UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14C
Information
Statement Pursuant to Section 14(c)
of
the Securities Exchange Act of 1934
Check the
appropriate box:
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¨
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Preliminary
Information Statement
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¨
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Confidential,
for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
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x
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Definitive
Information Statement
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LIGHTYEAR
NETWORK SOLUTIONS, INC.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing the Information Statement)
Payment
of Filing Fee (Check the appropriate box):
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¨
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Fee
computed on table below per Exchange Act Rules 14c-5(g) and Rule
0-11.
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1)
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Title
of each class of securities to which transaction
applies:
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2)
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Aggregate
number of securities to which transaction
applies:
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3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was
determined):
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4)
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Proposed
maximum aggregate value of
transaction:
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¨
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Fee
paid previously with preliminary
materials.
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¨
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its
filing.
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1)
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Amount
Previously Paid:
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2)
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Form,
Schedule or Registration Statement
No.:
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LIGHTYEAR
NETWORK SOLUTIONS, INC.
1901
Eastpoint Parkway
Louisville,
Kentucky 40223
(502)
244-6666
NOTICE
OF ACTION TAKEN WITHOUT A STOCKHOLDER MEETING
Approximate
Date of Mailing: September 2, 2010
To
the Stockholders of Lightyear Network Solutions, Inc.:
The
attached Information Statement is furnished by the Board of Directors (the
“
Board
”) of
Lightyear Network Solutions, Inc., a Nevada corporation (hereinafter, “
Lightyear
” or, the
“
Company
”). The
common stock of the Company is currently quoted on the Over the Counter Bulletin
Board (OTCBB.com).
The
attached Information Statement describes the Lightyear Network Solutions, Inc.
2010 Stock and Incentive Compensation Plan (the “
2010 Plan
”) designed
to (a) increase the profitability and growth of Lightyear; (b) provide
competitive compensation to employees; (c) attract and retain exceptional
personnel and encourage excellence in the performance of individual
responsibilities; and (d) motivate key employees and directors to contribute to
the success of the Company.
The
Information Statement is being mailed to holders of record of Company common
stock as of the close of business on May 18, 2010. The Company had
18,747,533 shares of common stock outstanding and 9,500,000 shares of
convertible preferred stock outstanding as of May 18, 2010.
On May
18, 2010, stockholders holding 69.0% of the Company’s outstanding voting
securities consented in writing to the 2010 Plan. This consent was
sufficient to approve the 2010 Plan under Nevada law and our
Bylaws.
PLEASE
NOTE THAT THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDERS
MEETING WILL BE HELD TO CONSIDER THE MATTERS DESCRIBED HEREIN. THIS INFORMATION
STATEMENT IS BEING FURNISHED TO YOU SOLELY FOR THE PURPOSE OF INFORMING
STOCKHOLDERS OF THE MATTERS DESCRIBED HEREIN PURSUANT TO SECTION 14(C) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND THE REGULATIONS PROMULGATED THEREUNDER,
INCLUDING REGULATION 14C.
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE
REQUESTED NOT TO SEND US A PROXY.
The
control share acquisition and dissenters’ rights provisions of Chapter 78 of the
Nevada Revised Statues are not applicable to the matters disclosed in this
Information Statement. Accordingly, there are no stockholder dissenters’ or
appraisal rights in connection with any of the matters discussed in the
following Information Statement.
INFORMATION
STATEMENT
Please
read this Notice and Information Statement carefully and in its entirety. It
describes the terms of the actions taken by the stockholders.
The
reports we file with the SEC and the accompanying exhibits may be inspected
without charge at the Public Reference Section of the Commission at 100 F
Street, NE, Washington, DC 20549. Copies of such materials may also be obtained
from the SEC at prescribed rates. The SEC also maintains a Web site (
www.sec.gov
)
that contains reports, proxy and information statements and other information
regarding public companies that file reports with the SEC.
Although
you will not have an opportunity to vote on the approval of the 2010 Plan, the
following Information Statement contains important information about the 2010
Plan and the business of the Company.
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By
Order of the Board of Directors
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/s/ J.
Sherman Henderson III
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J.
Sherman Henderson III,
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Chief
Executive Officer
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LIGHTYEAR
NETWORK SOLUTIONS, INC.
1901
Eastpoint Parkway
Louisville,
Kentucky 40223
(502)
244-6666
INFORMATION
STATEMENT
WE
ARE NOT ASKING YOU FOR A
PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
This
Information Statement is being furnished to the stockholders of Lightyear
Network Solutions, Inc., a Nevada corporation (“
Lightyear
,” the
“
Company
,”
“
we
” or “
us
”), to advise them
of the corporate actions that have been authorized by written consent of the
Company’s stockholders, who collectively own a majority of the Company’s
outstanding voting stock. These actions are being taken without notice, meetings
or votes in accordance with the Private Corporations law of the Nevada Revised
Statutes (“
NRS
”), Sections
78.315 and 78.320.
In accordance with Rule 14c-2
promulgated under the Securities Exchange Act of 1934, as amended (the
"
Exchange Act
"), the approval of
the action described herein by the holders of a majority of the voting power of
the Company will be deemed ratified and effective at a date that is at least 20
days after the date this Information Statement has been mailed or furnished to
our holders of Common Stock. We anticipate that this Information Statement is
first being mailed or furnished to stockholders on or about September 2,
2010.
Cautionary
Statement Concerning Forward-Looking Information
This
Information Statement, and any documents which we incorporate by reference into
this Information Statement, may contain “forward-looking statements.” All
statements other than statements of historical fact are “forward-looking
statements” for purposes of these provisions, including any projections of
earnings, revenues or other financial items, any statement of the plans and
objectives of management for future operations, and any statement of assumptions
underlying any of the foregoing. These statements may contain words such as
“expects,” “anticipates,” “plans,” “believes,” “projects,” and words of similar
meaning. These statements relate to our future business and financial
performance.
Actual
outcomes may differ materially from these statements. Any risk factors listed in
this Information Statement as well as any cautionary language in this
Information Statement, provide examples of risks, uncertainties and events that
may cause our actual results to differ materially from any expectations we
describe in our forward-looking statements. There may be other risks that we
have not described that may adversely affect our business and financial
condition. We disclaim any obligation to update or revise any of the
forward-looking statements contained in this Information Statement. We caution
you not to rely upon any forward-looking statement as representing our views as
of any date after the date of this Information Statement. You should carefully
review the information and risk factors set forth in other reports and documents
that we file from time to time with the SEC.
Lightyear’s
Common Stock is traded on the Over the Counter Bulletin Board
(OTCBB.com). On February 12, 2010, the Company and LY Holdings, LLC
(“
LYH
”), a
Kentucky limited liability company, entered into a securities exchange
transaction upon the approval of the Company’s board of directors (the “
Board
”). As
a result of this securities exchange transaction, the Company now owns 100% of
the equity in Lightyear Network Solutions, LLC (“
LNS
”), a Kentucky
limited liability company, and LYH owns 10,000,000 shares of Company common
stock and 9,500,000 shares of Company convertible preferred
stock. Each share of the Company common stock (“
Common Stock
”) and
Company preferred stock (“
Preferred Stock
”) has
the right to one vote, and the Common Stock and Preferred Stock vote together as
a single class. As such, LYH holds a controlling voting interest in
the Company.
Corporate Action
Taken
On May
18, 2010, LYH, casting 19,500,000 votes in favor of approval of the Lightyear
Network Solutions, Inc. 2010 Stock and Incentive Compensation Plan (the “
2010 Plan
”),
consented in writing to approval of the 2010 Plan. As of May 18,
2010, there were 18,247,533 shares of Common Stock and 9,500,000 shares of
Preferred Stock outstanding.
No
Vote Required
We are
not soliciting consents to approve the 2010 Plan. Approval of the
2010 Plan required a majority vote by the holders of voting
stock. Nevada law permits the Company to take any action which may be
taken at an annual or special meeting of its stockholders by written consent, if
the holders of a majority of the voting power sign and deliver a written consent
to the action to the Company.
No
Appraisal Rights
Under
Nevada law, stockholders have no appraisal or dissenters’ rights in connection
with the approval of the 2010 Plan. The control share acquisition and
dissenters’ rights provisions of Chapter 78 of the Nevada Revised Statues are
not applicable to the matters disclosed in this Information Statement.
Accordingly, there are no stockholder dissenters’ or appraisal rights in
connection with any of the matters discussed in this Information
Statement. No action needs to be taken by stockholders with regard to
this Information Statement and failure to take such action will not result in a
waiver of any appraisal or similar rights that a stockholder may
have.
Interests
of Certain Parties in the Matters to be Acted Upon
Each of
the directors and executive officers of the Company is eligible to participate
in the 2010 Plan as described in the section of this Information Statement
entitled, “2010 Plan Information – Persons Who May Participate in the 2010
Plan.” None of the Company’s directors informed the Company that he
opposed the 2010 Plan.
Change
in Control
On
February 12, 2010, the officers of LNS assumed operating control of the
Company. Moreover, LYH now holds 47.5% of the outstanding shares of
Common Stock and 100% of the outstanding shares of Preferred Stock, totaling a
65.0% voting interest in the Company. The transactions which resulted
in this change of control are described more fully in the Section of Item 2.01
of the Company’s Current Report on Form 8-K/A filed on March 31, 2010 entitled,
“Exchange Transaction.” More information regarding the beneficial ownership of
the shareholders of the Company may be found in “Security Ownership of Certain
Beneficial Owners,” below.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following tables set forth as of
May 18, 2010 beneficial ownership of the Company by the following groups: (i)
each of our directors, (ii) each of our named executive officers, (iii) all of
our directors and named executive officers as a group, and (iv) each stockholder
known by us to be the beneficial owner of more than 5% of the outstanding shares
of our Common Stock.
The
shares of Common Stock indicated as being owned by LYH in the following table
include both shares of Common Stock and of Preferred Stock.
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Directors and Executives Officers
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Amount and Nature of Beneficial Onwership
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P
ercent of Class (%)
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J.
Sherman Henderson III
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—
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0
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%
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Chris
T. Sullivan
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—
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0
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%
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Brent
Rice
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—
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0
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%
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Ronald
L. Carmicle
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—
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0
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%
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Rigdon
O. Dees III
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—
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0
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%
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Stephen
M. Lochmueller
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—
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0
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%
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Randy
Ammon
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—
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0
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%
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Elaine
G. Bush
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—
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0
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%
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John
Greive
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—
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0
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%
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Total
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—
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0
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%
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Directors
and Executive Officers as a Group
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—
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0
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%
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Total
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—
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0
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%
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5% Beneficial Owners
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Amount and Nature of Beneficial Onwership
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P
ercent of Class (%)
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LY
Holdings, LLC(1)
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19,500,000
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69
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%
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Total
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19,500,000
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69
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%
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(1) The
business address of LY Holdings, LLC is 1901 Eastpoint Parkway, Louisville, KY
40223. LY Holdings, LLC owns 10,000,000 shares of Common Stock and
9,500,000 shares of Preferred Stock.
EXECUTIVE
COMPENSATION
Summary Compensation
Table
The
following Summary Compensation Table indicates the cash and non-cash
compensation earned during the years ended 2009 and 2008 by the Named Executive
Officers of Lightyear:
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Name and Principal Position
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Year
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Salary
($)
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Bonus
($)
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All Other
Compensation
($)
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Total
($)
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J.
Sherman Henderson III,
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2009
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$
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343,615
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$
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0
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$
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60,375
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(1)(2)(3)
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$
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403,990
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CEO
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2008
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$
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360,000
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$
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0
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$
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58,477
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(1)(2)(3)
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$
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418,477
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Elaine
G. Bush,
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Chief
Financial Officer
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2009
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$
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138,294
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$
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0
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$
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0
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$
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138,924
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2008
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$
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144,000
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$
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11,280
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-
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$
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155,280
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Stephen
M. Lochmueller,(4)
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2009
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$
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48,461
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$
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0
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$
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0
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$
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48,461
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President
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2008
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$
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0
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$
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0
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$
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0
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$
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0
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Josh
Henderson,(5)
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Sr.
Vice President, Sales and Marketing
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2009
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$
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105,452
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$
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0
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$
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129,042
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(6)
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$
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234,494
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2008
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$
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130,523
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$
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11,794
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$
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67,273
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(6)
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$
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209,590
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(1)
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Includes
an automobile allowance of $13,690 per
year.
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(2)
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Includes
$39,828 and $35,587
for
life insurance paid for 2009 and 2008,
respectively.
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(3)
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Includes
matching Company contribution for 401(k)
plan.
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(4)
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Mr.
Lochmueller was hired as Chief Operating Officer on September 1, 2009, and
became President on April 29, 2010.
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(5)
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Mr.
Henderson ceased to be an executive officer in October,
2009.
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(6)
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Monies
were paid to Rover One, LLC through its Direct Sales Agreement with
Lightyear.
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Outstanding Equity Awards at Fiscal
Year-End
No equity was awarded by Lightyear
during the year 2009 and no equity awards were outstanding on December 31,
2009.
Narrative Disclosure to Summary
Compensation Table
Under the
2003 Employment Agreement between J. Sherman Henderson III and Lightyear, Mr.
Henderson is to receive an annual salary of $450,000 and certain benefits
(including the use of an automobile and life insurance, as well as participation
in the Company’s executive benefit plans). However, Mr. Henderson
agreed to salary reductions in January 2008, July 2009, December 2009 and June
2010, resulting in an annual base salary of $282,000 as of September 2,
2010. Also, Mr. Henderson has waived any back pay which may have
resulted from his reduction in salary.
Mr.
Henderson’s employment agreement was initially due to expire on December 31,
2008 but contains a provision automatically renewing it for successive one-year
terms. The current term began on January 1, 2010. While
the agreement contemplates that Mr. Henderson would be eligible for bonuses
calculated in accordance with the achievement of certain revenue targets, no
bonus plan is currently in place for Mr. Henderson. Mr. Henderson
will receive continuation of his salary for an eighteen month severance period
in the event of his termination for reasons other than death or cause, or, in
the event of his disability, a severance amount equal to his salary multiplied
by the greater of (i) two or (ii) the number of years remaining in his
employment term.
Mr.
Lochmueller’s current annual salary is $180,000. Mr. Lochmueller was
appointed as President of Lightyear on April 29, 2010 and previously served as
the Company’s Chief Operating Officer.
Ms.
Bush’s annual salary for the year ended December 31, 2009 was $129,600 (reduced
from $144,000 on July 19, 2009). Ms. Bush’s annual salary for the
year ended December 31, 2008 was $144,000.
John S.
“Josh” Henderson, IV formerly served as LNS’ Senior Vice President of Sales and
Marketing. Mr. Henderson’s salary for the year ended December 31,
2008 was $134,400. Mr. Henderson’s salary was decreased to $120,960
on July 19, 2009, and he separated from employment with LNS on a mutually agreed
basis on October 9, 2009.
401(k)
Plan
Lightyear
maintains a profit-sharing plan qualified under Section 401(k) of the Internal
Revenue Code. The Company may make discretionary matching
contributions to the profit-sharing plan, subject to certain limitations. During
2009, the Company did not make any matching contributions.
Other Compensation
We provide our executive officers
with medical, life, dental and vision insurance coverage consistent with that
provided to our other employees except that executive officers receive
additional life insurance coverage. Mr. Henderson’s employment
agreement provides for $6,000,000 in life insurance of which Mr. Henderson’s
family or trusts may be the beneficiary.
DIRECTOR
COMPENSATION
Director Compensation
Table
Other than Ron Carmicle, the Company
does not compensate the members of its board of directors for service in that
capacity. Mr. Carmicle is the only current member of the board of directors who
is not a beneficial owner of LYH. The following table summarizes compensation
paid to non-employee directors of Lightyear for 2009 and 2008:
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Fees
Earned or
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Stock
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Option
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Non-Equity
Incentive Plan
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Nonqualified
Deferred
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All Other
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Awards
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Awards
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Compensation
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Compensation
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Compensation
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Total
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Name
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Year
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Cash
|
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($)
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($)
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($)
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Earnings
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($)
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($)
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Ron
Carmicle
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2009
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$
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10,000
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0
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0
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0
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0
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0
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$
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10,000
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2008
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$
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10,000
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0
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0
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|
0
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0
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0
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$
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10,000
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Lightyear has agreed to pay Ron
Carmicle $1,500 per board meeting for a total amount of compensation of not less
than $10,000 per year.
2010
PLAN INFORMATION
The following is a summary of the
material provisions of the 2010 Plan. This summary does not purport
to be complete and is qualified in its entirety by reference to the 2010 Plan, a
copy of which is attached as Annex A.
Purposes
of the 2010 Plan
The purposes of the 2010 Plan are to
(a) increase the profitability and growth of Lightyear; (b) provide competitive
compensation to employees; (c) attract and retain exceptional personnel and
encourage excellence in the performance of individual responsibilities; and (d)
motivate key employees and directors to contribute to the success of
Lightyear.
Term
of the 2010 Plan
The 2010 Plan does not have a
termination date, but no incentive stock option may be issued on or after the
tenth anniversary of the effective date of the 2010 Plan.
ERISA
The 2010 Plan is not subject to the
provisions of the Employee Retirement Income Security Act of 1974, as
amended.
Shares
Available
The 2010
Plan provides for the reservation of 1,000,000 shares of Common Stock for
issuance pursuant to awards under the 2010 Plan. The number of shares authorized
to be issued under the 2010 Plan is subject to adjustment for certain changes in
the capitalization of Lightyear including any event of merger, reorganization,
consolidation, recapitalization, separation, liquidation, stock dividend,
split-up, share combination, or other change in the corporate structure of
Lightyear affecting the number of shares of stock or the kind of shares or
securities issuable upon exercise of an option or payment of another
award.
The
following limitations apply to any awards made under the 2010 Plan:
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§
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the
maximum number of shares of stock that may be subject to all awards
granted during any calendar year to any one participant is
200,000;
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§
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the
maximum performance-based cash compensation awarded during any calendar
year to any one participant is
$500,000;
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§
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the
maximum number of shares of stock that may be subject to purchase pursuant
to incentive stock options granted under the 2010 Plan is 1,000,000;
and
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§
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the
maximum number of shares of stock that may be subject to issuance under
awards that are Full Value Awards shall be 200,000; “
Full Value
Awards
” means any award under which a participant may be issued
shares of stock without the participant tendering consideration therefor
in the form of stock or cash at least equal to the fair market value at
the grant date of the stock issuable upon exercise or maturity of the
award.
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Administration
The 2010
Plan is currently administered by the full Board but in the future the Board may
appoint a committee (the “
Committee
”)
consisting of two or more members of the Board, each of whom is both an “outside
director” and a “non-employee director.”
The
Committee has the authority to grant and determine the terms of awards to such
employees, contractors and directors as the Committee may select in its sole
discretion. The Committee is also authorized to: construe and
interpret the 2010 Plan; establish, amend or waive rules and regulations for the
administration of the 2010 Plan; determine and accelerate the exercisability of
any award or the termination of any restriction period; correct inconsistencies
in the 2010 Plan or in any award agreement, or any other instrument relating to
an award; and amend the terms and conditions of any award to the extent such
terms and conditions are within the discretion of the Committee as provided in
the 2010 Plan, and subject to the consent of the recipient of an outstanding
award when applicable.
Any
construction of the 2010 Plan must be made in a manner the Committee believes is
consistent with awards not constituting “deferred compensation” within the
meaning of Section 409A of the Internal Revenue Code or to comply with that Code
section’s requirements, and with respect to incentive stock options, consistent
with the Internal Revenue Code and regulations governing the preservation of
their tax treatment.
Persons
Who May Participate in the 2010 Plan
Persons
eligible for awards under the 2010 Plan are employees or non-employee directors
of, or independent contractors to, Lightyear who are selected by the Committee
due to their potential to contribute substantially to the growth and
profitability of Lightyear, except that the amount and terms of awards to
directors are to be determined by the entire Board. Only employees
are eligible to be awarded incentive stock options.
Form
and Terms of Awards
The 2010
Plan authorizes the granting of awards, including shares of Common Stock, in any
combination of the following:
|
|
§
|
stock
options, including incentive stock options and nonqualified stock
options;
|
|
|
§
|
stock
appreciation right (“
SARs
”);
|
|
|
§
|
restricted
stock awards;
|
|
|
§
|
performance
share or cash awards; and
|
|
|
§
|
restricted
stock units.
|
All
awards to participants under the 2010 Plan are subject to terms, conditions, and
limitations as determined by the Committee and as evidenced by an award
agreement. A summary of each type of award is as follows:
Stock
Options
A stock
option confers upon the awardee the right to purchase a certain number of shares
of our Common Stock at an established exercise price. A stock option
granted to an employee under the 2010 Plan may consist of either an incentive
stock option that complies with the requirements of Section 422 of the Internal
Revenue Code or a nonqualified stock option that does not comply with those
requirements. A stock option granted to a director or independent contractor
under the 2010 Plan must be a nonqualified stock option.
The
Committee will establish the exercise price of all options under the 2010 Plan,
except all options must have an exercise price per share that is not less than
the fair market value of the Common Stock on the date of grant. Additionally, an
incentive stock option granted to a person who on the date of grant owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of Lightyear or any of its subsidiaries must have an exercise price that
is at least 110% of the fair market value of the stock on the grant date.
Subject to certain adjustment provisions of the 2010 Plan that apply only on
specified corporate events, the exercise price of an option granted under the
2010 Plan may not be decreased.
The
Committee will establish the term of any options; however, the term of an
incentive stock option may not extend more than ten years after the date of
grant. Incentive stock options that are awarded to employees who on the grant
date own or are deemed to own more than 10% of the total combined voting power
of all classes of stock of Lightyear may not exercise such options later than
five years from the grant date.
Options
must be exercised during employment with Lightyear, except that after a
participant’s termination of service an option may be exercised only to the
extent that the award was exercisable immediately before the termination of
service, but in no event after the expiration date of the award as specified in
the award agreement. Except to the extent that shorter or longer periods are
provided in the award agreement, a participant’s right to exercise an award upon
termination of service will terminate:
|
|
(i)
|
At
the expiration of three months (incentive stock options) or one year
(nonqualified stock options) after the participant’s retirement; however,
if an incentive stock option is not exercised after three months, it will
remain exercisable for the longer period allowed for retirement as if it
were a nonqualified stock option and will be a nonqualified stock option
when exercised; or
|
|
|
(ii)
|
At
the expiration of one year in the event of disability of the participant;
or
|
|
|
(iii)
|
At
the expiration of one year after the participant’s death if the
participant’s termination of service occurs by reason of death (the legal
representative of the estate of the participant or the person or persons
who acquire the right to exercise the award by bequest or inheritance may
exercise an award after the participant’s death);
or
|
|
|
(iv)
|
No
later than three months after the participant’s termination of service for
any reason other than those described in (i) through (iii). If the
participant is terminated for cause as that term is defined in Section 8.2
of the 2010 Plan, the participant will forfeit any and all unexercised
options immediately upon termination of
service.
|
Participants are only eligible to
exercise incentive stock options with a fair market value of up to $100,000 in
any calendar year. To the extent that a participant has incentive stock options
with a fair market value in excess of the $100,000 limit, the options will be
treated as nonqualified stock options for tax purposes.
An option can be exercised, as long as
it is vested and outstanding, from time to time in part or as a whole, by a
written notice of exercise in the form prescribed by the Committee. The written
notice must specify the number of shares to be purchased and must be accompanied
by payment in full of the exercise price in accordance with Section 6.8 of the
2010 Plan, and must otherwise be in accordance with the award agreement. In the
case of a nonqualified stock option, any required withholding taxes must be
provided pursuant to Section 15 of the 2010 Plan.
Stock
Appreciations Rights (“SARs”)
Stock
appreciation rights provide that the participant can be issued or paid stock
equal to the appreciation in value of a share of stock after the award’s grant
date. A stock appreciation right may be granted under the 2010 Plan with respect
to all or a portion of the shares of Common Stock subject to a stock option or
may be granted separately.
The
exercise price per share of stock subject to a SAR will be determined by the
Committee at the time of grant and may not be less than the fair market value of
the Common Stock on the date of grant. The exercise period will also be
determined by the Committee, and unless otherwise specified in the award
agreement, no SAR will be exercisable later than ten years from the grant
date.
SARs must
be exercised during employment with Lightyear, except that after a participant’s
termination of service a SAR may be exercised only to the extent that the award
was exercisable immediately before the termination of service, but in no event
after the expiration date of the award as specified in the award agreement.
Except to the extent that shorter or longer periods are provided in the award
agreement, a participant’s right to exercise an award upon termination of
service will terminate:
|
|
(i)
|
At
the expiration of one year after the participant’s retirement;
or
|
|
|
(ii)
|
At
the expiration of one year in the event of disability of the participant;
or
|
|
|
(iii)
|
At
the expiration of one year after the participant’s death if the
participant’s termination of service occurs by reason of death (the legal
representative of the estate of the participant or the person or persons
who acquire the right to exercise the award by bequest or inheritance may
exercise an award after the participant’s death);
or
|
|
|
(iv)
|
No
later than three months after the participant’s termination of service for
any reason other than those described in (i) through (iii). If the
participant is terminated for cause as that term is defined in Section 8.2
of the 2010 Plan, the participant will forfeit any and all unexercised
options immediately upon termination of
service.
|
A
participant may exercise a SAR if it is vested and outstanding, from time to
time in part or as a whole, subject to the terms in the award agreement. To
exercise a SAR, the participant or other person(s) entitled to exercise the SAR
must give written notice to the Committee, specifying the number of full shares
with respect to which the SAR is being exercised.
Upon the
exercise of a SAR, a participant is entitled to receive a number of whole shares
of Lightyear stock (with cash for any fractional shares) in an amount equal in
value to the extent to which the fair market value per share of Lightyear stock
exceeds the exercise price per share, multiplied by the number of shares with
respect to which the SAR is exercised.
Restricted
Stock Awards
Restricted
stock awards provide that shares of stock are granted subject to a restriction
period and/or condition which, if not satisfied, may result in the complete or
partial forfeiture of such stock. Shares awarded as restricted stock
awards are subject to such conditions, terms, restrictions against transfer,
substantial risks of forfeiture and attainment of performance objectives and for
such periods as the Committee determines. During the period restricted stock is
subject to forfeiture, the Secretary of Lightyear will hold the share
certificates for the recipient’s benefit, but the recipient will have the right
to receive dividends, to vote and to enjoy all other shareholder rights with
respect to the restricted stock, except that the recipient cannot sell,
transfer, pledge, exchange or otherwise dispose of the restricted stock, and any
attempt to do so will cause the immediate forfeiture of the restricted
stock.
In the
event of a participant’s termination of service during the period restricted
stock is subject to forfeiture, for any reason, the participant’s rights to the
stock subject to the restricted stock award will be forfeited and all
such stock will immediately be surrendered to Lightyear. The Committee may
provide in an award agreement that a restriction period that has not otherwise
expired will extend beyond a termination of service of the participant, if the
termination occurs by virtue of retirement, disability, or death.
Restricted
stock awards are not transferable, other than by will or the laws of descent and
distribution, until any restrictions applicable to a restricted stock award have
lapsed and Lightyear issues a certificate evidencing the participant’s ownership
of the stock free of restriction.
Restricted Stock Units
Restricted
stock units provide that shares of stock will be issued to a recipient upon the
lapse of restrictions determined in the award agreement. The recipient will not
have dividend, voting or other shareholder rights with respect to a restricted
stock unit at any time before the recipient has become the holder of the shares
subject to the restricted stock unit. However, the Committee may award a cash
dividend right or a dividend unit right in tandem with a restricted stock unit.
A cash dividend right entitles the recipient to receive an amount in cash equal
to any cash distributions made with respect to the common shares during the
period the restricted stock unit is outstanding. A dividend unit right entitles
the recipient to have an additional number of restricted stock units credited to
the recipient equal to the number of shares that could be purchased at fair
market value with the amount of each cash distribution made with respect to the
common shares during the period the restricted stock unit is
outstanding.
Performance Awards
Performance
awards entitle a recipient to receive Common Stock, cash or combination of the
two upon the satisfaction of performance measures established in the award
agreement. Performance awards may be intended to meet the requirements of
qualified performance-based compensation under Section 162(m) of the Internal
Revenue Code. The goals intended to satisfy Section 162(m) of the Internal
Revenue Code must be established by the Committee prior to the earlier
of:
|
|
§
|
90
days after the commencement of the period of service to which the
performance goals relate, and
|
|
|
§
|
the
lapse of 25% of the period of service require to vest on an
award.
|
A
performance award that is intended to meet the requirements of Section 162(m) of
the Internal Revenue Code will be subject to the achievement of one or more
objective performance goals established by, and the satisfaction of which is
certified by, the Committee, based on the attainment of specified levels of one
of or any combination of the following performance criteria for Lightyear as a
whole or any business unit of Lightyear, as reported or calculated by
Lightyear: (i) revenues; (ii) earnings from operations, earnings before or
after taxes, earnings before or after interest, depreciation, amortization,
incentive service fees or extraordinary or special items; (iii) net income or
net income per share (basic or diluted); (iv) earnings per share growth or
growth as compared with a peer group of companies; (v) return on assets, return
on investment, return on capital, or return on equity; (vi) cash flow, free cash
flow, cash flow return on investment, or net cash provided by operations; (vii)
economic value created; (viii) one or more operating ratios specified with
particularity by the Committee upon the award; (ix) stock price, dividends or
total stockholder return; (x) the accomplishment of mergers, acquisitions,
dispositions, public offerings or similar extraordinary business transactions,
or (xi) quality goals that are objectively determinable. Such performance
goals also may be based on the achievement of specified levels of company
performance (or performance of an applicable affiliate, division or business
unit of Lightyear) under one or more of the performance criteria described above
relative to the performance of other corporations. Such performance goals will
be set by the Committee over a specified performance period that will not be
shorter than one year, and will otherwise comply with the requirements of,
Section 162(m) of the Internal Revenue Code, and the regulations
thereunder. Before the payment of any performance award based on the
achievement of performance goals pursuant to Section 162(m) of the Internal
Revenue Code, the Committee must certify that the applicable performance goals
and any material terms were in fact satisfied.
The
Committee will establish the method of calculating the amount of payment to be
made under a cash performance award and will determine the number of full shares
(and the fraction to be paid in cash) to be issued under a performance share
award.
Restriction
on Transfer
Incentive
stock options, restricted stock awards, restricted stock units and performance
share or cash awards granted under the 2010 Plan are not transferable by the
recipient otherwise than by will or the laws of descent and distribution, and
can be exercised during the award holder’s lifetime only by the recipient (or,
in the event of the recipient’s legal incapacity or incompetency, the recipient
guardian or legal representative).
If
specifically provided in the award agreement, nonqualified stock options or SARs
(other than those issued in tandem with incentive stock options) may be
transferred by a participant to a “Permitted Transferee.” “
Permitted Transferee
”
means a member of a participant’s immediate family or household, certain trusts
benefiting those persons, a charitable foundation managed by the participant or
his family, or an entity which the participant controls, provided that no
consideration is provided for the transfer.
Recapitalization
or Change in Control
Subject
to the terms of any award agreement, if a change in control occurs, and
awards are not to continue and be assumed or replaced in the transaction with
comparable types of awards of substantially equivalent value, then:
|
|
§
|
outstanding
stock awards are subject to accelerated vesting if the award would
otherwise terminate upon the actual consummation or the happening of a
change in control;
|
|
|
§
|
alternatively,
in its discretion, the Committee may, in lieu of the exercise of an award,
make a cash payment to the participant in an amount equal to the economic
value to be received if such award had been exercised just prior to the
occurrence of the change in control transaction;
or
|
|
|
§
|
if
no exercise of a stock award is required (e.g., with respect to restricted
stock or a restricted stock unit or performance shares), and no cash
payment is made to the participant in lieu of the exercise of an award,
the stock award will become nonforfeitable in
full.
|
With
respect to Awards that continue because they are assumed or replaced in a change
in control, unless the Committee provides to the contrary in an award agreement,
with respect to any participant who incurs a termination of service within 12
months following the transaction, all awards made prior to the change of control
shall immediately become nonforfeitable and will be exercisable in accordance
with the 2010 Plan. The 2010 Plan describes a “
change in control
”
as:
|
|
§
|
an
event or series of events which have the effect of any “person” as
such term is used in Section 13(d) and 14(d) of the Exchange Act,
other than any trustee or other fiduciary holding securities of Lightyear
under any employee benefit plan of Lightyear, becoming the “beneficial
owner” as defined in Rule 13d-3 under the Exchange Act, directly or
indirectly, of securities of Lightyear representing 35% or more of the
combined voting power of Lightyear’s then outstanding stock other than by
an employee benefit plan sponsored by Lightyear or by a person who
owns such a percentage at the Effective
Date;
|
|
|
§
|
during
any period of two consecutive years, individuals who at the beginning of
such period constitute the Board cease for any reason to constitute a
majority thereof, unless the election, or the nomination for election by
the stockholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period;
|
|
|
§
|
the
shareholders of Lightyear approve a definitive agreement to enter into a
merger, consolidation, share exchange or other transaction with or into
another company (other than a transaction that would result in the voting
securities of Lightyear outstanding immediately prior to such transaction
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 65% of
the combined voting power of the voting securities of Lightyear or such
surviving entity outstanding immediately after such transaction) or to
sell or otherwise transfer all or substantially all of Lightyear’s assets
or to adopt a plan of liquidation;
and
|
|
|
§
|
if
(i) Lightyear enters into an agreement, the consummation of which
would result in the occurrence of a change of control, or (ii) the
Board adopts a resolution to the effect that a change of control for
purposes of this Plan has
occurred.
|
Provided,
however, that the Committee may provide in an Award Agreement that it believes
may constitute “deferred compensation” pursuant to Code Section 409A, that
“change of control” will have the meaning given in guidance from the Internal
Revenue Service construing that term for purposes of allowable triggers for
payment of deferred compensation, and such definition shall apply in all events
with respect to Cash Awards.
Terms
of the Plan, Amendments and Termination
The Board
may terminate, suspend, amend or alter the 2010 Plan in response to any legal
requirements or for any other purpose permitted by law; provided, however, the
Board may not:
|
|
§
|
adversely
affect the rights of a participant under an outstanding award without the
consent of the participant;
|
|
|
§
|
extend
the option period or exercise period of a SAR or the vesting/payment (and
taxation) date of a restricted stock award or a performance share award
beyond that originally stated in the award agreement, if such extension
would subject the award to the excise taxes provided under Section 409A of
the Internal Revenue Code;
|
|
|
§
|
decrease
the price of an option or the base price of any SAR to less than the fair
market value on the date the award was granted;
or
|
|
|
§
|
without
the approval of the stockholders: increase the total amount of stock which
may be delivered under the 2010 Plan; extend the period during which
awards may be granted; or make an amendment that would adversely affect an
award’s continued eligibility for the performance-based compensation
exemption under Section 162(m) of the Internal Revenue
Code.
|
Federal
Income Tax Consequences
The
following is a discussion of material U.S. federal income tax consequences to
participants in the 2010 Plan, based on the law as in effect on the date of this
Information Statement. This discussion is limited, and does not cover state,
local, or foreign tax treatment of participation in the 2010 Plan. Differences
in participants’ financial situations may cause tax consequences of
participation in the 2010 Plan to vary.
Participants
will not realize taxable income upon the grant of an option or SAR. Upon the
exercise of a nonqualified stock option or SAR, the participant will recognize
ordinary income. In the case of employees, the ordinary income is subject to
income, FICA and Medicare tax withholding by Lightyear and is an amount equal to
the excess of the amount of cash and the fair market value of the Common Stock
received on the date of exercise over the exercise price, if any, paid by the
employee. Tax withholding is not required for options or SARs exercised by
non-employee directors or independent contractors.
The
participant will generally have a tax basis in any shares of Common Stock
received pursuant to the exercise of a nonqualified option or SAR, that equals
the fair market value of the shares on the date of exercise. Generally,
Lightyear will be entitled to a deduction for U.S. federal income tax purposes
that corresponds as to timing and amount with the income recognized by the
participant.
Employees
will not have taxable income upon the grant of an incentive stock option. Upon
the exercise of an incentive stock option, the employee will not have taxable
income, although the excess of the fair market value of the shares of Common
Stock received upon exercise of the incentive stock option over the exercise
price will increase the alternative minimum taxable income of the employee,
which may cause the employee to incur alternative minimum tax. The payment of
any alternative minimum tax due to the exercise of an incentive stock option may
be allowed as a credit against the employee’s regular tax liability in a later
year if the employee’s regular tax liability is in excess of the alternative
minimum tax for that year.
Upon the
disposition of stock received upon exercise of a stock option that has been held
for the requisite holding period (generally one year from the date of exercise
and, with respect to incentive stock options, two years from the date of grant
of the option), the employee will generally recognize capital gain or loss equal
to the difference between the amount received in the disposition and the
exercise price paid. However, if an employee disposes of stock that has not been
held for the requisite holding period (a “disqualifying disposition”), the
employee will recognize ordinary income in the year of the disposition to the
extent that the fair market value of the stock at the time of exercise of the
option, exceeds the exercise price paid by the employee for the stock. The
employee will also recognize capital gain, or, depending on the holding period,
additional ordinary income, to the extent the amount realized in the disposition
exceeds the fair market value of the stock on the exercise date. If the exercise
price paid for the stock exceeds the amount realized in the disposition, the
excess would ordinarily be a capital loss. Any increase or decrease in value of
stock acquired upon exercise of a nonqualified stock option will generally be
taxed to the employee, director or independent contractor at a later sale of
that stock as a capital gain or loss (long term, if the required one year
holding period is met).
Lightyear
is generally not entitled to any federal income tax deduction upon the grant or
exercise of an incentive stock option, unless the employee makes a disqualifying
disposition of the stock. If an employee makes a disqualifying disposition, and
upon any exercise of a nonqualified stock option, Lightyear will be entitled to
a tax deduction that corresponds as to timing and amount with the compensation
income recognized by the employee, director or independent
contractor.
A
participant will recognize ordinary compensation income upon receipt of cash
pursuant to a cash performance award or, if earlier, at the time the cash is
otherwise made available for the participant to draw upon it.
A
participant will not have taxable income upon the grant of a stock award in the
form of units denominated in Common Stock but rather will generally recognize
ordinary compensation income at the time the participant receives Common Stock
in satisfaction of a stock unit award in an amount equal to the fair market
value of the Common Stock received. In general, a participant will recognize
ordinary compensation income as a result of the receipt of Common Stock pursuant
to a restricted stock or performance share award in an amount equal to the fair
market value of the Common Stock when the stock is received; provided, however,
that if the stock is not transferable and is subject to a substantial risk of
forfeiture when received, the participant will recognize ordinary compensation
income in an amount equal to the fair market value of the Common Stock when it
first becomes transferable or is no longer subject to a substantial risk of
forfeiture, unless the participant makes an election shortly after he is granted
an award to be taxed on the fair market value of the Common Stock when the stock
is received.
An
employee will be subject to tax withholding for federal, and generally for state
and local, income and employment taxes, at the time the employee recognizes
income with respect to Common Stock or cash received pursuant to a cash or share
performance award, restricted stock award, or restricted stock unit award.
Dividends that are received by a participant before the time that the Common
Stock is taxed to the participant are taxed as additional compensation, not as
dividend income. A participant’s tax basis in the Common Stock received will
equal the amount recognized by the participant as compensation income, and the
participant’s tax holding period in the shares will commence on the date income
is recognized.
Awards
under the 2010 Plan
All awards under the 2010 Plan will be
granted at the discretion of the Committee, as
appropriate. Therefore, the total benefits that will be received by
any particular group or person under the 2010 Plan are not determinable at this
time.
On May
19, 2010, the Company granted incentive stock options and nonqualified stock
options (collectively, the “
Options
”) to certain
of its officers and non-executive employees under the 2010 Plan. The
Options grant the holder the right to purchase one share of Common Stock, have a
ten-year term, and have an exercise price of $3.90. The Options
become exercisable in three equal annual installments beginning on the first
anniversary of the date of grant.
The below table lists the individuals
and groups that were awarded the Options:
|
Name and Position
|
|
Type of Award
|
|
Number of Options
|
|
J.
Sherman Henderson III, Chief Executive Officer
|
|
-
|
|
0
|
|
Stephen
M. Lochmueller, President
|
|
Incentive
Stock Options
|
|
76,923
|
|
Stephen
M. Lochmueller, President
|
|
Nonqualified
Stock Options
|
|
73,077
|
|
Elaine
G. Bush, Chief Financial Officer
|
|
Incentive
Stock Options
|
|
75,000
|
|
All
Current Executive Officers, as a group
|
|
Incentive
Stock Options
|
|
297,346
|
|
All
Current Executive Officers, as a group
|
|
Nonqualified
Stock Options
|
|
196,154
|
|
All
Current Non-Employee Directors, as a group
|
|
-
|
|
0
|
|
All
Employees, excluding executive officers
|
|
Incentive
Stock Options
|
|
293,000
|
DESCRIPTION
OF CAPITAL STOCK
The
following descriptions of Lightyear Network Solutions, Inc. capital stock are
only summaries and do not purport to be complete and are subject to and
qualified by Lightyear’s Amended and Restated Articles of Incorporation (the
“
Amended
Articles
”) and Bylaws, as filed with the SEC, and by the provisions of
the applicable corporate laws of the State of Nevada.
Common
Stock
Holders
of Common Stock are entitled to one vote for each share held of record on all
matters submitted to a vote of the stockholders. Lightyear may pay
dividends at such time and to the extent declared by the Board in accordance
with Nevada corporate law
.
Common Stock has no preemptive or other subscription rights, and there
are no conversion rights or redemption or sinking fund provisions with respect
to such shares. All outstanding shares of Common Stock are fully paid and
non-assessable. To the extent that additional shares of Common Stock may be
issued in the future, the relative interests of the then existing stockholders
may be diluted. The rights, preferences and privileges of Common Stock are
subject to the rights, preferences and privileges of Preferred Stock, as
described below.
Preferred
Stock
Each
share of Preferred Stock has the following rights, preferences and privileges,
including:
Stated Value
The stated value (“
Stated Value
”) of
Preferred Stock is $2.00 per share.
Dividends
Holders of Preferred Stock are
entitled to receive dividends at the rate of 5% of the aggregate Stated Value of
Preferred Stock held by them per annum, which shall accrue and be
payable when, as and if declared by the Board. If the Company fails to pay
dividends on Preferred Stock on a quarterly basis, the dividend payment rate
will increase to 8% per annum with respect to dividends previously
accrued and unpaid and any future dividend payments, until such time as all
accrued dividends have been paid and distributed, at which time the rate
of 5% per annum shall resume.
Conversion
Preferred Stock is convertible at
any time or from time to time, in whole or in part, at the option of the holder,
into shares of Common Stock (the “
Conversion Shares
”)
by multiplying the number of shares of Preferred Stock being converted by the
Applicable Conversion Rate. The “
Applicable Conversion
Rate
” means the quotient obtained by dividing the Stated Value by the
then-current Optional Conversion Price. The “
Optional Conversion
Price
” will initially be equal to the Stated Value, and thereafter is
adjusted as set forth below.
Holders of Preferred Stock are required
to convert Preferred Stock into shares of Common Stock upon any of the following
events:
|
|
·
|
An
underwritten or registered direct secondary public offering for not less
than $40 million of gross proceeds (a “
Qualifying
Secondary
”) and the Conversion Shares are (a) registered for
resale, and (b) not subject to any lock-up or other restriction on
transfer following the 180th day from closing of the Qualifying
Secondary;
|
|
|
·
|
Common
Stock has for 20 consecutive trading days (a) traded at a price equal to
not less than 200% of the then Optional Conversion Price and (b) traded
not less than 500,000 shares per day;
or
|
|
|
·
|
Conversion
of at least 50% of the amount of Preferred Stock originally
issued.
|
Adjustment
of the Optional Conversion Price
The Optional Conversion Price is
adjusted ratably for all stock splits, stock dividends, reclassifications, or
similar events.
Liquidation Preference
In the event of a winding up,
dissolution or liquidation of the Company, or upon a Change of Control
transaction, the holders of the Preferred Stock will receive an amount per share
equal to the greater of: (i) the Stated Value and any accrued but unpaid
dividends thereon; or (ii) the amount that would be received by each share of
Common Stock, assuming the conversion of all outstanding Preferred Stock into
Common Stock before such occurrence (the “
Liquidation Preference
Amount
”). Under the Amended Articles, a “
Change of Control
”
transaction (or series of related transactions) is a sale or transfer of all or
substantially all of the assets or equity of the Company, a merger or
consolidation or other acquisition transaction in which the shareholders of the
Company immediately preceding the transaction hold less than 50% of the shares
(calculated on an as-converted, fully diluted basis) of the Company immediately
after the transaction.
Voting Rights
On all matters submitted to the
stockholders for a vote, each holder of Preferred Stock is entitled to the
number of votes equal to the number of shares of Common Stock into which such
holder’s shares of Preferred Stock could be converted into, with the holders of
the Preferred Stock and the Common Stock voting together as a single
class.
Board Representation
For so long as at least 50% of the
Preferred Stock originally issued is outstanding, the Preferred Stockholders are
entitled to elect a majority of the Board.
Veto Rights
For so long as at least 50% of the
Preferred Stock originally issued remains outstanding, the Company can not
without the affirmative vote or written consent of holders of more than 50% of
the then outstanding shares of Preferred Stock voting as a separate
class:
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Declare
or pay dividends to the holders of Common Stock without paying, in
addition to dividends owed to Preferred Stock, the amount which the
Preferred Stockholders would have received had their Preferred Stock been
converted into Conversion Shares at the Optional Conversion Price
immediately before the record date for the payment of such
dividends.
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Amend,
alter or repeal any provision of the Amended Articles or the Bylaws of the
Company in a manner that adversely affects the Preferred
Stock.
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Create,
authorize or issue any additional preferred stock ranking senior in right
of liquidation to the Preferred
Stock.
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Sell,
transfer, pledge or otherwise encumber any of the Company’s assets
otherwise than in the ordinary course of
business.
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Issue
any debt, secured or unsecured, of any kind, other than trade debt,
equipment leases, bank lines of credit or other indebtedness incurred in
the ordinary course of business.
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[Remainder
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DELIVERY
OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS
Unless
the Company is otherwise advised by the stockholders, we will only deliver one
copy of this Information Statement to multiple stockholders sharing an address.
This practice known as “householding” is intended to reduce the Company’s
printing and postage costs.
We will,
upon request, promptly deliver a separate copy of this Information Statement to
a stockholder who shares an address with another stockholder. A stockholder, who
wishes to receive a separate copy of this Information Statement, may direct such
request to the Company at 1901 Eastpoint Parkway, Louisville, KY 40223 or you
can contact us via telephone at (502) 244-6666. Stockholders who receive
multiple copies of the Information Statement at their address and would like to
request that only a single copy of communications be delivered to the shared
address may do so by making either a written or oral request to the
Company.
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By
Order of the Board of Directors:
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LIGHTYEAR
NETWORK SOLUTIONS, INC.
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/s/ J.
Sherman Henderson III
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J.
Sherman Henderson III,
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Chief
Executive Officer
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Louisville,
Kentucky
September
2, 2010
Annex
A
LIGHTYEAR
NETWORK SOLUTIONS, INC.
2010
STOCK AND INCENTIVE COMPENSATION PLAN
Lightyear
Network Solutions, Inc. (the "Company") hereby establishes a stock and incentive
compensation plan for the benefit of the employees, directors and independent
contractors of the Company and of its subsidiaries.
Section 1 —
PURPOSE
The
Company adopts this compensation program to, among other things, (a) increase
the profitability and growth of the Company; (b) provide competitive
compensation to employees; (c) attract and retain exceptional personnel and
encourage excellence in the performance of individual responsibilities; and (d)
motivate key employees and directors to contribute to the Company's
success.
Section
2 —
DEFINITIONS
For
purposes of the Plan, the following terms shall have the meanings below unless
the context clearly indicates otherwise:
2.1 "
Award
" means an Incentive
Stock Option, a Nonqualified Stock Option, a Stock Appreciation Right, a
Restricted Stock Award, a Performance Share Award, a Restricted Stock Unit (the
foregoing collectively referred to herein as the "Stock Awards") or a Cash
Performance Award granted under the Plan.
2.2 "
Award Agreement
" means a
certificate of grant or, if there are promises required of the recipient of an
Award, a written agreement, in such form as the Committee prescribes from time
to time, setting forth the terms and conditions of an Award.
2.3 "
Board
" means the Board of
Directors of the Company.
2.4 "
Cash
Performance Award
" means an
Award granted pursuant to Section 12, under which, upon the satisfaction of
predetermined performance measures, cash is paid to the
Participant.
2.5 "
Change in Control
" means (i)
an event or series of events which have the effect of any "person" as such
term is used in Section 13(d) and 14(d) of the Exchange Act, other than any
trustee or other fiduciary holding securities of the Company under any employee
benefit plan of the Company, becoming the "beneficial owner" as defined in
Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of
the Company representing 35% or more of the combined voting power of the
Company's then outstanding stock other than by an employee benefit plan
sponsored by the Company or by a person who owns such a percentage at
the Effective Date; (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board
cease for any reason to constitute a majority thereof, unless the election, or
the nomination for election by the stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period; (iii) the shareholders
of the Company approve a definitive agreement to enter into a merger,
consolidation, share exchange or other transaction with or into another company
(other than a transaction that would result in the voting securities of the
Company outstanding immediately prior to such transaction continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 65% of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such transaction) or to sell or otherwise transfer all or
substantially all of the Company's assets or to adopt a plan of
liquidation. A Change in Control shall also be deemed to occur if
(i) the Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control, or (ii) the Board adopts a
resolution to the effect that a Change in Control for purposes of this Plan has
occurred. Provided, however, for purposes of payments triggered by a
Change in Control under Awards that constitute "deferred compensation" pursuant
to Code Section 409A, a Change in Control shall only be considered to have
occurred if the Change in Control also constitutes a change in the ownership or
effective control of a corporation or a change in the ownership of a substantial
portion of the assets of a corporation under Treasury Regulation Section
1.409A-3(i)(5) or subsequent guidance. See Section 3.4 for how a
Change in Control affects Awards, if not specifically provided otherwise in an
Award Agreement.
2.6 "
Code
" means the Internal
Revenue Code of 1986, as it may be amended from time to time.
2.7 "
Committee
" means, with respect
to interpretation and administration of the Plan and for determining the terms
of Awards to Employees, the Compensation Committee of the Board or
such other committee appointed by the Board which shall consist of two or more
members of the Board, each of whom is both an "outside director" and a
"non-employee director." If the Compensation Committee does not
consist of two or more members all of whom are "outside directors" and
"non-employee directors", then "Committee" shall mean the full
Board.
Provided,
however
, that, the amount and terms of Awards to Directors shall be
determined by the entire Board. For purposes of this Section 2.7, (A)
"outside director" means a Director of the Company who either (i) (a) is not a
current employee of the Company or an "affiliated corporation" (within the
meaning of Treasury Regulations promulgated under Code Section 162(m)), (b) is
not a former employee of the Company or an "affiliated corporation" who still
receives compensation for prior services (other than benefits under a
tax-qualified retirement plan), or was not an employee during any prior period
within the time defined under Exchange Act rules or the rules of any stock
exchange on which the Stock is then traded, (c) was not an officer of the
Company or an "affiliated corporation" at any time, and (d) does not
currently receive remuneration from the Company or an "affiliated corporation,"
either directly or indirectly, in any capacity other than as a Director, or (ii)
is otherwise considered an "outside director" for purposes of Code Section
162(m); and (B) "non-employee director" means a Director of the Company who (i)
is not a current employee or officer of the Company or its parent or a
subsidiary, (ii) does not receive compensation (directly or indirectly) from the
Company or its parent or a subsidiary for services rendered as a consultant or
in any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act ("Regulation S-K")), (iii) does not possess an
interest in any other transaction as to which disclosure would be required under
Item 404(a) of Regulation S-K and (iv) is not engaged in a business relationship
as to which disclosure would be required under Item 404(b) of Regulation
S-K. The number of Committee members shall be determined by the
Board. The Board shall add or remove members from the Committee as
the Board sees fit, and vacancies shall be filled by the Board.
2.8 "
Company
" means Lightyear
Network Solutions, Inc. and its successors.
2.9
"Director"
means a voting
member of the Board excluding any person who serves solely in an advisory
capacity or as a director emeritus.
2.10 "
Disability
" means (i) with
respect to Incentive Stock Options, permanent disability within the meaning of
Section 22(e)(3) of the Code; and (ii) with respect to all other types of Awards
that are not deferred compensation under Code Section 409A, the inability of the
Participant to perform the material duties of the Participant's job with the
Company, as determined in good faith by the Committee; and (iii) with respect to
Awards that are deferred compensation under Code Section 409A, (I) the inability
of the Participant to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months, or (II) the Participant is, by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of at least 12 months,
receiving income replacement benefits for a period of not less than 3 months
under an employer accident or health plan.
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2.11
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"
Effective Date
" has the
meaning set forth in Section 16.
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2.12 "
Employee
" means an employee of
the Company or a Subsidiary.
2.13 "
Exchange Act
" means the
Securities Exchange Act of 1934, as amended.
2.14
"Fair Market Value"
means (a)
if the Stock is listed on a national securities exchange, the closing price per
share on a given date; (b) if the Stock is traded on an exchange or market in
which prices are reported in terms of bid and asked prices, the mean between the
high bid and low asked prices for a share on the trading day as of which value
is determined, or any other reasonable method using actual transactions in the
Stock as reported by such exchange or market; and (c) if the Stock is not
publicly traded at the time a determination of fair market value is required to
be made hereunder, the determination of fair market value shall be made in good
faith by the Committee by reasonable application of a reasonable valuation
method, considering any and all information that the Committee deems relevant,
consistent with Code Section 409A and the Treasury Regulations promulgated
thereunder.
2.15 "
Full Value Award
" means any
Award under which a Participant may be issued shares of Stock without the
Participant tendering consideration therefor in the form of Stock or cash at
least equal to the Fair Market Value at the Grant Date of the Stock issuable
upon exercise or maturity of the Award.
2.16
"Grant Date"
means, with
respect to an Award, the date as of which the Award is granted as stated in the
Award Agreement, which shall not be earlier than the date on which the Committee
approves the grant. The grant of an Award must be communicated to the
recipient of the Award promptly after the Grant Date.
2.17 "
Incentive Stock Option
" means
an option to purchase Stock granted under Section 6 of the Plan that is
designated by the Committee as an Incentive Stock Option and is intended to meet
the requirements of Section 422 of the Code.
2.18 "
Named Executive
" means any
individual who is considered a "covered employee" under Code Section 162(m) and
the Treasury Regulation and other guidance issued thereunder, which generally is
limited to certain employees whose compensation is required to be reported to
shareholders under the Exchange Act.
2.19 "
Nonqualified Stock Option
"
means an option to purchase Stock granted under Section 6 of the Plan that is
not intended to be an Incentive Stock Option.
2.20 "
Option
" means an Incentive
Stock Option or a Nonqualified Stock Option.
2.21 "
Option Period
" means the
period from the Grant Date of an Option to the date the period for exercise of
the Option expires as stated in the Award Agreement.
2.22 "
Participant
" means an Employee
or Director or an independent contractor who provides substantial services to
the Company or a Subsidiary, who has been granted an Award under the
Plan.
2.23 "
Performance Share Award
" means
an Award granted pursuant to Section 10 under which, upon the satisfaction of
predetermined performance measures, shares of Stock are transferred to the
Participant.
2.24 "
Plan
" means this 2010 Stock
and Incentive Compensation Plan.
2.25 "
Restriction Period
" means the
period of time from the Grant Date of a Restricted Stock Award or Restricted
Stock Unit until the date when the restrictions placed on the Stock or Unit
lapse.
2.26 "
Restricted Stock Award
"
or
"
Restricted Stock
" means Stock
which is granted under Section 9 of the Plan, subject to a Restriction Period
and/or condition which, if not satisfied, may result in the complete or partial
forfeiture of such Stock.
2.27 "
Restricted Stock Unit
" means
an Award granted pursuant to Section 11 under which, upon the lapse of
predetermined restrictions, shares of Stock or cash are issued to the
Participant.
2.28 "
Retirement
" means a
Participant's Termination of Service with the Company or a Subsidiary after
attaining age 65, or such earlier age as the Committee might specify from time
to time in an Award Agreement.
2.29 "
Stock
" means the Company's
voting common stock of $0.001 par value per share, or such other securities into
which the Stock may be converted, by merger or otherwise.
2.30 "
Stock Appreciation Right
" or
"
SAR
" means a right
granted to a Participant pursuant to Section 7 with respect to a share of Stock
to receive upon exercise Stock or cash equal to the appreciation in value of a
share of Stock.
2.31 "
Subsidiary
" means any
corporation which at the time qualifies as a subsidiary of the Company under the
definition of "subsidiary corporation" in Section 424(f) of the
Code.
2.32 "
Termination of Service
" shall
be deemed to have occurred at the close of business on the last day on which an
Employee is carried as an active employee on the records of the Company and all
Subsidiaries, except as otherwise provided in an Award Agreement or in this
definition. With respect to a Director, it shall be deemed to occur on a
Director's cessation of service on the board of directors of both the Company
and any Subsidiary. The Committee shall define what shall constitute
a Termination of Service for any independent contractor receiving Awards
hereunder, based on the context of that contractor's services, if and to the
extent such termination affects rights or obligations under an Award
Agreement. Notwithstanding the forgoing, for an Award that is
deferred compensation under Code Section 409A, Termination of Service for
purposes of any provisions governing the timing of payment or exercise of an
Award means the date the Company and the Participant reasonably anticipate that
(i) the Participant will not perform any further services for the Company or any
other entity considered a single employer with the Company under Section 414(b)
or (c) of the Code, but substituting "at least 50%" for "at least 80%" (the
"Employer Group"), or (ii) the level of bona fide services performed after that
date (as an employee or independent contractor, except that service as a member
of the board of directors of an Employer Group entity is not counted unless
benefits under this Plan are aggregated with benefits under any other Employer
Group plan or agreement in which the Participant also participates as a
director)
will
permanently decrease to less than 20% of the average level of bona fide services
performed over the previous 36 months (or if shorter over the duration of
service). The Participant will not be treated as having a Termination
of Service while on military leave, sick leave or other bona fide leave of
absence if the leave does not exceed six months or, if longer, the period during
which the Participant has a reemployment right with the Employer Group by
statute or contract. If a bona fide leave of absence extends beyond
six months, a Termination of Service will be deemed to occur on the first day
after the end of such six month period, or on the day after the Participant's
statutory or contractual reemployment right lapses, if
later. Notwithstanding the foregoing, if a leave of absence is
due to any medically determinable physical or mental impairment that can be
expected to last for a continuous period of at least six months and that renders
the Participant unable to perform the duties of his position, the Participant
will not be considered to have a Termination of Service until the leave has
continued for a period of 12 months (regardless of whether the Participant has a
statutory or contractual reemployment right), unless the employment relationship
is permanently terminated before the end of that period by the Company or the
Participant. The Company will determine whether a Termination of
Service has occurred based on all relevant facts and circumstances, in
accordance with Treasury Regulation §1.409A-1(h).
Section
3 —
STOCK SUBJECT TO
THE PLAN
3.1
Available
Stock.
(a) Subject
to adjustments as provided in Sections 3.2 and 3.3, the aggregate number of
shares of Stock that may be issued pursuant to Awards under the Plan, shall be
1,000,000 shares of Stock. The aggregate number of shares of Stock
that may be issued hereunder shall not be decreased except pursuant to Section
3.2 or an amendment to this Plan.
(b) The
maximum number of shares of Stock that may be subject to all Awards (of any
type) granted under the Plan during the any calendar year to any one Participant
is 200,000. If Cash Performance Awards are granted during a year that
are intended to be performance-based compensation to Named Executives, within
the meaning Code Section 162(m) and Section 4.7 hereof, the total amount payable
in cash from Cash Performance Awards granted to any one Participant in any year
shall not exceed $500,000.
(c)
The maximum number of shares of Stock that may be subject to purchase pursuant
to Incentive Stock Options granted under the Plan is 1,000,000.
(d) The
maximum number of shares of Stock that may be subject to issuance under Awards
that are Full Value Awards shall be 200,000.
3.2
Changes in
Capitalization
. In the event of any merger, reorganization,
consolidation, recapitalization, separation, liquidation, stock dividend,
split-up, share combination, or other change in the corporate structure of the
Company affecting the number of shares of Stock or the kind of shares or
securities issuable upon exercise of an Option or payment of another Award, an
appropriate and proportionate adjustment shall be made by the Committee in the
number and kind of shares which may be delivered under the Plan, and in the
number and kind or price of shares subject to outstanding Awards, so that
no Award shall be diluted or
increased
; provided that the number of shares subject to any Award shall
always be a whole number. Any adjustment of an Incentive Stock Option
under this Section shall be made in such a manner so as not to constitute a
"modification" within the meaning of Section 424(h) of the Code and adjustments
to other Awards shall be made in a manner consistent with that Section, as if it
applied to non-Incentive Stock Options as well, so as not to trigger taxes under
Code Section 409A. Except as expressly provided herein, no issuance
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Stock subject to
an Award.
3.3
Adjustments for
Awards
. The Committee shall have sole discretion to determine
the manner in which shares of Stock available for grant of Awards under the Plan
are counted. Without limiting the discretion of the Committee under
this Section 3.3, unless otherwise determined by the Committee, the following
rules shall apply for the purpose of determining the number of shares of Stock
available for grant of Stock Awards under the Plan:
(a) The
grant of Options, Restricted Stock, Restricted Stock Units, and Performance
Share Awards shall reduce the number of shares of Stock available for grant of
Awards under the Plan by the maximum number of shares of Stock subject to such
an Award, and that number shall remain unavailable until exercise, maturity or
lapse of that Award. If any Award granted under the Plan expires or
terminates without exercise, the Stock no longer subject to such Award will be
available to be re-awarded under the Plan.
(b) The
grant of SARs shall reduce the number of shares available for grant of Awards
under the Plan by the number of shares subject to such an Award; provided,
however, that upon the exercise of SARs, the excess of the number of shares of
Stock with respect to which the Award is exercised over the number of shares of
Stock issued upon exercise of the Award shall again be available for grant of
Awards under the Plan.
3.4
Effect of Change in Control
and Other Transactions
.
(a) Except
as provided otherwise in this section or in an Award Agreement at the time an
Award is granted, notwithstanding anything to the contrary in this
Plan:
(i)
if
exercise of a Stock Award is required, then in the case of Change in Control
events that arise from a merger, consolidation, share exchange or liquidation,
each Award requiring exercise that is not exercised at the Change Effective Time
shall lapse and all rights thereunder shall be forfeited immediately after the
actual consummation (in the case of an agreement which will result in a Change
in Control) or the happening of a Change in Control (the "Change Effective
Time"), if the Participant holding such Stock Award has received written notice
at least fifteen (15) days prior to the Change Effective Time that
his right to exercise the Award in full has been accelerated and must be
exercised before the Change Effective Time to prevent such forfeiture or lapse
at the Change Effective Time, or
(ii)
alternatively
to subsection (i) above, in the discretion of the Committee, a Participant
shall receive, in lieu of the exercise of any Option or SAR, a cash
payment in an amount equal to the difference between the exercise price of the
Option or SAR upon the Change Effective Time equal to (A) in the case of a
tender offer or cash exchange offer, the final offer price paid per share of
Stock, multiplied by the number of shares of Stock covered by the Option or SAR,
or (B) in the case of any other Change in Control, the aggregate Fair Market
Value of the shares of Stock covered by the Option or SAR (as if fully vested),
or
(iii)
if the
Company shall at any time merge, consolidate with or into another corporation or
association, or enter into a statutory share exchange or any other similar
transactions in which shares of Stock are converted as a matter of law into
securities or other property, and to the extent the Committee does not exercise
its discretion to cause (i) or (ii) above to be applicable to an Award, each
Participant will receive, upon the exercise of an Award after consummation of
that merger, consolidation or share exchange, the securities or property to
which a holder of the number of shares of Stock then deliverable upon the
exercise of such Award would have been entitled if such Award had been exercised
immediately prior to such merger, consolidation, or share exchange and the
Company shall take such steps in connection with such merger, consolidation or
share exchange as may be necessary to assure that the provisions of this Plan
shall thereafter be applicable, as nearly as is reasonably possible, in relation
to any securities or property thereafter deliverable upon the exercise of such
Award. The changes in an award shall be made in a manner
that meets the conditions of a modification that would be permitted
under Code Section 424 with respect to an Incentive Stock Option (and similar
principles for other Awards to avoid them becoming deferred compensation within
the meaning of Code Section 409A). Any restrictions applicable under
any Award shall apply to any replacement shares received by a Participant under
this Section 3.3 as a result of a reorganization, merger, consolidation or
similar transaction; and
(iv)
if no
exercise of a Stock Award is required (e.g. with respect to Restricted Stock or
a Restricted Stock Unit or Performance Share), and subparagraph (b) hereof does
not apply, to the extent provided in an Award Agreement, an Award that is not
deferred compensation under Code Section 409A shall become nonforfeitable in
full immediately before the Change Effective Time, and Awards that are subject
to Code Section 409A shall continue or be paid as provided in the Award
Agreement.
Section
4 –
ADMINISTRATION
4.1
Committee
Governance
. This Plan shall be administered by the
Committee. The Committee shall select one of its members as the
chairperson of the Committee and shall hold meetings at such times and places as
it may determine. The Committee may appoint a secretary and, subject
to the provisions of the Plan and to policies determined by the Board, may make
such rules and regulations for the conduct of its business as it shall deem
advisable. Written action of the Committee may be taken by a majority
of its members, and actions so taken shall be fully effective as if taken by a
vote of a majority of the members at a meeting duly called and
held. A majority of Committee members shall constitute a quorum for
purposes of meeting. The act of a majority of the members present at
any meeting for which there is a quorum shall be a valid act of the
Committee.
4.2
Committee to Interpret
Plan
. Subject to the provisions of the Plan, the Committee
shall have the power to (i) construe and interpret the Plan; (ii) establish,
amend or waive rules and regulations for its administration, within the
limitations set forth herein; (iii) determine and accelerate the exercisability
of any Award or the termination of any Restriction Period; (iv) correct
inconsistencies in the Plan or in any Award Agreement, or any other instrument
relating to an Award; and (v) subject to the provisions of Section 13, to amend
the terms and conditions of any Award to the extent such terms and conditions
are within the discretion of the Committee as provided in the
Plan. Notwithstanding the foregoing, no action of the Committee may,
without the consent of the person or persons entitled to exercise any
outstanding Award, adversely affect the rights of such person or
persons. All constructions of this Plan shall be made in a manner the
Committee believes consistent with Awards under the Plan
not
constituting
"deferred compensation" within the meaning of Section 409A of the Code or to
comply with that Code Section's requirements, and with respect to Incentive
Stock Options, consistent with the Code and Regulations governing the
preservation of their tax treatment.
4.3
Liability;
Indemnification
. No member of the Committee, nor any person to whom
it has delegated authority, shall be personally liable for any action,
interpretation or determination made in good faith with respect to the Plan or
Awards granted hereunder, and each member of the Committee (or delegatee of the
Committee) shall be fully indemnified and protected by the Company with respect
to any liability he may incur with respect to any such action, interpretation or
determination, to the maximum extent permitted by applicable law.
4.4
Selection of
Participants
. The Committee shall have the exclusive authority
to grant Awards from time to time to such Employees, Directors and independent
contractors as may be selected by it in its sole discretion. The
grants shall not be deemed made, nor the Fair Market Value of the underlying
shares of Stock of an Award (if necessary) determined, until (i) a Committee
written action is unanimously signed, or (ii) a Committee resolution is duly
adopted at a meeting called in conformance with the rules governing the
Committee's operation, and Award Agreements shall be promptly prepared and
delivered to the Award recipient(s) after such grant of an Award.
4.5
Decisions
Binding
. All determinations and decisions made by the
Committee or the Board pursuant to the Plan, including factual determinations,
shall be final, conclusive and binding on all persons, including the Company,
its Subsidiaries, its shareholders, Participants and their estates and
assignees.
4.6
Award
Agreements.
Each Award under the Plan shall be evidenced by an
Award Agreement which shall be signed by the Chairman or Secretary of the
Committee or by an officer of the Company authorized by the Committee, and shall
contain such terms and conditions as may be approved by the Committee, which
need not be the same in all cases. Any Award Agreement may be
supplemented or amended in writing from time to time as approved by the
Committee, provided that the terms of the Agreement as amended or supplemented,
as well as the terms of the original Award Agreement, are not inconsistent with
the provisions of the Plan. An Employee, Director or independent
contractor who receives an Award under the Plan shall not, with respect to the
Award, be deemed to have become a Participant, or to have any rights with
respect to the Award, unless and until the Award Agreement has been signed by
the Chairman or Secretary of the Committee or by an officer of the Company
authorized by the Committee and, if required by its terms, by the Employee,
Director or independent contractor and delivered to the Committee or its
designee, and the Employee, Director or independent contractor has otherwise
complied with the applicable terms and conditions of the Award. The
Committee may condition any Award upon the agreement by the Participant to such
confidentiality, non-competition, and non-solicitation covenants as the
Committee deems appropriate.
4.7
Administration of
Performance-Based Compensation With Respect To Named
Executives
.
(a) The
per-share exercise price of an Option granted to a Named Executive shall, like
all other Options hereunder, be no less than 100% of the Fair Market Value per
share on the Grant Date and such Option shall thereby qualify as
performance-based compensation under Section 162(m) of the Code. With
respect to other Awards granted to Named Executives, the Plan may (but need not)
be administered so as to permit such Awards to qualify as performance-based
compensation under Section 162(m) of the Code under (b) below.
(b) If
the Committee determines, at the time an Award other than an Option or SAR is
granted to a Participant who is, or is likely to be as of the end of the tax
year in which the Company would claim a tax deduction in connection with such
Award, a Named Executive, the Committee may provide in the Award Agreement that
the distribution of shares of Stock or cash under the Award shall be subject to
the achievement of one or more objective performance goals established by, and
the satisfaction of which is certified by, the Committee, which shall be based
on the attainment of specified levels of one of or any combination of the
following "performance criteria" for the Company as a whole or any business unit
of the Company, as reported or calculated by the Company: (i)
revenues; (ii) earnings from operations, earnings before or after taxes,
earnings before or after interest, depreciation, amortization, incentives
service fees or extraordinary or special items; (iii) net income or net income
per share (basic or diluted); (iv) earnings per share growth or growth as
compared with a peer group of companies; (v) return on assets, return on
investment, return on capital, or return on equity; (vi) cash flow, free cash
flow, cash flow return on investment, or net cash provided by operations; (vii)
economic value created; (viii) one or more operating ratios specified with
particularity by the Committee upon the Award; (ix) stock price, dividends or
total stockholder return; (x) the accomplishment of mergers, acquisitions,
dispositions, public offerings or similar extraordinary business transactions;
or (xi) quality goals that are objectively determinable (collectively, the
"Performance Criteria"). Such performance goals also may be based on
the achievement of specified levels of Company performance (or performance of an
applicable affiliate, division or business unit of the Company) under one or
more of the Performance Criteria described above relative to the performance of
other corporations. Such performance goals shall be set by the
Committee over a specified performance period that shall not be shorter than one
year and otherwise within the time period prescribed by, and shall otherwise
comply with the requirements of, Section 162(m) of the Code, or any successor
provision thereto, and the regulations thereunder. Requirements shall
be established in writing by the Committee based on one or more specific
performance goals as set forth above not later than 90 days after commencement
of the performance period with respect to such Award, provided that the outcome
of the performance in respect of the goals remains substantially uncertain as of
such time. Payment of Stock or cash in satisfaction of such an Award
is conditioned up the Committee certifying that the Performance Criteria and
other material terms of the Award were in fact satisfied.
(c) With
respect to any Award to a Named Executive that is intended to be
performance-based within the meaning of Section 162(m)(3)(C) of the Code, the
Committee may adjust downwards, but not upwards, the amount payable pursuant to
such Award, and the Committee may not waive the achievement of the applicable
performance goals except in the case of the death or Disability of the Named
Executive or upon a Change in Control.
(d) Because
the specific targets under the various Performance Criteria set forth
in this Section 4.7 are to be determined within the discretion of the Committee,
the Performance Criteria set out above and approved by Shareholders by virtue of
approval of this Plan shall not be effective to make Awards beyond the date of
the Company's shareholder meeting that occurs in the 5
th
year
following the date the shareholders of the Company first approve this Plan,
unless the Performance Criteria are disclosed to and re-approved by Shareholders
of the Company on or before that time.
4.8
Limitation on
Awards
. No part of any Award may be exercised, no Performance
Share shall be issued, and no Restriction Period will lapse to the extent the
exercise, issuance or lapse would cause the Participant to have compensation
from the Company and its affiliated companies for any year in excess of
$1,000,000 and which is nondeductible by the Company and its affiliated
companies pursuant to Code Section 162(m). Any portion of an Award
that is not exercisable, not issued or for which a Restriction Period does not
lapse because of this limitation shall continue to be exercisable or shall be
issued, or the Restriction Period shall lapse, in any subsequent year in which
the exercise, issuance or lapse would not cause the loss of the Company’s or its
affiliated companies’ compensation tax deduction, provided such exercise or
issuance occurs before the Award expires, and otherwise complies with the terms
of the Plan and the Award Agreement and Code Section 409A's provisions for delay
of payment due to a Code Section 162(m).
Section
5 —
AWARDS UNDER THE
PLAN
Subject
to the limitations of the Plan, the Committee may in its sole and absolute
discretion grant Awards in such numbers, upon such terms and at such times as it
shall determine.
Section
6 —
STOCK
OPTIONS
6.1
Grant
. Both
Incentive Stock Options and Nonqualified Stock Options may be granted under the
Plan, provided that Incentive Stock Options may only be granted to
Employees. If an Option is designated as an Incentive Stock Option
but does not qualify as such under Section 422 of the Code, the Option (or
portion thereof) shall be treated as a Nonqualified Stock Option, and governed
by Section 83 of the Code. All Options granted under the Plan shall
be evidenced by an Award Agreement in such form as the Committee may from time
to time approve. All Options are subject to the terms and conditions
of this Section 6 and such additional terms and conditions contained in the
Award Agreement, which need not be the same in each case, not inconsistent with
the provisions of the Plan, as the Committee finds desirable.
6.2
Exercise
Price
. The exercise price per share of Stock covered by
an Option shall be determined by the Committee, but shall never be less than
100% of the Fair Market Value of the Stock on the Grant Date, and provided that
an Incentive Stock Option granted to a person who on the Grant Date owns (within
the meaning of Section 424 of the Code) stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any
Subsidiary, shall have an exercise price that is at least 110% of the Fair
Market Value of the Stock on the Grant Date.
6.3
Option
Period
. The Option Period shall be determined by the
Committee, and unless otherwise specifically provided in the Award Agreement, no
Option shall be exercisable later than ten years from the Grant
Date. No Incentive Stock Option shall be exercisable later than
ten years from the Grant Date, provided that in the case of an Employee who on
the Grant Date owns or is deemed to own (within the meaning of Section 424(d) of
the Code) more than 10% of the total combined voting power of all classes of
stock of the Company or any Subsidiary, the Incentive Stock Option shall not be
exercisable later than five years from the Grant Date. Options
may expire prior to the end of the Option Period due to the Participant's
Termination of Service as provided in Section 8, or in accordance with any
provision of the Award Agreement. No Option may be exercised at any
time unless the Option is vested and outstanding.
6.4
Limitation on Amount of
Incentive Stock Options
. The aggregate Fair Market Value
(determined as of each Option Grant Date) of Stock with respect to which a
Participant's Incentive Stock Options are exercisable for the first time during
any calendar year (under this and all other stock option plans of the Company
and any Subsidiary) shall not exceed $100,000. In the event,
due to acceleration or otherwise, Incentive Stock Options are exercisable as of
the Grant Date in excess of the $100,000 limit described herein, such Options
shall be treated as Nonqualified Stock Options for tax purposes, in accordance
with the first-grant ordering rules of Treasury Regulation Section
1.422-4.
6.5
Nontransferability of
Options
. No Option shall be transferable by a Participant
otherwise than by will or the laws of descent and distribution, and an Option
shall be exercisable, during the Participant's lifetime, only by the Participant
(or, in the event of the Participant's legal incapacity or incompetency, the
Participant's guardian or legal representative), except as provided in Section
14.14.
6.6
Exercise
. An
Option may be exercised, so long as it is vested and outstanding, from time to
time in part or as a whole, subject to any limitations with respect to the
number of shares for which the Option may be exercised at a particular time and
to such other conditions (
e.g.
, exercise could
be conditioned on performance) as the Committee in its discretion may specify
upon granting the Option or as otherwise provided in this Section
6.
6.7
Method of
Exercise
. To exercise an Option, the Participant or the other
person(s) entitled to exercise the Option shall deliver to the Committee (i) a
written notice of exercise in such form as the Committee may prescribe,
specifying the number of full shares to be purchased; (ii) payment in full of
the exercise price in accordance with Section 6.8; and (iii) in the case of
Nonqualified Stock Options, any required withholding taxes as provided in
Section 15. No shares of Stock shall be issued unless the Participant
has fully complied with the provisions of this Section 6.7.
6.8
Payment of Exercise
Price
. To the extent provided in the Award
Agreement for an Option and subject to any applicable rules of Section 16 of the
Exchange Act and any exchange on which the Stock is traded at any relevant time,
payment of the exercise price may be made (i) in cash; (ii) in shares of Stock
(based on the Fair Market Value of the Stock on the date the Option is
exercised) owned by the Participant (or jointly by the Participant and his
spouse) for at least six months (one year in the case of stock acquired pursuant
to an Incentive Stock Option); such shares shall be evidenced by negotiable
certificates or by a written attestation of ownership, and only the net shares
of Stock (those equal in value to the difference between the exercise price and
the then Fair Market Value) shall be issued in satisfaction of the Option or
portion thereof being exercised; (iii) by a written election to have the Company
retain that number of shares of Stock subject to the Option having an aggregate
Fair Market Value equal to the aggregate exercise price of the Option, provided
that for an Incentive Stock Options, this right must be granted by the Committee
at the time the Option is granted and may not be added in any modification of
the Award Agreement (unless the Fair Value is then not more than the exercise
price); or (iv) by any combination thereof. Any surrender by a
person subject to the reporting requirement of Section 16(b) of the Exchange Act
of previously owned shares of Stock upon exercise of an Option or SAR must
comply with the applicable provisions of Rule 16b-3 under the Exchange
Act.
Section
7 —
STOCK APPRECIATION
RIGHTS
7.1
Grant
. All
Stock Appreciation Rights ("SAR's") granted under the Plan shall be evidenced by
an Award Agreement in such form as the Committee may from time to time
approve. All SARs are subject to the terms and conditions of this
Section 7 and such additional terms and conditions contained in the Award
Agreement, which need not be the same in each case, not inconsistent with the
Plan, as the Committee finds desirable.
7.2
Exercise
Price
. The exercise price per share of Stock subject to a SAR
shall be determined by the Committee at the time of grant and specified in the
Award Agreement, and shall be no less than 100% of the Fair Market Value per
share on the Grant Date.
7.3
Exercise
Period
. The exercise period shall be determined by the
Committee, and unless otherwise specified in the Award Agreement, no SAR shall
be exercisable later than ten years from the Grant Date. No SAR may
be exercised at any time unless such SAR is vested and outstanding as provided
in this Section 7.
7.4
Nontransferability
. No
SAR shall be transferable other than by will or by the laws of
descent and distribution, and SAR's shall be exercisable, during the
Participant's lifetime, only by the Participant (or, in the event of the
Participant's legal incapacity or incompetency, the Participant's guardian or
legal representative), except as provided in Section 14.14.
7.5
Exercise
. An
SAR may be exercised, so long as it, is vested and outstanding, from time to
time in part or as a whole, subject to any limitations with respect to the
number of shares for which the SAR may be exercised at a particular time and to
such other conditions (
e.g.
, exercise could
be conditioned on performance) as the Committee in its discretion may specify
upon granting the SAR or as otherwise provided in this Section 7.
7.6
Method of
Exercise
. To exercise an SAR, the Participant or the other
person(s) entitled to exercise the SAR shall give written notice of exercise to
the Committee, specifying the number of full shares with respect to which the
SAR is being exercised.
7.7
Payment Upon
Exercise
. Upon the exercise of an SAR, a Participant shall be
entitled to receive an amount, in whole shares of Stock (with cash for any
fractional share), equal to the amount by which the then Fair Market Value of
one share of Stock exceeds the exercise price per share specified in the Award
Agreement, multiplied by the number of shares with respect to which the SAR is
exercised, subject to the Participant's satisfaction of any applicable tax
withholding amount in a manner acceptable to the Company. The number
of shares of Stock to be delivered to the Participant upon exercise of an SAR
shall be based on the Fair Market Value of the Stock on the date of
exercise. A certificate or certificates for shares of Stock acquired
upon exercise of an SAR shall be issued in the name of the Participant and
distributed to the Participant as soon as practicable following exercise,
subject to Section 14.5. No fractional shares of Stock will be
issuable upon exercise of an SAR and, unless otherwise provided in the Award
Agreement, the Participant will receive cash in lieu of fractional
shares.
Section
8 —
LIMITATIONS ON
EXERCISE OF OPTIONS AND SARs
AFTER
TERMINATION OF SERVICE
8.1
Exercise After
Termination
. After a Participant's Termination of Service, an
Option or SAR Award may be exercised only to the extent that the Award was
exercisable immediately before the Termination of Service, but in no event after
the expiration date of the Award as specified in the Award
Agreement. Except to the extent that shorter or longer periods are
provided in the Award Agreement, a Participant's right to exercise an Award upon
Termination of Service shall terminate:
(i) At
the expiration of three months (for Incentive Stock Options) or one year (for
Nonqualified Stock Options and SARs) after the Participant's Retirement;
provided, however, if an Incentive Stock Option is not exercised after three
months, it will remain exercisable for the longer period allowed for Retirement
as if it were a Nonqualified Stock Option and will be a Nonqualified Stock
Option when exercised; or
(ii) At
the expiration of one year in the event of Disability of the Participant;
or
(iii) At
the expiration of one year after the Participant's death if the Participant's
Termination of Service occurs by reason of death; any Award exercised under this
subparagraph (iii) may be exercised by the legal representative of the estate of
the Participant or by the person or persons who acquire the right to exercise
such Award by bequest or inheritance; or
(iv) No
later than three months after the Participant's Termination of Service for any
reason other than (A) those described in (i) through (iii) above, or (B)
Termination of Service for "Cause" as described in Section 8.2.
8.2
Termination for
Cause
. In the event the Committee determines that an
Employee's employment has been terminated for Cause, the Employee shall forfeit
any and all unexercised Option and SARs immediately upon the Termination of
Service. For purposes of this Plan, "Cause" shall mean the Employee's
(i) willful failure to substantially perform such Employee's reasonably assigned
duties, (ii) repeated gross negligence in performing such Employee's duties,
(iii) illegal conduct in performing such Employee's duties, (iv) willful actions
contrary to the Company's interest, (v) repeated refusal to comply with the
reasonable and lawful instructions of management of the Company or a Subsidiary,
or (vi) violation of the obligations imposed on the Employee under any
confidentiality or solicitation covenants to which the Employee is bound under
the terms of the Stock Option Agreement or otherwise.
Section
9 —
RESTRICTED STOCK
AWARDS
9.1
Grant
. All
Restricted Stock Awards granted under the Plan shall be evidenced by an Award
Agreement in such form as the Committee may from time to time
approve. All Restricted Stock Awards are subject to the terms and
conditions in this Section 9, and such additional terms and conditions contained
in the Award Agreement, which need not be the same in each case, not
inconsistent with the provisions of the Plan, as the Committee finds
desirable. The Company shall issue, in the name of each
Participant who is granted a Restricted Stock Award, a certificate for the
shares of Stock granted in the Award (subject to Section 14.5), as soon as
practicable after the Grant Date. The Secretary of the Company shall
hold such certificates for the Participant's benefit until the Restriction
Period lapses or the Restricted Stock is forfeited to the Company in accordance
with the Award Agreement.
9.2
Restriction
Period
. The Restriction Period shall be determined by the
Committee, and shall commence on the Grant Date and expire at the time specified
in the Award Agreement. Unless otherwise provided in the Award
Agreement, in the event of a Participant's Termination of Service during the
Restriction Period for any reason, the Participant's rights to the Stock subject
to the Restricted Stock Award shall be forfeited and all such Stock shall
immediately be
surrendered to the
Company. The Committee may provide in an Award Agreement that a
Restriction Period that has not otherwise expired will end at Retirement or if
such termination occurs by virtue of Disability or death.
9.3
Rights of
Participant
. Subject to the terms and conditions of the Award
Agreement, a Participant to whom Restricted Stock has been awarded shall have
the right to receive dividends thereon during the Restricted Period, to vote the
Restricted Stock and to enjoy all other stockholder rights with respect thereto,
except that (i) the Company shall retain custody of any certificates evidencing
the Restricted Stock during the Restricted Period, and (ii) the Participant may
not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the
Restricted Stock during the Restricted Period. Any attempt by a
Participant to sell, transfer, pledge, assign or otherwise dispose of Restricted
Stock shall cause immediate forfeiture of the Award. In
the event of any adjustment as provided in Section 3.2, new or additional shares
or securities shall be subject to the same terms and conditions as the original
Restricted Stock.
9.4
Expiration of Restriction
Period
. At the expiration of the Restriction Period, the
restrictions contained in Section 9.3 and in the Award Agreement shall, except
as otherwise specifically provided in the Award Agreement, expire, and the
Company shall deliver to the Participant a certificate evidencing the
Participant's ownership of the Stock free of the restrictions.
9.5
Nontransferability
. No
Restricted Stock Award shall be transferable other than by will or the laws of
descent and distribution until any restrictions applicable to such Award have
lapsed and a certificate evidencing the Participant's ownership of the stock
free of restrictions has been issued, except as provided in Section
14.14.
Section
10 —
PERFORMANCE SHARE
AWARDS
10.1
Grant
. All
Performance Share Awards granted under the Plan shall be evidenced by an Award
Agreement in such form as the Committee may from time to time
approve. All Performance Share Awards are subject to the terms
and
conditions of
this Section 10 and such additional terms and conditions contained in the Award
Agreement, which terms and conditions need not be the same in each case, not
inconsistent with the Plan, as the Committee finds desirable.
10.2
Performance
Criteria
. The performance criteria for each Performance Share
Award shall be determined by the Committee, and shall consist of service
requirements and/or any measures of performance of the Company or any Subsidiary
or such other criteria as the Committee specifies;
provided, however
, that
Awards to Named Executives that are intended to be exempt from the limitations
of Code Section 162(m) shall use measures defined in Section
4.7(b). Performance Share Awards granted under the Plan shall be
evidenced by an Award Agreement that at a minimum shall set forth (i) the number
of shares of Stock that the Participant may receive; (ii) the performance
objectives (the "Performance Goals"), which may or may not be consistent with
Section 4.7, depending upon whether the Awards is intended to be
performance-based compensation exempt from Code Section 162(m) limits; (iii) the
performance period over which the performance measure is determined (the
"Performance Period"); (iv) the date on which delivery under the Award, if any,
will be made; and (v) such additional terms and conditions, which need not be
the same in each case, not inconsistent with the Plan, as the Committee finds
desirable. At the times specified in the Award Agreement, the
Committee shall evaluate actual performance during such performance period
compared to the performance criteria established for the Award, and shall
determine the extent to which a stock payment is to be made pursuant to the
Performance Share Award. The Committee may provide in an Award
Agreement that one or more performance criteria under an Award will be deemed to
have been met upon the Retirement, death or Disability of the Participant,
provided that no Award that is intended to be exempt from Code Section 162(m)
under Section 4.7(b) shall be deemed to have been met on Retirement. However,
unless otherwise provided in the Award Agreement, in the event of a
Participant's Termination of Service for any reason before performance criteria
have been met, the Participant's rights to payment of a Performance Share Award
shall be forfeited.
10.3
Payment
. Performance
Share Awards will be paid only after the Committee determines, in its sole
discretion, that the performance criteria established under Section
10.2 have been achieved, subject to such other terms and conditions
as may be included in the Award Agreement and to the Committee's right to waive
any performance criteria in its discretion, provided that, if the Performance
Share Award constitutes deferred compensation within the meaning of Section 409A
of the Code, such waiver does not constitute prohibited acceleration of
payment. Payment shall be made, as provided in the Award Agreement in
whole shares of Stock (and the fractions in cash) having a Fair Market Value
equal to the number of shares of Stock represented by the Performance Share
Award. A certificate or certificates for shares of Stock to be issued
pursuant to a Performance Share Award shall be issued in the name of the
Participant and distributed to the Participant following the Committee's
determination that performance criteria have been met and distribution shall be
at the time specified in the Award Agreement. Such payment timing
shall be designed to be compliant with or exempt from Code Section
409A. No fractional shares of Stock will be issued in connection with
a Performance Share Award and, unless otherwise provided in the Award Agreement,
the Participant will receive cash in lieu of fractional shares.
10.4
Rights of
Participant
. A Participant shall not, with respect to a
Performance Share Award or any Stock that may in the future be issued under it,
have any rights as a stockholder of the Company, such as the right to vote the
shares or the right to receive dividends and other distributions, at any time
before the Participant has become the holder of record of the
Stock.
10.5
Nontransferability
. No
Performance Share Award shall be transferable other than by will or by the laws
of descent and distribution, or as provided in Section 14.14
Section 11 — RESTRICTED
STOCK UNITS
11.1
General
. All
Restricted Stock Units granted under the Plan shall provide for payment of Stock
or cash as provided in an Award Agreement in such form as the Committee may from
time to time approve but that, at a minimum, shall contain such terms,
conditions and restrictions on the Restricted Stock Unit and the period for
which they apply, which need not be the same in each case, not inconsistent with
the provisions of the Plan, as the Committee finds
desirable. Unless otherwise specifically provided in an Award
Agreement, the restrictions shall be crafted so as to constitute a "substantial
risk of forfeiture" as that phrase is defined for purposes of Section
83. The Award Agreement shall specify the terms on which
restrictions lapse and date or dates upon which the Participant shall be
entitled to receive from the Company the number of shares of Stock or cash equal
to the Fair Market Value thereof, equal to the number of Restricted Stock Units
granted under the Award. Each Restricted Stock Unit Award shall
be designed to be exempt from or compliant with Code Section 409A.
11.2
Rights of
Participant
. A Participant shall not, with respect to a
Restricted Stock Unit, have any rights as a shareholder of the Company, such as
the right to vote the shares or the right to receive dividends and other
distributions, at any time before the Participant has become the holder of
record of the Stock, except as provided in Section 11.4 below.
11.3
Nontransferability
. No
Restricted Stock Unit shall be transferable other than by will or by the laws of
descent and distribution, or as provided in Section 14.14.
11.4
Dividends
. Unless
otherwise provided in an Award Agreement, a Participant shall not, with respect
to an Award, be entitled to any dividends for the period the Award is
outstanding. The Committee may provide in the Award Agreement for a contingent
right, granted in tandem with a specific Restricted Stock Unit, to receive an
amount in cash at substantially the same time as shareholders of the Company,
equal to the cash distributions made by the Company with respect to a share of
Stock during the period such Award is outstanding, or to have an additional
number of Restricted Stock Units credited to a Participant in respect of the
Award equal to the whole number of shares of Stock that could be purchased at
Fair Market Value with the amount of each cash distribution made by the Company
with respect to a share of Stock during the period such Award is outstanding,
provided that the time and form of payment shall be compliant with, or exempt
from, Code Section 409A.
Section
12 —
CASH PERFORMANCE
AWARDS
12.1
Grant
. Performance
Awards may be granted based upon, payable in or otherwise related to, in whole
or in part, shares of Stock or cash, although this Plan need not be the
exclusive mechanism for grant cash-based incentive compensation, and, to the
extent granted to be payable in Stock, shall be governed by Section 10 hereof
and shall be Performance Share Awards. Cash Performance Awards
granted under the Plan shall be evidenced by an Award Agreement in such form as
the Committee may from time to time approve but that, at a minimum, shall set
forth (i) the amount of cash that the Participant may receive, (ii) the
Performance Criteria (as defined in Section 4.7 hereof) and the
specific targets under any such criteria, (iii) the performance period over
which the performance measure is determined (the "Performance Period"), (iv) the
date on which payment under the Award, if any, will be made, or the event which
will trigger such payment (which shall be compliant with, or exempt from, Code
Section 409A), and (v) such additional terms and conditions, which need not be
the same in each case, not inconsistent with the Plan, as the Committee finds
desirable.
12.2
Payment
. The
Committee shall establish the method of calculating the amount of payment to be
made under a Cash Performance Award. After completion of a
Performance Period, the performance of the Company or the Employee will be
measured against the Performance Criteria, and the Committee will determine
whether all, none, or any portion of a Performance Award will be
paid.
12.3
Nontransferability
. No
Cash Performance Award shall be transferable other than by will or by the laws
of descent and distribution.
Section
13 —
AMENDMENTS AND
TERMINATION
13.1
Amendments and
Termination
. The Board may terminate, suspend, amend or alter
the Plan, but no action of the Board may:
(a) Impair
or adversely affect the rights of a Participant in any material
way under an outstanding Award theretofore granted, without the
Participant's consent, other than as specifically provided herein or in an Award
Agreement (such as in Section 3.4); or,
(b) Extend
the Option Period or exercise period of an SAR, or the vesting/payment (and
taxation) date of any other type of Award beyond that originally stated in the
Award Agreement, unless and until the Committee determines that such extension
does not constitute a deferral of compensation feature that would subject the
Award to the excise taxes provided under Code Section 409A;
(c) Decrease
the price of an Option or the base price of any SAR to less than the Fair Market
Value on the date the Award was granted; or
(d) Without
the approval of the stockholders:
(i) Increase
the total amount of Stock which may be delivered under the Plan;
(ii) Extend
the period during which Awards may be granted; or
(iii) In
the case of an outstanding Award intended to be eligible for the
performance-based compensation exemption under Section 162(m) of the Code, the
Committee shall not, without the approval of a majority of the stockholders of
the Company, amend the Plan or the Award in a manner that would adversely affect
the Award's continued eligibility for the performance-based compensation
exemption under Section 162(m) of the Code.
13.2
Conditions on
Awards
. In granting an Award, the Committee may establish any
conditions that it determines are consistent with the purposes and provisions of
the Plan.
13.3
No
Repricing
. Except for adjustments made pursuant to Section
3.2, or repricing that is specifically approved by the Company's shareholders,
the exercise price for any outstanding Option or SAR shall not be decreased
after the Grant Date, nor may any outstanding Option or SAR be surrendered to
the Company as consideration for the grant of a new Option or SAR with a lower
exercise price.
13.4
No Reload
Rights
. Awards shall not contain any provision entitling the
Participant to an automatic grant of additional Awards in connection with any
exercise of the original Award.
13.5
Selective
Amendments
. Any amendment or alteration of the Plan may be
limited to, or may exclude from its effect, particular classes of
Participants.
Section
14 — GENERAL PROVISIONS
14.1
Section 409A
Compliance
. Notwithstanding any other provision of the Plan,
any Award under the Plan that comes within the meaning of Code
Section 409A's definition of "deferred compensation" shall be designed and
granted in such a way as to comply with that Code Section's election timing
rules, limitations on distribution triggering events, and must specify in the
Award Agreement the time and form of payment of the Award, with any changes in
time or form of payment made in accordance with Code Section 409A's
provisions.
14.2
Issuance of
Stock
. If an Award is to be satisfied in Stock, the Company
will deliver to the Participant the shares of Stock at the times provided in
this Plan and the Award Agreement either by (i) physical delivery of the
certificate(s) for such shares, or (ii) book entry to a brokerage account of the
Participant, free and clear of any lapsed restrictions.
14.3
Unfunded Status of
Plan
. The Plan is intended to constitute an "unfunded" plan
for incentive compensation, and the Plan is not intended to constitute a plan
subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended, and shall not extend, with respect to any payments not yet
made to a Participant, any rights that are greater than those of a general
creditor of the Company.
14.4
Transfers, Leaves of Absence
and Other Changes in Status
. For purposes of the Plan (i) a
transfer of an Employee from the Company to a Subsidiary or vice versa, or from
one Subsidiary to another, or (ii) a leave of absence not in excess of 90 days
duly authorized in writing by the Company or a Subsidiary for military service,
sickness or any other purpose approved by the Company or a Subsidiary, shall not
be a Termination of Service. The Committee, in its sole discretion
subject to the terms of the Award Agreement, shall determine the disposition of
all Awards made under the Plan in all cases involving any substantial change in
employment status other than an event described in this Section
14.4.
14.5
Restrictions on Distribution
of Stock
. The Committee may require Participants receiving
Stock pursuant to any Award under the Plan to represent to and agree with the
Company in writing that the Participant is acquiring the Stock for investment
without a view to distribution thereof. No Stock shall be issued or
transferred pursuant to an Award unless the Committee determines, in its sole
discretion, that such issuance or transfer complies with all relevant provisions
of law, including but not limited to, the (i) limitations, if any, imposed in
the state of issuance or transfer, (ii) restrictions, if any, imposed by the
Securities Act of 1933, as amended, the Exchange Act, and the rules and
regulations promulgated
thereunder, and (iii) requirements of any stock exchange upon which the Stock
may then be listed. The certificates for Stock issued pursuant to an
Award may include any legend that the Committee deems appropriate to reflect any
restrictions on transfer. The Company shall not be obligated to
register any securities covered hereby or to take any affirmative action to
facilitate the sale, transfer or other disposition of Stock issued of Stock
pursuant to an Award to comply with any law or regulation of any governmental
authority.
14.6
Assignment
Prohibited
. Subject to the provisions of the Plan and the
Award Agreement, no Award shall be assigned, transferred, pledged or otherwise
encumbered by the Participant otherwise than by will or by the laws of descent
and distribution, and an Award shall be exercisable, during the Participant's
lifetime, only by the Participant. Awards shall not be pledged or
hypothecated in any way, and shall not be subject to any execution, attachment,
or similar process. Any attempted transfer, assignment, pledge,
hypothecation or other disposition of an Award contrary to the provisions of the
Plan, or the levy of any process upon an Award, shall be null, void and without
effect.
14.7
Other Compensation
Plans
. Nothing contained in the Plan shall prevent the Company
from adopting other compensation arrangements, subject to stockholder approval
if such approval is required.
14.8
Limitation of
Authority
. No person shall at any time have any right to
receive an Award hereunder and no person other than a duly authorized member of
the Committee shall have authority to enter into an agreement on behalf of the
Company for the granting of an Award or to make any
representation or
warranty with respect thereto. Participants shall have no rights in
respect
to any
Award except as set forth in the Plan and the applicable Award
Agreement.
14.9
No Right to
Employment
. Neither the action of the Company in establishing
the Plan, nor any action taken by it or by the Board or the Committee under the
Plan or any Award Agreement, nor any provision of the Plan, shall be construed
as giving to any person the right to be retained in the employ or service of the
Company or any other entity as an employee, director or independent contractor
or to interfere in any way with the right of the Company or any other entity to
terminate any person's service or employment at any time.
14.10
Not a
Shareholder
. The person or persons entitled to exercise, or
who have exercised, an Option or SAR shall not be entitled to any rights as a
shareholder of the Company with respect to any Stock to be issued upon such
exercise until such persons or persons shall have become the holder of record of
such Stock.
14.11
Severability
. If
any provision of this Plan is found to be illegal or unenforceable by any court
of law in any jurisdiction, the remaining provisions hereof and thereof shall be
severable and enforceable in accordance with their terms, and all provisions
shall remain enforceable in any other jurisdiction.
14.12
Headings
. The
headings in this Plan have been inserted solely for convenience of reference and
shall not be considered in the interpretation or construction of this
Plan.
14.13
Governing
Law
. The validity, interpretation, construction and
administration of this Plan shall be governed by the laws of the Company's state
of incorporation, as it may change from time to time.
14.14
Transfer to Permitted
Transferees
. If specifically provided in the Award Agreement,
Nonqualified Stock Options or SARs (other than those issued in tandem with
Incentive Stock Options) may be transferred by a Participant to a Permitted
Transferee. Any attempted sale, transfer, pledge, exchange,
hypothecation or other disposition of an Award not specifically permitted by the
Plan or the Award Agreement shall be null and void and without
effect. For purposes of the Plan, "Permitted Transferee" means (i) a
member of a Participant's immediate family, (ii) any person sharing the
Participant's household (other than a tenant or employee of the Participant),
(iii) trusts in which a person listed in (i) or (ii) above has more than 50% of
the beneficial interest, (iv) a foundation in which the Participant or a person
listed in (i) or (ii) above controls the management of assets, (v) any other
entity in which the Participant or a person listed in (i) or (ii) above owns
more than 50% of the voting interests, provided that in the case of the
preceding clauses (i) through (v), no consideration is provided for the
transfer, and (vi) any transferee permitted under applicable securities and tax
laws as determined by counsel to the Company. In determining whether
a person is a "Permitted Transferee," immediate family members shall include a
Participant's child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships.
Section 15 —
TAXES
15.1
Tax
Withholding
. All Participants shall make arrangements
satisfactory to the Committee to pay to the Company or a Subsidiary, any
federal, state or local taxes required to be withheld with respect to an Award
issued under the Plan at the time such taxes are required to be
withheld. If a Participant fails to make such tax payments, the
Company and its Subsidiary shall, to the extent permitted by law, have the right
to deduct any such taxes from any payment of any kind otherwise due to the
Participant, including a payment related to any Award under the
Plan.
15.2
Share
Withholding
. The Committee may in its discretion provide
in an Award Agreement that all or a portion of a Participant's tax withholding
obligation may be satisfied by the Company retaining shares of Stock with a Fair
Market Value equal to the amount required to be withheld.
15.3
Tax
Reporting
. The Company shall reflect the exercise of any
Incentive Stock Option on an informational report as required by Section 6039 of
the Code no later than January 31
st
of the
year following exercise. The compensation resulting from the exercise
of a Nonqualified Stock Option or SAR, the lapse of the restrictions of a
Restricted Stock Award or Restricted Stock Unit, or the satisfaction of the
criteria of a Performance Share Award or Cash Performance Award, and related
income and employment tax withholding related thereto, shall be reported on the
Employee's W-2 Form for the year of exercise or vesting (as the case may be) or
as may hereafter be required by the Code.
Section 16 — EFFECTIVE DATE
OF PLAN
The Plan
shall be effective on the date (the "Effective Date") when the Board adopts the
Plan, subject to approval of the Plan by a majority of the total votes eligible
to be cast by shareholders at a shareholder meeting or by written shareholder
action within 12 months of the Effective Date; provided that Awards may be
granted before obtaining shareholder approval of the Plan, but any such Awards
shall be contingent upon such shareholder approval being obtained and Awards may
not be exercised or paid before such approval.
Section 17 — TERM OF
PLAN
The Plan
has no termination date, provided that no Incentive Stock Option may be issued
on or after the tenth anniversary of the Effective Date as defined in Section
16.
* * * * *
|
Board Approval: May 18, 2010
|
_______/s/___JG________________
|
|
|
|
|
Shareholder
Approval: May 18, 2010
|
_______/s/___JG________________
|
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