The Audit Committee of the Board of Directors follows procedures designed to ensure that all audit and permitted non-audit services provided by the Company's independent registered public accounting firm are pre-approved by the Audit Committee. All of the services described above for 20192020 and 20182019 were pre-approved by the Audit Committee. The Audit Committee has discussed these matters with the Company's independent registered public accounting firm. The Audit Committee also monitors the Company's compliance with restrictions put in place to continue to ensure that the services provided by the Company's independent registered public accounting firm are consistent with the maintenance of that firm's independence in the conduct of its auditing functions.
Ratification of the Audit Committee's selection of Deloitte & Touche LLP as the Company's independent registered public accounting firm for the current fiscal year will require the affirmative vote of the holders of a
majority of the shares of Common Stock represented at the meeting and voted on such proposal. Unless otherwise specified therein, shares represented by the accompanying form of proxy will be voted at the meeting in favor of such ratification. The Board recommends that shareholders vote “FOR” such ratification.
Shareholders of record who do not submit proposals for inclusion in the proxy statement but who intend to submit a proposal at the 20212022 Annual Meeting, and shareholders of record who intend to submit nominations for directors at the meeting, must provide advance written notice. Such notice must be delivered to the Company’s Secretary at the address described above (i) in the case of director nominations, not less than 60 days nor more than 90 days prior to the date of the 20212022 Annual Meeting (which the Company will announce early in 2021)2022) and (ii) in the case of other proposed business, no later than January 6, 2021.3, 2022. The written notice must satisfy certain requirements specified in the Company's By-Laws. A copy of the Company's Amended and Restated By-Laws as now in effect is available over the Internet at the SEC's website at http://www.sec.gov as Exhibit 3.4D to the Company's Report on Form 8-K filed on December 22, 2014, and may also be obtained without cost by writing to Clean Harbors, Inc., 42 Longwater Drive, Norwell, MA 02061, Attention: Executive Office.
Except for the matters set forth above, management knows of no other matter which is to be brought before the meeting, but if any other matter shall properly come before the meeting, it is the intention of the persons named in the accompanying form of proxy to vote such proxy in accordance with their judgment on such matter.
THE BOARD OF DIRECTORS HOPES THAT SHAREHOLDERS WILL ATTEND THE ANNUAL MEETING. REGARDLESS OF WHETHER YOU PLAN TO ATTEND, PLEASE AUTHORIZE YOUR PROXY TO VOTE YOUR SHARES BY TELEPHONE, VIA THE INTERNET, OR BY MAIL AS DESCRIBED IN THE E-PROXY NOTICE, PROXY CARD OR VOTING INSTRUCTIONS WHICH YOU RECEIVED.
Appendix A
CLEAN HARBORS, INC.
2020 STOCKMANAGEMENT INCENTIVE PLAN
TABLE OF CONTENTS[As Amended and Restated Effective January 1, 2022]
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1. PURPOSE | A-3 |
2. DEFINED TERMS | A-3 |
3. ELIGIBILITY | A-3 |
4. ADMINISTRATION AND DELEGATION | A-3 |
(a) Administration | A-3 |
(b) Awards to Non-Employee Directors | A-3 |
(c) Delegation to Officers | A-3 |
5. STOCK AVAILABLE FOR AWARDS | A-4 |
(a) Numbers of Shares; Share Counting | A-4 |
(b) Sub-limits | A-4 |
(c) Substitute Awards | A-4 |
6. STOCK OPTIONS | A-5 |
(a) General | A-5 |
(b) Incentive Stock Options | A-5 |
(c) Exercise Price | A-5 |
(d) Minimum Vesting Requirements | A-5 |
(e) Duration of Options | A-5 |
(f) Exercise of Option | A-6 |
(g) Payment Upon Exercise | A-6 |
(h) Prohibition of Repricing | A-6 |
(i) No Reload Options | A-6 |
(j) No Dividend Rights | A-6 |
7. STOCK APPRECIATION RIGHTS | A-6 |
(a) General | A-6 |
(b) Grants | A-6 |
(c) Exercise Price | A-7 |
(d) Duration of SARs | A-7 |
(e) Exercise SARs | A-7 |
(f) Prohibition of Repricing | A-7 |
(g) No Dividend Right | A-7 |
8. RESTRICTED STOCK; RESTRICTED STOCK UNITS | A-7 |
(a) General | A-7 |
(b) Terms and Conditions | A-8 |
(c) Additional Provisions Relating to Restricted Stock | A-8 |
(d) Additional Provisions Relating to Restricted Stock Units | A-8 |
(e) Minimum Vesting Requirements | A-8 |
9. OTHER STOCK-BASED AWARDS | A-8 |
10. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS | A-9 |
(a) Changes in Capitalization | A-9 |
(b) Reorganization Events | A-9 |
(c) Change-in-Control | A-10 |
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11. GENERAL PROVISIONS APPLICABLE TO AWARDS | A-12 |
(a) Transferability of Awards | A-12 |
(b) Documentation | A-12 |
(c) Committee Discretion | A-12 |
(d) Termination of Status; Acceleration of Vesting | A-12 |
(e) Withholding | A-12 |
(f) Amendment of Award | A-12 |
(g) Conditions on Delivery of Stock | A-13 |
(h) Performance Awards | A-13 |
(i) Forfeiture for Clause | A-14 |
(j) Dodd-Frank Clawback | A-14 |
(k) Stock Ownership and Retention Guidelines | A-15 |
12. MISCELLANEOUS | A-15 |
(a) No Right To Employment or Other Status | A-15 |
(b) No Rights As Stockholder | A-15 |
(c) No Fractional Shares | A-15 |
(d) Effective Date and Term of Plan | A-15 |
(e) Amendment of the Plan | A-15 |
(f) Provisions for Foreign Participants | A-15 |
(g) Compliance with Code Section 409A | A-15 |
(h) Expenses | A-16 |
(i) Severability | A-16 |
(j) Governing Law | A-16 |
CLEAN HARBORS, INC.
2020 STOCK INCENTIVE PLAN
The purposepurposes of this 2020 StockManagement Incentive Plan (the “Plan”“MIP”) of Clean Harbors, Inc.,are to provide a Massachusetts corporation (the “Company”), is to advance the interestsstrong financial incentive for performance of the Company’s shareholders by enhancingChief Executive Officer (the “CEO”), the Company’s ability to attract, retainother executive officers, and motivate persons who are expected to make important contributions tocertain other senior managers of the Company and its Subsidiaries by providing such persons with equity ownership opportunities and performance-based incentives that are intended to align their interests with thosemaking available for each Plan Year potential bonuses (“Annual MIP Bonuses”) payable in cash based upon objective measures of the Company’s shareholders. Except where the context otherwise requires, the term “Company” shall include anyperformance or satisfaction of the Company’s present or future “parent” and “subsidiary” corporations, as thosecertain other objective Personal Goals pre-determined for each Participant. Certain other terms used below are defined respectively, in Sections 424(e) and 424(f)Section 7 hereof.
The Compensation Committee (the “Committee”) of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgated thereunder, and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Company’s Board of Directors (the “Board”).
Certain shall be responsible for administration of the MIP and for determining the terms used throughoutand amounts of the Annual MIP Bonuses.
2.Shareholder Approval.
The MIP is subject to the approval of the shareholders of the Company in a separate vote; in addition, shareholder approval of the Performance Criteria must be renewed not less often than every five years. Approval of the MIP (and subsequent renewal of the approval of the Performance Criteria) shall require the affirmative, separate vote of the holders of a majority of the shares of common stock represented and cast on such proposal at the meeting. If the Company’s shareholders fail to approve the material Performance Criteria at least once in every five years, the MIP shall terminate. The MIP shall also terminate if so directed by the Board or by the Committee.
3.Annual MIP Bonuses.
(a) Establishment of Potential Annual MIP Bonuses. On or before the 90th day of each Plan Year (that is, before March 30 in the case of a calendar year or, in the case of a Plan Year that is less than 360 days, before the lapse of 25% of the period), the Committee shall have the respective meaningsdetermine and set forth in writing:
(i) with respect to Annual MIP Bonuses potentially payable based on achievement of Performance Criteria for such Plan Year, the Sectionsnature and level of such Performance Criteria and, where deemed appropriate by the Committee, Threshold, Maximum and any Interim Levels of Achievement and how the amount of the Plan referenced inAnnual MIP Bonuses associated with such Performance Criteria shall be determined if the Glossaryactual level of Defined Terms attached hereto.
Subjectachievement relating to the provisionssuch Criteria is between such respective Levels of the Plan, all of the Company’s employees, directors and consultants areAchievement;
(ii) with respect to SEIP Bonuses potentially eligible to receive stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards (each, an “Award”)payable under the Plan. Each person who receives an Award under the Plan is deemed a “Participant.”
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4. | Administration and Delegation |
(a)Administration. Except to the extent that the provisions of the Plan specifically reserve authority to the Board (including, without limitation, asSenior Executive Incentive Program (the “SEIP”) described in Section 4(b) with respect to Awards made to any director of3(e) below, the Company who is not an employee of the Company (a “Non-Employee Director”) or the Committee shall delegate to one or more of the Company’s officers power to grant certain Awards as described in Section 4(c), thePersonal Goals for such Plan will be administered by the Compensation Committee of the Board (the “Committee”). The Committee may be a committee or subcommittee of the Board. The Committee shall consist solely of two or more Non-Employee Directors all of whom are “outside directors” as that term is defined in Treas. Reg. §1.162-27(c)(3),Year and, all of whom are “independent” as that term is defined under the rules of the New York Stock Exchange or such other stock exchange upon which the Common Stock may then be primarily listed for trading (the “Applicable Exchange”). The Committee shall, subject to the provisions of the Plan, have authority to grant Awards, to set the conditions for vesting and payment of such Awards and determine whether such conditions at any time have been fulfilled, to approve the forms of Award agreements to be entered into with respect to individual Awards, to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan and the Awards as the Committee shall deem advisable, and to construe and interpret the terms of the Plan and the Award agreements. The Committee may also correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All decisionswhere deemed appropriate by the Committee, shalla Threshold, Maximum and any Interim Levels of Achievement for each such Personal Goal; and
(iii) the respective amounts of Annual MIP Bonuses which can potentially be made inpaid based on attainment of each such Level of Achievement, which may be expressed as a percentage of each Participant’s Base Compensation for the Committee’s sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan Year, as a fixed dollar amount, or in any Award. No director or officer acting pursuant to the authority of the Board or the Committee shall be liable for any action or determination relating to or under the Plan made in good faith.
(b)Awards to Non-Employee Directors. Subject to the provisions of the Plan, the Board shall have authority to grant Awards (other than Incentive Stock Options and Performance Awards) to Non-Employee Directors of the Company. In connection with any such Awards, the provisions of the Plan with respect to the general authority of the Committee in connection with the granting and administration of Awards shall be applicable to the Board.
(c)Delegation to Officers. To the extent permitted by applicable law, the Committee may delegate, particularly in connection with the hiring of new employees, to any one or more officers of the Company or any of its present or future subsidiaries the power to grant Awards (subject to the provisions of the Plan) and to exercise such other powers under the Planmanner as the Committee may determine provided that the amount thereof can be objectively calculated.
In no case shall the Committee determine any Performance Criteria or Personal Goal which, as of the time it is determined, is substantially certain to be achieved.
(b) Participants. Each of the CEO, the other executive officers, and other senior managers of the Company and its Subsidiaries shall be eligible to participate in the MIP, subject to selection by the CEO. At the beginning of each Plan Year, the CEO, based on advice from the Executive Staff, will select the Participants in the MIP for that Plan Year based on each such employee’s potential contribution to the performance of the Company and its Subsidiaries for that Plan Year.
(c) Performance Criteria and Personal Goals. Each of the Performance Criteria, Personal Goals and Levels of Achievement relevant thereto shall be objective and satisfy the requirements of Section 6. Except as required to satisfy the same requirements under Sections 6(c) and Section 6(d) as are applicable to Performance Criteria, Personal Goals shall not be considered Performance Criteria under the MIP.
(d) Significant Developments. To the extent that the Committee determines following the establishment of the Performance Criteria, Personal Goals and Levels of Achievement for any Plan Year that a change (either an increase or a decrease) is appropriate in order to adjust either (i) for effects of significant developments (such as a material acquisition or divestiture or change in accounting methods as determined under GAAP which affect the calculation of such Criteria, Personal Goals or Levels of Achievement and which become effective during such Plan Year), or (ii) to respond to input from the Company’s shareholders, the Committee, shall fixhave authority to make such change by setting forth the maximum numberrevised terms thereof in writing.
(e) Supplemental Executive Incentive Program (the “SEIP”). The SEIP shall be part of shares which may be subject to Awards to any Participantthis MIP and the aggregate number of shares subject to all Awards thatrequirements set forth herein. Pursuant to the SEIP, the Committee shall have authority to award to any such officer or officers may grant; and (ii) no officermember of the Executive Staff (which excludes the CEO) a SEIP Bonus (which shall be authorizedconsidered an Annual MIP Bonus) of up to grant Awardsa specified percentage of Base Compensation (or a fixed dollar amount) if such Participant meets or exceeds during a Plan Year the Personal Goals which are established by the Committee for such Participant in the same manner as the Committee shall establish Performance Criteria for potential payment of Annual MIP Bonuses to all Participants.
(f) Determination and Certification of Annual MIP Bonuses. Within 75 days following the end of each Plan Year, the Committee shall determine and certify in writing to the Board (i) whether or not each of the Performance Criteria for such Plan Year has been satisfied and, if so, at what Level of Achievement, (ii) whether or not any “executive officer”Personal Goals established for any Participant for such Plan Year have been met and, if so, the level of Achievement, and (iii) the amount, if any, of the total Annual MIP Bonus payable for such Plan Year to each of the Participants. In all cases the amount of any Annual MIP Bonus shall be determined strictly based on the achievement of one or more Performance Criteria and/or Personal Goals which are objective and pre-established by the Committee as set forth herein, provided, however, that the Committee may, if it deems it to be in the best interests of the Company, (as defined by
Rule 3b-7 underdecrease (but not increase) or eliminate the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), any “officer”amount of the Company (as definedpotential bonus from that calculated. The amount of any Annual MIP Bonus, as so certified by Rule 16a-1 under the Exchange Act), or any “covered employee” (as definedCommittee, shall be communicated in Section 162(m) of the Code or any successor provision thereto,writing to each Participant and the regulations thereunder).
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5. | Stock Available for Awards |
(a)Number of Shares; Share Counting.
(i)Authorized Number of Shares. Subjectshall be payable to adjustment under Section 10, Awards may be made under the Plan for up to 2,500,000 shares of the Company’s common stock, $0.01 par value per share (“Common Stock”). Each share of Common Stock, as it may hereafter be adjusted under Section 10, is hereafter referred to as a “Share.” Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.
(ii)Share Counting. For purposes of counting the number of Shares available for Awards under the Plansuch Participant as provided in Section 5(a)(1)3(h).
(g) Employment Requirement for Annual MIP Bonus Payments and under the sub-limitsExceptions Thereto. In order to be eligible to receive an Annual MIP Bonus for any Plan Year:
(i) Except as provided in Section 5(b)3(g)(ii), (i) all Shares covered both bypayment of an Option andAnnual Incentive Bonus to a Tandem SARParticipant for a Plan Year shall be treatedmade only if, and to the extent that, the foregoing requirements of this Section 3 have been met with respect to that Plan Year and, except as subject toset forth in Sections 3(g)(ii) and 3(i), only one Award, if the Participant has been employed by the Company for the entire Plan Year (from the first day of the Plan Year through the last day of the Plan Year).
(ii) all Shares coveredIf, under circumstances described in this Section 3(g)(ii), a Participant has been employed by an Independent SARthe Company for only part of a Plan Year, a pro-rata Annual Incentive Bonus shall be counted againstpaid to the number of Shares availableParticipant. The pro-rata Annual Incentive Bonus shall be calculated by multiplying the Annual Incentive Bonus (to the extent based on Performance Criteria as opposed to Personal Goals) which would be payable if such employment had been for the grantentire Plan Year by a fraction, the numerator of Awards;which shall be the Participant’s days of such employment during the Plan Year (except as provided however, that Independent SARs that mayin this Section 3(g)(ii)) and the denominator of which shall be settled only365. The circumstances under which such a pro-rata Annual Incentive Bonus shall become payable with respect to a Plan Year are the following:
(A) the Participant died during the Plan Year;
(B) the Participant became an employee of the Company during the Plan Year and remained so employed on the last day of the Plan Year; or
(C) the Participant was disabled (within the meaning of the Company’s long-term disability plan) during part of the Plan Year, in cashwhich event the numerator of the fraction used to calculate the pro-rata Annual Incentive Bonus shall be either the days of the Plan Year during which the Participant was actively at work or such other number (which shall not be so counted; (iii) if any Award (A) expires ormore than 365) as is terminated, surrendered or canceled without having been fully exercised or Shares potentially issuable thereunder are forfeited or repurchaseddetermined by the Company at original issue price (if any)Committee in wholeits sole discretion.
(h) Time of Payment; Voluntary Termination or Termination for Cause; Potential Clawback. Except as provided in part or (B) results inSection 3(i), any Shares not being issued (including as a result of an Independent SAR that was settleable either in cash or in Shares actually being settled in cash), the unused Shares covered by such Award shall again be available for the grant of Awards; provided, however, in the case ofAnnual Incentive Stock Options, the foregoing shall be subjectBonus to any limitations under the Code; and provided further, in the case of Independent SARs, that the full number of Shares subject to any stock-settled SAR shall be counted against the Shares available under the Plan and against the sub-limits listed in clause (ii) above regardless of the number of Shares actually used to settle such SAR upon exercise. However, (i) Shares tendered to the Company bywhich a Participant or cancelled by the Company to (A) purchase Shares upon the exercise of an Option or (B) satisfy tax withholding obligations shall not be added back to the number of Shares available for the future grant of Awards; and (ii) Shares repurchased by the Company on the open market (including, without limitation, by using cash proceeds from the exercise of Options) shall not increase the number of Shares available for future grant of Awards.
(b)Sub-limits. Subject to adjustmentbecomes entitled under this Section 10, the following sub-limits on the number of Shares subject to Awards shall apply:
(1)Per-Participant Limit. The maximum number of Shares3 with respect to which Awards maya Plan Year shall be grantedpaid in a lump sum cash payment as soon as practicable after the amount thereof is determined by the Committee, but not later than the March 15immediately following completion of the Plan Year. However, all bonuses paid to any onea Participant under the Plan shall be 250,000 per calendar year. For purposes of the foregoing limit, the combination of an Option with a Tandem SAR shall be treated as a single Award. In addition, the Fair Market Value of all Shares subject to one or more Incentive Stock Options that are first exercisable in any one calendar year may not exceed, on the date of such Award(s) the maximum amount permitted under Section 422 of the Code (currently $100,000).
(2)Limit on Incentive Stock Options. The maximum number of Shares with respect to which all Incentive Stock Options may be granted over the term of the Plan to all Participants in the aggregate shall be limited to 1,250,000.
(3)Limit on Other Stock-Based Awards. The maximum number of Shares with respect to which all Other Stock-Based Awards may be granted over the term of the Plan to all Participants in the aggregate shall be equal to five percent (5.0%) of the total number of Shares authorized for Awards in Section 5(a)(1), as such Section may potentially be amended in the future with the approval of the Company’s shareholders in accordance with Section 12(e).
(c)Substitute Awards. In connection with an acquisition by the Company of another entity, the Board may grant Awards (“Substitute Awards”) under the Plan in substitution for any then outstanding options or other stock or stock-based awards which were previously granted by such entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan. Substitute Awards shall not count against the overall Share limit set forth in Section 5(a)(1) or any sub-limits contained in the Plan, except as may be required by Section 422 and related provisions of the Code and provided that any Substitute Awards which are intended to qualify as Incentive Stock Options shall be included for purposes of the limitation set forth in Section
5(b)(2) on the maximum number of Shares with respect to which all Incentive Stock Options may be granted over the term of the Plan to all Participants. If, however, Awards shall, other than in substitution for outstanding options or other stock or stock-based awards, be granted under the Plan for inducement, recruitment, retention or other purposes to any of the former employees or consultants of the acquired company, the Shares subject to such Awards shall count against the overall share limit set forth in Section 5(a)(1) and any relevant sub-limits contained in the Plan.
(a)General. Subject to the limitations set forth in this Section 6, the Committee may grant options to purchase Shares (each, an “Option”) and determine the number of Shares to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. An Option which is not intended to be, or does not qualify as, an Incentive Stock Option shall be deemed a “Nonstatutory Stock Option.”
(b)Incentive Stock Options. Options (each an “Incentive Stock Option”) that the Committee intends to be “incentive stock options” as defined in Section 422 of the Code, or any successor provisions thereto, and the regulations thereunder, may only be granted to employees of the Company, any of the Company’s present or future parent or subsidiary corporations as defined in Section 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive incentive stock options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive Stock Option does not satisfy all of the requirements in the Code for an “incentive stock option” or for any action taken by the Committee, including without limitation the conversion of an Incentive Stock Option to a Nonstatutory Stock Option. Furthermore, if any Participant shall make a “disposition” (as defined in Section 424 of the Code) of all or any portion of the Shares acquired upon exercise of an Incentive Stock Option within two years from the grant date of such Incentive Stock Option or within one year after the issuance of the Shares acquired upon exercise of such Incentive Stock Option, such Participant shall be required to immediately advise the Company in writing as to the occurrence of the sale and the price realized upon the sale of such Shares.
(c)Exercise Price. The Committee shall establish the exercise price of each Option and specify such exercise price in the applicable Option agreement. The exercise price shall be not less than 100% of the Fair Market Value of the Common Stock as determined by (or in a manner approved by) the Committee on the date the Option is granted, provided that if the Committee approves the grant of an Option with an exercise price to be determined on a specified future date, the exercise price shall be not less than 100% of the Fair Market Value on such future date. For this purpose, if the Common Stock is then listed on an Applicable Exchange, the “Fair Market Value” of the Common Stock shall be the closing price as reported by such exchange on the grant day of the Award (or if no sales of Common Stock are reported on such day then on the most recent trading day on which such sales were reported) or, if the Common Stock is not then listed on any Applicable Exchange, such fair market value as shall be determined by the Committee in good faith (with the Fair Market Value of the Common Stock as so determined by the Committee to be conclusive and binding on all persons). However, in the case of any Incentive Stock Option granted to any employee then owning more than 10% of the total combined voting power of the Company and its affiliates, the exercise price shall be not less than 110% of the Fair Market Value on the date of the Award.
(d)Minimum Vesting Requirements. The minimum vesting period following the date of Option Awards shall be at least one year for Performance Awards and three years for Option Awards which are not Performance Awards. Notwithstanding the foregoing, (i) Option Awards which are not Performance Awards may vest proportionately in annual increments commencing one year after the date of the Award based on continued employment or service during such vesting period and (ii) any Option Awards made to Participants who are Non-Employee Directors as compensation for service to be rendered by them as directors may vest in full upon or immediately prior to the next annual meeting of the Company’s shareholders subject to their continued service as directors through such vesting date.
(e)Duration of Options. Subject to Section 6(d), each Option shall be exercisable at such times and subject to such terms and conditions as the Committee may specify in the applicable Option agreement; provided, however, that no Option may be granted for a term in excess of 10 years.
(f)Exercise of Option. Options may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Committee together with payment in full as specified in Section 6(g) for the number of Shares for which the Option is exercised.
(g)Payment Upon Exercise. Shares purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:
(1)in cash or by check, payable to the order of the Company;
(2)except as the Committee may otherwise provide in an Option agreement, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;
(3)during any period when the Common Stock is registered under the Exchange Act, by delivery of shares of Common Stock owned by the Participant (including, without limitation, through cancellation of a portion of the Shares being acquired by the Participant through exercise of such Option provided such manner of payment is provided for in the option agreement approved by the Committee) valued at their then Fair Market Value, provided (i) such method of payment is then permitted under applicable law, and (ii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;
(4)to the extent permitted by applicable law and by the Committee and provided for in the Option agreement, by (i) delivery of a promissory note of the Participant to the Company on terms determined by the Committee, or (ii) payment of such other lawful consideration as the Committee may determine; or
(5)by any combination of the above permitted forms of payment.
(h)Prohibition of Repricing. Unless such action is approved by the Company’s shareholders: (1) no outstanding Option granted under the Plan may be amended to provide an exercise price per Share that is lower than the then-current exercise price per Share of such outstanding Option or SAR (other than adjustments pursuant to Section 10), (2) the Committee may not cancel any outstanding Option (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan covering the same or a different number of Shares and having an exercise price per Share lower than the then-current exercise price per Share of the cancelled Option, and (3) the Company will not purchase for cash any outstanding Option having an exercise price greater than the then Fair Market Value of Common Stock.
(i)No Reload Options. No Option that provides for an automatic grant of another Option upon exercise of the original Option may be granted under the Plan.
(j)No Dividend Rights. If the Company shall pay any ordinary cash dividends with respect to its outstanding Common Stock prior to the exercise of an Option and the issuance to the Participant of the related Shares of Common Stock, the Participant holding such Option shall not be entitled to receive such dividend or any form of dividend equivalent rights. However, if the Company shall pay any dividend which is not an ordinary cash dividend during such period, the number of Shares of Common Stock which the Participant shall be entitled to receive upon exercise of such Option shall be subject to potential adjustment to the extent and in the manner described in Section 10(a).
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7. | Stock Appreciation Rights |
(a)General. Subject to the limitations set forth in this Section 7, the Committee may grant stock appreciation rights (“SARs”) entitling the holder, upon exercise, to receive an amount in cash or in Shares or a combination thereof (such form to be determined by the Committee) determined in whole or in part by reference to appreciation, from and after the date of grant, in the Fair Market Value of a share of Common Stock. SARs may be based solely on appreciation in the Fair Market Value of Common Stock or on a comparison of such appreciation with some other measure of market growth such as (but not limited to) appreciation in a recognized market index. The date as of which such appreciation or other measure is determined shall be the exercise date unless another date is specified by the Committee in the SAR Award.
(b)Grants. SARs may be granted either in tandem with, or independently of, Options granted under the Plan.
(1)Tandem SARs. When a SAR is expressly granted in tandem with an Option (a “Tandem SAR”), (i) the SAR will be exercisable only at such time or times, and only to the extent, that the related Option is exercisable (except to the extent designated by the Committee in connection with a Reorganization Event) and will be exercisable in accordance with the procedure required for exercise of the related Option; (ii) the SAR will terminate and no longer be exercisable upon the termination or exercise of the related Option (except to the extent designated by the Committee in connection with a Reorganization Event), and except that a SAR granted with respect to less than the full number of Shares covered by an Option will not be reduced until the number of Shares as to which the related Option has been exercised or has terminated exceeds the number of Shares not covered by the SAR; (iii) the Option
will terminate and no longer be exercisable upon the exercise of the related SAR; and (iv) the SAR will be transferable only together with the related Option.
(2)Independent SARs. A SAR not expressly granted in tandem with an Option (an “Independent SAR”) will become exercisable at such time or times, and on such conditions, as the Committee may specify in the SAR Award.
(c)Exercise Price. The Committee shall establish the exercise price of each SAR and specify it in the applicable SAR agreement. The exercise price shall not be less than 100% of the Fair Market Value of the underlying Common Stock on the date the SAR is granted; provided that if the Committee approves the grant of a SAR with an exercise price to be determined on a specified future date, the exercise price shall be not less than 100% of the Fair Market Value of the underlying Common Stock on such future date.
(d)Duration of SARs. Each SAR shall be exercisable at such times and subject to such terms and conditions as the Committee may specify in the applicable SAR agreement; provided, however, that no SAR will be granted with a term in excess of 10 years.
(e)Exercise of SARs. SARs may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Committee together with any other documents required by the Committee.
(f)Prohibition of Repricing. Unless such action is approved by the Company’s shareholders: (1) no outstanding SAR granted under the Plan may be amended to provide an exercise price per Share that is lower than the then-current exercise price per Share of such outstanding SAR (other than adjustments pursuant to Section 10); (2) the Committee may not cancel any outstanding SAR (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan covering the same or a different number of Shares and having an exercise price per share lower than the then-current exercise price per Share of the cancelled SAR, and (3) the Company will not purchase for cash any outstanding SAR having an exercise price greater than the then Fair Market Value of Common Stock.
(g)No Dividend Rights. If the Company shall pay any ordinary cash dividend with respect to its outstanding Common Stock prior to the exercise of a SAR and the issuance to the Participant of the related shares of Common Stock or cash, the Participant holding such SAR shall not be entitled to receive such dividend or any form of dividend equivalent rights. However, if the Company shall pay any dividend which is not an ordinary cash dividend during such period, the number of shares of Common Stock and the amount of cash or other property which the Participant shall be entitled to receive upon exercise of such SAR shall be subject to potential adjustment to the extent and in the manner described in Section 10(a).
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8. | Restricted Stock; Restricted Stock Units |
(a)General. Subject to the limitations set forth in this Section 8, the Committee may grant Awards (“Restricted Stock”) consisting of Shares subject to a right of the Company to require either forfeiture (if such Shares are issued without a purchase price) or repurchase at their original purchase price (if such Shares are issued for a purchase price) of all or part of such Shares from the recipient in the event that conditions specified by the Committee in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Committee for such Awards. Instead of granting Awards for Restricted Stock, the Committee may also grant Awards entitling the recipients to receive either Shares or cash based on the then Fair Market Value of such Shares to be delivered at the time such Awards vest (“Restricted Stock Units”). Any Awards of either Restricted Stock or Restricted Stock Units are collectively referred to hereafter as “Restricted Stock Awards.”
(b)Terms and Conditions. The Committee shall determine the terms and conditions of a Restricted Stock Award, including the conditions for forfeiture to the Company (if such Shares issued without a purchase price) or repurchase by the Company (if such Shares are issued for a purchase price) and whether or not such Awards shall consist of Performance Awards.
(c)Additional Provisions Relating to Restricted Stock.
(1)Dividends. If the Company shall pay any dividends with respect to its outstanding Common Stock, Participants then holding shares of Restricted Stock granted as Awards under the Plan shall not be entitled to receive such dividends unless and until all applicable performance goals and/or vesting requirements applicable to such Restricted Stock shall have been satisfied, and during the respective periods between the date of payment of any such
dividends and the satisfaction of all such applicable performance goals and/or vesting requirements, such dividends shall be held in escrow and forfeited to the Companysubsequent repayment to the extent, if any, such performance goals and/required by any clawback or vesting requirements are not satisfied. Unless otherwise providedsimilar policies adopted by the Board or the Committee from time to time. Notwithstanding any of the foregoing provisions of the Plan, if any dividends or distributions are paid in Shares, or consistthe employment of a dividendParticipant has been terminated either voluntarily by the Participant or distribution to holdersfor cause (as determined in the sole discretion of Common Stock other than an ordinary cash dividend, the Shares, cash or other property will be subjectCommittee prior to the same restrictions on transferability and forfeitability asoccurrence of any Change in Control) at any time before the Shares of Restricted StockCompany has paid the Participant’s Annual Incentive Bonus with respect to which they were paid. Each such dividend payment or distribution will be madea Plan Year, no later than the end of the calendar year in which the related dividend or distribution is paid to holders of Common Stock or, if later, the 15th day of the third month following the date the dividend is paid to holders of Common Stock.
(2)Stock Certificates. Unless otherwise determined by the Committee, any stock certificates issued in respect of a Restricted Stock AwardAnnual Incentive Bonus shall be registered in the name of the Participant and deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction period, the Company (or such designee) shall deliver the certificates (if any) representing the Shares of Common Stock (if any) which are no longer subject to such restrictionspaid to the Participant or, ifwith respect to such Plan Year. For purposes of the ParticipantPlan, after a Change in Control has died, to the beneficiary designated, in a manner determined byoccurred, the Committee byshall have no power to determine that a Participant to receive amounts due or exercise rightstermination of the Participant in the event of thea Participant’s death (the “Designated Beneficiary”). Inemployment was made for cause and the absence of an effective designation by a Participant, the “Designated Beneficiary” shall mean the Participant’s estate.
(d)Additional Provisions Relating to Restricted Stock Units.
(1)Settlement. Upon the vesting of each Restricted Stock Unit, the Participant shall be entitled to receive from the Company one Share or an amount of cash equal to the then Fair Market Value of one share of Common Stock, as provided in the applicable Award agreement, for each vested and unrestricted Restricted Stock Unit.
(2)Voting Rights. A Participant shall have no voting rights with respectobligation to repay any Restricted Stock Units.
(3)Dividend Rights. Except to the extent provided in Section 10(a) with respect to potential adjustments relating to dividends which are not ordinary cash dividends, a Participant shall have no right to dividends with respect to any Restricted Stock Units.
(e)Minimum Vesting Requirements. The minimum vesting period following the date of Restricted Stock Awards shall be at least one year for Performance Awards and three years for Restricted Stock Awards which are not Performance Awards. Notwithstanding the foregoing, (i) Restricted Stock Awards which are not Performance Awards may vest proportionately in annual increments commencing one year after the date of the Awardssuch Bonus previously received based on continued employmenta change in any clawback or service during such vesting period and (ii) any Restricted Stock Awards made to Participants who are Non-Employee Directors as compensation for service to be renderedsimilar policy adopted by them as directors may vest in full uponthe Board or immediately prior to the next annual meeting of the Company’s shareholders subject to their continued service as directors through such vesting date.
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9. | Other Stock-Based Awards |
Subject to the other provisions of the Plan (including, without limitation, the limitation under Section 5(b)(3) of the maximum number of Shares with respect to which Other Stock-Based Awards may be granted), the Committee may grant Other Stock-Based Awards consisting of non-restricted Shares of Common Stock or other Awards that are valuedsubsequent to such Change in whole or in part by reference to, or are otherwise based on, shares of Common Stock but are not Options, SARs, Restricted Stock or Restricted Stock Units (but may be Common Stock which would otherwise be Restricted Stock but which does not satisfy the vesting requirements specified in Section 8(e)). Such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based Awards may be paid in Shares or cash, as the Committee shall determine. Subject to the provisions of the Plan, the Committee shall determine the conditions of each Other Stock-Based Award, including any purchase price applicable thereto.
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10. | Adjustments for Changes in Common Stock and Certain Other Events |
(a)Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares reclassification of shares, spin-off or other similar change in capitalization or event affecting Common Stock, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under the Plan, (ii) the sub-limits and share counting rules set forth in Section
5(a) and Section 5(b), (iii) the number and class of securities and exercise price per share of each outstanding Option, (iv) the share- and per-share-related provisions and the exercise price of each SAR, (v) the number of Shares subject to forfeiture or repurchase and the repurchase price, if any, per Share subject to each outstanding Restricted Stock Award, and (vi) the share- and per-share-related provisions and the purchase price, if any, of each outstanding Other Stock-Based Award, shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Committee. Without limiting the generality of the foregoing, in the event the Company effects a split of Common Stock by means of a stock dividend and the exercise price of and the number of Shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the Shares acquired upon such Option exercise, notwithstanding that such Shares were not outstanding as of the close of business on the record date for such stock dividend.
(b)Reorganization Events.
(1)Definition. A “Reorganization Event” shall mean: (i) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is acquired or converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (ii) any exchange of all of the outstanding Common Stock of the Company for cash, securities or other property pursuant to an exchange transaction, (iii) one person or entity (or more than one persons or entities acting as a group) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a gross fair market value equal to or more than 50% of the total gross fair market value of all the assets of the Company immediately before such acquisition(s), or (iv) any liquidation or dissolution of the Company.
(2)Consequences of a Reorganization Event on Awards Other than Restricted Stock Awards.Control.
(i)In connection with a Reorganization Event, the Board may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards other than Restricted Stock Awards on such terms as the Board determines: (A) provide that Awards shall, with the consent of the acquiring or succeeding entity Change in such Reorganization Event or an affiliate thereof (the “Acquiror”) but without requiring the consent of any Participant, be assumed, or substantially equivalent Awards be substituted, by the Acquiror, (B) upon written notice to a Participant, provide that the Participant’s unexercised Awards will terminate immediately prior to the consummation of such Reorganization Event unless exercised by the Participant within a specified period following the date of such notice, (C) subject to the provisions of Section 10(c), if such Reorganization Event involves a Change-in-Control, provide that outstanding Awards shall become exercisable, realizable, or deliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such Reorganization Event, (D) in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a cash payment to a Participant equal to the excess, if any, of (x) the Acquisition Price times the number of shares of Common Stock subject to the Participant’s Award over (y) the aggregate exercise price, if any, of such outstanding Award to the Participant and any applicable tax withholdings, in exchange for the termination of such Award and if there is no such excess that such outstanding Award shall be terminated without any cash payment being made to the Participant, (E) provide that, in connection with a liquidation or dissolution of the Company, Awards shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise price, if any, thereof and any applicable tax withholdings), and if there is no such excess that such outstanding Awards shall be terminated without any liquidation proceeds being distributed to the Participant, or (F) any combination of the foregoing. In taking any of the actions permitted under this Section 10(b)(2)(i), the Board shall not be obligated by the Plan to treat all outstanding Awards, all Awards held by a Participant, or all Awards of the same type, identically.
(ii)For purposes of Section 10(b)(2)(i), an Option shall be considered assumed if, following consummation of the Reorganization Event, the Option confers the right to purchase, for each Share subject to the Option immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the Acquiror, the Board may, with the consent of the Acquiror, provide for the consideration to be received upon
the exercise of Options to consist solely of common stock of the Acquiror equivalent in value (as determined by the Board) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.
(3)Consequences of a Reorganization Event on Restricted Stock AwardsControl. Upon the occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the forfeiture, repurchase and other rights of the Company under each outstanding Restricted Stock Award shall, unless the Board determines otherwise, inure to the benefit of the Company’s successor and apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Common Stock subject to such Restricted Stock Award. Upon the occurrence of a Reorganization Event involving the liquidation or dissolution of the Company, except to the extent specifically provided to the contrary in the Restricted Stock award agreement or any other agreement between a Participant and the Company, all restrictions and conditions on all Restricted Stock Awards then outstanding shall automatically be deemed terminated or satisfied.
(c)Change-in-Control.
(1)Definitions. For purposes of this Section 10(c),
(i)“Change-in-Control” means any of the following:
(A)any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) is or becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 35% of the combined voting power of the then-outstanding stock of the Company having the right to vote for the election or removal of directors or succeeds in having nominees as directors elected in an “election contest” within the meaning of Rule 14a-12(c) under the Exchange Act and, within 18 months thereafter, individuals who were members of the Board of the Company immediately prior to either such event cease to constitute a majority of the members of the Board of the Company;
(B)a majority of the Board ceases to be composed of Incumbent Directors; or
(C)a Reorganization Event becomes effective unless, in any such case, (x) no Person (other than the Company, any entity resulting from such Reorganization Event or any employee benefit plan (or related trust) sponsored or maintained by the Company, any subsidiary or such entity resulting from such Reorganization Event) beneficially owns, directly or indirectly, 35% or more of the combined voting power of the then outstanding shares of stock having the right to vote for election or removal of directors of the entity resulting from such Reorganization Event and (y) at least one-half of the members of the board of directors (or equivalent body) of the entity resulting from such Reorganization Event were Incumbent Directors at the time of the execution of the initial agreement providing for such Reorganization Event.
(ii)“Good Reason” means any of the following: (A) the Company (or its successor) adversely changes the Participant’s title or changes in any material respect the responsibilities, authority or status of the Participant without prior notice and acceptance; (B) the substantial or material failure of the Company (or its successor) to comply with its obligations under the Plan or any other agreement that may be in effect that is not remedied within a reasonable time after specific written notice thereof by the Participant to the Company (or its successor); (C) the diminution of the Participant’s base salary; and (D) requiring the Participant to relocate more than 50 miles from his or her location of employment immediately prior to the Change-in- Control. However, Good Reason shall only exist in the prior (A) through (D) if the Participant has given reasonable and specific written notice to the chief executive officer of the Company (or its successor) of such failure, the Company (or its successor) has been given a reasonable opportunity to cure, and no cure has been effected or initiated within a reasonable time after such notice.
(iii)“Incumbent Directors” means the individuals who, as of the date of adoption of the Plan, are directors of the Company and any individual(s) becoming director(s) subsequent to the date hereof whose election, nomination for election by the Company’s shareholders or appointment was approved by a vote of at least two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Company in which each such person is named as a nominee for director, without
objection to such nomination); provided, however, that an individual shall not be an Incumbent Director if such individual’s election or appointment to the Board occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.
(2)Effect of Change-in-Control on Options and SARs.
(i)Subject to the limitations set forth in this Section 10(c), in the event of a Change-in-Control which occurs in connection with a Reorganization Event, the Acquiror may, without the consent of any Participant, either assume the Company’s rights and obligations under outstanding Options and SARs or substitute for outstanding Options and SARs substantially equivalent awards covering the Acquiror’s stock. However, all such Options and SARs assumed or substituted for by the Acquiror in connection with a Change-in-Control will become fully vested and exercisable if the Participant’s employment is terminated at any time during the 24-months period following the Change-in-Control either (A) by the Acquiror without Cause or (B) by the Participant for Good Reason.
(ii)Any Option or SAR granted one year or more prior to the Change-in-Control that is neither assumed nor substituted for by the Acquiror in connection with any such Change-in-Control shall, contingent on the Change-in-Control becoming effective, become fully vested and exercisable immediately prior to the Change-in-Control. Any Option or SAR granted less than one year prior to the Change-in-Control that is neither assumed nor substituted for by the Acquiror in connection with the Change-in-Control shall, to the extent not previously vested and exercisable, immediately prior to the Change-in-Control become vested and exercisable as to the number of Shares subject to such Option or SAR equal to (A) the number of Shares originally subject to such Option or SAR, multiplied by (B) the number of whole months between the grant date of the Award and the Change-in-Control, divided by (C) the number of months between the grant date of the Award and the date on which all Shares originally subject to such Option or SAR would have been fully vested and exercisable; and such Option or SAR shall terminate with respect to all remaining Shares subject to such Option or SAR. For purposes of determining the number of Shares which shall become fully vested and exercisable under any Award which is a Performance Award and which is neither assumed nor substituted for by the Acquiror in connection with any such Change-in-Control, the target (as opposed to the threshold or maximum) level of achievement shall be deemed to apply.
(3)Effect of Change-in-Control on Outstanding Awards Other Than Options or SARs. Subject to the limitations set forth in this Section 10(c), in the event a Change-in-Control occurs in connection with a Reorganization Event, the Acquiror may, without requiring the consent of any Participant, either assume the Company’s rights and obligations under outstanding Awards other than Options or SARs or substitute for such Awards substantially equivalent awards covering the Acquiror’s stock. However, all Awards other than Options or SARs assumed or substituted for by the Acquiror in connection with such Reorganization Event will become fully vested and all restrictions on such Awards will lapse if the Participant’s employment is terminated at any time during the 24‑months period following the Reorganization Event either (i) by the Acquiror without Cause (as defined in Section 11(i)) or (ii) by the Participant for Good Reason. Any Award that is neither assumed nor substituted for by the Acquiror in connection with the Change-in-Control shall, upon the Change-in-Control, become fully vested and all restrictions shall be released immediately prior to the Change-in-Control.
(4)Other Conditions Applicable to a Change-in-Control. Notwithstanding anything in this Section 10(c) to the contrary, the Company shall not in connection with a Change-in-Control take or cause to be taken any action, and shall not undertake or permit to arise any legal or contractual obligation, that results or would result in any postponement of the issuance or delivery of Shares or the payment of benefits under any Award or the imposition of any other conditions on such issuance, delivery or payment, to the extent that such postponement or other condition would represent a greater burden on a Participant than existed on the 90th day preceding the effective date of the Change-in-Control.
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11. | General Provisions Applicable to Awards |
(a)Transferability of Awards. Until such time as they become fully vested, Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, in the case of an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the life of the Participant, shall be exercisable only by the Participant; provided, however,
that the Board may permit or provide in an Award for the gratuitous transfer of the Award by the Participant to or for the benefit of any immediate family member, family trust or other entity established for the benefit of the Participant and/or an immediate family member thereof if, with respect to such proposed transferee, the Company would be eligible to use a Form S-8 for the registration of the sale of the Common Stock subject to such Award under the Securities Act of 1933, as amended; provided, further, that the Company shall not be required to recognize any such transfer until such time as the Participant and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees. The foregoing restrictions on the transferability of Awards shall not be deemed to apply to any Shares received as Awards, or upon exercise or other settlement of Awards, following such date as all vesting and other requirements applicable to such Awards have been satisfied or otherwise terminated in accordance with the provisions of the Plan and the applicable Award agreement or other documentation evidencing such Awards.
(b)Documentation. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Committee shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan.
(c)Committee Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Committee need not treat Participants uniformly.
(d)Termination of Status; Acceleration of Vesting. The Committee shall determine the effect on an Award of the disability, death, termination or other cessation of employment, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award. However, the vesting requirements set forth in an Award will not accelerate except upon death, disability or, upon such terms as shall be established by the Committee, retirement of the Participant or, subject to the provisions of Section 10(c), an acquisition of the Company by an Acquiror which does not agree to assume or issue substantially equivalent awards for outstanding Awards.
(e)Withholding. The Participant must satisfy all applicable federal, state, local and any other applicable income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company may, but shall not be required, to satisfy the withholding obligations through additional withholding on salary or wages. If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations. Payment of withholding obligations is due before the Company will issue any shares on exercise or vesting of an Award or, if the Company so requires, at the same time as payment of the exercise price is due unless the Company determines otherwise. If provided for in an Award or approved by the Committee in its sole discretion, a Participant may satisfy such tax obligations in whole or in part by delivery of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their then Fair Market Value; provided, however, except as otherwise provided by the Committee, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). Shares surrendered to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.
(f)Amendment of Award. The Committee may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that (1) the Participant’s consent to such action shall be required unless (i) the Committee determines that the action, taking into account any related action, would not materially and adversely affect the Participant’s rights under the Plan and such Award or (ii) the change is permitted under Section 10, and (2) the Committee may not amend or modify any outstanding Award in a manner inconsistent with the minimum vesting and performance periods and the prohibition of repricing provisions set forth in Sections 6, 7, 8 and 11(h).
(g)Conditions on Delivery of Stock. The Company will not be obligated to deliver any Shares pursuant to the Plan or to remove restrictions from Shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such Shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the
Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.
(h)Performance Awards.
(1)Grants. Options, SARs, Restricted Stock Awards and Other Stock-Based Awards under the Plan may be made subject to the achievement of performance goals pursuant to this Section 11(h) (“Performance Awards”).
(2)Committee. Grants of Performance Awards to any Covered Employee shall be made only by the Committee. “Covered Employee” shall mean any person who is, or whom the Committee, in its discretion, determines may be, a “covered employee” under Section 162(m)(3) of the Code.
(3)Performance Measures. For any Award that is intended to qualify as a Performance-Based Award, the Committee shall specify that the exercise or vesting thereof shall be subject to the achievement of one or more objective performance measures preestablished by the Committee, which shall be objective and shall meet the requirement that the levels of performance targeted by the Committee result in the achievement of performance goals being “substantially uncertain.” One or more of the following business criteria for the Company, on a consolidated basis, and/or for any present or future parent or subsidiary of the Company, or for business or geographical units of the Company and/or any present or future parent or subsidiary of the Company (except with respect to the total shareholder return and earnings per share criteria), shall be used by the Committee in establishing performance goals for such Performance Awards: (i) earnings per share; (ii) revenues; (iii) cash flow; (iv) operating margin; (v) return on the net assets, investment, capital, or equity; (vi) economic value added; (vii) direct contribution; (viii) net income; pretax income; or earnings from continued operations; (ix) income before earnings before interest, taxes, depreciation and amortization; and with such other adjustments as shall be consistent with the Company’s then credit agreement or the Company’s reports then being filed with the Securities and Exchange Commission (“Adjusted EBITDA”); (x) ratio of Adjusted EBITDA to revenues (“Adjusted EBITDA Margin”); (xi) working capital; (xii) management of fixed costs or variable costs; (xiii) identification or consummation of investment opportunities or completion of specified projects in accordance with corporate business plans, including mergers, acquisitions or divestitures; (xiv) total shareholder return; (xv) health, safety and compliance statistics; and (xvi) debt reduction. Any of the above goals may be determined on an absolute or relative basis or as compared to the performance of a published or special index deemed applicable by the Committee including, but not limited to, the Standard & Poor’s 500 Stock Index or a group of companies that are comparable to the Company. The Committee may adjust for or exclude the impact of an event or occurrence which the Committee determined should appropriately be excluded, including without limitation (A) acquisitions, restructurings, discontinued operations, and other unusual or non-recurring charges, (B) extraordinary events either not directly related to the operations of the Company or not within the reasonable control of the Company’s management such as government shut downs, acts of terrorism, natural disasters, communicable or infectious disease affecting the general population, and other unusual or non-recurring events or charges, or (C) changes in accounting standards required by generally accepted accounting principles.
(4)Performance Periods. Achievement of performance goals in respect of a Performance Award shall be measured over a period no shorter than 12 months and no longer than five years, as specified by the Committee (the “Performance Period”). Performance goals shall be established not later than 90 days after the beginning of any period applicable to such Performance Awards.
(5)Adjustments. The Committee may, in its discretion, reduce the amount of a settlement otherwise to be made in connection with Performance Awards subject to this Section 11(h), but may not exercise discretion to increase any such amount payable to a Participant in respect of a Performance Award subject to this Section 11(h). Subject to the provisions of Section 10(b) with respect to Reorganization Events and Section 10(c) with respect to a Change-in-Control, the Committee shall specify the circumstances in which such Performance Awards shall become exercisable or vest or shall be forfeited in the event of termination of employment by the Participant prior to the end of a Performance Period or settlement of such Awards.
(6)Certification Requirement. No Performance-Based Awards become exercisable or shall vest under the Plan unless the Committee has certified, by resolution or other appropriate action in writing, that the performance criteria and any other material terms previously established by the Committee or set forth in the Plan, have been satisfied.
(i)Forfeiture for Cause.
(1)Notwithstanding any other provision of the Plan to the contrary, the following provisions of this Section 11(i) shall apply(i) if a Change in the event of “Cause,” which means the Participant’s (i) material breachControl of the Participant’s fiduciary dutyCompany shall occur on or following completion of a Plan Year as to which the actual Annual Incentive Bonus to be paid has been determined but such Bonus has not yet been paid, such Bonus shall be paid immediately in cash, (ii) if a Change in Control shall occur on or following completion of a Plan Year as to which the actual Bonus to be paid has not yet been determined, such Annual Incentive Bonus shall be immediately determined and paid in cash, and (iii) if a Change in Control shall occur during a Plan Year as to which a potential Annual Incentive Bonus has been established but the actual Annual Incentive Bonus to be paid has not yet been determined, such Plan Year shall be deemed to have been completed, each of the Performance Criteria shall be deemed to have been satisfied at the midpoint between the Threshold and Maximum Levels of Achievement, and a pro-rata portion of the Annual Incentive Bonus (to the extent based on Performance Criteria, as opposed to Personal Goals) so determined for such partial Plan Year (based on the number of full and partial months which have elapsed with respect to such Plan Year) shall be paid immediately in cash to the Participant.
4.Compensation Committee.
(a) The MIP shall be administered by the Compensation Committee (the “Committee”) of the Board, which shall be appointed by the full Board and which shall consist, during the term of the MIP, of not less than two members of the Board. Every member of the Committee shall be an “independent director” under the listing requirements of the New York Stock Exchange (or such other primary stock exchange on which the common stock of the Company or an actmay then be listed). No member of fraud, dishonesty or theft upon the Company; (ii) conviction (or entry ofCommittee may be a plea bargain admitting criminal guilt) of any felony or misdemeanor involving moral turpitude or a willful violation of any material law, rule or regulation relating to the businesscurrent employee of the Company or any of its affiliates;Subsidiary, or (iii) material breacha current or former officer of the Participant’s non-competitionCompany or non-disclosure obligations to the Company. For this purpose,any Subsidiary. No member of the Committee shall determine in such body’s sole discretion whethermay receive remuneration from the Participant has engaged in conduct that constitutes Cause.
(2)If the Committee shall determine thatCompany or any Subsidiary other than normal and customary fees and other amounts payable for services as a Participant has engaged in conduct which constitutes Cause,
(i)Any outstanding Option shall immediately and automatically terminate, be forfeited and shall cease to be exercisable, without limitation. In addition, any Sharesdirector or member of Restricted Stock, Restricted Stock Units or Other Stock-Based Awards as to which the restrictions have not lapsed shall immediately and automatically be forfeited, and alla committee of the rights of the Participant to such Shares or Share equivalents shall immediately terminate.Board.
(ii)The lapse of restrictions on or vesting of Restricted Stock, Restricted Stock Units or Other Stock-Based Awards that have vested or upon which the restrictions have lapsed within the 36-month period immediately prior to the date it is determined that the Participant engaged in conduct constituting Cause (the “Determination Date”) shall be rescinded and all outstanding Awards shall be canceled.
(iii)The Committee may, to the extent permitted by applicable law, rescind any Awards made to the Participant within the 36-month period immediately prior to the Determination Date.
(iv)The Committee may, to the extent permitted by applicable law, recover any gains realized from the sale of vested Shares or the sale or other disposition of any Shares issued or issuable upon the exercise of an Option, in the case of any such sale or other disposition during the 36-month period immediately prior to the Determination Date.
(3)Notwithstanding the foregoing provisions of this Section 11(i), any provision of this Section 11(i) that is determined by a court of competent jurisdiction to be invalid or unenforceable shall be construed or limited in a manner that is valid and enforceable and that comes closest to the business objectives intended by such invalid or unenforceable provision, without invalidating or rendering unenforceable the remaining provisions of this Section 11(i).
(j)Dodd-Frank Clawback.(b) The Committee shall have fullthe obligation and authority in its sole discretion, subject to implement any policies and procedures necessary to complynot inconsistent with Section 10Dthe express provisions of the Exchange ActMIP, to administer the MIP and any rules promulgated thereunder,to exercise all the powers and all Awards made pursuantauthorities either specifically granted to it under the Plan shall be subject toMIP or necessary or advisable in the clawback policiesadministration of the Company adopted from time to time by the Board.MIP. Without limiting the foregoing, the Committee shall have authority to construe and interpret the MIP, to prescribe, amend and rescind rules and regulations relating to the MIP, and to make all other determinations deemed necessary or advisable for the administration of the MIP.
(c) The Committee may appoint a chair and a secretary and may make such rules and regulations for the conduct of its business as it shall deem advisable, and shall keep minutes of its meetings. All determinations of the Committee shall be made by a majority of its members either present in person or participating by conference telephone at a meeting or by unanimous written consent. The Committee may delegate to one or more of its members or to one or more agents such administrative duties as it may deem advisable, and the Committee or any person to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any Award grantedresponsibility the Committee or such person may have under the Plan,MIP. All decisions, determinations and interpretations of the Committee shall be final and binding on all persons, including the Company, any Participant (or any person claiming any rights under the MIP from or through any Participant) and any shareholder.
(d) No member of the Committee shall be liable for any action taken or determination made in good faith with respect to the MIP or any Annual MIP Bonus hereunder.
5.General Provisions.
(a) No Right to Any Annual MIP Bonus or Continued Employment. Nothing in the eventMIP shall confer upon any Participant the right to (i) receive any Annual MIP Bonus, whether or not such bonus might otherwise be deemed to have been “earned” because of a financial restatement that reducessatisfaction of any Performance Criteria or Personal Goal, if, and to the extent, the Committee may in its discretion elect under Section 3(f) to decrease or diminish the amount of previously awarded incentive compensation that would not have been earned hador eliminate any potential Annual MIP Bonus; (ii) continue in the Company’s financial results been properly reported, vestingemploy of outstanding Awards may be canceled and the Company may clawback (i.e., recapture) realized value and gains derived from Awardsor any Subsidiary in any capacity or to be entitled to any remuneration or benefits not set forth in the MIP; or (iii) interfere with or limit in any way the right of the Company or any Subsidiary to terminate such Participant’s employment. Furthermore, nothing in the MIP shall adversely affect the authority of the Board or the Committee to authorize any bonus or other payment to any employee of the Company or any Subsidiary whether or not such employee is then a Participant in the MIP, to the extent such vestingbonus or gains were derived from such misstated financial results.other payment may be lawfully paid without giving effect to the terms of the MIP.
(k)(b) Stock Ownership and Retention GuidelinesWithholding Taxes. Shares of Common Stock issued pursuant to AwardsThe Company shall deduct from all payments under the Plan willMIP any taxes required to be subject towithheld by federal, state and local governments.
(c) Amendment and Termination of the stock ownershipMIP. The Board or the Committee may at any time and retention guidelines adopted from time to time by the Board for the Company’s directors and officers.
(a)No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.
(b)No Rights As Stockholder. Except in the case of Restricted Stock, and subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any Shares to be distributed with respect to an Award until becoming the record holder of such Shares.
(c)No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares of Common Stock or whether such fractional shares of Common Stock and any rights thereto shall be forfeited or otherwise eliminated (including by rounding to the nearest whole Share).
(d)Effective Date and Term of Plan. The Plan shall become effective on the date the Plan is approved by the Company’s shareholders (the “Effective Date”). No Awards shall be granted under the Plan after the expiration of 10 years from the Effective Date, but Awards previously granted may extend beyond that date.
(e)Amendment of the Plan. The Board mayalter, amend, suspend, or terminate the Plan or any portion thereof at any time provided that (i) no amendment that would require shareholder approval under the rules of the Applicable Exchange may be made effective unless and until such amendment shall have been approved by the Company’s shareholders, and (ii) if the Applicable Exchange amends its corporate governance rules so that such rules no longer require shareholder approval of “material amendments” to equity compensation plans, then, from and after the effective date of such amendment to Applicable Exchange rules, no amendment to the Plan (A) increasing the number of Shares authorized under the Plan other than pursuant to Section 5(c) or Section 10, (B) expanding the types of Awards that may be granted under the Plan, (C) materially expanding the class of Participants eligible to participate in the Plan, (D) decreasing the exercise price per share at which Options or SARs may be awarded or allowing repricing of outstanding Options or SARs, (E) removing the Committee as the administrator of the Plan, or (F) amending this Section 12(e) in a manner which would defeat its purpose, shall be effective unless shareholder approval is obtained. In addition, if at any time the approval of the Company’s shareholders is required as to any other modification or amendment under Section 422 of the Code with respect to Incentive Stock Options, the Board may not effect such modification or amendment without such approval. Unless otherwise specified in the amendment, any amendment to the Plan adopted in accordance with this Section 12(e) shall apply to, and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment is adopted.
(f)Provisions for Foreign Participants. The Committee may modify Awards granted to Participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Plan to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.
(g)Compliance with Code Section 409A.
(1)No Award shall provide for deferral of compensation that does not comply with Section 409A of the Code (“Section 409A”) and the regulations thereunder unless the Committee, at the time of grant, specifically provides that the Award is not intended to comply with Section 409A. The Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A is not so exempt or compliant or for any action taken by the Board.
(2)Notwithstanding anything in the Plan to the contrary, if any provision of the Plan or any Award document would result in the imposition of the additional tax under Section 409A, that Plan or Award provision may be reformed, to the extent permitted by Section 409A, to avoid imposition of the additional tax and no action taken by the Company to have the Award comply with Section 409A shall be deemed to materially adversely affect the Participant’s rights with respect to the Award. Further, if any payment or benefit provided for under an Award would be subject to additional taxes and interest under Section 409A if the Participant’s receipt of such payment or benefit is not delayed in accordance with the requirements of Section 409A(a)(2)(B)(i) of the Code, then such payment or benefit shall not be provided to the Participant (or the Participant’s estate, if applicable) until the earlier of (i) the date
of the Participant’s death or (ii) the date that is six months after the date of the Participant’s separation from service with the Company.
(h)Expenses. The expenses of administering the Plan shall be paid by the Company.
(i)Severability. If any of the provisions of the Plan or any Award is held to be invalid, illegal or unenforceable, whetherMIP in whole or in part, including, without limitation, to make such provisionamendments as it deems necessary to comply with the Code or any other applicable laws, rules and regulations.
(d) Participant Rights. No Participant in the MIP for a particular Plan Year shall have any claim to be granted any Annual MIP Bonus under the MIP for any subsequent Plan Year. Furthermore, there is no obligation for uniformity of treatment of Participants in the event that more than one Participant shall potentially be entitled to receive an Annual MIP Bonus with respect to any Plan Year or any subsequent Plan Year.
(e) Unfunded Status of Annual MIP Bonuses. The MIP is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments which at any time are not yet made to a Participant with respect to an Annual MIP Bonus, nothing contained in the MIP or any related document shall give any such Participant any rights that are greater than those of a general creditor of the Company.
(f) Nonalienation of Benefits. No right or benefit under the MIP shall be deemed modifiedsubject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge the extent, but onlysame will be void. No potential right to receive any Annual MIP Bonus hereunder shall in any manner be subject to any debts, contracts, liabilities, or torts of the extent, ofperson entitled to such invalidity, illegalityright or unenforceability and the remaining provisions shall not be affected thereby.interest.
(j)(g) Governing Law. The provisionsMIP and the rights of the Plan and all Awards madepersons claiming hereunder shall be governed byconstrued and interpreteddetermined in accordance with the laws of the Commonwealth of Massachusetts without regard(without giving effect to the choice of law principles thereof), except to the extent that such law is preempted by federal law.
(h) Effective Date. The effective date of the MIP, as amended and restated hereby, is January 1, 2022.
6.Performance Criteria and Personal Goals.
(a) For purposes of determining Annual MIP Bonuses for all Participants other than under the SEIP, the Performance Criteria may (provided they satisfy the requirements set forth in Section 6(c) and 6(d)) include one or more of the following:
(i) the Company’s consolidated revenues;
(ii) the Company’s earnings before interest, taxes, depreciation and amortization (“EBITDA”), which shall mean the Company’s “Adjusted EBITDA” as reported in the Company’s annual report on Form 10-K;
(iii) the ratio of the Company’s EBITDA to consolidated revenues (“EBITDA Margin”);
(iv) the Company’s cash flow from operations;
(v) the Company’s “Adjusted Free Cash Flow,” which shall mean the Company’s cash flow from operations excluding cash impacts of items derived from non-operating activities, such as taxes paid in connection
with divestitures and cash payments made in connection with early extinguishment of debt, less capital expenditures, net of disposals;
(vi) the Company’s earnings per share;
(vii) the Company’s return on total assets (excluding excess cash);
(viii) the Company’s return on stockholders’ equity;
(ix) the Company’s return on invested capital;
(x) the Company’s return on long-term assets;
(xi) the Company’s “Total Shareholder Return” consisting of the increase over a specified period in the value of a hypothetical $100 investment in the Company’s common stock, assuming reinvestment of dividends; and
(xii) improved health, safety and compliance statistics (“HS&C Compliance”).
(b) For purposes of determining Annual MIP Bonuses under the SEIP, Personal Goals may (provided each of them satisfy the requirements set forth in Sections 6(c) and 6(d)) include one or more factors as the Committee may in its discretion establish for any member of the Executive Staff who participates in the SEIP based on the management responsibilities of such executive. Without limitation, such Personal Goals may include: for all SEIP participants, one or more of the Performance Criteria described in Section 6(a) to the extent the Committee determines that a Participant in the SEIP may significantly contribute to the Company’s achievement of such Performance Criteria, succession planning, hiring, leadership development and cost reductions; for the chief financial officer, timeliness and accuracy of financial reports, reduction of the average duration of the Company outstanding receivables (in days), and results of debt financing or refinancing; for the chief sales officer, increases in the overall level of sales or profitability; and for the executive officer principally responsible for acquisitions, completion of acquisitions and integration of management, training and reporting systems of acquired businesses.
(c) Performance Criteria and Personal Goals may be based on an absolute performance under such measure for the Plan Year or upon a comparison of such performance with the performance in a prior period, or the performance of a peer group.
(d) In all cases, for purposes of potential bonuses payable either to all Participants or pursuant to the SEIP, both the Performance Criteria and Personal Goals and the manner of determining the Level of Achievement thereof must be objective such that a third party having knowledge of the relevant facts could determine (i) whether or not the Performance Criteria and Personal Goals at each such Level of Achievement has been achieved and (ii) the total dollar amount of the bonus (if any) for each year which shall be potentially payable based on such performance.
7.Definitions.
The following terms, as used herein, have the following meanings:
(a) “Annual MIP Bonus” means any Annual MIP Bonus, including any such Bonus which is based on achievement of either or both Performance Criteria and/or Personal Goals, to which a Participant may become entitled pursuant to the MIP; provided, however, that the establishment by the Committee of a potential Annual MIP Bonus with respect to a Participant pursuant to Section 3(a) does not, by itself, entitle the Participant to payment of any such Bonus unless and until such Bonus becomes payable pursuant to other provisions hereof.
(b) “Base Compensation” means the actual earned base salary which each Participant receives or is entitled to receive from the Company or any Subsidiary for such Participant’s services during any Plan Year.
(c) “Beneficial Owner” has the meaning set forth in Rule 13d-3 under the Exchange Act.
(d) “Board” means the Board of Directors of the Company.
(e) “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred during the term of the Plan:
(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates (which term shall have the meaning set forth in Rule 12b-2 promulgated under the Exchange Act)) representing 30% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (A) of paragraph (iii) below; or
(ii) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who on the effective date of the Plan constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds of the directors then still in office who either were directors on the effective date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or
(iii) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 51% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities; or
(iv) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 51% of the combined voting power of the voting securities of which are owned by shareholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.
(f) “Committee” means the Compensation Committee of the Board.
(g) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.
(h) “Company” means Clean Harbors, Inc., a corporation organized under the laws of the Commonwealth of Massachusetts, or any successor corporation.
(i) “EBITDA” means the Company’s “Adjusted EBITDA” as reported in the Company’s Annual Report on Form 10-K.
(j) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
(k) “Executive Staff” means those senior executive officers of the Company and its Subsidiaries who report directly to the Company’s Chief Executive Officer.
(l) “GAAP” means generally accepted accounting principles as used by the Company for purposes of preparing its financial statements for any Plan Year.
(m) “Interim Level of Achievement” means any Level of Achievement between the Threshold Level of Achievement and the Maximum Level of Achievement which must be attained for a portion between the minimum and
maximum portions of an Annual MIP Bonus which is based on achievement of that Performance Criteria or Personal Goal to become potentially payable.
(n) “Level of Achievement” means a Minimum Level of Achievement, a Maximum Level of Achievement, and any Interim Levels of Achievement which may be established by the Committee in its discretion with respect to each Performance Criteria or Personal Goal for each Plan Year.
(o) “Maximum Level of Achievement” means a specified level of Achievement of a Performance Criteria or Personal Goal applicable to a Plan Year which must be attained for the maximum portion of an Annual MIP Bonus which is based on achievement of that Performance Criteria or Personal Goal to become potentially payable.
(p) “MIP” means this Management Incentive Plan, as amended and restated hereby and as it may hereafter be amended and/or restated from time to time in accordance with its terms.
(q) “Participant” means the Company’s CEO and any other employee of the Company or any Subsidiary who shall, based on such employee’s potential contribution to the corporate performance of the Company and its Subsidiaries for any Plan Year, be selected (as evidenced by a written notification to such Participant) by the Company’s CEO (based upon advice from the Executive Staff) to participate in the MIP for such Plan Year.
(r) “Performance Criteria” means one or more pre-established, objective measures of the Company’s performance during a Plan Year determined by the Committee in its discretion provided such Performance Criteria satisfy the requirements set forth in Section 6.
(s) “Person” has the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, or (v) any individual or entity (including the trustees (in such capacity) of any such entity which is a trust) which as of January 1, 2022 is, directly or indirectly, the Beneficial Owner of securities of the Company representing 5% or more of the combined voting power of the Company’s then outstanding securities or any Affiliate of any such individual or entity, including, for purposes of this Plan, any of the following: (A) any trust (including the trustees thereof in such capacity) established by or for the benefit of any such individual; (B) any charitable foundation (whether a trust or a corporation, including the trustees or directors thereof in such capacity) established by any such individual; (C) any spouse of any such individual; (D) the ancestors (and spouses) and lineal descendants (and spouses) of such individual and such spouse; (E) the brothers and sisters (whether by the whole or half blood or by adoption) of either such individual or such spouse; or (F) the lineal descendants (and their spouses) of such brothers and sisters.
(t) “Personal Goals” means goals applicable to a Plan Year which are established by the Committee on the advice of the Company’s CEO with respect to any member of the Executive Staff who participates in the SEIP provided such Personal Goals satisfy the requirements set forth in Section 6.
(u) “Plan Year” means the Company’s fiscal year. In the event that a Participant becomes eligible and is added to the MIP later than the beginning of the fiscal year, the Plan Year as to that Participant will comprise such shorter period as runs from the effective date of such addition to the end of the fiscal year, but in no case less than 90 days.
(v) “SEIP” means the Supplemental Executive Incentive Bonus Plan established under Section 3(e).
(w) “SEIP Bonus” means a portion of an Annual MIP Bonus to which a member of the Executive Staff may become entitled under SEIP based on achievement by such member of one or more Personal Goals established by the Committee for such member for any Plan Year.
(x) “Subsidiary” means any company or other entity with respect to which the Company, either directly or indirectly through another Subsidiary, owns a majority of the common stock or other equity interests or otherwise has the power to vote or sufficient securities to elect a majority of the directors or other managers.
(y) “Threshold Level of Achievement” means a minimum Level of Achievement of a Performance Criteria or Personal Goal applicable conflictsto a Plan Year which must be attained for the minimum level of law principles.
an Annual MIP Bonus which is based on achievement of that Performance Criteria or Personal Goal to become potentially payable.
Glossary of Defined Terms
|
| |
Term | Section |
Acquiror | 10(b)(2)(i) |
Acquisition Price | 10(b)(2)(i) |
Applicable Exchange | 4(a) |
Award | 3 |
Board | 1 |
Cause | 11(i)(1) |
Change-in-Control | 10(c)(1)(i) |
Code | 1 |
Committee | 4(a) |
Common Stock | 5(a)(1) |
Company | 1 |
Covered Employee | 11(h)(2) |
Designated Beneficiary | 8(c)(2) |
Determination Date | 11(i)(2)(ii) |
Effective Date | 12(d) |
Exchange Act | 4(c) |
Fair Market Value | 6(c) |
Good Reason | 10(c)(1)(ii) |
Incentive Stock Option | 6(b) |
Incumbent Directors | 10(c)(1)(iii) |
Independent SAR | 7(b)(2) |
Non-Employee Director | 4(a) |
Nonstatutory Stock Option | 6(a) |
Option | 6(a) |
Other Stock-Based Award | 9 |
Participant | 3 |
Performance Awards | 11(h)(1) |
Performance Period | 11(h)(4) |
Person | 10(c)(1)(i) |
Plan | 1 |
Reorganization Event | 10(b)(1) |
Restricted Stock | 8(a) |
Restricted Stock Award | 8(a) |
Restricted Stock Unit | 8(a) |
SAR | 7(a) |
Section 409A | 12(g)(1) |
Share | 5(a)(1) |
Substitute Awards | 5(c) |
Tandem SAR | 7(b)(1) |