Document:

Exhibit 10.2

 

FORM OF EXECUTION VERSION

 

THIS OPTION AND THE SHARES RECEIVED UPON EXERCISE OF THIS OPTION ARE SUBJECT TO THE RIGHTS, RESTRICTIONS AND OBLIGATIONS APPLICABLE TO SUCH SECURITIES, ALL AS PROVIDED IN THE STOCKHOLDERS AGREEMENT DATED AS OF OCTOBER 11, 2012 AMONG THE COMPANY AND CERTAIN OTHER PARTIES THERETO, AS AMENDED AND IN EFFECT FROM TIME TO TIME (THE “STOCKHOLDERS AGREEMENT”).

 

PHW Holdings, Inc.
 2012 INCENTIVE PLAN

 

STOCK OPTION CERTIFICATE

 

This stock option is granted by PHW Holdings, Inc., a Delaware corporation (the “Company”), to [·] (the “Optionee”), pursuant to the Company’s 2012 Equity Incentive Plan (the “Plan”).  Definitions not otherwise set forth in the text hereof are set forth in Section 3 hereof.  All capitalized terms not otherwise defined herein (either in the text or Section 3 hereof) shall have the meaning provided in the Plan or the Stockholders Agreement.

 

1.                             Grant of Option.

 

(a)          This certificate evidences the grant by the Company on [·](the “Grant Date”) to the Optionee of an option to purchase, in whole or in part, on the terms provided herein and in the Plan: (i) the Basic Option and (ii) the Performance Option (collectively, the “Shares”), in each case with an exercise price of $[·] per Share.

 

(b)          The latest date on which this option may be exercised (the “Final Exercise Date”) is the earlier of (i) the tenth anniversary of the Grant Date or (ii) the termination of this option in accordance with this certificate, the Stockholders Agreement or the Plan.

 

(c)          The option evidenced by this certificate is not intended to qualify as an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

 

(d)          The term “Basic Option” means [·] shares of non-voting common stock, $0.001 par value per share, of the Company (“Common Stock”).

 

(e)          The term “Performance Option” means [·] shares of Common Stock.

 

2.                             Vesting.

 

(a)          The Shares attributable to the Basic Option shall vest and become exercisable as follows: [·]% of the aggregate Shares that are the subject to the Basic Option shall vest and become exercisable on [·] and [·]% of the aggregate Shares that are the subject to the Basic Option shall vest and become exercisable on each of the first [·] anniversaries of such date.  Notwithstanding the foregoing, the Shares attributable to the Basic Option shall vest and become exercisable as to 100% of the total number of such Shares upon a Sale Transaction.

 

 

(b)          The Shares attributable to the Performance Option shall vest and become exercisable to the extent the Proceeds received by Gridiron (including in the Company Sale, IPO or other transaction described below triggering this calculation) result in Gridiron receiving (I) more than a [·] IRR (as defined below) on its Gridiron Equity Investment and (II) greater than or equal to [·] times cash on cash return on the Applicable Percentage of its Gridiron Equity Investment (in each case, after taking into account the vesting of any outstanding options) upon the earlier to occur of (i) a Sale Transaction, (ii) such time after an IPO that all shares of Common Stock held, directly or indirectly, by Gridiron have become Marketable Securities and (iii) any other transaction in which Gridiron receives Proceeds and at such time the Shares attributable to the Performance Option would vest in accordance with this Section 2(b) (the earliest such date, whether or not the cash on cash return target and IRR return specified above are met, being the “Determination Date”); provided that, upon the Determination Date but subject to the provisions herein, a portion of the Performance Option shall vest to the extent, after taking into account the vesting of any other outstanding options, the partial vesting of such Performance Option will not cause the cash on cash return or the IRR return specified above to not be met following such partial vesting.

 

For the purposes of the Performance Option, “cash on cash return” shall be measured by reference to the sum of (a) the Proceeds and (b) the fair market value of any Contingent Proceeds (which fair market value shall be determined by the Board in good faith) received by Gridiron in relation to the Applicable Percentage of the Gridiron Equity Investment; provided, however, that for purposes of this calculation, any proceeds received by Gridiron shall in no event be treated as having been received twice.  Upon the occurrence of the Determination Date, all Shares which do not become vested in accordance with the foregoing shall be forfeited and not exercisable, but only if the fair market value of any Contingent Proceeds (as determined by the Board in good faith) is taken into consideration when determining whether the “cash on cash return” and IRR targets have been met.  Notwithstanding the foregoing, in the event a Sale Transaction includes escrowed Proceeds, earnouts or other deferred, contingent or non-cash consideration (including non-Marketable Securities) (collectively, “Contingent Proceeds”), the Board may in its reasonable good faith discretion, consistent with the intent of the Plan and this Option Certificate, make such provisions for the treatment of the Performance Option in connection with such Sale Transaction as it deems appropriate to give effect to such intent, including without limitation fully or partially vesting such Performance Options, escrowing the proceeds to be received by Optionee with respect the Performance Option until such Contingent Proceeds are actually received, deferring such Determination Date until the date such Contingent Proceeds are actually received or any combination of the foregoing.

 

(c)          Notwithstanding the foregoing, no portion of the option evidenced by this certificate will vest and become exercisable after the termination of the Optionee’s employment with the Company or any subsidiary of the Company; provided, that to the extent the Optionee is terminated without Cause (as defined in the Stockholders Agreement) or terminates his employment for Good Reason (as defined in the employment agreement between the Optionee and the Company) within 120 days prior to the Determination Date, such termination shall be deemed to have occurred on the day immediately following the Determination Date.

 

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3.                             Definitions.

 

As used herein, the following terms shall have the meanings set forth below:

 

“Applicable Percentage” shall mean the percentage representing the number of Gridiron Common Shares sold or transferred (or in respect of which a liquidating distribution has been made) in all Common Sales and Sale Transactions (including in the Sale Transaction triggering this calculation) plus all Gridiron Common Shares that have become Marketable Securities as compared to the total Gridiron Common Shares Purchased.

 

“Board” shall mean the board of directors of the Company.

 

“Cause” shall have the meaning set forth in the Stockholders Agreement.

 

“Common Sale” shall mean one or more transactions in which Gridiron and/or any of its Permitted Transferees, directly or indirectly, sell or otherwise transfer for value, or cause to be sold or transferred for value, the direct or indirect beneficial ownership of any or all of the Gridiron Common Shares Purchased to any Person other than any Permitted Transferee of Gridiron; provided, that a sale or transfer for value to the Company, for purposes of this definition, shall be considered a Common Sale.

 

“Gridiron” shall mean Gridiron Capital Fund II, L.P., a Delaware limited partnership, and Gridiron Co-Investors II, LLC, a Delaware limited liability company.

 

“Gridiron Common Shares” shall mean the shares of Common Stock of the Company held, directly or indirectly, by Gridiron or any other securities or equity interests into which such Gridiron Common Shares shall be converted or exchanged pursuant to a merger, recapitalization or other transaction and any other securities or equity interests held, directly or indirectly, by Gridiron that can be, directly or indirectly, converted or exchanged into or exercised for Common Stock.

 

“Gridiron Common Shares Purchased” shall mean, at the time of determination, the aggregate number of Gridiron Common Shares acquired, directly or indirectly, by Gridiron, without giving effect to any reduction resulting from any Common Sale or Sale Transaction.

 

“Gridiron Equity Investment” shall mean, at the time of determination, the aggregate cash consideration paid by Gridiron (indirectly through its ownership of Investor) to acquire the Gridiron Common Shares Purchased, without giving effect to any reduction resulting from any Common Sale or Sale Transaction.

 

“Group” shall mean any two or more Persons who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, act as a partnership, limited partnership, syndicate or other group for the purpose of acquiring or holding securities of the Company.

 

“Initial Public Offering” or “IPO” shall mean the first completion of a sale of Common Stock of the Company pursuant to a registration statement which has become effective under the Securities Act of 1933, as amended (excluding registration statements on Form S-4, S-8 or

 

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similar limited purpose forms), in which the Common Stock of the Company shall be listed and traded on a national exchange.

 

“Investor” shall mean Performance Health Equity Investors, L.P., a Delaware limited partnership.

 

“IRR” shall mean an annual pre-tax internal rate of return calculated by taking into account (a) the date or dates of payment by the Investor for the Gridiron Common Shares Purchased, (b) the date or dates on which Gridiron receives Proceeds and (c) the amounts of such Proceeds.  For purposes of calculating the IRR, all determinations shall be made on an average cost basis for any Gridiron Common Shares Purchased sold or otherwise transferred for value.

 

“Marketable Securities” shall mean shares of capital stock that are immediately and freely tradable on national stock exchanges or in over the counter markets without a legal restriction (including without limitation volume restrictions) or an underwriter’s lock-up or similar contractual restriction.

 

“Member of the Immediate Family” shall mean, with respect to any individual, each spouse or child or other descendants of such individual, each trust, limited liability company or limited partnership created solely for the benefit of one or more of the aforementioned Persons and/or their spouses and each custodian or guardian of any property of one or more of the aforementioned Persons in his capacity as such custodian or guardian.

 

“Permitted Transferee” shall have the meaning set forth in the Stockholders Agreement; provided, that solely for the purposes of this Option Certificate, Permitted Transferee shall not include the Company.

 

“Person” shall mean any individual, partnership, corporation, association, limited liability company, trust, joint venture, unincorporated organization or entity, or any government, governmental department or agency or political subdivision thereof.

 

“Proceeds” shall mean the sum of:

 

(a)          actual proceeds actually received by Gridiron indirectly in respect of Gridiron Common Shares in all Common Sales and Sale Transactions in respect of its capital interest in the Investor;

 

(b)          any dividends and other distributions actually received by Gridiron on Gridiron Common Shares; and

 

(c)          in the case of a Determination Date triggered by Section 2(b)(ii), (x) the total number of Gridiron Common Shares then indirectly held through the Investor multiplied by (y) the average closing price of the Company’s Common Stock as reported on the national exchange on which the Company’s Common Stock is listed or traded, for the thirty consecutive trading days immediately preceding the Determination Date.

 

For purposes of clauses (a) and (b), proceeds shall only include cash and/or Marketable Securities.  Any Proceeds that are actually received by the Investor in respect of the Gridiron

 

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Common Shares, but not otherwise distributed to Gridiron and which are not subject to any restrictions to such distribution to Gridiron pursuant to the limited partnership agreement of the Investor, as amended and then in effect, on or prior to the Determination Date, shall nonetheless be treated as actual proceeds received by Gridiron on the Determination Date for purposes of determining whether the “cash on cash return” and IRR targets have been met; provided, however, that such Proceeds shall in no event be treated as having been received twice by virtue of this sentence.  Notwithstanding the foregoing, in no event shall “Proceeds” include the receipt by Gridiron or its Affiliates of management fees, closing fees, investment banking fees or similar fees payable in connection with any transaction.  Proceeds shall be calculated on a pre-tax basis.

 

“Sale Affiliate” shall mean, with respect to any specified Person, (a) any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person (for the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise) and (b) in the case of a specified Person who is an individual, any Member of the Immediate Family of such Person.

 

“Sale Transaction” shall mean (a) any transaction or series of related transactions in which any Person who is not (1) a Sale Affiliate of the Company, Gridiron or the Investor, or (2) any two or more such Persons acting as a Group, or (3) an Affiliate of such Person or Persons, shall (i) acquire, whether by purchase, exchange, tender offer, merger, consolidation, recapitalization or otherwise, or (ii) otherwise be the owner of (as a result of a redemption of shares of the Company’s Common Stock or otherwise), shares of the Company’s common stock (or shares in a successor corporation by merger, consolidation or otherwise) such that following such transaction or transactions, such Person or Group and their respective Sale Affiliates beneficially own fifty percent (50%) or more of the voting power at elections for the Board or any successor corporation or otherwise have the power, directly or indirectly, by contract or otherwise, to direct or cause the election of directors having a majority of the voting power of the Board, or (b) the sale or transfer of all or substantially all the Company’s assets and following such sale or transfer, there is a liquidation of the Company.

 

4.                             Exercise of Option.

 

Each election to exercise this option shall be in writing, signed by the Optionee or by his or her executor or administrator or by the Person or Persons to whom this option is transferred by will or the applicable laws of descent and distribution (the “Legal Representative”), and received by the Company at its principal office, accompanied by payment in full and by such additional documentation evidencing the right to exercise (or, in the case of a Legal Representative, the authority of such Legal Representative) as the Company may require.  The purchase price may be paid (i) in cash or by personal check, bank check or money order payable to the order of the Company, (ii) through the delivery of shares of Stock (including shares of Stock that have been outstanding for less than six months) and that have a fair market value on the last business day preceding the date of exercise equal to the exercise price, (iii) by delivery of an unconditional and irrevocable undertaking by a broker to deliver to the Company promptly upon the sale of

 

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Shares to be issued sufficient funds to pay the exercise price, or (iv) by any combination of the permissible forms of payment.

 

5.                             Stockholders Agreement; Termination of Employment.

 

The option evidenced by this certificate and any Shares received upon the exercise of this option shall be subject to the Stockholders Agreement, and the issuance of this option certificate or at the election of the Company, the issuance of shares of Common Stock upon exercise of this option certificate, shall be conditional upon the execution and delivery by the Optionee of a joinder to the Stockholders Agreement.  This option and the Shares received upon exercise of this option shall be subject to the rights, restrictions and obligations applicable to options and shares of Common Stock of the Company as provided from time to time in such Stockholders Agreement, including without limitation, the obligations applicable to options and shares of Common Stock of the Company under Section 4 thereof relating to the Company’s right to call securities.  In addition to the provisions of the Stockholders Agreement, any portion of this option that shall not have vested and become exercisable shall be forfeited, terminated and cancelled upon (a) the termination of Optionee’s employment with the Company subject to the proviso set forth in Section 2(c) hereof or (b) if earlier, with respect to the Performance Option, a Determination Date with respect to which the cash on cash return required for the Performance Option to vest and become exercisable was not achieved.  In addition, in the event of a termination of employment of the Optionee for Cause at any time, any vested but unexercised portion of the option evidenced by this certificate shall automatically and without any further action by any party be forfeited, terminated and cancelled.

 

6.                             Restrictions on Transfer.

 

(a)          In addition to the provisions of Section 3 above, if at the time this option is exercised the Company is a party to any other agreement restricting the transfer of any outstanding shares of its Common Stock, this option may be exercised only if the Shares so acquired are made subject to the transfer restrictions set forth in that agreement (or if more than one such agreement is then in effect, the agreement or agreements specified by the Board).

 

(b)          Certificates evidencing any Shares purchased by an Optionee upon exercise of options granted hereby may bear the following legends, in addition to any legends which may be required by any agreement referred to in the immediately preceding paragraph:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE ACT COVERING THE TRANSFER OR AN OPINION OF COUNSEL, SATISFACTORY TO THE ISSUER, THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.”

 

“THE SALE, ASSIGNMENT, TRANSFER, ENCUMBRANCE OR OTHER DISPOSITION OF STOCK REPRESENTED BY THIS CERTIFICATE,

 

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ARE SUBJECT TO THE PROVISIONS OF A STOCKHOLDERS AGREEMENT TO WHICH THE ISSUER AND CERTAIN OF ITS STOCKHOLDERS ARE PARTY, A COPY OF WHICH MAY BE INSPECTED AT THE PRINCIPAL OFFICE OF THE ISSUER OR OBTAINED FROM THE ISSUER WITHOUT CHARGE.  NO SALE, ASSIGNMENT, TRANSFER OR OTHER DISPOSITION OF THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE SHALL BE EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS OF SUCH STOCKHOLDERS AGREEMENT HAVE BEEN COMPLIED WITH IN FULL.”

 

All Shares shall also bear all legends required by federal and state securities laws.

 

7.                             Withholding.

 

No Shares will be issued pursuant to the exercise of this option unless and until the Person exercising this option shall have remitted to the Company an amount sufficient to satisfy any federal, state or local withholding tax requirements, or shall have made other arrangements satisfactory to the Company with respect to such taxes.

 

8.                             Nontransferability of Option.

 

This option is not transferable by the Optionee other than by will or the applicable laws of descent and distribution, and is exercisable during the Optionee’s lifetime only by the Optionee.

 

9.                             Provisions of the Plan.

 

This option is subject in its entirety to the provisions of the Plan, which are incorporated herein by reference.  A copy of the Plan as in effect on the date of the grant of this option has been furnished to the Optionee.  By exercising all or any part of this option, the Optionee agrees to be bound by the terms of the Plan and this certificate.

 

[Remainder of Page Intentionally Left Blank]

 

7Exhibit 10.3

 

PERFORMANCE HEALTH HOLDINGS CORP. 

2016 OMNIBUS INCENTIVE PLAN

 

1.                                      DEFINED TERMS

 

Exhibit A, which is incorporated by reference, defines the terms used in the Plan and sets forth certain operational rules related to those terms.

 

2.                                      PURPOSE

 

The Plan has been established to advance the interests of the Company by providing for the grant to Participants of Stock, Stock-based and other incentive Awards.

 

3.                                      ADMINISTRATION

 

The Administrator has discretionary authority, subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award; determine the form of settlement of Awards (whether in cash, shares of Stock or other property); prescribe forms, rules and procedures relating to the Plan; and otherwise do all things necessary or appropriate to carry out the purposes of the Plan.  Determinations of the Administrator made under the Plan will be conclusive and will bind all parties.

 

4.                                      LIMITS ON AWARDS UNDER THE PLAN

 

(a)                                 Number of Shares.  The maximum number of shares of Stock that may be delivered in satisfaction of Awards under the Plan is [·] shares, plus [·] shares that are available for grant under the Company’s 2012 Option Plan as of the Date of Adoption.  Up to the total number of shares available for Awards to employee Participants may be issued in satisfaction of ISOs, but nothing in this Section 4(a) will be construed as requiring that any, or any fixed number of, ISOs be awarded under the Plan.  The limits set forth in this Section 4(a) shall be construed to comply with Section 422 of the Code.  For purposes of this Section 4(a), the number of shares of Stock delivered in satisfaction of Awards will be determined net of shares of Stock withheld by the Company in payment of the exercise price or purchase price of the Award or in satisfaction of tax withholding requirements with respect to the Award and, for the avoidance of doubt, without including any shares of Stock underlying Awards settled in cash or that otherwise expire or become unexercisable without having been exercised or that are forfeited to or repurchased by the Company due to failure to vest.  To the extent consistent with the requirements of Section 422 and the regulations thereunder, and with other applicable legal requirements (including applicable stock exchange requirements), Stock issued under awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition shall not reduce the number of shares of Stock available for Awards under the Plan.

 

(b)                                 Type of Shares.  Stock delivered by the Company under the Plan may be authorized but unissued Stock or previously issued Stock acquired by the Company.  No fractional shares of Stock will be delivered under the Plan.

 

 

(c)                                  Individual Limits.  The following additional limits will apply to Awards of the specified type granted to any person in any calendar year:

 

(1)                                 Stock Options: [·] shares of Stock.

 

(2)                                 SARs: [·] shares of Stock.

 

(3)                                 Awards other than Stock Options or SARs [·] shares of Stock.

 

In applying the foregoing limits, (i) all Awards of the specified type granted to the same person in the same calendar year will be aggregated and made subject to one limit; (ii) the limits applicable to Stock Options and SARs refer to the number of shares of Stock subject to those Awards; and (iii) the share limit under clause (3) refers to the maximum number of shares of Stock that may be delivered, or the value of which could be paid in cash or other property, under an Award or Awards of the type specified in clause (3) assuming a maximum payout.  The foregoing provisions will be construed in a manner consistent with Section 162(m), including, without limitation, where applicable, the rules under Section 162(m) pertaining to permissible deferrals of exempt awards.

 

(d)                                 Director Limits.  In the case of a non-employee director of the Company, an additional limit shall apply such that the maximum grant-date fair value of Awards granted in any fiscal year of the Company during any part of which the director is then eligible under the Plan shall be $400,000, computed in accordance with FASB ASC Topic 718 (or its successor provision).  The foregoing additional limit related to non-employee directors of the Company shall not apply to any Award or shares of Stock granted pursuant to a non-employee Director’s election to receive an Award or shares of Stock in lieu of cash retainers or other fees (to the extent such Award or shares of Stock have a fair value equal to the value of such cash retainers or other fees).

 

5.                                      ELIGIBILITY AND PARTICIPATION

 

The Administrator will select Participants from among key Employees and Directors of, and consultants and advisors to, the Company and its Affiliates.  Eligibility for ISOs is limited to individuals described in the first sentence of this Section 5 who are employees of the Company or of a “parent corporation” or “subsidiary corporation” of the Company as those terms are defined in Section 424 of the Code.  Eligibility for Stock Options other than ISOs is limited to individuals described in the first sentence of this Section 5 who are providing direct services on the date of grant of the Stock Option to the Company or to a subsidiary of the Company that would be described in the first sentence of Section 1.409A-1(b)(5)(iii)(E) of the Treasury Regulations.

 

6.                                      RULES APPLICABLE TO AWARDS

 

(a)                                 All Awards.

 

(1)                                 Award Provisions.  The Administrator will determine the terms of all Awards, subject to the limitations provided herein.  By accepting (or, under such rules as the Administrator may prescribe, being deemed to have accepted) an Award, the Participant will be

 

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deemed to have agreed to the terms of the Award and the Plan.  Notwithstanding any provision of this Plan to the contrary, awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition may contain terms and conditions that are inconsistent with the terms and conditions specified herein, as determined by the Administrator.

 

(2)                                 Term of Plan.  No Awards may be made after ten years from the Date of Adoption, but previously granted Awards may continue beyond that date in accordance with their terms.

 

(3)                                 Transferability.  Neither ISOs nor, except as the Administrator otherwise expressly provides in accordance with the third sentence of this Section 6(a)(3), other Awards may be transferred other than by will or by the laws of descent and distribution.  During a Participant’s lifetime, ISOs (and, except as the Administrator otherwise expressly provides in accordance with the third sentence of this Section 6(a)(3), SARs and NSOs) may be exercised only by the Participant.  The Administrator may permit the gratuitous transfer (i.e., transfer not for value) of Awards other than ISOs to any transferee eligible to be covered by the provisions of Form S-8 (under the Securities Act of 1933, as amended), subject to such limitations as the Administrator may impose.

 

(4)                                 Vesting, etc.  The Administrator will determine the time or times at which an Award will vest or become exercisable and the terms on which a Stock Option or SAR will remain exercisable.  Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax or other consequences resulting from such acceleration.  Unless the Administrator expressly provides otherwise, however, the following rules will apply if a Participant’s Employment ceases:

 

(A)                               Immediately upon the cessation of the Participant’s Employment and except as provided in (B) and (C) below, each Stock Option and SAR that is then held by the Participant or by the Participant’s permitted transferees, if any, will cease to be exercisable and will terminate and all other Awards that are then held by the Participant or by the Participant’s permitted transferees, if any, to the extent not already vested will be forfeited.

 

(B)                               Subject to (C) and (D) below, all Stock Options and SARs held by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of three months or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.

 

(C)                               All Stock Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment due to his or her death or due to the termination of the Participant’s Employment by the Company due to his or her Disability, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of twelve (12) months or (ii) the period ending on the latest date on which such Stock Option or SAR could have

 

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been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.

 

(D)                               All Stock Options and SARs (whether or not exercisable) held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment will immediately terminate upon such cessation of Employment if the termination is for Cause or occurs in circumstances that in the sole determination of the Administrator would have constituted grounds for the Participant’s Employment to be terminated for Cause.

 

(5)                                 Additional Restrictions.  The Administrator may cancel, rescind, withhold or otherwise limit or restrict any Award at any time if the Participant is not in compliance with all applicable provisions of the Award agreement and the Plan, or if the Participant breaches any agreement with the Company or its Affiliates with respect to non-competition, non-solicitation or confidentiality.  Without limiting the generality of the foregoing, the Administrator may recover Awards made under the Plan and payments or shares of Stock delivered under or gain in respect of any Award in accordance with any applicable Company clawback or recoupment policy, as such policy may be amended and in effect from time to time, or as otherwise required by applicable law or applicable stock exchange listing standards, including, without limitation, Section 10D of the Securities Exchange Act of 1934, as amended.

 

(6)                                 Taxes.  The delivery, vesting and retention of Stock, cash or other property under an Award are conditioned upon full satisfaction by the Participant of all tax withholding requirements with respect to the Award.  The Administrator will prescribe such rules for the withholding of taxes as it deems necessary.  The Administrator may, but need not, hold back shares of Stock from an Award or permit a Participant to tender previously owned shares of Stock in satisfaction of tax withholding requirements (but not in excess of the minimum withholding required by law or such greater amount that would not result in adverse accounting consequences to the Company, as determined by the Administrator).

 

(7)                                 Dividend Equivalents, Etc.  The Administrator may provide for the payment of amounts (on terms and subject to conditions established by the Administrator) in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award whether or not the holder of such Award is otherwise entitled to share in the actual dividend or distribution in respect of such Award.  Any entitlement to dividend equivalents or similar entitlements will be established and administered either consistent with an exemption from, or in compliance with, the requirements of Section 409A.  Dividends or dividend equivalent amounts payable in respect of Awards that are subject to restrictions may be subject to such limits or restrictions as the Administrator may impose.

 

(8)                                 Rights Limited.  Nothing in the Plan will be construed as giving any person the right to continued employment or service with the Company or its Affiliates, or any rights as a stockholder except as to shares of Stock actually issued under the Plan.  The loss of existing or potential profit in Awards will not constitute an element of damages in the event of a termination of Employment for any reason, even if the termination is in violation of an obligation of the Company or any Affiliate to the Participant.

 

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(9)                                 Section 162(m).  In the case of any Performance Award (other than a Stock Option or SAR) intended to qualify for the performance-based compensation exception under Section 162(m), the Administrator will establish the applicable Performance Criterion or Criteria in writing no later than ninety (90) days after the commencement of the period of service to which the performance relates (or at such earlier time as is required to qualify the Award as performance-based under Section 162(m)) and, prior to the event or occurrence (grant, vesting or payment, as the case may be) that is conditioned on the attainment of such Performance Criterion or Criteria, will certify whether it or they have been attained.  The preceding sentence will not apply to an Award eligible (as determined by the Administrator) for exemption from the limitations of Section 162(m) by reason of the post-initial public offering transition relief in Section 1.162-27(f) of the Treasury Regulations.

 

(10)                          Coordination with Other Plans.  Awards under the Plan may be granted in tandem with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under other compensatory plans or programs of the Company or its Affiliates.  For example, but without limiting the generality of the foregoing, awards under other compensatory plans or programs of the Company or its Affiliates may be settled in Stock (including, without limitation, Unrestricted Stock) if the Administrator so determines, in which case the shares delivered will be treated as awarded under the Plan (and will reduce the number of shares thereafter available under the Plan in accordance with the rules set forth in Section 4).  In any case where an award is made under another plan or program of the Company or its Affiliates and such award is intended to qualify for the performance-based compensation exception under Section 162(m), and such award is settled by the delivery of Stock or another Award under the Plan, the applicable Section 162(m) limitations under both the other plan or program and under the Plan will be applied to the Plan as necessary (as determined by the Administrator) to preserve the availability of the Section 162(m) performance-based compensation exception with respect thereto.

 

(11)                          Section 409A.  Each Award will contain such terms as the Administrator determines, and will be construed and administered, such that the Award either qualifies for an exemption from the requirements of Section 409A or satisfies such requirements.

 

(12)                          Fair Market Value.  In determining the fair market value of any share of Stock under the Plan, the Administrator will make the determination in good faith consistent with the rules of Section 422 and Section 409A, to the extent applicable.

 

(13)                          Stockholders Agreement.  To the extent required by the Administrator and set forth in an Award agreement, (i) Awards issued under the Plan and all Stock issued thereunder will be subject to the Stockholders Agreement and (ii) Awards will not be granted to a Participant and no Stock will be delivered to a Participant, in either case, until the Participant has executed the Stockholders Agreement.  If, notwithstanding this Section (6)(a)(13), a Participant fails to execute the Stockholders Agreement as required by the Administrator but nevertheless receives Stock Options, upon exercise of such Stock Options, such Participant shall be deemed to have executed the Stockholders Agreement and thereafter be subject to all of its provisions with respect to the shares of Stock the Participant receives upon the exercise of such Stock Options.

 

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(b)                                 Stock Options and SARs.

 

(1)                                 Time and Manner of Exercise.  Unless the Administrator expressly provides otherwise, no Stock Option or SAR will be deemed to have been exercised until the Administrator receives a notice of exercise (in form acceptable to the Administrator), which may be an electronic notice, signed (including electronic signature in form acceptable to the Administrator) by the appropriate person and accompanied by any payment required under the Award.  A Stock Option or SAR exercised by any person other than the Participant will not be deemed to have been exercised until the Administrator has received such evidence as it may require that the person exercising the Award has the right to do so.  The Administrator may impose conditions on the exercisability of Awards, including limitations on the time periods during which Awards may be exercised or settled.

 

(2)                                 Exercise Price.  The exercise price (or the base value from which appreciation is to be measured) of each Award requiring exercise will be no less than 100% (or in the case of an ISO granted to a ten-percent shareholder within the meaning of subsection (b)(6) of Section 422, 110%) of the fair market value of the Stock subject to the Award, determined as of the date of grant, or such higher amount as the Administrator may determine in connection with the grant.  Except in connection with a corporate transaction involving the Company (which term shall include, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares) or as otherwise contemplated by Section 7 of the Plan, the terms of outstanding Stock Options or SARs, as applicable, may not be amended to reduce the exercise prices of such Stock Options or the base values from which appreciation under such SARs are to be measured other than in accordance with the stockholder approval requirements of the NASDAQ Stock Market.

 

(3)                                 Payment of Exercise Price.  Where the exercise of an Award is to be accompanied by payment, payment of the exercise price will be by cash or check acceptable to the Administrator or by such other legally permissible means, if any, as may be acceptable to the Administrator.

 

(4)                                 Maximum Term.  Stock Options and SARs will have a maximum term not to exceed ten (10) years from the date of grant (or five (5) years from the date of grant in the case of an ISO granted to a ten-percent shareholder described in Section 6(b)(2) above).

 

7.                                      EFFECT OF CERTAIN TRANSACTIONS

 

(a)                                 Mergers, etc.  Except as otherwise provided in an Award agreement, the following provisions will apply in the event of a Covered Transaction:

 

(1)                                 Assumption or Substitution.  If the Covered Transaction is one in which there is an acquiring or surviving entity, the Administrator may (but, for the avoidance of doubt, need not) provide (i) for the assumption or continuation of some or all outstanding Awards or any portion thereof or (ii) for the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor.

 

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(2)                                 Cash-Out of Awards.  Subject to Section 7(a)(5) below the Administrator may (but, for the avoidance of doubt, need not) provide for payment (a “cash-out”), with respect to some or all Awards or any portion thereof, equal in the case of each affected Award or portion thereof to the excess, if any, of (A) the fair market value of one share of Stock (as determined by the Administrator in its reasonable discretion) times the number of shares of Stock subject to the Award or such portion, over (B) the aggregate exercise or purchase price, if any, under the Award or such portion (in the case of an SAR, the aggregate base value above which appreciation is measured), in each case on such payment terms (which need not be the same as the terms of payment to holders of Stock) and other terms, and subject to such conditions, as the Administrator determines; it being understood that if the exercise or purchase price (or base value) of an Award is equal to or greater than the fair market value of one share of Stock, the Award may be cancelled with no payment due hereunder.

 

(3)                                 Acceleration of Certain Awards.  Subject to Section 7(a)(5) below, the Administrator may (but, for the avoidance of doubt, need not) provide that any Award requiring exercise will become exercisable, in full or in part and/or that the delivery of any shares of Stock remaining deliverable under any outstanding Award of Stock Units (including Restricted Stock Units and Performance Awards to the extent consisting of Stock Units) will be accelerated in full or in part, in each case on a basis that gives the holder of the Award a reasonable opportunity, as determined by the Administrator, following exercise of the Award or the delivery of the shares, as the case may be, to participate as a stockholder in the Covered Transaction.

 

(4)                                 Termination of Awards Upon Consummation of Covered Transaction.  Except as the Administrator may otherwise determine in any case, each Award will automatically terminate (and in the case of outstanding shares of Restricted Stock, will automatically be forfeited) upon consummation of the Covered Transaction, other than Awards assumed pursuant to Section 7(a)(1) above.

 

(5)                                 Additional Limitations.  Any share of Stock and any cash or other property delivered pursuant to Section 7(a)(2) or Section 7(a)(3) above with respect to an Award may, in the discretion of the Administrator, contain such restrictions, if any, as the Administrator deems appropriate to reflect any performance or other vesting conditions to which the Award was subject and that did not lapse (and were not satisfied) in connection with the Covered Transaction.  For purposes of the immediately preceding sentence, a cash-out under Section 7(a)(2) above or acceleration under Section 7(a)(3) above will not, in and of itself, be treated as the lapsing (or satisfaction) of a performance or other vesting condition.  In the case of Restricted Stock that does not vest and is not forfeited in connection with the Covered Transaction, the Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such Stock in connection with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Administrator deems appropriate to carry out the intent of the Plan.

 

(b)                                 Changes in and Distributions With Respect to Stock.

 

(1)                                 Basic Adjustment Provisions.  In the event of a stock dividend, stock split or combination of shares (including a reverse stock split), recapitalization or other change in the Company’s capital structure that constitutes an equity restructuring within the meaning of

 

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FASB ASC Topic 718, the Administrator will make appropriate adjustments to the maximum number of shares of Stock that may be delivered under the Plan and to the maximum share limits described in Section 4(c) and will also make appropriate adjustments to the number and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise or purchase prices (or base values) relating to Awards and any other provision of Awards affected by such change.

 

(2)                                 Certain Other Adjustments.  The Administrator may also make adjustments of the type described in Section 7(b)(1) above to take into account distributions to stockholders other than those provided for in Section 7(a) and 7(b)(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan, having due regard for the qualification of ISOs under Section 422, the requirements of Section 409A, and for the performance-based compensation rules of Section 162(m), where applicable.

 

(3)                                 Continuing Application of Plan Terms.  References in the Plan to shares of Stock will be construed to include any stock or securities resulting from an adjustment pursuant to this Section 7.

 

8.                                      LEGAL CONDITIONS ON DELIVERY OF STOCK

 

The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under the Plan until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such shares have been addressed and resolved; (ii) if the outstanding Stock is at the time of delivery listed on any stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and (iii) all conditions of the Award have been satisfied or waived.  The Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of the Securities Act of 1933, as amended, or any applicable state or non-U.S. securities law.  Any Stock required to be issued to Participants under the Plan will be evidenced in such manner as the Administrator may deem appropriate, including book-entry registration or delivery of stock certificates.  In the event that the Administrator determines that Stock certificates will be issued to Participants under the Plan, the Administrator may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Stock, and the Company may hold the certificates pending lapse of the applicable restrictions.

 

9.                                      AMENDMENT AND TERMINATION

 

The Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, and may at any time terminate the Plan as to any future grants of Awards; provided, that, except as otherwise expressly provided in the Plan, the Administrator may not, without the Participant’s consent, alter the terms of an Award so as to affect materially and adversely the Participant’s rights under the Award, unless the Administrator expressly reserved the right to do so at the time the Award was granted or if such changes are required by law.  Any amendments to the Plan will be conditioned upon

 

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stockholder approval only to the extent, if any, such approval is required by law (including the Code and applicable stock exchange requirements), as determined by the Administrator.

 

10.          OTHER COMPENSATION ARRANGEMENTS

 

The existence of the Plan or the grant of any Award will not in any way affect the Company’s right to award a person bonuses or other compensation in addition to Awards under the Plan.

 

11.          MISCELLANEOUS

 

(a)           Waiver of Jury Trial.  By accepting an Award under the Plan, each Participant waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights under the Plan and any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection therewith, and agrees that any such action, proceedings or counterclaim will be tried before a court and not before a jury.  By accepting an Award under the Plan, each Participant certifies that no officer, representative, or attorney of the Company has represented, expressly or otherwise, that the Company would not, in the event of any action, proceeding or counterclaim, seek to enforce the foregoing waivers.  Notwithstanding anything to the contrary in the Plan, nothing herein is to be construed as limiting the ability of the Company and a Participant to agree to submit disputes arising under the terms of the Plan or any Award made hereunder to binding arbitration or as limiting the ability of the Company to require any eligible individual to agree to submit such disputes to binding arbitration as a condition of receiving an Award hereunder.

 

(b)           Limitation of Liability.  Notwithstanding anything to the contrary in the Plan, neither the Company, nor any Affiliate, nor the Administrator, nor any person acting on behalf of the Company, any Affiliate, or the Administrator, will be liable to any Participant or to the estate or beneficiary of any Participant or to any other holder of an Award by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted by reason of the failure of an Award to satisfy the requirements of Section 422 or Section 409A or by reason of Section 4999 of the Code, or otherwise asserted with respect to the Award.

 

12.          ESTABLISHMENT OF SUB-PLANS

 

The Administrator may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable blue sky, securities or tax laws of various jurisdictions.  The Administrator will establish such sub-plans by adopting supplements to the Plan setting forth (i) such limitations on the Administrator’s discretion under the Plan as it deems necessary or desirable and (ii) such additional terms and conditions not otherwise inconsistent with the Plan as it deems necessary or desirable.  All supplements so established will be deemed to be part of the Plan, but each supplement will apply only to Participants within the affected jurisdiction (as determined by the Administrator).

 

13.          GOVERNING LAW

 

(a)           Certain Requirements of Corporate Law.  Awards will be granted and administered consistent with the requirements of applicable Delaware law relating to the

 

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issuance of stock and the consideration to be received therefor, and with the applicable requirements of the stock exchanges or other trading systems on which the Stock is listed or entered for trading, in each case as determined by the Administrator.

 

(b)           Other Matters.  Except as otherwise provided by the express terms of an Award agreement, under a sub-plan described in Section 12 or as provided in Section 13(a) above, the provisions of the Plan and of Awards under the Plan and all claims or disputes arising out of or based upon the Plan or any Award under the Plan or relating to the subject matter hereof or thereof will be governed by and construed in accordance with the domestic substantive laws of the State of Delaware without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction.

 

(c)           Jurisdiction.  By accepting an Award, each Participant will be deemed to (a) have submitted irrevocably and unconditionally to the jurisdiction of the federal and state courts located within the geographic boundaries of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon the Plan or any Award; (b) agree not to commence any suit, action or other proceeding arising out of or based upon the Plan or an Award, except in the federal and state courts located within the geographic boundaries of the United States District Court for the District of Delaware; and (c) waive, and agree not to assert, by way of motion as a defense or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that the Plan or an Award or the subject matter thereof may not be enforced in or by such court.

 

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EXHIBIT A

 

Definition of Terms

 

The following terms, when used in the Plan, will have the meanings and be subject to the provisions set forth below:

 

“Administrator”:  The Compensation Committee, except that the Compensation Committee may delegate (i) to one or more of its members (or one or more other members of the Board (including the full Board)) such of its duties, powers and responsibilities as it may determine; (ii) to one or more officers of the Company the power to grant Awards to the extent permitted by applicable law; and (iii) to such Employees or other persons as it determines such ministerial tasks as it deems appropriate.  In the event of any delegation described in the preceding sentence, the term “Administrator” will include the person or persons so delegated to the extent of such delegation.

 

“Affiliate”:  Any corporation or other entity that stands in a relationship to the Company that would result in the Company and such corporation or other entity being treated as one employer under Section 414(b) and Section 414(c) of the Code, provided that, for purposes of determining treatment as a single employer under Section 414(b) and Section 414(c) of the Code, “50%” shall replace “80%” in the applicable stock ownership requirements under such sections of the Code and the regulations thereunder.

 

“Award”:  Any or a combination of the following:

 

(i) Stock Options.

 

(ii) SARs.

 

(iii) Restricted Stock.

 

(iv) Unrestricted Stock.

 

(v)  Stock Units, including Restricted Stock Units.

 

(vi) Performance Awards.

 

(viii)  Awards (other than Awards described in (i) through (vii) above) that are convertible into or otherwise based on Stock.

 

“Board”:  The Board of Directors of the Company.

 

“Cause”:  In the case of any Participant who is party to an effective employment or severance-benefit agreement with the Company or a subsidiary of the Company that contains a definition of “Cause,” the definition set forth in such agreement will apply with respect to such Participant under the Plan.  In the case of any other Participant, “Cause” will mean, as determined by the Administrator in its reasonable judgment, (i) a substantial failure of the Participant to perform the Participant’s duties and responsibilities to the Company or subsidiaries

 

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or substantial negligence in the performance of such duties and responsibilities; (ii) the commission by the Participant of a felony or a crime involving moral turpitude; (iii) the commission by the Participant of theft, fraud, embezzlement, material breach of trust or any material act of dishonesty involving the Company or any of its subsidiaries; (iv) a significant violation by the Participant of the code of conduct of the Company or its subsidiaries of any material policy of the Company or its subsidiaries, or of any statutory or common law duty of loyalty to the Company or its subsidiaries; (v) material breach of any of the terms of the Plan or any Award made under the Plan, or of the terms of any other agreement between the Company or subsidiaries and the Participant; or (vi) other conduct by the Participant that could be expected to be harmful to the business, interests or reputation of the Company.

 

“Code”:  The U.S. Internal Revenue Code of 1986 as from time to time amended and in effect, or any successor statute as from time to time in effect.

 

“Compensation Committee”:  The Compensation Committee of the Board.

 

“Company”:  Performance Health Holdings Corp.

 

“Covered Transaction”:  Any of (i) a consolidation, merger, or similar transaction or series of related transactions, including a sale or other disposition of stock, in which the Company is not the surviving corporation or that results in the acquisition of all or substantially all of the Company’s then outstanding common stock by a single person or entity or by a group of persons and/or entities acting in concert, (ii) a sale or transfer of all or substantially all the Company’s assets, or (iii) a dissolution or liquidation of the Company.  Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) (as determined by the Administrator), the Covered Transaction will be deemed to have occurred upon consummation of the tender offer.

 

“Date of Adoption”:  The date the Plan was approved by the Company’s stockholders or adopted by the Board, as determined by the Compensation Committee.

 

“Director”:  A member of the Board who is not an Employee.

 

“Disability”: In the case of any Participant who is party to an effective employment or severance-benefit agreement with the Company or a subsidiary of the Company that contains a definition of “Disability,” the definition set forth in such agreement will apply with respect to such Participant under the Plan.  In the case of any other Participant, a permanent disability as defined in the long-term disability plan maintained by the Company or one of its subsidiaries, or as defined from time to time by the Company in its sole discretion.

 

“Employee”:  Any person who is employed by the Company or an Affiliate.

 

“Employment”:  A Participant’s employment or other service relationship with the Company and its Affiliates.  Employment will be deemed to continue, unless the Administrator expressly provides otherwise, so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section 5 to the Company or an Affiliate.  If a Participant’s employment or other service relationship is with an Affiliate and that entity ceases to be an Affiliate, the Participant’s Employment will be deemed to have terminated when the

 

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entity ceases to be an Affiliate unless the Participant transfers Employment to the Company or its remaining Affiliates.  Notwithstanding the foregoing and the definition of “Affiliate” above, in construing the provisions of any Award relating to the payment of “nonqualified deferred compensation” (subject to Section 409A) upon a termination or cessation of Employment, references to termination or cessation of employment, separation from service, retirement or similar or correlative terms will be construed to require a “separation from service” (as that term is defined in Section 1.409A-1(h) of the Treasury Regulations, after giving effect to the presumptions contained therein) from the Company and from all other corporations and trades or businesses, if any, that would be treated as a single “service recipient” with the Company under Section 1.409A-1(h)(3) of the Treasury Regulations.  The Company may, but need not, elect in writing, subject to the applicable limitations under Section 409A, any of the special elective rules prescribed in Section 1.409A-1(h) of the Treasury Regulations for purposes of determining whether a “separation from service” has occurred.  Any such written election will be deemed a part of the Plan.

 

“ISO”:  A Stock Option intended to be an “incentive stock option” within the meaning of Section 422.  Each Stock Option granted pursuant to the Plan will be treated as providing by its terms that it is to be an NSO unless, as of the date of grant, it is expressly designated as an ISO.

 

“NSO”:  A Stock Option that is not intended to be an “incentive stock option” within the meaning of Section 422.

 

“Participant”:  A person who is granted an Award under the Plan.

 

“Performance Award”:  An Award subject to Performance Criteria.  The Administrator in its discretion may grant Performance Awards that are intended to qualify for the performance-based compensation exception under Section 162(m) and Performance Awards that are not intended so to qualify.

 

“Performance Criteria”:  Specified criteria, other than the mere continuation of Employment or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of an Award.  For purposes of Awards that are intended to qualify for the performance-based compensation exception under Section 162(m), a Performance Criterion will mean an objectively determinable measure of performance relating to any or any combination of the following (measured either absolutely or comparatively (including, without limitation, by reference to an index or indices or a specified peer group) and determined either on a gross, net or consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof and subject to such adjustments, if any, as the Committee specifies, consistent with the requirements of Section 162(m)): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or equity expense, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, invested capital, capital, capital employed or assets; one or more operating ratios; profit or operating income, including on an after tax basis; borrowing levels, leverage ratios or credit rating; margins; market share; capital expenditures; economic value added; cash flow, free cash flow or free cash flow conversion; stock price; stockholder return; sales of particular products or services; customer acquisition or retention; acquisitions and divestitures (in whole or in part);

 

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joint ventures and strategic alliances; spin-offs, split-ups and the like; reorganizations; or recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings.  A Performance Criterion and any targets with respect thereto determined by the Administrator need not be based upon an increase, a positive or improved result or avoidance of loss.  To the extent consistent with the requirements for satisfying the performance-based compensation exception under Section 162(m), the Administrator may provide in the case of any Award intended to qualify for such exception that one or more of the Performance Criteria applicable to such Award will be adjusted in an objectively determinable manner to reflect events (for example, the impact of charges for restructurings, discontinued operations, mergers, acquisitions, and other unusual or infrequently occurring items, and the cumulative effects of tax or accounting changes, each as defined by U.S. generally accepted accounting principles) occurring during the performance period that affect the applicable Performance Criterion or Criteria.

 

“Plan”:  Performance Health Holdings Corp. 2016 Omnibus Incentive Plan as from time to time amended and in effect.

 

“Restricted Stock”:  Stock subject to restrictions requiring that it be redelivered or offered for sale to the Company if specified conditions are not satisfied.

 

“Restricted Stock Unit”:  A Stock Unit that is, or as to which the delivery of Stock or cash in lieu of Stock is, subject to the satisfaction of specified performance or other vesting conditions.

 

“SAR”:  A right entitling the holder upon exercise to receive an amount (payable in cash or in shares of Stock of equivalent value) equal to the excess of the fair market value of the shares of Stock subject to the right over the base value from which appreciation under the SAR is to be measured.

 

“Section 409A”:  Section 409A of the Code.

 

“Section 422”:  Section 422 of the Code.

 

“Section 162(m)”:  Section 162(m) of the Code.

 

“Stock”:  Common stock of the Company.

 

“Stock Option”:  An option entitling the holder to acquire shares of Stock upon payment of the exercise price.

 

“Stock Unit”:  An unfunded and unsecured promise, denominated in shares of Stock, to deliver Stock or cash measured by the value of Stock in the future.

 

“Stockholders Agreement”:  the Stockholders Agreement dated as of October 11, 2012, among the Company and certain stockholders and the other parties thereto, as amended or modified from time to time.

 

“Unrestricted Stock”:  Stock not subject to any restrictions under the terms of the Award.

 

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