NORTHWESTERN
CORPORATION
2005 LONG-TERM INCENTIVE
PLAN
_______________________________
Effective March 10,
2005
_______________________________
Amended October 31,
2007
_______________________________
As approved by the Board of
Directors
on October 31, 2007
NORTHWESTERN
CORPORATION
AMENDED AND
RESTATED
2005 LONG-TERM INCENTIVE
PLAN
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1.
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Establishment,
Purpose, and Types of Awards
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NorthWestern Corporation (the “Company”) previously
established this equity-based incentive compensation plan to be
known as the “NorthWestern Corporation 2005 Long-Term
Incentive Plan” (hereinafter referred to as the
“Plan”), in order to provide incentives and awards to
select Employees, Directors and Advisors of the Company and its
Affiliates. This plan was developed in accordance with the
“New Incentive Plan” provided for in the Second Amended
and Restated Plan of Reorganization (“POR”) and
bankruptcy court order confirming the POR (“Order”)
and, as such, does not require shareholder approval. This amends
and restates the Plan effective October 31, 2007.
The Plan permits the granting of the following types of awards
(“Awards”) according to the Sections of the Plan listed
here:
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Section 6
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Options
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Section 7
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Share Appreciation
Rights
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Section 8
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Restricted and
Unrestricted Share Awards
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Section 9
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Deferred Share
Units
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Section 10
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Performance Awards
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The Plan is not intended to affect and shall not affect any stock
options, equity-based compensation, or other benefits that the
Company or its Affiliates may have provided, or may separately
provide in the future pursuant to any agreement, plan, or program
that is independent of this Plan.
Terms in the Plan that begin with an initial capital letter have
the defined meaning set forth in Appendix A , unless
defined elsewhere in this Plan or the context of their use clearly
indicates a different meaning.
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3.
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Shares Subject to
the Plan
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Subject to the provisions of Section 13 of the Plan, the number of
Shares that the Company may issue for all Awards is the number of
shares approved by the Committee to fund the Plan as set forth by
approval date on Schedule 1. For all Awards, the Shares issued
pursuant to the Plan shall be issued and outstanding Shares.
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SCHEDULE 1
Pursuant to Section 3 of the Plan, this Schedule 1 provides the
number of restricted shares that the Human Resources Committee has
approved by resolution to fund the Plan.
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Number of Shares
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Resolution
Date
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700,000
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March 9,
2005
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600,000
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October 31, 2007
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Shares that are subject to an Award that for any reason expires, is
forfeited, is cancelled, or becomes unexercisable, and Shares that
are for any other reason not paid or delivered under the Plan shall
again, except to the extent prohibited by Applicable Law, be
available for subsequent Awards under the Plan. In addition, any
Shares that the Company retains from otherwise delivering pursuant
to an Award either (i) as payment of the exercise price of an
Award, or (ii) in order to satisfy the withholding or employment
taxes due upon the grant, exercise, vesting, or distribution of an
Award shall also be available for subsequent Awards under the Plan.
Notwithstanding the foregoing, but subject to adjustments pursuant
to Section 13 below, the number of Shares that are available for
Incentive Share Options (“ISO”) Awards shall be
determined, to the extent required under applicable tax laws, by
reducing the number of Shares designated in the preceding paragraph
by the number of Shares granted pursuant to Awards (whether or not
Shares are issued pursuant to such Awards); provided that any
Shares that are either purchased under the Plan and forfeited back
to the Plan, or surrendered in payment of the Exercise Price for an
Award shall be available for issuance pursuant to ISO Awards.
(a)
General . The Committee shall administer the Plan in
accordance with its terms, provided that the Board may act in lieu
of the Committee on any matter. The Committee shall hold meetings
at such times and places as it may determine and shall make such
rules and regulations for the conduct of its business as it deems
advisable. In the absence of a duly appointed Committee or if the
Board otherwise chooses to act in lieu of the Committee, the Board
shall function as the Committee for all purposes of the Plan.
(b)
Committee Composition . The Committee shall initially
consist of the Human Resources Committee of the Board of Directors.
If and to the extent permitted by Applicable Law, the Committee may
authorize one or more Reporting Persons (or other officers) to make
Awards to Eligible Persons who are not Reporting Persons (or other
officers whom the Committee has specifically authorized to make
Awards). The Board may at any time appoint additional members to
the Committee, remove and replace members of the Committee with or
without Cause, and fill vacancies on the Committee however
caused.
(c)
Powers of the Committee. Subject to the provisions of the
Plan, the Committee shall have the authority, in its sole
discretion:
(i) to
determine Eligible Persons to whom Awards shall be granted from
time to time and the number of Shares, units, or SARs to be covered
by each Award;
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(ii) to
determine, from time to time, the Fair Market Value of Shares;
(iii) to
determine, and to set forth in Award Agreements, the terms and
conditions of all Awards, including any applicable exercise or
purchase price, the installments and conditions under which an
Award shall become vested (which may be based on performance),
terminated, expired, cancelled, or replaced, and the circumstances
for vesting acceleration or waiver of forfeiture restrictions, and
other restrictions and limitations;
(iv) to
approve the forms of Award Agreements and all other documents,
notices and certificates in connection therewith which need not be
identical either as to type of Award or among Participants;
(v) to
construe and interpret the terms of the Plan and any Award
Agreement, to determine the meaning of their terms, and to
prescribe, amend, and rescind rules and procedures relating to the
Plan and its administration; and
(vi) in
order to fulfill the purposes of the Plan and without amending the
Plan, modify, cancel, or waive the Company’s rights with
respect to any Awards, to adjust or to modify Award Agreements for
changes in Applicable Law, and to recognize differences in foreign
law, tax policies, or customs; and
(vii) to make all
other interpretations and to take all other actions that the
Committee may consider necessary or advisable to administer the
Plan or to effectuate its purposes.
Subject to Applicable Law and the restrictions set forth in the
Plan, the Committee may delegate administrative functions to
individuals who are Reporting Persons, officers, or Employees of
the Company or its Affiliates.
(d)
Deference to Committee Determinations. The Committee shall
have the discretion to interpret or construe ambiguous, unclear, or
implied (but omitted) terms in any fashion it deems to be
appropriate in its sole discretion, and to make any findings of
fact needed in the administration of the Plan or Award Agreements.
The Committee’s prior exercise of its discretionary authority
shall not obligate it to exercise its authority in a like fashion
thereafter. The Committee’s interpretation and construction
of any provision of the Plan, or of any Award or Award Agreement,
shall be final, binding, and conclusive. The validity of any such
interpretation, construction, decision or finding of fact shall not
be given de novo review if challenged in court, by arbitration, or
in any other forum, and shall be upheld unless clearly arbitrary or
capricious.
(e)
No Liability; Indemnification. Neither the Board nor any
Committee member, nor any Person acting at the direction of the
Board or the Committee, shall be liable for any act, omission,
interpretation, construction or determination made in good faith
with respect to the Plan, any Award or any Award Agreement. The
Company and its Affiliates shall pay or reimburse any member of the
Committee, as well as any Director, Employee, or Advisor who takes
action in connection with the Plan, for all expenses incurred with
respect to the Plan, and to the full extent allowable under
Applicable Law shall indemnify each and every one of them for any
claims, liabilities, and costs (including reasonable
attorney’s fees) arising out of their good faith performance
of duties under the Plan. The Company and its Affiliates may obtain
liability insurance for this purpose.
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(f)
Installments . The right to a series of installment payments
upon the distribution of an amount deferred pursuant to the Plan
shall be treated as a right to a series of separate payments.
(g)
Compliance with Code Section 409A . The provisions of the
Plan dealing with amounts subject to Code Section 409A shall be
interpreted and administered in accordance with Section 409A and
the applicable guidance issued by the Department of the Treasury
with respect to the application of Section 409A.
Notwithstanding any provision of the Plan to the contrary, no
payment subject to Code Section 409A, payable on account of a break
in Continuous Service shall be made to a Participant who is a
specified employee (within the meaning of Code Section 409A and the
applicable guidance issued by the Department of the Treasury with
respect to the application of Section 409A), as of the date of such
Participant’s break in Continuous Service, within the
six-month period following such Participant’s break in
Continuous Service. Amounts to which such Participant would
otherwise be entitled under the Plan during the first six months
following the break in Continuous Service will be accumulated and
paid on the first day of the seventh month following the
Participant’s break in Continuous Service.
(a)
General Rule . The Committee may grant all Awards other than
ISOs to any Eligible Person. The Committee may grant ISOs only to
Employees (including officers who are Employees) of the Company or
an Affiliate that is a “parent corporation” or
“subsidiary corporation” within the meaning of Section
424 of the Code. A Participant who has been granted an Award may be
granted an additional Award or Awards if the Committee shall so
determine, if such person is otherwise an Eligible Person and if
otherwise in accordance with the terms of the Plan.
(b)
Grant of Awards . Subject to the express provisions of the
Plan, the Committee shall determine from the class of Eligible
Persons those individuals to whom Awards under the Plan may be
granted, the number of Shares subject to each Award, the price (if
any) to be paid for the Shares or the Award and, in the case of
Performance Awards, in addition to the matters addressed in Section
10 below, the specific objectives, goals and performance criteria
that further define the Performance Award. Each Award shall be
evidenced by an Award Agreement signed by the Company and, if
required by the Committee, by the Participant. The Award Agreement
shall set forth the material terms and conditions of the Award
established by the Committee.
(c)
Limits on Awards . During the term of the Plan, no
Participant may receive Options and SARs that relate to more than
200,000 Shares. The Committee will adjust these limitations
pursuant to Section 13 below.
(d)
Replacement Awards . Subject to Applicable Laws (including
any associated Shareholder approval requirements), the Committee
may, in its sole discretion and upon such terms as it deems
appropriate, require as a condition of the grant of an Award to a
Participant that the Participant surrender for cancellation some or
all of the Awards that have previously been granted to the
Participant under this Plan or otherwise. An Award that is
conditioned upon such surrender may or may not be the same type of
Award, may cover the same (or a lesser or greater) number of Shares
as such surrendered Award, may have other terms that are determined
without regard to the terms or conditions of such surrendered
Award, and may contain any other terms that the
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Committee deems appropriate. In the case of Options, these other
terms may not involve an Exercise Price that is lower than the
Exercise Price of the surrendered Option unless the Company’s
shareholders approve the grant itself or the program under which
the grant is made pursuant to the Plan.
(a)
Types; Documentation . The Committee may in its
discretion grant ISOs to any Employee and Non-ISOs to any Eligible
Person, and shall evidence any such grants in an Award Agreement
that is delivered to the Participant. Each Option shall be
designated in the Award Agreement as an ISO or a Non-ISO, and the
same Award Agreement may grant both types of Options. At the sole
discretion of the Committee, any Option may be exercisable, in
whole or in part, immediately upon the grant thereof, or only after
the occurrence of a specified event, or only in installments, which
installments may vary. Options granted under the Plan may contain
such terms and provisions not inconsistent with the Plan that the
Committee shall deem advisable in its sole and absolute
discretion.
(b)
ISO $100,000 Limitation. To the extent that the aggregate
Fair Market Value of Shares with respect to which Options
designated as ISOs first become exercisable by a Participant in any
calendar year (under this Plan and any other plan of the Company or
any Affiliate) exceeds $100,000, such excess Options shall be
treated as Non-ISOs. For purposes of determining whether the
$100,000 limit is exceeded, the Fair Market Value of the Shares
subject to an ISO shall be determined as of the Grant Date. In
reducing the number of Options treated as ISOs to meet the $100,000
limit, the most recently granted Options shall be reduced first. In
the event that Section 422 of the Code is amended to alter the
limitation set forth therein, the limitation of this Section 6(b)
shall be automatically adjusted accordingly.
(c)
Term of Options . Each Award Agreement shall specify a term
at the end of which the Option automatically expires, subject to
earlier termination provisions contained in Section 6(h) hereof;
provided, that, the term of any Option may not exceed ten years
from the Grant Date. In the case of an ISO granted to an Employee
who is a Ten Percent Holder on the Grant Date, the term of the ISO
shall not exceed five years from the Grant Date.
(d)
Exercise Price. The exercise price of an Option shall be
determined by the Committee in its discretion and shall be set
forth in the Award Agreement, provided that (i) if an ISO is
granted to an Employee who on the Grant Date is a Ten Percent
Holder, the per Share exercise price shall not be less than 110% of
the Fair Market Value per Share on the Grant Date, and (ii) for all
other Options, such per Share exercise price shall not be less than
100% of the Fair Market Value per Share on the Grant Date.
(e)
Exercise of Option . The Committee shall in its sole
discretion determine the times, circumstances, and conditions under
which an Option shall be exercisable, and shall set them forth in
the Award Agreement. The Committee shall have the discretion to
determine whether and to what extent the vesting of Options shall
be tolled during any unpaid leave of absence; provided, however,
that in the absence of such determination, vesting of Options shall
be tolled during any such leave approved by the Company.
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(f)
Minimum Exercise Requirements . An Option may not be
exercised for a fraction of a Share. The Committee may require in
an Award Agreement that an Option be exercised as to a minimum
number of Shares, provided that such requirement shall not prevent
a Participant from purchasing the full number of Shares as to which
the Option is then exercisable.
(g)
Methods of Exercise. Prior to its expiration pursuant to the
terms of the applicable Award Agreement, and subject to the times,
circumstances and conditions for exercise contained with the
applicable Award Agreement, each Option may be exercised, in whole
or in part (provided that the Company shall not be required to
issue fractional shares), by delivery of written notice of exercise
to the secretary of the Company accompanied by the full exercise
price of the Shares being purchased. In the case of an ISO, the
Committee shall determine the acceptable methods of payment on the
Grant Date and it shall be included in the applicable Award
Agreement. The methods of payment that the Committee may in its
discretion accept or commit to accept in an Award Agreement
include:
(i) cash
or check payable to the Company (in U.S. dollars);
(ii) other
Shares that (A) are owned by the Participant who is purchasing
Shares pursuant to an Option, (B) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the
Shares as to which the Option is being exercised, (C) were not
acquired by such Participant pursuant to the exercise of an Option,
unless such Shares have been owned by such Participant for at least
six months or such other period as the Committee may determine, (D)
are all, at the time of such surrender, free and clear of any and
all claims, pledges, liens and encumbrances, or any restrictions
which would in any manner restrict the transfer of such shares to
or by the Company (other than such restrictions as may have existed
prior to an issuance of such Shares by the Company to such
Participant), and (E) are duly endorsed for transfer to the
Company;
(iii) a
cashless exercise program that the Committee may approve, from time
to time in its discretion, pursuant to which a Participant may
concurrently provide irrevocable instructions (A) to such
Participant’s broker or dealer to effect the immediate sale
of the purchased Shares and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to
cover the exercise price of the Option plus all applicable taxes
required to be withheld by the Company by reason of such exercise,
and (B) to the Company to deliver the certificates for the
purchased Shares directly to such broker or dealer in order to
complete the sale; or
(iv) any
combination of the foregoing methods of payment.
The Company shall not be required to deliver Shares pursuant to the
exercise of an Option until payment of the full exercise price
therefore is received by the Company.
(h)
Termination of Continuous Service . The Committee may
establish and set forth in the applicable Award Agreement the terms
and conditions on which an Option shall remain exercisable, if at
all, following termination of a Participant’s Continuous
Service. Subject to Section 15 hereof, the Committee may waive or
modify these provisions at any time. To the extent that a
Participant is not entitled to exercise an Option at the date of
his or her termination of Continuous Service, or if the Participant
(or other person entitled to exercise the Option) does not exercise
the Option to the
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extent so entitled within the time specified in the Award Agreement
or below in sub-paragraphs (i) through (v), as applicable, the
Option shall terminate and the Shares underlying the unexercised
portion of the Option shall revert to the Plan and become available
for future Awards. In no event may any Option be exercised after
the expiration of the Option term as set forth in the Award
Agreement.
The following provisions shall apply to the extent an Award
Agreement does not specify the terms and conditions upon which an
Option shall terminate when there is a termination of a
Participant’s Continuous Service:
(i)
Termination other than Upon Disability or Death or for Cause
. In the event of termination of a Participant’s Continuous
Service (other than as a result of Participant’s death,
disability, retirement or termination for Cause), the Participant
shall have the right to exercise an Option at any time within 90
days following such termination to the extent the Participant was
entitled to exercise such Option at the date of such
termination.
(ii)
Disability . In the event of termination of a
Participant’s Continuous Service as a result of his or her
being Disabled, the Participant shall have the right to exercise an
Option at any time within one year following such termination to
the extent the Participant was entitled to exercise such Option at
the date of such termination.
(iii)
Retirement . In the event of termination of a
Participant’s Continuous Service as a result of
Participant’s retirement, the Participant shall have the
right to exercise the Option at any time within six months
following such termination to the extent the Participant was
entitled to exercise such Option at the date of such
termination.
(iv)
Death . In the event of the death of a Participant during
the period of Continuous Service since the Grant Date of an Option,
or within 30 days following termination of the Participant’s
Continuous Service, the Option may be exercised, at any time within
one year following the date of the Participant’s death, by
the Participant’s estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to
the extent the right to exercise the Option had vested at the date
of death or, if earlier, the date the Participant’s
Continuous Service terminated.
(v)
Cause . If the Committee determines that a
Participant’s Continuous Service terminated due to Cause, the
Participant shall immediately forfeit the right to exercise any
Option, and it shall be considered immediately null and void.
(i)
Reverse Vesting. The Committee in its sole and absolute
discretion may allow a Participant to exercise unvested Options, in
which case the Shares then issued shall be Restricted Shares having
analogous vesting restrictions to the unvested Options.
(j)
Buyout Provisions . The Committee may at any time offer to
buy out an Option, in exchange for a payment in cash or Shares,
based on such terms and conditions as the Committee shall establish
and communicate to the Participant at the time that such offer is
made. In addition, but subject to any Shareholder approval
requirement of applicable law, if the Fair Market Value for Shares
subject to an Option is more than 33% below their exercise price
for more than 30 consecutive business days, the Committee may
unilaterally terminate and cancel the Option either
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(i) by paying the Participant, in cash or Shares, an amount not
less than the Black-Scholes value of the vested portion of the
Option, or (ii) subject to the approval of the shareholders of the
Company, by irrevocably committing to grant a new Option, on a
designated date more than six months after such termination and
cancellation of such Option (but only if the Participant’s
Continuous Service has not terminated prior to such designated
date), on substantially the same terms as the cancelled Option,
provided that the per Share exercise price for the new Option shall
equal the per Share Fair Market Value of a Share on the date the
new grant occurs.
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7.
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Share Appreciate
Rights (SARs)
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(a)
Grants . The Committee may in its discretion grant Share
Appreciation Rights to any Eligible Person, in any of the following
forms:
(i)
SARs Related to Options . The Committee may grant SARs
either concurrently with the grant of an Option or with respect to
an outstanding Option, in which case the SAR shall extend to all or
a portion of the Shares covered by the related Option. An SAR shall
entitle the Participant who holds the related Option, upon exercise
of the SAR and surrender of the related Option, or portion thereof,
to the extent the SAR and related Option each were previously
unexercised, to receive payment of an amount determined pursuant to
Section 7(e) below. Any SAR granted in connection with an ISO will
contain such terms as may be required to comply with the provisions
of Section 422 of the Code and the regulations promulgated
thereunder.
(ii)
SARs Independent of Options . The Committee may grant SARs
which are independent of any Option subject to such conditions as
the Committee may in its discretion determine, which conditions
will be set forth in the applicable Award Agreement.
(iii)
Limited SARs . The Committee may grant SARs exercisable only
upon or in respect of a Change in Control or any other specified
event, and such limited SARs may relate to or operate in tandem or
combination with or substitution for Options or other SARs, or on a
stand-alone basis, and may be payable in cash or Shares based on
the spread between the exercise price of the SAR, and (A) a price
based upon or equal to the Fair Market Value of the Shares during a
specified period, at a specified time within a specified period
before, after or including the date of such event, or (B) a price
related to consideration payable to the Company’s
shareholders generally in connection with the event.
(b)
Exercise Price . The per Share exercise price of an SAR
shall be determined in the sole discretion of the Committee, shall
be set forth in the applicable Award Agreement, and shall be no
less than 100% of the Fair Market Value of one Share. The exercise
price of an SAR related to an Option shall be the same as the
exercise price of the related Option. The exercise price of an SAR
shall be subject to the special rules on pricing contained in
Sections 6(d) and 6(j) hereof.
(c)
Exercise of SARs . Unless the Award Agreement otherwise
provides, an SAR related to an Option will be exercisable at such
time or times, and to the extent, that the related Option will be
exercisable; provided that the Award Agreement shall not, without
the approval of the shareholders of the Company, provide for a
vesting period for the exercise of the SAR that is more favorable
to the Participant than the exercise period for the related Option.
An SAR may not have a term exceeding 10 years from its Grant Date.
An SAR granted independently of any other Award
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will be exercisable pursuant to the terms of the Award Agreement,
but shall not, without the approval of the shareholders of the
Company, provide for a vesting period for the exercise of the SAR
that is more favorable to the Participant than the exercise period
for the related Option. Whether an SAR is related to an Option or
is granted independently, the SAR may only be exercised when the
Fair Market Value of the Shares underlying the SAR exceeds the
exercise price of the SAR.
(d)
Effect on Available Shares . To the extent that an SAR is
exercised, only the actual number of delivered Shares (if any) will
be charged against the maximum number of Shares that may be
delivered pursuant to Awards under this Plan. The number of Shares
subject to the SAR and the related Option of the Participant will,
however, be reduced by the number of underlying Shares as to which
the exercise relates, unless the Award Agreement otherwise
provides.
(e)
Payment. Upon exercise of an SAR related to an Option and
the attendant surrender of an exercisable portion of any related
Award, the Participant will be entitled to receive payment of an
amount determined by multiplying –
(i) the
excess of the Fair Market Value of a Share on the date of exercise
of the SAR over the exercise price per Share of the SAR, by
(ii) the
number of Shares with respect to which the SAR has been
exercised.
Notwithstanding the foregoing, an SAR granted independently of an
Option (i) may limit the amount payable to the Participant to a
percentage, specified in the Award Agreement but not exceeding
one-hundred percent (100%), of the amount determined pursuant to
the preceding sentence, and (ii) shall be subject to any payment or
other restrictions that the Committee may at any time impose in its
discretion, including restrictions intended to conform the SARs
with Section 409A of the Code.
(f)
Form and Terms of Payment . Subject to Applicable Law, the
Committee may, in its sole discretion, settle the amount determined
under Section 7(e) above solely in cash, solely in Shares (valued
at their Fair Market Value on the date of exercise of the SAR), or
partly in cash and partly in Shares. In any event, cash shall be
paid in lieu of fractional Shares. Absent a contrary determination
by the Committee, all SARs shall be settled in cash as soon as
practicable after exercise. Notwithstanding the foregoing, the
Committee may, in an Award Agreement, determine the maximum amount
of cash or Shares or combination thereof that may be delivered upon
exercise of an SAR.
(g)
Termination of Employment or Consulting Relationship
. The Committee shall establish and set forth in the
applicable Award Agreement the terms and conditions on which an SAR
shall remain exercisable, if at all, following termination of a
Participant’s Continuous Service. The provisions of Section
6(h) above shall apply to the extent an Award Agreement does not
specify the terms and conditions upon which an SAR shall terminate
when there is a termination of a Participant’s Continuous
Service.
(h)
Buy-out . The Committee has the same discretion to buy-out
SARs as it has to take such actions pursuant to Section 6(j) above
with respect to Options.
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8.
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Restricted
Shares, Restricted Share Units and Unrestricted Shares
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(a)
Grants. The Committee may in its discretion grant restricted
shares (“Restricted Shares”) to any Eligible Person and
shall evidence such grant in an Award Agreement that is delivered
to the Participant and that sets forth the number of Restricted
Shares, the purchase price for such Restricted Shares (if any) and
the terms upon which the Restricted Shares may become vested. In
addition, the Company may in its discretion grant the right to
receive Shares after certain vesting requirements are met
(“Restricted Share Units”) to any Eligible Person and
shall evidence such grant in an Award Agreement that is delivered
to the Participant which sets forth the number of Shares (or
formula, that may be based on future performance or conditions, for
determining the number of Shares) that the Participant shall be
entitled to receive upon vesting and the terms upon which the
Shares subject to a Restricted Share Unit may become vested. The
Committee may condition any Award of Restricted Shares or
Restricted Share Units to a Participant on receiving from the
Participant such further assurances and documents as the Committee
may require to enforce the restrictions. In addition, the Committee
may grant Awards hereunder in the form of unrestricted shares
(“Unrestricted Shares”), which shall vest in full upon
the date of grant or such other date as the Committee may determine
or which the Committee may issue pursuant to any program under
which one or more Eligible Persons (selected by the Committee in
its discretion) elect to receive Unrestricted Shares in lieu of
cash bonuses that would otherwise be paid.
(b)
Vesting and Forfeiture . The Committee shall set forth in an
Award Agreement granting Restricted Shares or Restricted Share
Units, the terms and conditions under which the Participant’s
interest in the Restricted Shares or the Shares subject to
Restricted Share Units will become vested and non-forfeitable.
Except as set forth in the applicable Award Agreement or the
Committee otherwise determines, upon termination of a
Participant’s Continuous Service for any other reason, the
Participant shall forfeit his or her Restricted Shares and
Restricted Share Units; provided that if a Participant purchases
the Restricted Shares and forfeits them for any reason, the Company
shall return the purchase price to the Participant only if and to
the extent set forth in an Award Agreement.
(c)
Issuance of Restricted Shares Prior to Vesting . The Company
shall issue stock certificates that evidence Restricted Shares
pending the lapse of applicable restrictions, and that bear a
legend making appropriate reference to such restrictions. Except as
set forth in the applicable Award Agreement or the Committee
otherwise determines, the Company or a third party that the Company
designates shall hold such Restricted Shares and any dividends that
accrue with respect to Restricted Shares pursuant to Section 8(e)
below.
(d)
Issuance of Shares upon Vesting . As soon as
practicable after vesting of a Participant’s Restricted
Shares (or Shares underlying Restricted Share Units) and the
Participant’s satisfaction of applicable tax withholding
requirements, the Company shall release to the Participant, free
from the vesting restrictions, one Share for each vested Restricted
Share (or issue one Share free of the vesting restriction for each
vested Restricted Share Unit), unless an Award Agreement provides
otherwise. No fractional shares shall be distributed, and cash
shall be paid in lieu thereof.
(e)
Dividends Payable on Vesting . Whenever Shares are released
to a Participant or duly-authorized transferee pursuant to Section
8(d) above as a result of the vesting of Restricted Shares or the
Shares underlying Restricted Share Units are issued to a
Participant pursuant to Section 8(d) above, such Participant or
duly-authorized transferee shall also be entitled to receive
(unless
11
otherwise provided in the Award Agreement), with respect to each
Share released or issued, an amount equal to any cash dividends
(plus, in the discretion of the Committee, simple interest at a
rate as the Committee may determine) and a number of Shares equal
to any stock dividends, which were declared and paid to the holders
of Shares between the Grant Date and the date such Share is
released from the vesting restrictions in the case of Restricted
Shares or issued in the case of Restricted Share Units.
(f)
Section 83(b) Elections . A Participant may make an election
under Section 83(b) of the Code (the “Section 83(b)
Election”) with respect to Restricted Shares. If a
Participant who has received Restricted Share Units provides the
Committee with written notice of his or her intention to make a
Section 83(b) Election with respect to the Shares subject to such
Restricted Share Units, the Committee may in its discretion convert
the Participant’s Restricted Share Units into Restricted
Shares, on a one-for-one basis, in full satisfaction of the
Participant’s Restricted Share Unit Award. The Participant
may then make a Section 83(b) Election with respect to those
Restricted Shares. Shares with respect to which a Participant makes
a Section 83(b) Election shall not be eligible for deferral
pursuant to Section 9 below.
(g)
Deferral Elections . The Committee may permit a Participant
who is a member of a select group of management or highly
compensated employees (within the meaning of Title I of ERISA) to
irrevocably elect to defer all or a percentage of the Shares that
would otherwise be transferred to the Participant upon the vesting
of such Award in accordance with this Section 8(g). Except as
otherwise provided in this Section 8(g), an Award of Restricted
Shares or Restricted Share Units awarded with respect to services
to be performed by a Participant during a calendar year may be
deferred at the election of the Participant only if the election to
defer such Award is made and becomes irrevocable not later than the
last day of the calendar year immediately preceding the calendar
year during which services are to be performed.
In the case of the first year in which an Eligible Person becomes
eligible to participate in the Plan (as defined in section
1.409A-1(c) of the final Treasury Regulations or the corresponding
provision in subsequent guidance issued by the Department of the
Treasury to include any other plan that would be considered
together with this Plan as the same plan), as permitted by the
Committee, the Eligible Person may make an initial deferral
election within thirty (30) days after the date the Eligible Person
becomes eligible to participate in the Plan, with respect to an
Award of Restricted Shares or Restricted Share Units awarded with
respect to services to be performed by the Eligible Person
subsequent to the election.
In the case of an Award of Restricted Shares or Restricted Share
Units that is subject to a vesting condition requiring the
Participant to continue to provide services for a period of at
least 12 months from the date of the Award, as permitted by the
Committee, the Participant may make a deferral election within 30
days of receiving the Award provided that the election is made at
least 12 months in advance of the date that the Award could first
become vested (disregarding vesting on death or disability).
Any election to defer Awards pursuant to this Section 8(g) shall be
on a form provided by and acceptable to the Committee. If a
Participant makes an election to defer under this Section 8(g), the
Shares subject to the election, and any associated dividends and
interest, shall be credited to an account established pursuant to
Section 9 hereof on the date such Shares would otherwise have been
released or issued to the Participant pursuant to Section 8(d)
above.
12
(a)
Elections to Defer. The Committee may permit any Eligible
Person who is a Director, Advisor or member of a select group of
management or highly compensated employees (within the meaning of
Title I of ERISA) to irrevocably elect, on a form provided by and
acceptable to the Committee (the “Election Form”), to
forego the receipt of cash or other compensation (including the
Shares deliverable pursuant to any Award other than Restricted
Shares for which a Section 83(b) Election has been made), and in
lieu thereof to have the Company credit to an internal Plan account
(the “Account”) a number of deferred share units
(“Deferred Share Units”) having a Fair Market Value
equal to the Shares and other compensation deferred. These credits
will be made at the end of each calendar month during which
compensation is deferred. Each Election Form shall take effect on
the first day of the next calendar year (or on the first day of the
next calendar month in the case of an initial election by a
Participant who is first eligible to defer hereunder) after its
delivery to the Company, subject to Section 8(g) regarding deferral
of Restricted Shares and Restricted Share Units and to Section
10(e) regarding deferral of Performance Awards, unless the Company
sends the Participant a written notice explaining why the Election
Form is invalid within five business days after the Company
receives it. Notwithstanding the foregoing sentence: (i) Election
Forms shall be ineffective with respect to any compensation that a
Participant earns before the date on which the Company receives the
Election Form, and (ii) the Committee may unilaterally make awards
in the form of Deferred Share Units, regardless of whether or not
the Participant foregoes other compensation.
(b)
Vesting . Unless an Award Agreement expressly provides
otherwise, each Participant shall be 100% vested at all times in
any Shares subject to Deferred Share Units.
(c)
Issuances of Shares . The Company shall provide a
Participant with one Share for each Deferred Share Unit in five
substantially equal annual installments that shall begin within 90
days of the date on which the Participant’s Continuous
Service terminates and are distributable on each of the first four
anniversaries thereof, unless –
(i) the
Participant has properly elected a different form of distribution,
on a form approved by the Committee, that permits the Participant
to select any combination of a lump sum and annual installments
that are completed within ten years following termination of the
Participant’s Continuous Service, and
(ii) the
Company received the Participant’s distribution election form
at the time the Participant elects to defer the receipt of cash or
other compensation pursuant to Section 9(a), provided that such
election may be changed through any subsequent election that (A) is
delivered to the Administrator at least twelve months before the
date on which distributions are otherwise scheduled to commence
pursuant to the Participant’s election and does not take
effect for at least twelve months, and (B) defers the commencement
of distributions by at least five years from the originally
scheduled commencement date.
Fractional shares shall not be issued, and instead shall be paid
out in cash.
(d)
Crediting of Dividends . Whenever Shares are issued to a
Participant pursuant to Section 9(c) above, such Participant shall
also be entitled to receive, with respect to each Share issued, a
cash amount equal to any cash dividends (plus simple interest at a
rate of five percent per annum, or such
13
other reasonable rate as the Committee may determine), and a number
of Shares equal to any stock dividends which were declared and paid
to the holders of Shares between the Grant Date and the date such
Share is issued.
(e)
Hardship Distributions from Accounts. In the event a
Participant suffers a Hardship, the Participant may apply to the
Committee for an immediate distribution of all or a portion of the
Participant’s Account. The amount of any distribution
hereunder shall be limited to the amount necessary to relieve the
Participant’s Hardship, plus amounts necessary to pay taxes
reasonably anticipated as a result of the distribution, after
taking into account the extent to which the Hardship is or may be
relieved through reimbursement or compensation by insurance or
otherwise, by liquidation of the Participant’s assets (to the
extent the liquidation of such assets would not itself cause severe
financial hardship), or by cessation of the Participant’s
deferrals under the Plan. The Committee shall determine whether a
Participant has a qualifying Hardship and the amount which
qualifies for distribution, if any. The Committee may require
evidence of the purpose and amount of the need, and may establish
such application or other procedures as it deems appropriate.
Notwithstanding the foregoing, a financial need shall not
constitute a Hardship unless it is for at least $100,000 for all
Participants (or the entire vested principal amount of the
Participant’s Accounts, if less). Hardship ”
means an unforeseeable emergency resulting in financial hardship of
the Participant or beneficiary due to an illness or accident of the
Participant or beneficiary, a
