Document:

Exhibit 10.56

 

TSG HOLDINGS CORP.

AND

THE SHERIDAN GROUP, INC.

 

Change-of-Control Incentive Plan for Officers

 

Effective September 1, 2010

 

This Change-of-Control Incentive Plan for Officers (the “Plan”) is adopted by TSG Holdings Corp. and The Sheridan Group, Inc. (referred to herein as the “Company”, individually or collectively, as the context requires).  The Plan is maintained for certain of the Company’s officers for the purpose of providing deferred compensation benefits taxable pursuant to section 451 of the Internal Revenue Code of 1986, as amended (the “Code”).  The Plan is intended to be an unfunded deferred compensation plan maintained for a select group of management or highly-compensated employees under sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  The Plan also is intended to comply with the requirements of section 409A of the Code.

 

The Company desires to provide certain protection to officers in the event of a Change of Control (as defined below).  This protection is necessary to induce officers to remain in the employ of the Company notwithstanding any risks and uncertainties created by a potential Change of Control. Therefore, in the event of a Change of Control followed by a Separation from Service by the Covered Employee due to an involuntary termination without Cause or a termination for Good Reason during the 18 month period that begins September 1, 2010 and ends February 29, 2012, the Company agrees to provide Covered Employees with deferred compensation benefits for a limited period of time, as specified in this Plan.  Such continued compensation serves as an extended severance benefit necessary to retain the Covered Employees in light of the significant job risks faced by him or her as a result of a Change of Control.  Benefits provided under this Plan are intended to supplement, rather than replace, any benefit that may be provided to a Covered Employee upon Separation from Service pursuant to the Company’s “Change-of-Control Incentive Plan - Key Management Employees” or any employment agreement between the Covered Employee and the Company.

 

Defined Terms:

 

“Applicable Period” means the number of months, determined at the time of the Covered Employee’s Separation from Service, remaining in the 18 month period that commences on September 1, 2010 and ends February 29, 2012, as shown in the chart below:

 

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Month of Separation from Service
    	
 
    	
Applicable Period (in months)
    
	
September 2010
    	
 
    	
18
    
	
October 2010
    	
 
    	
17
    
	
November 2010
    	
 
    	
16
    
	
December 2010
    	
 
    	
15
    
	
January 2011
    	
 
    	
14
    
	
February 2011
    	
 
    	
13
    
	
March 2011
    	
 
    	
12
    
	
April 2011
    	
 
    	
11
    
	
May 2011
    	
 
    	
10
    
	
June 2011
    	
 
    	
9
    
	
July 2011
    	
 
    	
8
    
	
August 2011
    	
 
    	
7
    
	
September 2011
    	
 
    	
6
    
	
October 2011
    	
 
    	
5
    
	
November 2011
    	
 
    	
4
    
	
December 2011
    	
 
    	
3
    
	
January 2012
    	
 
    	
2
    
	
February 2012
    	
 
    	
1
    
	
March 2012 or later
    	
 
    	
0
    

 

“Base Salary” means, for Covered Employees who have an employment agreement with the Company, the base salary provided as severance pay in Section 6(e)(i)(A) of the Covered Employee’s employment agreement.  “Base Salary” means, for all other Covered Employees, the base salary provided in paragraph (i) of the term “Severance Compensation” in the Company’s “Change-of-Control Incentive Plan - Key Management Employees”.

 

“Cause” means, for Covered Employees who have an employment agreement with the Company, “Cause” as defined the employment agreement.  For all other Covered Employees, “Cause” means “Cause” as defined in the Company’s “Change-of-Control Incentive Plan - Key Management Employees”.

 

“Cenveo, Inc.” means Cenveo, Inc. or any other business entity that is a member of a controlled group of corporations, within the meaning of Section 414(b) of the Code, of which Cenveo, Inc. is a member, or any other trade or business (whether or not incorporated) under common control, within the meaning of Section 414(c) of the Code, with Cenveo, Inc., or any service organization that is a member of an affiliated service group, within the meaning of Section 414(m) of the Code, of which Cenveo, Inc. is a member.

 

“Change of Control” means (i) the sale or other transfer of all or substantially all of the assets of TSG Holdings Corp. or The Sheridan Group, Inc. in a single transaction or series of related transactions to Cenveo, Inc., (ii) the merger or consolidation of TSG Holdings Corp. or The Sheridan Group, Inc. with Cenveo, Inc., or (iii) the sale or other transfer of a majority of the outstanding voting securities of TSG Holdings Corp. or The

 

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Sheridan Group, Inc. in a single transaction or series of related transactions to Cenveo, Inc..

 

“Company” means TSG Holdings Corp. and The Sheridan Group, Inc. (individually or collectively, as the context requires), and their successors and assigns unless otherwise herein provided, or any other corporation or business organization which, with the consent of the Company, assumes the Company’s obligations hereunder, or any other corporation or business organization which agrees, with the consent of the Company, to become a party to the Plan.  In addition, as provided in the section of this Plan called “Company’s Successors”, “Company” also means Cenveo, Inc. if and when it assumes and agrees to the terms and provisions of this Plan or otherwise becomes bound by all the terms and provisions of this Plan by operation of law.

 

“Covered Employees” means the individuals listed on the Exhibit A so long as they are employed at the time of the closing of a Change of Control.

 

“Good Reason” means, for Covered Employees who have an employment agreement with the Company, “Good Reason” as defined the employment agreement.  For all other Covered Employees, “Good Reason” means “Good Reason” as defined in the Company’s “Change-of-Control Incentive Plan - Key Management Employees”.

 

“Incentive Bonuses” means any management incentive bonus paid to a Covered Employee, in accordance with an incentive bonus plan adopted by the Board or maintained by the Company and its subsidiaries, but excluding any “Retention Bonus” or other similar amount payable into such Covered Employee’s Deferred Compensation Plan.

 

“Separation from Service” means an anticipated permanent reduction in the level of bona fide services performed by the Covered Employee to 20% or less of the average level of bona fide services performed by the Covered Employee over the immediately preceding 36-month period (or the full period during which the Covered Employee performed services for the Company, if that is less than 36 months).

 

Deferred Compensation Benefit:

 

In the event of a Change of Control followed by a Separation from Service by the Covered Employee due to an involuntary termination without Cause or a termination for Good Reason during the 18 month period that begins on September 1, 2010 and ends February 29, 2012, the Covered Employee will receive the following payments during the Applicable Period:

 

(i) payments, in accordance with the payroll practices of the Covered Employee’s employer in existence on the date of Separation from Service, at an annual rate equal to the sum of (1) the Covered Employee’s annual Base Salary plus (2) the average of the Incentive Bonuses earned by the Covered Employee during the two fiscal years immediately preceding the date of his or her Separation from Service; and

 

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(ii) provided that the Covered Employee elects COBRA continuation coverage under the health insurance plan maintained by the Covered Employee’s employer for its full-time salaried employees upon Separation from Service, monthly installment payments of an amount equal to the difference of (i) the cost of continuing group health benefits for the Covered Employee (and, if applicable, the Covered Employee’s spouse and dependents) under COBRA for one month under the health insurance plan in which the Covered Employee participates as of the date of Separation from Service, MINUS (ii) the cost of group health benefits for the Covered Employee (and, if applicable, the Covered Employee’s spouse and dependents) under the health insurance plan in which the Covered Employee participates as of the date preceding the date of Separation from Service for one month if the Covered Employee had remained an active employee.

 

Notwithstanding the preceding, a Covered Employee is not eligible for any deferred compensation benefits under this Plan if (i) the Covered Employee has a Separation from Service for any reason on or before the date of the closing of a Change of Control, or (ii) there is no Change of Control and subsequent Separation from Service by the Covered Employee due to an involuntary termination without Cause or a termination for Good Reason during the 18 month period that begins on September 1, 2010 and ends February 29, 2012.

 

The Company shall not reduce the amount payable under this Plan to a Covered Employee if the Covered Employee obtains new employment at any time prior to the last day of the Applicable Period.

 

Payment Commencement Date:

 

Except as provided on Exhibit B, payments under this Plan, if any, will commence during the 19th month following the date of the Covered Employee’s Separation from Service.

 

For purposes of Code section 409A, any payment made under this Plan shall be made within 90 days after the payment date specified in the Plan; provided, however, such payment shall not be made later than the later of (i) the last day of the calendar year in which the payment date occurs, or, if later, the 15th day of the third calendar month following the payment date, or (ii) the last day of such other, extended period as the IRS may prescribe, such as in the case of disputed payments or refusals to pay, provided the conditions of such extension have been satisfied.

 

If a Covered Employee fails to provide sufficient contact information to make his or her location known to the Company to permit transmittal of the payment to the Covered Employee by the latest date upon which the payment could have been timely made in accordance with the terms of the Plan and Code section 409A, then the Company shall report such payment(s) as made (including withholding and remitting any required taxes and reporting the payment as paid on any required tax reports).  The Company shall

 

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hold any such unclaimed payment (as a general asset, without adjustment for earnings) until the Covered Employee claims such payment.

 

Death Benefits:

 

If a Covered Employee dies prior to becoming entitled to payments hereunder, no payments shall be made to or on behalf of a Covered Employee following his or her death.  If a Covered Employee dies after becoming entitled to payments hereunder, but prior to the commencement (or, if payments have commenced, prior to the completion) of payments, any remaining payments at the time of death shall continue to be paid to the Covered Employee’s spouse (or, if there is no spouse, to the Covered Employee’s estate) at the same time and in the same form as payments would have been made to the Covered Employee had the Covered Employee survived.

 

Claims Procedure:

 

This section is based on final regulations issued by the Department of Labor and published in the Federal Register on November 21, 2000 and codified at section 2560.503-1 of the Department of Labor Regulations.  If any provision of this section conflicts with the requirements of those regulations, the requirements of those regulations will prevail.

 

(a)           Initial Claim.  A Covered Employee (hereinafter referred to as a “Claimant”) who believes he or she is entitled to any Plan benefit under this Plan may file a claim with the Company.  The Company shall review the claim itself or appoint an individual or an entity to review the claim.

 

The Claimant shall be notified within 90 days after the claim is filed whether the claim is allowed or denied, unless the Claimant receives written notice from the Company or appointee of the Company prior to the end of the 90 day period stating that special circumstances require an extension of the time for decision, such extension not to extend beyond the day which is 180 days after the day the claim is filed.

 

If the Company denies a claim, it must provide to the Claimant, in writing or by electronic communication:

 

(i)            The specific reasons for the denial;

 

(ii)           A reference to the Plan provision upon which the denial is based;

 

(iii)          A description of any additional information or material that the Claimant must provide in order to perfect the claim;

 

(iv)          An explanation of why such additional material or information is necessary;

 

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(v)           Notice that the Claimant has a right to request a review of the claim denial and information on the steps to be taken if the Claimant wishes to request a review of the claim denial; and

 

(vi)          A statement of the Claimant’s right to bring a civil action under ERISA section 502(a) following a denial on review of the initial denial.

 

(b)           Review Procedures.  A request for review of a denied claim must be made in writing to the Company within 60 days after receiving notice of denial.  The decision upon review will be made within 60 days after the Company’s receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered not later than 120 days after receipt of a request for review.  A notice of such an extension must be provided to the Claimant within the initial 60 day period and must explain the special circumstances and provide an expected date of decision.

 

The reviewer shall afford the Claimant an opportunity to review and receive, without charge, all relevant documents, information and records and to submit issues and comments in writing to the Company.  The reviewer shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim regardless of whether the information was submitted or considered in the initial benefit determination.

 

Upon completion of its review of an adverse initial claim determination, the Company will give the Claimant, in writing or by electronic notification, a notice containing:

 

(i)            its decision;

 

(ii)           the specific reasons for the decision;

 

(iii)          the relevant Plan provisions on which its decision is based;

 

(iv)          a statement that the Claimant is entitled to receive, upon request and without charge, reasonable access to, and copies of, all documents, records and other information in the Plan’s files which is relevant to the Claimant’s claim for benefits;

 

(v)           a statement describing the Claimant’s right to bring an action for judicial review under ERISA section 502(a); and

 

(vi)          if an internal rule, guideline, protocol or other similar criterion was relied upon in making the adverse determination on review, a statement that a copy of the rule, guideline, protocol or other similar criterion will be provided without charge to the Claimant upon request.

 

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(c)           Calculation of Time Periods.  For purposes of the time periods specified in this section, the period of time during which a benefit determination is required to be made begins at the time a claim is filed in accordance with the Plan procedures without regard to whether all the information necessary to make a decision accompanies the claim.  If a period of time is extended due to a Claimant’s failure to submit all information necessary, the period for making the determination shall be tolled from the date the notification is sent to the Claimant until the date the Claimant responds.

 

(d)           Failure of Plan to Follow Procedures.  If the Plan fails to follow the claims procedures required by this section, a Claimant shall be deemed to have exhausted the administrative remedies available under the Plan and shall be entitled to pursue any available remedy under ERISA section 502(a) on the basis that the Plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim.

 

(e)           Failure of Claimant to Follow Procedures.  A Claimant’s compliance with the foregoing provisions of this section is a mandatory prerequisite to the Claimant’s right to commence any legal action with respect to any claim for benefits under the Plan.

 

Arbitration of Disputes:

 

Any controversy or claim between any Covered Employee and the Company arising out of or relating to this Plan or the breach thereof shall, subject to the initial review provided for in the foregoing Claims Procedures provisions of this Plan and to the extent permitted by law, be settled by arbitration in any forum and form agreed upon by the Covered Employee and the Company, or in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Baltimore, Maryland in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators, except that the Company shall pay all administrative fees and arbitrator’s fees and expenses related to such arbitration. Notwithstanding the foregoing, this provision shall not preclude any party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate, provided that any other relief shall be pursued through an arbitration proceeding as provided herein.

 

Limitations on Liability of Company:

 

Neither the establishment of the Plan nor any modification thereof, nor the creation of any benefit under the Plan, nor the payment of any benefits under the Plan shall be construed as giving to any Covered Employee or other person any legal or equitable right against the Company or any officer or employer thereof, except as provided by law or by any Plan provision.  In no event shall the Company, or any successor, employee, officer, director or stockholder of the Company, be liable to any

 

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person on account of any claim arising by reason of the provisions of the Plan or of any instrument or instruments implementing its provisions, or for the failure of any Covered Employee or other person to be entitled to any particular tax consequences with respect to the Plan, or any benefit or distribution hereunder.

 

Severability:

 

If any provision of this Plan is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired; except to the extent that Code section 409A requires that this section be disregarded because it purports to nullify Plan terms that are not in compliance with Code section 409A.

 

Waivers:

 

No delay or omission by any Covered Employee, by the Company or any of its subsidiaries, or by any successor company in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.

 

Company’s Successors:

 

The rights and obligations of the Company under this Plan shall inure to the benefit of and shall be binding upon the Company, and shall be transferred to and shall inure to the benefit of and be binding upon Cenveo, Inc. if it becomes a successor of the Company as defined in applicable law, including, but not limited to, pursuant to a merger or consolidation of the Company with Cenveo, Inc. or the sale or other transfer of a majority of the outstanding voting securities of the Company to Cenveo, Inc.  For example, if Cenveo, Inc. succeeds to the Company’s rights and obligations by, for example, being the surviving entity after a merger with the Company, it will succeed to all of the Company’s obligations to the Covered Employees hereunder.

 

In addition, if Cenveo, Inc. becomes a successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the assets of the Company, the Company with require Cenveo, Inc. to expressly assume and agree to perform the obligations under this Plan in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.  (In the case of a transaction involving a transfer of all or substantially all of the assets of the Company to Cenveo, Inc., or any other transaction that results in Cenveo, Inc. being a successor to the Company but that does not result in the Company ceasing to exist by operation of the transaction as a matter of law, the Company shall not be relieved of its obligations hereunder.  Instead, the Company and Cenveo, Inc. shall be jointly and severally liable for the Company’s obligations to the Covered Employees hereunder.)

 

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As used in this Plan, “Company” therefore includes any successor to its assets as aforesaid which assumes and agrees to the terms and provisions of this Plan or which otherwise becomes bound by all the terms and provisions of this Plan by operation of law.

 

Should the Company ever contemplate a transaction that would implicate the foregoing paragraphs, the Company will require that all entities involved in the transaction acknowledge, in writing and prior to the closing of the transaction, their various post-closing obligations to the Covered Employees pursuant to the foregoing paragraphs and the other provisions of this Plan.  In appropriate circumstances, such writing would take the form of an express assumption by Cenveo, Inc. of the Company’s obligations to the Covered Employees under this Plan.

 

Amendment; Termination:

 

Except as provided below, this Plan shall not be amended except by a written instrument hereafter signed by the Company and each affected Covered Employee.

 

The Plan may be amended by the Company at any time, retroactively if required, in the opinion of the Company, in order to ensure that the Plan is characterized as “top-hat” plan as described under ERISA sections 201(2), 301(a)(3), and 401(a)(1), to conform the Plan to Code section 409A and to conform the Plan to the requirements of any other applicable law (including ERISA and the Code).  No such amendment shall be considered prejudicial to any interest of a Covered Employee hereunder.

 

In the event there is no Change of Control followed by a Separation from Service by a Covered Employee due to an involuntary termination without Cause or a termination for Good Reason on or before February 29, 2012, the Plan shall terminate on February 29, 2012.  Unless sooner terminated in accordance with the preceding sentence, the Plan shall terminate on the date all payments have been made to all Covered Employees entitled to payments hereunder.

 

Construction and Governing Law:

 

For all purposes of the Plan, where the context admits, the singular shall include the plural, and the plural shall include the singular.  Headings of sections herein are inserted only for convenience of reference and are not to be considered in the construction of the Plan.  The laws of the State of Maryland shall govern, control and determine all questions of law arising with respect to the Plan and the interpretation and validity of its respective provisions, except where those laws are preempted by the laws of the United States.  Participation under the Plan will not give any Covered Employee the right to be retained in the service of the Company or any right or claim to any benefit under the Plan unless such right or claim has specifically accrued hereunder.

 

The Plan is intended to be and at all times shall be interpreted and administered so as to qualify as an unfunded deferred compensation plan, consistently with the

 

9

 

requirements of Code section 409A, and no provision of the Plan shall be interpreted so as to give any individual any right in any assets of the Company which right is greater than the rights of a general unsecured creditor of the Company.

 

Spendthrift Provision:

 

No amount payable to a Covered Employee under the Plan will, except as otherwise specifically provided by law, be subject in any manner to anticipation, alienation, attachment, garnishment, sale, transfer, assignment (either at law or in equity), levy, execution, pledge, encumbrance, charge or any other legal or equitable process, and any attempt to do so will be void; nor will any benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled thereto. Further, subject to Code section 409A, (i) the withholding of taxes from Plan benefit payments; (ii) the recovery under the Plan of overpayments of benefits previously made to a Covered Employee; (iii) if applicable, the transfer of benefit rights from the Plan to another plan; or (iv) the direct deposit of benefit payments to an account in a banking institution (if not actually part of an arrangement constituting an assignment or alienation) shall not be construed as an assignment or alienation.

 

Aggregation of Employers:

 

To the extent required under Code section 409A, if the Company is a member of a controlled group of corporations or a group of trades or business under common control (as described in Code sections 414(b) or (c), but substituting a 50% ownership level for the 80% level set forth in those Code sections), all members of the group shall be treated as a single employer for purposes of whether there has occurred a Separation from Service and for any other purposes under the Plan as Code section 409A shall require.

 

Aggregation of Plans:

 

If the Company offers other deferred compensation plans in addition to the Plan, those plans together with the Plan shall be treated as a single plan to the extent required under Code section 409A.

 

Prohibited Acceleration/Distribution Timing:

 

This section shall take precedence over any other provision of the Plan to the contrary.  If the timing of any distribution would result in any tax or other penalty (other than ordinarily payable Federal, state or local income or payroll taxes), which tax or penalty can be avoided by payment of the distribution at a later time, then the distribution shall be made on (or as soon as practicable after) the first date on which such distribution can be made without such tax or penalty; except to the extent that Code section 409A requires that this section be disregarded because it purports to nullify Plan terms that are not in compliance with Code section 409A.

 

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IN WITNESS WHEREOF, the Company has caused this Amendment and Restatement of the Plan to be executed effective as of September 1, 2010.

 

	
ATTEST/WITNESS
    	
 
    	
THE   SHERIDAN GROUP, INC.
    
	
 
    	
 
    	
 
    
	
/s/   Dale A. Tepp
    	
 
    	
By:
    	
/s/   John A. Saxton
    
	
 
    	
 
    	
 
    
	
Print   Name
    	
Dale   A. Tepp
    	
 
    	
Print   Name:
    	
John   A. Saxton
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Date:
    	
August 31,   2010
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
ATTEST/WITNESS
    	
 
    	
TSG   HOLDINGS CORP.
    
	
 
    	
 
    	
 
    
	
/s/   Dale A. Tepp
    	
 
    	
By:
    	
/s/   John A. Saxton
    
	
 
    	
 
    	
 
    
	
Print   Name
    	
Dale   A. Tepp
    	
 
    	
Print   Name:
    	
John   A. Saxton
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Date:
    	
August 31,   2010
    
							

 

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EXHIBIT A

 

Covered Employees

 

G. Paul Bozuwa

Joan B. Davidson

Douglas R. Ehmann

Robert M. Jakobe

Gary J. Kittredge

Eric D. Lane

John A. Saxton

Michael J. Seagram

Patricia A. Stricker

Dale A. Tepp

 

12

 

EXHIBIT B

 

Payment Commencement Date

 

Notwithstanding anything in the Plan to the contrary, payments to John A. Saxton under this Plan, if any, will commence during the 25th month following the date of his Separation from Service.

 

13Exhibit 10.21

 

KOSMOS ENERGY LTD.

LONG TERM INCENTIVE PLAN

 

Section 1.  Purpose.  The purpose of the Kosmos Energy Ltd. Long Term Incentive Plan (the “Plan”) is to motivate and reward those employees and other individuals who are expected to contribute significantly to the success of Kosmos Energy Ltd. (the “Company”) and its Affiliates to perform at the highest level and to further the best interests of the Company and its shareholders.

 

Section 2.  Definitions.  As used in the Plan, the following terms shall have the meanings set forth below:

 

(a)                                  “Affiliate” means, except as provided in Section 2(h), (i) any entity that, directly or indirectly, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, in each case as determined by the Committee.

 

(b)                                 “Award” means any Option, SAR, Restricted Stock, RSU, Performance Award or Other Stock-Based Award granted under the Plan.

 

(c)                                  “Award Document” means any agreement, contract or other instrument or document evidencing any Award granted under the Plan, which may, but need not, be executed or acknowledged by a Participant.

 

(d)                                 “Beneficial Owner” has the meaning ascribed to such term in Rule 13d-3 under the Exchange Act.

 

(e)                                  “Beneficiary” means a person entitled to receive payments or other benefits or exercise rights that are available under the Plan in the event of such Participant’s death.  If no such person is named by a Participant, or if no Beneficiary designated by such Participant is eligible to receive payments or other benefits or exercise rights that are available under the Plan at such Participant’s death, such Participant’s Beneficiary shall be such Participant’s estate.

 

(f)                                    “Board” means the board of directors of the Company.

 

(g)                                 “Cause” means, with respect to any Participant, “cause” as defined such Participant’s Employment Agreement, if any, or if not so defined, except as otherwise provided in such Participant’s Award Document, such Participant’s:

 

(i)                                     failure to perform his or her duties to the Company or any Affiliate (other than any such failure resulting from his or her physical or mental incapacity);

 

(ii)                                  having engaged in misconduct, negligence or a breach of fiduciary duty, or breach of any applicable Employment Agreement;

 

 

(iii)                               having been convicted of, or having entered a plea bargain or settlement admitting guilt or the imposition of unadjudicated probation for, any crime of moral turpitude or felony under any applicable law;

 

(iv)                              breach of any restrictive covenant to which he or she is subject contained in any applicable Employment Agreement or other agreement with the Company or any Affiliate;

 

(v)                                 breach of any policy of the Company or any Affiliate, including without limitation any such policy that relates to expense management, human resources or the Foreign Corrupt Practices Act;

 

(vi)                              unlawful use or possession of illegal drugs on the premises of the Company or any Affiliate or while performing his or her duties to the Company or any Affiliate; or

 

(vii)                           commission of an act of fraud, embezzlement or misappropriation, in each case, against the Company or any Affiliate.

 

(h)                                 “Change in Control” means the occurrence of any one or more of the following events:

 

(i)                                     any Person (other than the Initial Investors (as defined below), the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the shareholders of the Company immediately prior to the occurrence with respect to which the evaluation is being made in substantially the same proportions as their ownership of the common shares of the Company) becomes the Beneficial Owner (except that a Person shall be deemed to be the Beneficial Owner of all shares that any such Person has the right to acquire pursuant to any agreement or arrangement or upon exercise of conversion rights, warrants or options or otherwise, without regard to the 60-day period referred to in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities;

 

(ii)                                  during any period of 12 consecutive months, individuals who at the beginning of such period constitute the Board, and any new director whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such 12-month period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board;

 

(iii)                               the consummation of a merger, amalgamation or

 

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consolidation of the Company with any other entity, other than a merger, amalgamation or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or resulting entity) more than 50% of the combined voting power of the surviving or resulting entity outstanding immediately after such merger, amalgamation or consolidation; or

 

(iv)                              the consummation of a transaction (or series of transactions within a 12-month period) that constitutes the sale or disposition of all or substantially all of the consolidated assets of the Company having a gross fair market value of 50% or more of the total gross fair market value of all of the consolidated assets of the Company (other than such a sale or disposition immediately after which such assets will be owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of the common shares of the Company immediately prior to such sale or disposition), and the subsequent distribution of the proceeds from such transaction (or series of transactions) to the Company’s shareholders having a fair market value that is greater than 50% of the fair market value of the Company and its subsidiaries immediately prior to such transaction (or series of transactions).

 

For purposes of clause (i) above, “Initial Investors” means the “Blackstone Group,” the “Warburg Group” and their respective “Affiliates” (as all such terms are defined in that certain Shareholders Agreement dated as of [                ], 2011, by and among the Company and the other parties thereto).

 

(i)                                     “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules, regulations and guidance thereunder.  Any reference to a provision in the Code shall include any successor provision thereto.

 

(j)                                     “Committee” means the Compensation Committee of the Board or such other committee as may be designated by the Board.  If the Board does not designate the Committee, references herein to the “Committee” shall refer to the Board.

 

(k)                                  “Covered Employee” means an individual who is (i) either a “covered employee” or expected by the Committee to be a “covered employee,” in each case within the meaning of Section 162(m)(3) of the Code or (ii) expected by the Committee to be the recipient of compensation (other than Section 162(m) Compensation) in excess of $1,000,000 for the tax year of the Company with regard to which a deduction in respect of such individual’s Award would be claimed.

 

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(l)                                     “Disability” means, with respect to any Participant, “disability” as defined in such Participant’s Employment Agreement, if any, or if not so defined, except as otherwise provided in such Participant’s Award Document, at any time that the Company or any Affiliate sponsors a long-term disability plan that covers such Participant, “disability” as defined in such plan for the purpose of determining such Participant’s eligibility for benefits; provided that if such plan contains multiple definitions of disability, then “Disability” shall refer to that definition of disability which, if Participant qualified for such benefits, would provide coverage for the longest period.  The determination of whether Participant has a Disability shall be made by the person or persons required to make final disability determinations under such plan.  At any time that the Company and the Affiliates do not sponsor a long-term disability plan that covers such Participant, Disability shall mean Participant’s physical or mental incapacity that renders him or her unable for a period of 90 consecutive days or an aggregate of 120 days in any consecutive 12-month period to perform his or her duties to the Company or any Affiliate.

 

(m)                               “Effective Date” means the date on which the Plan is adopted by the Board.

 

(n)                                 “Employment Agreement” means any employment, severance, consulting or similar agreement between the Company or any of its Affiliates and a Participant.

 

(o)                                 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules, regulations and guidance thereunder.  Any reference to a provision in the Exchange Act shall include any successor provision thereto.

 

(p)                                 “Fair Market Value” means with respect to Shares, the closing price of a Share on the date in question (or, if there is no reported sale on such date, on the last preceding date on which any reported sale occurred) on the principal stock market or exchange on which the Shares are quoted or traded, or if Shares are not so quoted or traded, fair market value as determined by the Committee, and with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee.

 

(q)                                 “Good Reason” means, with respect to any Participant, “good reason” as defined in such Participant’s Employment Agreement, if any, or if not so defined, except as otherwise provided in such Participant’s Award Document, the occurrence of any of the following events, in each case without such Participant’s consent:

 

(i)                                     a reduction in such Participant’s base salary or target bonus, other than any such reduction that applies generally to similarly situated employees of the Company and the Affiliates;

 

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(ii)                                  relocation of the geographic location of such Participant’s principal place of employment by more than 50 miles; or

 

(iv)                              a material reduction in such Participant’s duties or responsibilities that occurs within two years following a Change in Control;

 

provided that, in each case, (A) such Participant shall provide the Company with written notice specifying the circumstances alleged to constitute Good Reason within 90 days following the first occurrence of such circumstances, (B) the Company shall have 30 days following receipt of such notice to cure such circumstances, and (C) if the Company has not cured such circumstances within such 30-day period, then the date of such Participant’s Termination of Service must occur not later than 60 days after the end of such 30-day period.

 

(r)                                    “Incentive Stock Option” means an option representing the right to purchase Shares from the Company, granted pursuant to Section 6, that meets the requirements of Section 422 of the Code.

 

(s)                                  “Intrinsic Value” means, with respect to an Option or SAR Award, (i) the price or implied price per Share in a Change in Control or other event over (ii) the exercise or hurdle price of such Award multiplied by (iii) the number of Shares covered by such Award.

 

(t)                                    “IPO Awards” means Awards granted in connection with the initial public offering of the Shares.

 

(u)                                 “Lock Up Agreement” means any agreement between the Company or any of its Affiliates and a Participant that provides for restrictions on the transfer of Shares held by such Participant.

 

(v)                                 “Non-Qualified Stock Option” means an option representing the right to purchase Shares from the Company, granted pursuant to Section 6, that is not an Incentive Stock Option.

 

(w)                               “Option” means an Incentive Stock Option or a Non-Qualified Stock Option.

 

(x)                                   “Other Stock-Based Award” means an Award granted pursuant to Section 10.

 

(y)                                 “Participant” means the recipient of an Award granted under the Plan.

 

(z)                                   “Performance Award” means an Award granted pursuant to Section 9.

 

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(aa)                            “Performance Period” means the period established by the Committee at the time any Performance Award is granted or at any time thereafter during which any performance goals specified by the Committee with respect to such Award are measured.

 

(bb)                          “Person” has the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including “group” as defined in Section 13(d) thereof.

 

(cc)                            “Replacement Award” means an Award granted in assumption of, or in substitution for, an outstanding award previously granted by a company acquired by the Company or with which the Company combines.

 

(dd)                          “Restricted Stock” means any Share granted pursuant to Section 8.

 

(ee)                            “RSU” means a contractual right granted pursuant to Section 8 that is denominated in Shares.  Each RSU represents a right to receive the value of one Share (or a percentage of such value) in cash, Shares or a combination thereof.  Awards of RSUs may include the right to receive dividend equivalents.

 

(ff)                                “SAR” means any right granted pursuant to Section 7 to receive upon exercise by a Participant or settlement, in cash, Shares or a combination thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise or settlement over (ii) the exercise or hurdle price of the right on the date of grant, or if granted in connection with an Option, on the date of grant of the Option.

 

(gg)                          “Section 162(m) Compensation” means “qualified performance-based compensation” under Section 162(m) of the Code.

 

(hh)                          “Shares” means shares of the Company’s common shares.

 

(ii)                                  “Termination of Service” means, with respect to any Participant:

 

(i)                                     the cessation of all services performed by such Participant for the Company and the Affiliates, including by reason of death or Disability; or

 

(ii)                                  the permanent decrease in the level of services performed by such Participant for the Company and the Affiliates (whether as an employee or as an independent contractor) to no more than 20 percent of the average level of services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period

 

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(or the full period of services to the Company and the Affiliates, if such Participant has been providing such services for less than 36 months).

 

Section 3.  Eligibility.

 

(a)                                  Any employee, non-employee director, consultant or other advisor of, or any other individual who provides services to, the Company or any Affiliate shall be eligible to be selected to receive an Award under the Plan.

 

(b)                                 Holders of options and other types of awards granted by a company acquired by the Company or with which the Company combines are eligible for grants of Replacement Awards under the Plan.

 

Section 4.  Administration.

 

(a)                                  The Plan shall be administered by the Committee.  The Committee shall be appointed by the Board and shall consist of not fewer than three directors of the Board.  To the extent necessary to comply with applicable regulatory regimes, any action by the Committee shall require the approval of  Committee members who are (i) independent, within the meaning of and to the extent required by applicable rulings and interpretations of the applicable stock market or exchange on which the Shares are quoted or traded; (ii) a non-employee director within the meaning of Rule 16b-3 under the Exchange Act; and (iii) an outside director pursuant to Section 162(m) of the Code.  The Board may designate one or more directors as alternate members of the Committee who may replace any absent or disqualified member at any meeting of the Committee.  To the extent permitted by applicable law, the Committee may delegate to one or more officers of the Company the authority to grant Awards, except that such delegation shall not be applicable to any Award for  a person then covered by Section 16 of the Exchange Act.  The Committee may issue rules and regulations for administration of the Plan.  It shall meet at such times and places as it may determine.

 

(b)                                 Subject to the terms of the Plan and applicable law, the Committee (or its delegate) shall have full power and authority to:  (i) designate Participants; (ii) determine the type or types of Awards (including Replacement Awards) to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or with respect to which payments, rights or other matters are to be calculated in connection with) Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent and under what circumstances Awards may be settled or exercised in cash, Shares, other Awards, other property, net settlement, or any combination thereof, or canceled, repurchased, forfeited or suspended, and the method or methods by which Awards may be settled, exercised, canceled, repurchased, forfeited or suspended; (vi) determine whether, to what extent and under what circumstances cash, Shares, other Awards, other property and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the

 

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election of the holder thereof or of the Committee; (vii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (viii) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.

 

(c)                                  All decisions of the Committee shall be final, conclusive and binding upon all parties, including the Company, its shareholders and Participants and any Beneficiaries thereof.

 

Section 5.  Shares Available for Awards.

 

(a)                                  Subject to adjustment as provided in Section 5(c) and except for Replacement Awards and IPO Awards, (i) the maximum number of Shares available for issuance under the Plan shall not exceed 24,503,000 Shares and (ii) no Participant may receive under the Plan in any calendar year (A) Options and SARs that relate to more than 2,450,300 Shares; (B) Restricted Stock, RSUs and Other Stock-Based Awards that relate to more than 2,450,300 Shares or (C) Performance Awards that relate to more than 2,450,300 Shares.

 

(b)                                 Any Shares subject to an Award (other than a Replacement Award or IPO Award), that expires, is canceled, repurchased, forfeited or otherwise terminates without the delivery of such Shares, including (i) the number of Shares surrendered or withheld in payment of any grant, purchase, exercise or hurdle price of an Award or taxes related to an Award and (ii) any Shares subject to an Award to the extent that Award is settled without the issuance of Shares, shall again be, or shall become, available for issuance under the Plan.

 

(c)                                  In the event that, as a result of any dividend or other distribution (whether in the form of cash, Shares or other securities, but excluding any ordinary cash dividend), recapitalization, stock split, reverse stock split, reorganization, merger, amalgamation, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, issuance of Shares pursuant to the anti-dilution provisions of securities of the Company, or other similar corporate transaction or event affecting the Shares, an adjustment is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall adjust equitably any or all of:

 

(i)     the number and type of Shares (or other securities) which thereafter may be made the subject of Awards, including the aggregate and individual limits specified in Section 5(a);

 

(ii)  the number and type of Shares (or other securities) subject to outstanding Awards; and

 

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(iii)       the grant, purchase, exercise or hurdle price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award;

 

provided, however, that the number of Shares subject to any Award denominated in Shares shall always be a whole number.

 

(d)                                 Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or Shares acquired by the Company.

 

Section 6.  Options.  The Committee is authorized to grant Options to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:

 

(a)                                  The exercise price per Share under an Option shall be determined by the Committee; provided, however, that, except in the case of Replacement Awards, such exercise price shall not be less than the Fair Market Value of a Share on the date of grant of such Option.

 

(b)                                 The term of each Option shall be fixed by the Committee but shall not exceed 10 years from the date of grant of such Option.

 

(c)                                  The Committee shall determine the time or times at which an Option may be exercised in whole or in part.

 

(d)                                 The Committee shall determine the method or methods by which, and the form or forms, including cash, Shares, other Awards, other property, net settlement, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price, in which payment of the exercise price with respect thereto may be made or deemed to have been made.

 

(e)                                  The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code.

 

Section 7.  Stock Appreciation Rights.  The Committee is authorized to grant SARs to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:

 

(a)                                  SARs may be granted under the Plan to Participants either alone (“freestanding”) or in addition to other Awards granted under the Plan (“tandem”) and may, but need not, relate to a specific Option granted under Section 6.

 

(b)                                 The exercise or hurdle price per Share under a SAR shall be determined by the Committee; provided, however, that, except in the case of

 

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Replacement Awards, such exercise or hurdle price shall not be less than the Fair Market Value of a Share on the date of grant of such SAR.

 

(c)                                  The term of each SAR shall be fixed by the Committee but shall not exceed 10 years from the date of grant of such SAR.

 

(d)                                 The Committee shall determine the time or times at which a SAR may be exercised or settled in whole or in part.

 

Section 8.  Restricted Stock and RSUs.  The Committee is authorized to grant Awards of Restricted Stock and RSUs to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:

 

(a)                                  Shares of Restricted Stock and RSUs shall be subject to such restrictions as the Committee may impose (including any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend, dividend equivalent or other right), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate.

 

(b)                                 Any share of Restricted Stock granted under the Plan shall be evidenced by entry in the register of members of the Company and in such other manner as the Committee may deem appropriate, including issuance of a share certificate or certificates.  In the event any share certificate is issued in respect of shares of Restricted Stock granted under the Plan, such certificate shall be registered in the name of such Participant and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock.

 

(c)                                  If the Committee intends that an Award granted under this Section 8 shall constitute or give rise to Section 162(m) Compensation, then, to the extent the Committee determines the following to be necessary under Section 162(m) of the Code, such Award may be structured in accordance with the requirements of Section 9(b), including the performance criteria and the Award limitation set forth therein, and any such Award shall be considered a Performance Award for purposes of the Plan.

 

(d)                                 The Committee may provide in an Award Document that an Award of Restricted Stock is conditioned upon such Participant making or refraining from making an election with respect to the Award under Section 83(b) of the Code.  If a Participant makes an election pursuant to Section 83(b) of the Code with respect to an Award of Restricted Stock, such Participant shall be required to file promptly a copy of such election with the Company.

 

Section 9.  Performance Awards.  The Committee is authorized to grant Performance Awards to Participants with the following terms and conditions and

 

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with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:

 

(a)                                  Performance Awards may be denominated as a cash amount, number of Shares or a combination thereof and are Awards which may be earned upon achievement or satisfaction of performance conditions specified by the Committee.  In addition, the Committee may specify that any other Award shall constitute a Performance Award by conditioning the right of a Participant to exercise the Award or have it settled, and the timing thereof, upon achievement or satisfaction of such performance conditions as may be specified by the Committee.  The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions.  Subject to the terms of the Plan, the performance goals to be achieved during any Performance Period, the length of any Performance Period, the amount of any Performance Award granted and the amount of any payment or transfer to be made pursuant to any Performance Award shall be determined by the Committee.

 

(b)                                 Every Performance Award shall, if the Committee intends that such Award should constitute Section 162(m) Compensation and the Committee determines the following to be necessary under Section 162(m) of the Code, include a pre-established formula, such that payment, retention or vesting of the Award is subject to the achievement during a Performance Period or Performance Periods, as determined by the Committee, of a level or levels of, or increases in, in each case as determined by the Committee, one or more of the following performance measures with respect to the Company:  captured prospects, prospecting licenses signed, operated prospects matured to drill ready, drilling programs commenced, drillable prospects, capabilities and critical path items established, operating budget, third-party capital sourcing, captured net risked resource potential, acquisition cost efficiency, acquisitions of oil and gas interests, increases in proved, probable or possible reserves, finding and development costs, recordable or lost time incident rates, overhead costs, general and administration expense, market price of a Share, cash flow, reserve value, net asset value, earnings, net income, operating income, cash from operations, revenue, margin, EBITDA (earnings before interest, taxes, depreciation and amortization), EBITDAX (earnings before interest, taxes, depreciation, amortization and exploration expense), net capital employed, return on assets, shareholder return, reserve replacement, return on equity, return on capital employed, production, assets, unit volume, sales, market share, or strategic business criteria consisting of one or more objectives based on meeting specified goals relating to acquisitions or divestitures, each as determined in accordance with generally accepted accounting principles, where applicable, as consistently applied by the Company.  Performance criteria may be measured on an absolute (e.g., plan or budget) or relative basis.  Relative performance may be measured against a group of peer companies, a financial market index or other acceptable objective and quantifiable indices.  Except in the case of an award intended to

 

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qualify as Section 162(m) Compensation, if the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which the Company conducts its business, or other events or circumstances render the performance objectives unsuitable, the Committee may modify the performance objectives or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable.  Performance measures may vary from Performance Award to Performance Award, respectively, and from Participant to Participant, and may be established on a stand-alone basis, in tandem or in the alternative.  The Committee shall have the power to impose such other restrictions on Awards subject to this Section 9(b) as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for Section 162(m) Compensation.  Notwithstanding any provision of the Plan to the contrary, to the extent required by Section 162(m) of the Code, the Committee shall not be authorized to increase the amount payable under any Award to which this Section 9(b) applies upon attainment of such pre-established formula.

 

(c)                                  Settlement of Performance Awards; Other Terms.  Settlement of Performance Awards shall be in cash, Shares, other Awards, other property, net settlement, or any combination thereof, in the discretion of the Committee.  Performance Awards will be settled only after the end of the relevant Performance Period.  The Committee may, in its discretion, increase or reduce the amount of a settlement otherwise to be made in connection with a Performance Award but, to the extent required by Section 162(m) of the Code, may not exercise discretion to increase any amount payable to a Covered Employee in respect of a Performance Award intended to qualify as Section 162(m) Compensation.  Any settlement that changes the form of payment from that originally specified shall be implemented in a manner such that the Performance Award and other related Awards do not, solely for that reason, fail to qualify as Section 162(m) Compensation.  The Committee shall specify the circumstances in which, and the extent to which, Performance Awards shall be paid or forfeited, including by way of repurchase by the Company at par value, in the event of a Participant’s Termination of Service.

 

Section 10.  Other Stock-Based Awards.  The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares or factors that may influence the value of Shares, including convertible or exchangeable debt securities, other rights convertible or exchangeable into Shares, purchase rights for Shares, Awards with value and payment contingent upon performance of the Company or business units thereof or any other factors designated by the Committee.  The Committee shall determine the terms and conditions of such Awards.  Shares delivered pursuant to an Award in the nature of a purchase right granted under this Section 10 shall be purchased for such consideration, paid for at such times, by such methods and in such forms, including cash, Shares, other

 

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Awards, other property, or any combination thereof, as the Committee shall determine.  Cash awards, as an element of or supplement to any other Award under the Plan, may also be granted pursuant to this Section 10.

 

Section 11.  Effect of Termination of Service or a Change in Control on Awards.

 

(a)                                  The Committee may provide, by rule or regulation or in any Award Document, or may determine in any individual case, the circumstances in which, and the extent to which, an Award may be exercised, settled, vested, paid or forfeited, including by way of repurchase by the Company at par value, in the event of a Participant’s Termination of Service prior to the end of a Performance Period or exercise or settlement of such Award.

 

(b)                                 The Committee may set forth the treatment of an Award upon a Change in Control in the applicable Award Document.

 

(c)                                  In the case of an Option or SAR Award, except as otherwise provided in the applicable Award Document, upon a Change in Control, a merger or consolidation involving the Company or any other event with respect to which the Committee deems it appropriate, the Committee may cause such Award to be canceled in consideration of (i) the full acceleration of such Award and either (A) a period of at least ten days prior to such Change in Control to exercise the Award or (B) a payment in cash or other consideration to such Participant who holds such Award in an amount equal to the Intrinsic Value of such Award (which may be equal to but not less than zero), which, if in excess of zero, shall be payable upon the effective date of such Change in Control, merger, consolidation or other event or (ii) a substitute award (which immediately upon grant shall have an Intrinsic Value equal to the Intrinsic Value of such Award).

 

Section 12.  General Provisions Applicable to Awards.

 

(a)                                  Awards shall be granted for such cash or other consideration, if any, as the Committee determines; provided that in no event shall Awards be issued for less than such minimal cash consideration as may be required by applicable law.

 

(b)                                 Awards may, in the discretion of the Committee, be granted either alone or in addition to or in tandem with any other Award or any award granted under any other plan of the Company.  Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company, may be granted either at the same time as or at a different time from the grant of such other Awards or awards.

 

(c)                                  Subject to the terms of the Plan, payments or transfers to be made by the Company upon the grant, exercise or settlement of an Award may be

 

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made in the form of cash, Shares, other Awards, other property, net settlement, or any combination thereof, as determined by the Committee in its discretion at the time of grant, and may be made in a single payment or transfer, in installments or on a deferred basis, in each case in accordance with rules and procedures established by the Committee.  Such rules and procedures may include provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of dividend equivalents in respect of installment or deferred payments.

 

(d)                                 Except as may be permitted by the Committee or as specifically provided in an Award Document, (i) no Award and no right under any Award shall be assignable, alienable, saleable or transferable by a Participant otherwise than by will or pursuant to Section 12(e) and (ii) during a Participant’s lifetime, each Award, and each right under any Award, shall be exercisable only by such Participant or, if permissible under applicable law, by such Participant’s guardian or legal representative.  The provisions of this Section 12(d) shall not apply to any Award that has been fully exercised or settled, as the case may be, and shall not preclude forfeiture, including by way of repurchase by the Company at par value, of an Award in accordance with the terms thereof.

 

(e)                                  A Participant may designate a Beneficiary or change a previous Beneficiary designation at such times prescribed by the Committee by using forms and following procedures approved or accepted by the Committee for that purpose.

 

(f)                                    All certificates for Shares and/or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations and other requirements of the Securities and Exchange Commission, any stock market or exchange upon which such Shares or other securities are then quoted, traded or listed, and any applicable securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

 

(g)                                 The Committee may impose restrictions on any Award with respect to non-competition, confidentiality and other restrictive covenants as it deems necessary or appropriate in its sole discretion.

 

Section 13.  Amendments and Termination.

 

(a)                                  Except to the extent prohibited by applicable law and unless otherwise expressly provided in an Award Document or in the Plan, the Board may amend, alter, suspend, discontinue or terminate the Plan or any portion thereof at any time; provided, however, that no such amendment, alteration, suspension, discontinuation or termination shall be made without (i) shareholder approval if such approval is required by applicable law or the rules of the stock market or exchange, if any, on which the Shares are principally quoted, traded or

 

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listed (ii) the consent of the affected Participant, if such action would materially adversely affect the rights of such Participant under any outstanding Award, except to the extent any such amendment, alteration, suspension, discontinuance or termination is made to cause the Plan to comply with applicable law, stock market or exchange rules and regulations or accounting or tax rules and regulations.  Notwithstanding anything to the contrary in the Plan, the Committee may amend the Plan in such manner as may be necessary to enable the Plan to achieve its stated purposes in any jurisdiction in a tax-efficient manner and in compliance with local rules and regulations.

 

(b)                                 The Committee may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue or terminate any Award theretofore granted, prospectively or retroactively, without the consent of any relevant Participant or holder or Beneficiary of an Award; provided, however, that no such action shall materially adversely affect the rights of any affected Participant or holder or Beneficiary under any Award theretofore granted under the Plan, except to the extent any such action is made to cause the Plan to comply with applicable law, stock market or exchange rules and regulations or accounting or tax rules and regulations; provided further that, except as provided in Section 5(c), no such action shall directly or indirectly, through cancellation and regrant or any other method, reduce, or have the effect of reducing, the exercise price of any Award established at the time of grant thereof; and provided further, that the Committee’s authority under this Section 13(b) is limited in the case of Awards subject to Section 9(b), as provided in Section 9(b).

 

(c)                                  Except as provided in Section 9(b), the Committee shall be authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of events (including the events described in Section 5(c)) affecting the Company, or the financial statements of the Company, or of changes in applicable laws, regulations or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

 

(d)                                 The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem desirable to carry the Plan into effect.

 

Section 14.  Miscellaneous.

 

(a)                                  No employee, Participant or other person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of employees, Participants or holders or Beneficiaries of Awards under the Plan.  The terms and conditions of Awards need not be the same with respect to each recipient.  Any Award granted under the Plan shall be a one-time Award that does not constitute a promise of future grants.  The

 

15

 

Company, in its sole discretion, maintains the right to make available future grants under the Plan.

 

(b)                                 The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of, or to continue to provide services to, the Company or any Affiliate.  Further, the Company or the applicable Affiliate may at any time dismiss a Participant, free from any liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Document or in any other agreement binding the parties.  The receipt of any Award under the Plan is not intended to confer any rights on the receiving Participant except as set forth in the applicable Award Document.

 

(c)                                  Nothing contained in the Plan shall prevent the Company from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases.

 

(d)                                 The Company shall be authorized to withhold from any Award granted or any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to a Participant the amount (in cash, Shares, other Awards, other property, net settlement, or any combination thereof) of applicable withholding taxes due in respect of an Award, its exercise or settlement or any payment or transfer under such Award or under the Plan and to take such other action (including providing for elective payment of such amounts in cash or Shares by such Participant) as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes.

 

(e)                                  If any provision of the Plan or any Award Document is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to any person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award Document, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award Document shall remain in full force and effect.

 

(f)                                    Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a Participant or any other person.  To the extent that any person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company.

 

(g)                                 No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash or other securities shall be paid or transferred in lieu of any fractional Shares, or

 

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whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.

 

Section 15.  Effective Date of the Plan.  The Plan shall be effective as of the Effective Date.

 

Section 16.  Term of the Plan.  No Award shall be granted under the Plan after the earliest to occur of (i) the tenth year anniversary of the Effective Date, (ii) the maximum number of Shares available for issuance under the Plan have been issued or (iii) the Board terminates the Plan in accordance with Section 13(a).  However, unless otherwise expressly provided in the Plan or in an applicable Award Document, any Award theretofore granted may extend beyond such date, and the authority of the Committee to amend, alter, adjust, suspend, discontinue or terminate any such Award, or to waive any conditions or rights under any such Award, and the authority of the Board to amend the Plan, shall extend beyond such date.

 

Section 17.  Section 409A of the Code.  With respect to Awards subject to Section 409A of the Code, the Plan is intended to comply with the requirements of Section 409A of the Code, and the provisions of the Plan and any Award Document shall be interpreted in a manner that satisfies the requirements of Section 409A of the Code, and the Plan shall be operated accordingly.  If any provision of the Plan or any term or condition of any Award would otherwise frustrate or conflict with this intent, the provision, term or condition will be interpreted and deemed amended so as to avoid this conflict.  Notwithstanding anything else in the Plan, if the Board considers a Participant to be one of the Company’s “specified employees” under Section 409A of the Code at the time of such Participant’s Termination of Service, any distribution that otherwise would be made to such Participant with respect to this Award as a result of such termination shall not be made until the date that is six months after such Termination, except to the extent that earlier distribution would not result in such Participant’s incurring interest or additional tax under Section 409A of the Code.

 

17

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