND PURPOSE
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 2.
    	
 
    	
DEFINITIONS
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
“Affiliate”
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
“Award”
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
“Board of Directors”
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
(d)
    	
 
    	
“Change in Control”
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
(e)
    	
 
    	
“Code”
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
(f)
    	
 
    	
“Committee”
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
(g)
    	
 
    	
“Corporation”
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
(h)
    	
 
    	
“Consultant”
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
(i)
    	
 
    	
“Employee”
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
(j)
    	
 
    	
“Exchange Act”
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
(k)
    	
 
    	
“Exercise Price”
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
(l)
    	
 
    	
“Fair Market Value”
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
(m)
    	
 
    	
“ISO”
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
(n)
    	
 
    	
“Nonstatutory Option” or “NSO”
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
(o)
    	
 
    	
“Offeree”
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
(p)
    	
 
    	
“Option”
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
(q)
    	
 
    	
“Optionee”
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
(r)
    	
 
    	
“Outside Director”
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
(s)
    	
 
    	
“Parent”
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
(t)
    	
 
    	
“Participant”
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
(u)
    	
 
    	
“Performance Shares”
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
(v)
    	
 
    	
“Performance Share Agreement”
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
(w)
    	
 
    	
“Plan”
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
(x)
    	
 
    	
“Purchase Price”
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
(y)
    	
 
    	
“Qualifying Performance Criteria”
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
(z)
    	
 
    	
“Restricted Share”
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
(aa)
    	
 
    	
“Restricted Share Agreement”
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
(bb)
    	
 
    	
“Restricted Stock Unit”
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
(cc)
    	
 
    	
“Restricted Stock Unit Agreement”
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
(dd)
    	
 
    	
“SAR”
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
(ee)
    	
 
    	
“SAR Agreement”
    	
9
    

 

i

 

	
(ff)
    	
 
    	
“Service”
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
(gg)
    	
 
    	
“Share”
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
(hh)
    	
 
    	
“Stock”
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
(ii)
    	
 
    	
“Stock Option Agreement”
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
(jj)
    	
 
    	
“Subsidiary”
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
(kk)
    	
 
    	
“Total and Permanent Disability”
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 3.
    	
 
    	
ADMINISTRATION
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
Committee Composition
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
Committee for Non-Officer Grants
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Committee Procedures
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
(d)
    	
 
    	
Committee Responsibilities
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 4.
    	
 
    	
ELIGIBILITY
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
General Rule
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
Ten-Percent Stockholders
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Attribution Rules
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
(d)
    	
 
    	
Outstanding Stock
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 5.
    	
 
    	
STOCK SUBJECT TO PLAN
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
Basic Limitation
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
Award Limitation
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Additional Shares
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 6.
    	
 
    	
RESTRICTED SHARES
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
Restricted Share Agreement
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
Payment for Awards
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Vesting
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
(d)
    	
 
    	
Voting and Dividend Rights
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
(e)
    	
 
    	
Restrictions on Transfer of Shares
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 7.
    	
 
    	
TERMS AND CONDITIONS OF OPTIONS
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
Stock Option Agreement
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
Number of Shares
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Exercise Price
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
(d)
    	
 
    	
Withholding Taxes
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
(e)
    	
 
    	
Exercisability and Term
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
(f)
    	
 
    	
Exercise of Options
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
(g)
    	
 
    	
Effect of Change in Control
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
(h)
    	
 
    	
No Rights as a Stockholder
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
(i)
    	
 
    	
Modification, Extension and Assumption of   Options
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
(j)
    	
 
    	
Restrictions on Transfer of Shares
    	
15
    

 

ii

 

	
(k)
    	
 
    	
Buyout Provisions
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 8.
    	
 
    	
PAYMENT FOR SHARES
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
General Rule
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
Surrender of Stock
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Services Rendered
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
(d)
    	
 
    	
Cashless Exercise
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
(e)
    	
 
    	
Exercise/Pledge
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
(f)
    	
 
    	
Promissory Note
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
(g)
    	
 
    	
Other Forms of Payment
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
(h)
    	
 
    	
Limitations under Applicable Law
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 9.
    	
 
    	
STOCK APPRECIATION RIGHTS
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
SAR Agreement
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
Number of Shares
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Exercise Price
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
(d)
    	
 
    	
Exercisability and Term
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
(e)
    	
 
    	
Effect of Change in Control
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
(f)
    	
 
    	
Exercise of SARs
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
(g)
    	
 
    	
Modification or Assumption of SARs
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
(h)
    	
 
    	
Buyout Provisions
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 10.
    	
 
    	
RESTRICTED STOCK UNITS
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
Restricted Stock Unit Agreement
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
Payment for Awards
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Vesting Conditions
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
(d)
    	
 
    	
Voting and Dividend Rights
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
(e)
    	
 
    	
Form and Time of Settlement of   Restricted Stock Units
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
(f)
    	
 
    	
Death of Recipient
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
(g)
    	
 
    	
Creditors’ Rights
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 11.
    	
 
    	
PERFORMANCE SHARES
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
Performance Shares and Performance Share   Agreement
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
Payment for Awards
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Terms of Performance Share Awards
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
(d)
    	
 
    	
Voting and Dividend Rights
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
(e)
    	
 
    	
Form and Time of Settlement of Performance   Shares
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
(f)
    	
 
    	
Death of Recipient
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
(g)
    	
 
    	
Creditors’ Rights
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 12.
    	
 
    	
AUTOMATIC GRANTS TO OUTSIDE DIRECTORS
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
Initial Grants
    	
20
    

 

iii

 

	
(b)
    	
 
    	
Annual Grants
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Vesting Conditions
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
(d)
    	
 
    	
Stock Option Agreement
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
(e)
    	
 
    	
Additional Grants
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 13.
    	
 
    	
ADJUSTMENT OF SHARES; REORGANIZATIONS
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
Adjustments
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
Dissolution or Liquidation
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Reorganizations
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
(d)
    	
 
    	
Reservation of Rights
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 14.
    	
 
    	
DEFERRAL OF AWARDS
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
Committee Powers
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
General Rules
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Code Section 409A
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 15.
    	
 
    	
PAYMENT OF DIRECTOR’S FEES IN SECURITIES
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
Effective Date
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
Elections to Receive NSOs, Restricted   Shares or Restricted Stock Units
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Number and Terms of NSOs, Restricted Shares or Restricted   Stock Units
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 16.
    	
 
    	
AWARDS UNDER OTHER PLANS
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 17.
    	
 
    	
LEGAL AND REGULATORY REQUIREMENTS
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 18.
    	
 
    	
WITHHOLDING TAXES
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
General
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
Share Withholding
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 19.
    	
 
    	
OTHER PROVISIONS APPLICABLE TO AWARDS
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
Transferability
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
Qualifying Performance Criteria
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Restrictions on Full Value Awards
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 20.
    	
 
    	
NO EMPLOYMENT RIGHTS
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 21.
    	
 
    	
APPLICABLE LAW
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 22.
    	
 
    	
DURATION AND AMENDMENTS
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
Term of the Plan
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
Right to Amend or Terminate the Plan
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Effect of Termination
    	
27
    

 

iv

 

INCYTE CORPORATION

 

2010 STOCK INCENTIVE PLAN

 

SECTION 1.                       ESTABLISHMENT AND PURPOSE.

 

The Plan was adopted by the Board of Directors on March 19, 2010, and amended and restated on March 8, 2011.  The purpose of the Plan is to promote the long-term success of the Corporation and the creation of stockholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership.  The Plan seeks to achieve this purpose by providing for Awards in the form of Restricted Shares, Restricted Stock Units, Performance Shares, Options (which may constitute ISOs or NSOs) and SARs.

 

SECTION 2.                       DEFINITIONS.

 

(a)                               “Affiliate” shall mean any entity other than a Subsidiary, if the Corporation and/or one or more Subsidiaries own not less than 50% of such entity.

 

(b)                               “Award” shall mean any award of an Option, a SAR, Restricted Shares, Restricted Stock Units or Performance Shares under the Plan.

 

(c)                                “Board of Directors” shall mean the Board of Directors of the Corporation, as constituted from time to time.

 

(d)                               “Change in Control” shall mean the occurrence of any of the following events:

 

(i)                                     A change in the composition of the Board of Directors, as a result of which fewer than one-half of the incumbent directors are directors who either:

 

(A)          Had been directors of the Corporation 24 months prior to such change; or

 

(B)           Were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the directors who had been directors of the Corporation 24 months prior to such change and who were still in office at the time of the election or nomination; or

 

(ii)                                  Any “person” (as defined below) by the acquisition or aggregation of securities is or becomes the beneficial owner (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Corporation representing 50% or more of the combined voting power of the Corporation’s then outstanding securities ordinarily (and apart from rights

 

5

 

accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change in the relative beneficial ownership of the Corporation’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Corporation; or

 

(iii)          The consummation of a merger or consolidation of the Corporation with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Corporation immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of (A) the continuing or surviving entity and (B) any direct or indirect parent corporation of such continuing or surviving entity; or

 

(iv)          The consummation of the sale, transfer or other disposition of all or substantially all of the assets of the Corporation.

 

For purposes of subsection (d)(ii) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Corporation or a Parent or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Corporation in substantially the same proportions as their ownership of the Stock.

 

Any other provision of this Section 2(d) notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Corporation’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Corporation’s securities immediately before such a transaction.

 

(e)                                “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(f)                                   “Committee” shall mean the committee designated by the Board of Directors to administer the Plan, as described in Section 3 hereof (or in the absence of such designation, the Board of Directors itself).

 

(g)                               “Corporation” shall mean Incyte Corporation, a Delaware corporation.

 

(h)                               “Consultant” shall mean a consultant or advisor who provides bona fide services to the Corporation, a Parent, a Subsidiary or an Affiliate as an independent contractor (not including service as a member of the Board of Directors) or a member of the board of directors of a Parent or a Subsidiary, in each case who is not an Employee.

 

(i)                                  “Employee” shall mean any individual who is a common-law employee of the Corporation, a Parent, a Subsidiary or an Affiliate.

 

6

 

(j)                                   “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(k)                               “Exercise Price” shall mean (a) in the case of an Option, the amount for which one Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement, and (b) in the case of a SAR, an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Share in determining the amount payable upon exercise of such SAR.

 

(l)                                  “Fair Market Value” with respect to a Share, shall mean the market price of one Share, determined by the Committee as follows:

 

(i)            If the Stock was traded on The NASDAQ Stock Market, then the Fair Market Value shall be equal to the last reported sale price reported for such date by The NASDAQ Stock Market; or

 

(ii)           If the Stock was not traded on The NASDAQ Stock Market but was traded on another United States stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported for such date by the applicable composite-transactions report; or

 

(iii)          If the Stock was traded over-the-counter on the date in question, then the Fair Market Value shall be equal to the last reported sale price reported for such date by the OTC Bulletin Board or, if not so reported, shall be equal to the closing sale price quoted for such date by Pink OTC Markets Inc. or similar organization or, if no last reported or closing sale price is reported, shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the OTC Bulletin Board or, if the Stock is not quoted on the OTC Bulletin Board, by Pink OTC Markets Inc. or similar organization; or

 

(iv)          If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

 

In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons.

 

(m)                             “ISO” shall mean an employee incentive stock option described in Section 422 of the Code.

 

(n)                               “Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO.

 

(o)                               “Offeree” shall mean an individual to whom the Committee has offered the right to acquire Shares under the Plan (other than upon exercise of an Option).

 

(p)                               “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.

 

7

 

(q)                               “Optionee” shall mean an individual or estate who holds an Option or SAR.

 

(r)                                 “Outside Director” shall mean a member of the Board of Directors who is not an Employee or a Consultant.

 

(s)                                 “Parent” shall mean any corporation or other entity (other than the Corporation) in an unbroken chain of corporations or other entities ending with the Corporation, if each of the corporations or other entities other than the Corporation owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation or other entity that attains the status of a Parent on a date after the adoption of the Plan shall be a Parent commencing as of such date.

 

(t)                                  “Participant” shall mean an individual or estate who holds an Award.

 

(u)                               “Performance Shares” shall mean a bookkeeping entry representing the Corporation’s obligation to deliver Shares (or distribute cash) on a future date in accordance with the provisions of a Performance Share Agreement.

 

(v)                                “Performance Share Agreement” shall mean the agreement between the Corporation and the recipient of Performance Shares that contains the terms, conditions and restrictions pertaining to such Performance Shares.

 

(w)                             “Plan” shall mean this 2010 Stock Incentive Plan of Incyte Corporation, as amended from time to time.

 

(x)                                “Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee.

 

(y)                                “Qualifying Performance Criteria” shall have the meaning set forth in Section 19(b).

 

(z)                                 “Restricted Share” shall mean a Share awarded under the Plan and subject to the terms, conditions and restrictions set forth in a Restricted Share Agreement.

 

(aa)                        “Restricted Share Agreement” shall mean the agreement between the Corporation and the recipient of a Restricted Share that contains the terms, conditions and restrictions pertaining to such Restricted Shares.

 

(bb)                        “Restricted Stock Unit” shall mean a bookkeeping entry representing the Corporation’s obligation to deliver one Share (or distribute cash) on a future date in accordance with the provisions of a Restricted Stock Unit Agreement.

 

(cc)                          “Restricted Stock Unit Agreement” shall mean the agreement between the Corporation and the recipient of a Restricted Stock Unit that contains the terms, conditions and restrictions pertaining to such Restricted Stock Unit.

 

(dd)                        “SAR” shall mean a stock appreciation right granted under the Plan.

 

8

 

(ee)                          “SAR Agreement” shall mean the agreement between the Corporation and an Optionee that contains the terms, conditions and restrictions pertaining to his or her SAR.

 

(ff)                                “Service” shall mean service as an Employee, Consultant or Outside Director, subject to such further limitations as may be set forth in the Plan or the applicable Stock Option Agreement, SAR Agreement, Restricted Share Agreement, Restricted Stock Unit Agreement or Performance Share Agreement.  Service does not terminate when an Employee goes on a bona fide leave of absence, that was approved by the Corporation in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law.  However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s employment will be treated as terminating 90 days after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract.  Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work.  The Corporation shall be entitled to determine in its sole discretion which leaves of absence count toward Service, and when Service terminates for all purposes under the Plan.

 

(gg)                        “Share” shall mean one share of Stock, as adjusted in accordance with Section 13 (if applicable).

 

(hh)                        “Stock” shall mean the common stock of the Corporation, $.001 par value per share.

 

(ii)                              “Stock Option Agreement” shall mean the agreement between the Corporation and an Optionee that contains the terms, conditions and restrictions pertaining to such Option.

 

(jj)                                “Subsidiary” shall mean any corporation, if the Corporation or one or more other Subsidiaries own not less than 50% of the total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

 

(kk)                        “Total and Permanent Disability” shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last for a continuous period of not less than one year.

 

SECTION 3.                       ADMINISTRATION.

 

(a)                               Committee Composition. The Plan shall be administered by the Board of Directors or a Committee appointed by the Board of Directors.  The Committee shall consist of two or more members of the Board of Directors.  In addition, to the extent required by the Board of Directors, the composition of the Committee shall satisfy (i) such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act; and (ii) such requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under Section 162(m)(4)(C) of the Code.

 

9

 

(b)                               Committee for Non-Officer Grants.  The Board of Directors may also appoint one or more separate committees of the Board of Directors, each composed of one or more members of the Board of Directors who need not satisfy the requirements of Section 3(a), who may administer the Plan with respect to Employees who are not considered officers or directors of the Corporation under Section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and may determine all terms of such grants.  Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding sentence.  To the extent permitted by applicable laws, the Board of Directors may also authorize one or more officers of the Corporation to designate Employees, other than persons subject to Section 16 of the Exchange Act, to receive Awards and to determine the number of such Awards to be received by such Employees.

 

(c)                                Committee Procedures.  The Board of Directors shall designate one of the members of the Committee as chairman.  The Committee may hold meetings at such times and places as it shall determine.  The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing (including via email) by all Committee members, shall be valid acts of the Committee.

 

(d)                               Committee Responsibilities.  Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take the following actions:

 

(i)            To interpret the Plan and to apply its provisions;

 

(ii)           To adopt, amend or rescind rules, procedures and forms relating to the Plan;

 

(iii)          To adopt, amend or terminate sub-plans established for the purpose of satisfying applicable foreign laws, including qualifying for preferred tax treatment under applicable foreign tax laws;

 

(iv)          To authorize any person to execute, on behalf of the Corporation, any instrument required to carry out the purposes of the Plan;

 

(v)           To determine when Awards are to be granted under the Plan;

 

(vi)          To select the Offerees and Optionees;

 

(vii)         To determine the number of Shares to be made subject to each Award;

 

(viii)        To prescribe the terms and conditions of each Award, including the Exercise Price, the Purchase Price, the performance criteria, the performance period, and the vesting or duration of the Award (including accelerating the vesting of Awards, either at the time of the Award or thereafter, without the consent of the Participant), to determine whether an Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the agreement relating to such Award;

 

10

 

(ix)          To amend any outstanding Award agreement, subject to applicable legal restrictions and to the consent of the Participant if the Participant’s rights or obligations would be materially impaired;

 

(x)           To prescribe the consideration for the grant of each Award or other right under the Plan and to determine the sufficiency of such consideration;

 

(xi)          To determine the disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage;

 

(xii)         To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other compensation plan of an acquired business;

 

(xiii)        To correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award agreement;

 

(xiv)        To establish or verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; and

 

(xv)         To take any other actions deemed necessary or advisable for the administration of the Plan.

 

Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation of or the granting of Awards under the Plan to persons subject to Section 16 of the Exchange Act.  All decisions, interpretations and other actions of the Committee shall be final and binding on all Participants, and all persons deriving their rights from a Participant.  No member of the Committee shall be liable for any action that he or she has taken or has failed to take in good faith with respect to the Plan or any Award.

 

SECTION 4.                       ELIGIBILITY.

 

(a)          General Rule. Only Employees shall be eligible for the grant of ISOs. Only Employees, Consultants and Outside Directors shall be eligible for the grant of Restricted Shares, Restricted Stock Units, Performance Shares, Nonstatutory Options or SARs.

 

(b)          Ten-Percent Stockholders. An Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Corporation, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5) of the Code.

 

(c)           Attribution Rules. For purposes of Section 4(b) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock owned,

 

11

 

directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries.

 

(d)          Outstanding Stock. For purposes of Section 4(b) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after the grant but shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person.

 

SECTION 5.                       STOCK SUBJECT TO PLAN.

 

(a)          Basic Limitation.  Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares.  The aggregate number of Shares authorized for issuance as Awards under the Plan shall not exceed 11,900,000 Shares, plus 653,475 Shares previously approved by the Corporation’s stockholders for issuance under the Corporation’s 1991 Stock Plan and its 1993 Directors’ Stock Option Plan (the “Prior Plans”) which are not subject to any outstanding award under the Prior Plans and which are no longer available for issuance under the Prior Plans by action of the Board of Directors.  The limitation of this Section 5(a) shall be subject to adjustment pursuant to Section 13.  Notwithstanding the foregoing, the number of Shares that may be issued under the Plan, other than (i) upon exercise of Options or SARs or (ii) pursuant to any sale of Restricted Shares for a Purchase Price at least equal to 100 percent of the Fair Market Value shall not exceed 200,000 Shares, subject to adjustment pursuant to Section 13.  The number of Shares that are subject to other Awards outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan.  The Corporation, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan.  Shares tendered or withheld in full or partial payment of the Exercise Price of an Award or to satisfy tax withholding obligations in connection with an Award, and Shares issued under an Award that are purchased by the Corporation on the open market, shall not be available for future issuance under the Plan.

 

(b)          Award Limitation.  Subject to the provisions of Section 13, no Participant may receive Awards under the Plan in any calendar year that relate to more than 800,000 Shares.

 

(c)           Additional Shares.  If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to Restricted Shares, Restricted Stock Units or Performance Shares, is forfeited to or repurchased by the Corporation due to failure to vest, the unpurchased Shares (or for Awards other than Options or SARs the forfeited or repurchased Shares) which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated).  With respect to SARs, when a stock settled SAR is exercised, all of the Shares subject to the SAR shall be counted against the number of Shares available for future grant or sale under the Plan, regardless of the number of Shares actually issued pursuant to such exercise.  Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued pursuant to Awards of Restricted Shares, Restricted Stock Units or Performance Shares are repurchased by the Corporation or are forfeited to the Corporation, such Shares will become available for future grant under the Plan.  To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.

 

12

 

SECTION 6.                       RESTRICTED SHARES.

 

(a)                               Restricted Share Agreement.  Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Share Agreement between the recipient and the Corporation. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various Restricted Share Agreements entered into under the Plan need not be identical.

 

(b)                               Payment for Awards.  Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including cash, cash equivalents, full-recourse promissory notes, past services and future services.

 

(c)                                Vesting.  Each Award of Restricted Shares shall vest over a minimum period of three years of the Participant’s Service, except as otherwise provided in Section 19(c).  Vesting shall occur, in full or in installments, upon satisfaction of such Service requirement and such other conditions specified in the Restricted Share Agreement.  A Restricted Share Agreement may provide for accelerated vesting in the event of the Participant’s death, Total and Permanent Disability or retirement or other events.  The Committee may determine, at the time of granting Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested upon a Change in Control.  Except as may be set forth in a Restricted Share Agreement, vesting of the Restricted Shares shall cease on the termination of the Participant’s Service.

 

(d)                               Voting and Dividend Rights.  The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Corporation’s other stockholders.  A Restricted Share Agreement, however, may require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares.  Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid.

 

(e)                                Restrictions on Transfer of Shares.  Restricted Shares shall be subject to such rights of repurchase, rights of first refusal or other restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Restricted Share Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

 

SECTION 7.                       TERMS AND CONDITIONS OF OPTIONS.

 

(a)                               Stock Option Agreement.  Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Corporation.  Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Agreement.  The Stock Option Agreement shall specify whether the Option is an ISO or an NSO.  The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.  Options may be granted in consideration of a reduction in the Optionee’s other compensation.

 

(b)                               Number of Shares.  Each Stock Option Agreement shall specify the number of Shares that are subject to the Option (subject to adjustment in accordance with Section 13).

 

13

 

(c)                                Exercise Price.  Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except as otherwise provided in Section 4(b), and the Exercise Price of an NSO shall not be less 100% of the Fair Market Value of a Share on the date of grant.  Subject to the foregoing in this Section 7(c), the Exercise Price under any Option shall be determined by the Committee at its sole discretion.  The Exercise Price shall be payable in one of the forms described in Section 8.

 

(d)                               Withholding Taxes.  As a condition to the exercise of an Option, the Optionee shall make such arrangements as the Corporation may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise.  The Optionee shall also make such arrangements as the Corporation may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option.

 

(e)                                Exercisability and Term.  Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable.  The Stock Option Agreement shall also specify the term of the Option; provided, however, that the term of an ISO shall in no event exceed 10 years from the date of grant (five years for Employees described in Section 4(b)). A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s death, Total and Permanent Disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited. Subject to the foregoing in this Section 7(e), the Committee at its sole discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire.

 

(f)                                   Exercise of Options.  Each Stock Option Agreement shall set forth the extent to which the Optionee shall have the right to exercise the Option following termination of the Optionee’s Service with the Corporation and its Subsidiaries, and the right to exercise the Option of any executors or administrators of the Optionee’s estate or any person who has acquired such Option(s) directly from the Optionee by bequest or inheritance.  Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.

 

(g)                               Effect of Change in Control.  The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Shares subject to such Option upon a Change in Control.

 

(h)                               No Rights as a Stockholder.  An Optionee, or a permitted transferee of an Optionee, shall have no rights as a stockholder of the Corporation with respect to any Shares covered by the Option until the date of the issuance of the Shares underlying the Option upon a valid exercise thereof.

 

14

 

(i)                                  Modification, Extension and Assumption of Options.  Within the limitations of the Plan, the Committee may modify, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Corporation or another issuer) in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price; provided, however, that the Committee may not modify outstanding Options to lower the Exercise Price nor may the Committee assume or accept the cancellation of outstanding Options in return for the grant of new Options with a lower Exercise Price, unless such action has been approved by the Corporation’s stockholders.  The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, materially impair such Optionee’s rights or increase his or her obligations under such Option.

 

(j)                                   Restrictions on Transfer of Shares.  Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine.  Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

 

(k)                               Buyout Provisions.  Except with respect to an Option whose Exercise Price exceeds the Fair Market Value of the Shares subject to the Option, the Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize an Optionee to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.

 

SECTION 8.                       PAYMENT FOR SHARES.

 

(a)                               General Rule.  The entire Exercise Price or Purchase Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Section 8(b) through Section 8(g) below.

 

(b)                               Surrender of Stock.  To the extent that a Stock Option Agreement so provides, payment may be made all or in part by surrendering, or attesting to the ownership of, Shares which have already been owned by the Optionee or his representative.  Such Shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan.  The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Corporation to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes.

 

(c)                                Services Rendered.  At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the Corporation or a Subsidiary prior to the award.  If Shares are awarded without the payment of a Purchase Price in cash, the Committee shall make a determination (at the time of the award) of the value of the services rendered by the Offeree and the sufficiency of the consideration to meet the requirements of Section 6(b).

 

(d)                               Cashless Exercise.  To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an

 

15

 

irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Corporation in payment of the aggregate Exercise Price.

 

(e)                                Exercise/Pledge.  To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or part of the loan proceeds to the Corporation in payment of the aggregate Exercise Price.

 

(f)                                   Promissory Note.  To the extent that a Stock Option Agreement or Restricted Share Agreement so provides, payment may be made all or in part by delivering (on a form prescribed by the Corporation) a full-recourse promissory note.

 

(g)                               Other Forms of Payment.  To the extent that a Stock Option Agreement or Restricted Share Agreement so provides, payment may be made in any other form that is consistent with applicable laws, regulations and rules.

 

(h)                               Limitations under Applicable Law.  Notwithstanding anything herein or in a Stock Option Agreement or Restricted Share Agreement to the contrary, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion.

 

SECTION 9.                       STOCK APPRECIATION RIGHTS.

 

(a)                               SAR Agreement.  Each grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the Optionee and the Corporation.  Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various SAR Agreements entered into under the Plan need not be identical.  SARs may be granted in consideration of a reduction in the Optionee’s other compensation.

 

(b)                               Number of Shares.  Each SAR Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Section 13.

 

(c)                                Exercise Price.  Each SAR Agreement shall specify the Exercise Price, which shall not be less than 100% of the Fair Market Value of a Share on the date of grant.  A SAR Agreement may specify an Exercise Price that varies in accordance with a predetermined formula while the SAR is outstanding.

 

(d)                               Exercisability and Term.  Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable.  The SAR Agreement shall also specify the term of the SAR.  A SAR Agreement may provide for accelerated exercisability in the event of the Optionee’s death, Total and Permanent Disability or retirement or other events.  Except as may be set forth in a SAR Agreement, vesting of the SAR shall cease on the termination of the Participant’s Service.  SARs may be awarded in combination with Options, and such an Award may provide that the SARs will not be exercisable unless the related Options are forfeited. A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the

 

16

 

time of grant or thereafter. A SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control.

 

(e)                                Effect of Change in Control.  The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully exercisable as to all Shares subject to such SAR upon a Change in Control.

 

(f)                                   Exercise of SARs.  Upon exercise of a SAR, the Optionee (or any person having the right to exercise the SAR after his or her death) shall receive from the Corporation (a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall determine.  The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price.

 

(g)                               Modification or Assumption of SARs.  Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Corporation or by another issuer) in return for the grant of new SARs for the same or a different number of Shares and at the same or a different exercise price.  The foregoing notwithstanding, no modification of a SAR shall, without the consent of the holder, materially impair his or her rights or obligations under such SAR.

 

(h)                               Buyout Provisions.  Except with respect to a SAR whose Exercise Price exceeds the Fair Market Value of the Shares subject to the SAR, the Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents a SAR previously granted, or (b) authorize an Optionee to elect to cash out a SAR previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.

 

SECTION 10.                RESTRICTED STOCK UNITS.

 

(a)                               Restricted Stock Unit Agreement.  Each grant of Restricted Stock Units under the Plan shall be evidenced by a Restricted Stock Unit Agreement between the recipient and the Corporation.  Such Restricted Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Stock Unit Agreements entered into under the Plan need not be identical. Restricted Stock Units may be granted in consideration of a reduction in the recipient’s other compensation.

 

(b)                               Payment for Awards. To the extent that an Award is granted in the form of Restricted Stock Units, no cash consideration shall be required of the Award recipients.

 

(c)                                Vesting Conditions.  Each Award of Restricted Stock Units shall vest over a minimum period of three years of the Participant’s Service, except as otherwise provided in Section 19(c).  Vesting shall occur, in full or in installments, upon satisfaction of such Service requirement and such other conditions specified in the Restricted Stock Unit Agreement.  A Restricted Stock Unit Agreement may provide for accelerated vesting in the event of the Participant’s death, Total and Permanent Disability or retirement or other events.  The Committee may determine, at the time of granting Restricted Stock Units or thereafter, that all or part of such Restricted Stock Units shall become vested in the event that a Change in Control

 

17

 

occurs with respect to the Corporation. Except as may be set forth in a Restricted Stock Unit Agreement, vesting of the Restricted Stock Units shall cease on the termination of the Participant’s Service.

 

(d)                               Voting and Dividend Rights.  The holders of Restricted Stock Units shall have no voting rights.  Prior to settlement or forfeiture, any Restricted Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents.  Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Restricted Stock Unit is outstanding. Dividend equivalents may be converted into additional Restricted Stock Units.  Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Restricted Stock Units to which they attach.

 

(e)                                Form and Time of Settlement of Restricted Stock Units.  Settlement of vested Restricted Stock Units may be made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee.  The actual number of Restricted Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors.  Methods of converting Restricted Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days.  A Restricted Stock Unit Agreement may provide that vested Restricted Stock Units may be settled in a lump sum or in installments.  A Restricted Stock Unit Agreement may provide that the distribution may occur or commence when all vesting conditions applicable to the Restricted Stock Units have been satisfied or have lapsed, or it may be deferred to any later date.  The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents.  Until an Award of Restricted Stock Units is settled, the number of such Restricted Stock Units shall be subject to adjustment pursuant to Section 13.

 

(f)                                   Death of Recipient. Any Restricted Stock Units that become payable after the recipient’s death shall be distributed to the recipient’s beneficiary or beneficiaries. Each recipient of Restricted Stock Units under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Corporation.  A beneficiary designation may be changed by filing the prescribed form with the Corporation at any time before the Award recipient’s death.  If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Restricted Stock Units that become payable after the recipient’s death shall be distributed to the recipient’s estate.

 

(g)                               Creditors’ Rights.  A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Corporation. Restricted Stock Units represent an unfunded and unsecured obligation of the Corporation, subject to the terms and conditions of the applicable Restricted Stock Unit Agreement.

 

SECTION 11.                PERFORMANCE SHARES.

 

(a)                               Performance Shares and Performance Share Agreement.  Each grant of Performance Shares under the Plan shall be evidenced by a Performance Share Agreement between the recipient and the Corporation.  Such Performance Shares shall be subject to all

 

18

 

applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Performance Share Agreements entered into under the Plan need not be identical. Performance Shares may be granted in consideration of a reduction in the recipient’s other compensation.

 

(b)                               Payment for Awards. To the extent that an Award is granted in the form of Performance Shares, no cash consideration shall be required of the Award recipients.

 

(c)                                Terms of Performance Share Awards.  The Committee may determine the terms of Performance Share Awards, all of which shall be subject to Section 19(b) of the Plan.  Each Performance Share Agreement shall set forth the number of Shares subject to such Performance Share Award, the Qualifying Performance Criteria and the performance period.  Except as otherwise provided in Section 19(c), the Participant shall be required to perform Service for the entire performance period (or if less, one year) in order to be eligible to receive payment under the Performance Share Award.  Except as otherwise provided in the Performance Share Agreement, the Performance Share Award shall terminate upon the termination of the Participant’s Service.  Prior to settlement and in accordance with Section 19(b) of the Plan, the Committee shall determine the extent to which Performance Shares have been earned.  Performance periods may overlap and the holders may participate simultaneously with respect to Performance Shares Awards that are subject to different performance periods and different Qualifying Performance Criteria.  The number of Shares may be fixed or may vary in accordance with such Qualifying Performance Criteria as may be determined by the Committee.  A Performance Share Agreement may provide for accelerated vesting in the event of the Participant’s death, Total and Permanent Disability or retirement or other events.  The Committee may determine, at the time of granting Performance Share Awards or thereafter, that all or part of the Performance Shares shall become vested upon a Change in Control.

 

(d)                               Voting and Dividend Rights. The holders of Performance Shares shall have no voting rights with respect to such Performance Shares.  Prior to settlement or forfeiture, any Performance Share awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents.  Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Performance Share is outstanding.  Dividend equivalents may be converted into additional Performance Shares.  Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both.  Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Performance Shares to which they attach.

 

(e)                                Form and Time of Settlement of Performance Shares.  Settlement of Performance Shares may be made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee and set forth in the Performance Share Agreements.  The actual number of Performance Shares eligible for settlement may be larger or smaller than the number included in the original Award, based on the Qualifying Performance Criteria.  Methods of converting Performance Shares into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days.  A Performance Share Agreement may provide that Performance Shares may be settled in a lump sum or in installments.  A Performance Share Agreement may provide that the distribution may occur or

 

19

 

commence when all vesting conditions applicable to the Performance Shares have been satisfied or have lapsed, or it may be deferred to any later date.  The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents.  Until an Award of Performance Shares is settled, the number of such Performance Shares shall be subject to adjustment pursuant to Section 13.

 

(f)                                   Death of Recipient. Any Performance Share Award that becomes payable after the recipient’s death shall be distributed to the recipient’s beneficiary or beneficiaries. Each recipient of a Performance Share Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Corporation.  A beneficiary designation may be changed by filing the prescribed form with the Corporation at any time before the Award recipient’s death.  If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Performance Share Award that becomes payable after the recipient’s death shall be distributed to the recipient’s estate.

 

(g)                               Creditors’ Rights.  A holder of Performance Shares shall have no rights other than those of a general creditor of the Corporation. Performance Shares represent an unfunded and unsecured obligation of the Corporation, subject to the terms and conditions of the applicable Performance Share Agreement.

 

SECTION 12.                AUTOMATIC GRANTS TO OUTSIDE DIRECTORS

 

(a)                               Initial Grants.  Each new Outside Director as of the effective date of the Plan, shall receive Nonstatutory Options covering 35,000 Shares within one business day after his or her initial election to the Board of Directors.  The number of Shares included in an Option shall be subject to adjustment under Section 13.

 

(b)                               Annual Grants. On the first business day following the conclusion of each regular annual meeting of the Corporation’s stockholders, each Outside Director who will continue serving as a member of the Board of Directors thereafter shall receive an Option covering 20,000 Shares, subject to adjustment under Section 13.  Each Outside Director who is not initially elected at a regular annual meeting of the Corporation’s stockholders shall receive an Option to purchase a pro rata portion of 20,000 Shares within ten business days of such Director’s election based on the number of full months remaining from the date of election until the next regular annual meeting of the Corporation’s stockholders divided by twelve.  Any fractional shares resulting from such calculation shall be rounded up to the nearest whole number.

 

(c)                                Vesting Conditions.  Each Option granted under Subsection (a) of this Section 12 shall become exercisable (i) as to one-fourth (1/4) of the total number of Shares covered by such Option on the first anniversary of the date of grant and (ii) as to one-forty-eighth (1/48) of the total number of Shares covered by such Option on each of a series of thirty-six (36) monthly installments thereafter.  Except as set forth in the next succeeding sentence and in the last sentence of this Subsection (c), each Option granted under Subsection (b) of this Section 12 shall become exercisable in full on the first anniversary of the date of grant; provided, however, that each such Option shall become exercisable in full immediately prior to the next regular annual meeting of the Corporation’s stockholders following such date of grant in the event such meeting occurs prior to such first anniversary date.  Except as set forth in the last sentence of this

 

20

 

Subsection (c), each Option granted under Subsection (b) to Outside Directors who were not initially elected at a regular annual meeting of the Corporation’s stockholders shall become exercisable in full immediately prior to the next regular annual meeting of the Corporation’s stockholders following the date of grant.  Notwithstanding the foregoing, each Option granted under Subsection (b) above that is outstanding shall become exercisable in full in the event that a Change in Control occurs with respect to the Corporation.

 

(d)                               Stock Option Agreement.  All grants to Outside Directors under this Section 12 shall be evidenced by a Stock Option Agreement between the Optionee and the Corporation.  Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to other terms and condition that are not inconsistent with the Plan and that the Board of Directors deems appropriate for inclusion in a Stock Option Agreement.

 

(e)                                Additional Grants.  Notwithstanding the foregoing provisions of this Section 12, the Board of Directors may from time to time increase the number of Shares subject to an initial or annual grant of Options under Section 12(a) or (b) to any Outside Director to the extent the Board of Directors determines necessary to induce an Outside Director to become or remain an Outside Director or to reflect an increase in the duties or responsibilities of the Outside Director, subject to all terms and conditions of the Plan otherwise applicable to grants of Options.  Each such Option may become exercisable on the same schedule as set forth in Section 12(c) or on a different schedule, as the Board of Directors in each case shall determine.

 

SECTION 13.                ADJUSTMENT OF SHARES; REORGANIZATIONS.

 

(a)                               Adjustments.  In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the Fair Market Value of Shares, a combination or consolidation of the outstanding Stock (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make appropriate and equitable adjustments in:

 

(i)                                     The numerical limitations set forth in Sections 5(a) and (b);

 

(ii)                                  The number of Shares covered by all outstanding Awards; and

 

(iii)                               The Exercise Price under each outstanding Option and SAR.

 

(b)                               Dissolution or Liquidation.  To the extent not previously exercised or settled, all outstanding Awards shall terminate immediately prior to the dissolution or liquidation of the Corporation.

 

(c)                                Reorganizations.  In the event the Corporation is party to a merger or other reorganization, subject to any vesting acceleration provisions in an Award agreement, outstanding Awards shall be treated in the manner provided in the agreement of merger or reorganization (including as the same may be amended).  Such agreement shall not be required to treat all Awards or individual types of Awards similarly in the merger or reorganization; provided, however, that such agreement shall provide for one of the following with respect to all outstanding Awards (as applicable):

 

21

 

(i)            The continuation of the outstanding Award by the Corporation, if the Corporation is a surviving corporation;

 

(ii)           The assumption of the outstanding Award by the surviving corporation or its parent or subsidiary;

 

(iii)          The substitution by the surviving corporation or its parent or subsidiary of its own award for the outstanding Award;

 

(iv)          Full exercisability or vesting and accelerated expiration of the outstanding Award, followed by the cancellation of such Award;

 

(v)           The cancellation of an outstanding Option or SAR and a payment to the Optionee equal to the excess of (i) the Fair Market Value of the Shares subject to such Option or SAR (whether or not such Option or SARs is then exercisable or such Shares are then vested) as of the closing date of such merger or reorganization over (ii) its aggregate Exercise Price.  Such payment may be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. Such payment may be made in installments and may be deferred until the date or dates when such Option or SAR would have become exercisable or such Shares would have vested.  Such payment may be subject to vesting based on the Optionee’s continuing Service, provided that the vesting schedule shall not be less favorable to  the Optionee than the schedule under which such Option or SAR would have become exercisable or such Shares would have vested (including any vesting acceleration provisions).  If the Exercise Price of the Shares subject to any Option or SAR exceeds the Fair Market Value of the Shares subject thereto, then such Option or SAR may be cancelled without making a payment to the Optionee with respect thereto.  For purposes of this Subsection (v), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security;

 

(vi)          The cancellation of an outstanding Restricted Stock Unit and a payment to the Participant equal to the Fair Market Value of the Shares subject to such Restricted Stock Unit (whether or not such Restricted Stock Unit is then vested) as of the closing date of such merger or other reorganization.  Such payment may be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount.  Such payment may be made in installments and may be deferred until the date or dates when such Restricted Stock Unit would have vested.  Such payment may be subject to vesting based on the Participant’s continuing Service, provided that the vesting schedule shall not be less favorable to the Participant than the schedule under which such Restricted Stock Unit would have vested (including any vesting acceleration provisions).  For purposes of this

 

22

 

Subsection (vi), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security; or

 

(vii)         The cancellation of an outstanding Performance Share Award and a payment to the Participant equal to the Fair Market Value of the target Shares subject to such Performance Share Award (whether or not such Performance Share Award is then vested) as of the closing date of such merger or reorganization.  Such payment may be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount.  Such payment may be made in installments and may be deferred until the date or dates when such Performance Share Award would have settled.  Such payment may be subject to the Participant’s continuing Service and the achievement of performance criteria that are based on the performance criteria set forth in the Performance Share Award, with such changes that may necessary to give effect to the merger or other reorganization, provided that the performance period shall not be less favorable to the Participant than the performance period under such Performance Share Award (including any vesting acceleration provisions).  For purposes of this Subsection (vii), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security.

 

(d)                               Reservation of Rights. Except as provided in Section 13, a Participant shall have no rights by reason of the occurrence of (or relating to) any merger or other reorganization, any transaction described in Section 13(a), or any transaction that results in an increase or decrease in the number of shares of stock of any class of the Corporation.  Any issue by the Corporation of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, Awards. The grant of an Award pursuant to the Plan shall not affect in any way the right or power of the Corporation to effect any merger or other reorganization, any transaction described in Section 13(a), any dissolution or liquidation of the Corporation or any transaction that results in an increase or decrease in the number of shares of stock of any class of the Corporation.

 

SECTION 14.                DEFERRAL OF AWARDS.

 

(a)                               Committee Powers. The Committee in its sole discretion may permit or require a Participant to:

 

(i)            Have cash that otherwise would be paid to such Participant as a result of the exercise of a SAR or the settlement of Restricted Stock Units or Performance Shares credited to a deferred compensation account established for such Participant by the Committee as an entry on the Corporation’s books;

 

23

 

(ii)           Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR converted into an equal number of Restricted Stock Units; or

 

(iii)          Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR or the settlement of Restricted Stock Units or Performance Shares converted into amounts credited to a deferred compensation account established for such Participant by the Committee as an entry on the Corporation’s books. Such amounts shall be determined by reference to the Fair Market Value of such Shares as of the date when they otherwise would have been delivered to such Participant.

 

(b)                               General Rules. A deferred compensation account established under this Section 14 may be credited with interest or other forms of investment return, as determined by the Committee. A Participant for whom such an account is established shall have no rights other than those of a general creditor of the Corporation. Such an account shall represent an unfunded and unsecured obligation of the Corporation and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Corporation. If the deferral or conversion of Awards is permitted or required, the Committee in its sole discretion may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts established under this Section 14.

 

(c)                                Code Section 409A. Notwithstanding the foregoing, any deferrals of Award payments in respect of an Award held by a Participant who is subject to United States federal income tax shall be subject to the applicable requirements of Section 409A of the Code and the Treasury Regulations promulgated thereunder.  To the extent that the Committee determines that any Award granted under the Plan is subject to Section 409A of the Code, the Award agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code.  In the event that following the grant of an Award the Committee determines that such Award may be subject to Section 409A of the Code, the Committee may adopt such amendments to the applicable Award agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and the Treasury Regulations promulgated thereunder and thereby avoid the application of any penalty taxes under such Section.

 

SECTION 15.                PAYMENT OF DIRECTOR’S FEES IN SECURITIES

 

(a)                               Effective Date(i).  No provision of this Section 15 shall be effective unless and until the Board has determined to implement such provision.

 

(b)                               Elections to Receive NSOs, Restricted Shares or Restricted Stock Units. An Outside Director may elect to receive his or her annual retainer payment and/or meeting fees from the Corporation in the form of cash, NSOs, Restricted Shares or Restricted Stock Units, or a combination thereof, as determined by the Board.  Such NSOs, Restricted Shares or Restricted

 

24

 

Stock Units shall be issued under the Plan.  An election under this Section 15 shall be filed with the Corporation on the prescribed form.

 

(c)                                Number and Terms of NSOs, Restricted Shares or Restricted Stock Units. The number of NSOs, Restricted Shares or Restricted Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the Board.  The term of such NSOs, Restricted Shares or Restricted Stock Units shall also be determined by the Board.

 

SECTION 16.                AWARDS UNDER OTHER PLANS.

 

The Corporation may grant awards under other plans or programs.  Such awards may be settled in the form of Shares issued under this Plan.  Such Shares shall be treated for all purposes under the Plan like Shares issued in settlement of Restricted Stock Units and shall, when issued, reduce the number of Shares available under Section 5.

 

SECTION 17.                LEGAL AND REGULATORY REQUIREMENTS.

 

Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations and the regulations of any stock exchange on which the Corporation’s securities may then be listed, and the Corporation has obtained the approval or favorable ruling from any governmental agency which the Corporation determines is necessary or advisable.  The Corporation shall not be liable to a Participant or other persons as to: (a) the non-issuance or sale of Shares as to which the Corporation has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Corporation’s counsel to be necessary to the lawful issuance and sale of any Shares under the Plan; and (b) any tax consequences expected, but not realized, by any Participant or other person due to the receipt, exercise or settlement of any Award granted under the Plan.

 

SECTION 18.                WITHHOLDING TAXES.

 

(a)                               General.  To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Corporation for the satisfaction of any withholding tax obligations that arise in connection with the Plan.  The Corporation shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied.

 

(b)                               Share Withholding.  The Corporation may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Corporation withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired.  Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash.  In no event may a Participant have Shares withheld that would otherwise be issued to him or her in excess of the number necessary to satisfy the legally required minimum tax withholding.

 

25

 

SECTION 19.                OTHER PROVISIONS APPLICABLE TO AWARDS.

 

(a)                               Transferability.  Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly provides otherwise, no Award granted under this Plan, nor any interest in such Award, may be assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner (prior to the vesting and lapse of any and all restrictions applicable to Shares issued under such Award), other than by will, by designation of a beneficiary (which shall be a family member or family trust) delivered to the Company, or by the laws of descent and distribution; provided, however, that an ISO may be transferred or assigned only to the extent consistent with Section 422 of the Code.  Notwithstanding the foregoing, in no event may a Participant sell or otherwise transfer for value any Award granted under the Plan or any interest in such an Award, other than Shares issued to the Participant that are no longer subject to vesting or other restrictions under the terms of the applicable Award.  Any purported sale, assignment, conveyance, gift, pledge, hypothecation or transfer in violation of this Section 19(a) shall be void and unenforceable against the Corporation.

 

(b)                               Qualifying Performance Criteria.  The number of Shares or other benefits granted, issued, retainable and/or vested under an Award may be made subject to the attainment of performance goals for a specified period of time relating to one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Corporation as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ or quarter’s results or to a designated comparison group or index, in each case as specified by the Committee in the Award: (a) cash flow (including operating cash flow), (b) earnings per share, (c) (i) earnings before interest, (ii) earnings before interest and taxes, (iii) earnings before interest, taxes and depreciation, (iv) earnings before interest, taxes, depreciation and amortization, or (iv) earnings before any combination of such expenses or deductions, (d) return on equity, (e) total stockholder return, (f) share price performance, (g) return on capital, (h) return on assets or net assets, (i) revenue, (j) income or net income, (k) operating income or net operating income, (l) operating profit or net operating profit, (m) operating margin or profit margin (including as a percentage of revenue), (n) return on operating revenue, (o) return on invested capital, (p) market segment shares or (q) economic profit (“Qualifying Performance Criteria”).  The Committee may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occur during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) any extraordinary, nonrecurring items to be disclosed in the Corporation’s financial statements (including footnotes) for the applicable year and/or in management’s discussion and analysis of the financial condition and results of operations appearing in the Corporation’s annual report to stockholders for the applicable year.  If applicable, the Committee shall determine the Qualifying Performance Criteria not later than the 90th day of the performance period, and shall determine and certify, for each Participant (or for all Participants), the extent to which the Qualifying Performance Criteria have been met.  The Committee may not in any event increase the amount of compensation payable under the Plan upon the attainment of a Qualifying Performance Criteria to a Participant who is a “covered employee” within the meaning of Section 162(m) of the Code.

 

26

 

(c)                                Restrictions on Full Value Awards.  Notwithstanding the three-year minimum vesting period for Restricted Shares and Restricted Stock Units specified in Sections 6(c) and 10(c), respectively, and the one-year minimum vesting period for Performance Shares specified in Section 11(c), the Committee shall be permitted to prescribe a shorter minimum vesting period (or no vesting period) if the number of Shares subject to all such Awards qualifying for such different vesting treatment does not exceed ten percent (10%) of the total number of Shares authorized under the Plan.

 

SECTION 20.                NO EMPLOYMENT RIGHTS.

 

No provision of the Plan, nor any Award granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee.  The Corporation and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason, with or without notice.

 

SECTION 21.                APPLICABLE LAW.

 

The Plan shall be construed and enforced in accordance with the law of the State of Delaware, without reference to its principles of conflicts of law.

 

SECTION 22.                DURATION AND AMENDMENTS.

 

(a)                               Term of the Plan. The Plan, as set forth herein, shall terminate automatically on March 18, 2020 and may be terminated on any earlier date pursuant to Subsection (b) below.

 

(b)                               Right to Amend or Terminate the Plan. The Board of Directors may amend or terminate the Plan at any time and from time to time. Rights and obligations under any Award granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the Participant. An amendment of the Plan shall be subject to the approval of the Corporation’s stockholders only to the extent required by applicable laws, regulations or rules.

 

(c)                                Effect of Termination. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan shall not affect Awards previously granted under the Plan.

 

27

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00190-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00190-of-00352.parquet"}]]