THE CRONOS GROUP

2005 EQUITY INCENTIVE PLAN

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Table of Contents

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

 

 

 

1.

 

ESTABLISHMENT; PURPOSE; DEFINITIONS

 

 

1

 

2.

 

ADMINISTRATION

 

 

4

 

3.

 

STOCK SUBJECT TO THE PLAN

 

 

4

 

 

 

(a)

 

Aggregate Stock Subject to the Plan

 

 

4

 

 

 

(b)

 

Forfeiture or Termination of Awards or Stock

 

 

4

 

 

 

(c)

 

Adjustment

 

 

5

 

 

 

(d)

 

Annual Award Limitation

 

 

5

 

4.

 

ELIGIBILITY

 

 

5

 

5.

 

RESTRICTED STOCK

 

 

5

 

 

 

(a)

 

Grant

 

 

5

 

 

 

(b)

 

Terms and Conditions

 

 

5

 

6.

 

DIRECTOR’S STOCK UNITS

 

 

7

 

 

 

(a)

 

General

 

 

7

 

 

 

(b)

 

Grants of Director’s Stock Units

 

 

7

 

 

 

(c)

 

Director’s Accounts

 

 

7

 

 

 

(d)

 

Vesting; Accelerated Vesting; Deferral; Nontransferability

 

 

8

 

 

 

(e)

 

Delivery of Share Certificates

 

 

8

 

 

 

(f)

 

No Shareholder Rights

 

 

8

 

7.

 

AUTOMATIC GRANTS OF RESTRICTED STOCK TO INDEPENDENT DIRECTORS

 

 

8

 

 

 

(a)

 

Initial Grant

 

 

8

 

 

 

(b)

 

Succeeding Grant

 

 

9

 

 

 

(c)

 

Vesting and Exercisability

 

 

9

 

 

 

(d)

 

Form of Grant

 

 

9

 

 

 

(e)

 

Exercise Price

 

 

9

 

 

 

(f)

 

Termination of Option

 

 

9

 

 

 

(g)

 

Other Terms and Conditions

 

 

9

 

8.

 

CHANGE IN CONTROL PROVISION

 

 

9

 

 

 

(a)

 

Impact of Event

 

 

9

 

 

 

(b)

 

Definition of Change in Control

 

 

9

 

 

 

(c)

 

Definition of Potential Change in Control

 

 

10

 

 

 

(d)

 

Change in Control Price

 

 

10

 

9.

 

TERMINATION OF AWARDS

 

 

10

 

 

 

(a)

 

Termination due to Death, Disability or by the Company for Other than Cause

 

 

10

 

 

 

(b)

 

Termination due to Qualified Retirement

 

 

10

 

 

 

(c)

 

Termination by the Company for Cause or for Any Other Reason

 

 

11

 

10.

 

AMENDMENTS AND TERMINATION

 

 

11

 

11.

 

UNFUNDED STATUS OF PLAN

 

 

12

 

12.

 

GENERAL PROVISIONS

 

 

12

 

13.

 

LEGAL COMPLIANCE

 

 

13

 

14.

 

INABILITY TO OBTAIN AUTHORITY

 

 

13

 

15.

 

RESERVATION OF SHARES

 

 

13

 

16.

 

SHAREHOLDER APPROVAL; EFFECTIVE DATE OF PLAN

 

 

13

 

17.

 

TERM OF PLAN

 

 

14

 

THE CRONOS GROUP

2005 EQUITY INCENTIVE PLAN

 

 

1.

ESTABLISHMENT; PURPOSE; DEFINITIONS.

      (a) The Cronos Group, a société anonyme holding organized under the laws of the Grand Duchy of Luxembourg (the “Company”), hereby establishes an incentive compensation plan for key employees and Independent Directors (as defined below), to be known as “The Cronos Group 2005 Equity Incentive Plan” (the “Plan”), as set forth in this document. The Plan provides for the grant of incentive compensation to key employees and Independent Directors of the Company and its Subsidiaries and Affiliates.

      (b) The purpose of the Plan is to enable the Company to attract, retain and reward key employees and Independent Directors of the Company and its Subsidiaries and Affiliates and strengthen the mutuality of interests between such key employees and the Company’s shareholders by offering such individuals equity incentives.

      (c) For purposes of the Plan, the following terms shall have the meanings set forth below:

 

 

 

      “Affiliate” means any entity (other than the Company and its Subsidiaries) that is designated by the Board as a participating employer under the Plan.

 

 

 

      “Applicable Laws” means the requirements relating to any stock exchange or quotation system on which the common shares of the Company are listed or quoted and the applicable laws of any foreign jurisdiction where Awards are, or will be, granted under the Plan.

 

 

 

      “Award” means any award or grant of Restricted Stock or Director’s Stock Units.

 

 

 

      “Award Agreement” means an agreement setting forth the terms and conditions applicable to an Award granted to a Participant under the Plan.

 

 

 

      “Board” means the Board of Directors of the Company.

 

 

 

      “Cause” shall mean a felony conviction of a Participant or the failure of a Participant to contest prosecution for a felony, or a Participant’s willful misconduct or dishonesty, any of which, in the judgment of the Committee, is harmful to the business or reputation of the Company or any Subsidiary or Affiliate; or any material violation of the Code of Ethics or any agreement between the Participant and the Company.

 

 

 

      “Change in Control” has the meaning assigned to it in Section 8(b).

 

 

 

      “Change in Control Price” has the meaning assigned to it in Section 8(d).

 

 

 

      “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.

 

 

 

      “Code of Ethics” means the Code of Ethics adopted by the Company.

 

 

 

      “Committee” means the Compensation Committee of the Board.

 

 

 

      “Company” means The Cronos Group, a société anonyme holding organized and existing under the laws of The Grand Duchy of Luxembourg.

 

 

 

      “Deferral Plan” has the meaning assigned to it in Section 5(b)(9).

 

 

 

      “Director” means a member of the Board.

 

 

 

      “Director’s Account” is established only for purposes of measuring the value of the Company’s obligation to an Independent Director in respect of Director’s Stock Units and earnings thereon and not to segregate assets or to identify assets that may be used to settle Director’s Stock Units.

 

 

 

      “Director’s Deferred Compensation” refers to the bookkeeping record established for each Independent Director.

 

 

 

      “Director’s Stock Unit” refers to a restricted stock unit granted to an Independent Director pursuant to Section 6 hereof.

 

 

 

      “Disability” means a mental or physical condition which, in the opinion of the Committee, renders a Participant unable or incompetent to carry out the job responsibilities held by such Participant or the duties assigned to such Participant at the time such condition arose or was incurred, and which is expected to be permanent or for an indefinite duration.

 

 

 

      “Disqualification Date” shall mean the earliest date as of which the Participant engaged in any Disqualifying Activity, as determined by the Committee.

 

 

 

      “Disqualifying Activity” shall mean any of the following acts or activities (except that the ownership of less than 2% of the outstanding voting securities of a publicly traded corporation which competes with the Company or any of its Subsidiaries or Affiliates shall not constitute a Disqualifying Activity):

 

 

 

 

      (1) directly or indirectly serving as a principal, shareholder, partner, director, officer, employee or agent of, or as a consultant, advisor or in any other capacity to, any business or entity which competes with the Company or its Subsidiaries or Affiliates in any business or activity then conducted by the Company or any of its Subsidiaries or Affiliates to an extent deemed material by the Committee; or

 

 

 

      (2) any disclosure by the Participant, or any use by the Participant for his or her own benefit or for the benefit of any other person or entity (other than the Company or its Subsidiaries or Affiliates), of any confidential information or trade secret of the Company or any of its Subsidiaries or Affiliates without the consent of the Company; or

 

 

 

      (3) any material violation of any of the provisions of the Code of Ethics or any agreement between the Participant and the Company or any of its Subsidiaries or Affiliates; or

 

 

 

      (4) making any other disclosure or taking any other action which is determined by the Committee to be materially detrimental to the business, prospects or reputation of the Company or any of its Subsidiaries or Affiliates; or

 

 

 

      (5) the Participant fails, in any material respect, to perform his or her assigned responsibilities as an employee of the Company or any of its Subsidiaries or Affiliates, as determined by the Committee, in its sole judgment, after consulting with the Chief Executive Officer of the Company.

 

 

 

 

      “Effective Date” means the date the shareholders of the Company approve the Plan.

 

 

 

      “Eligible Persons” has the meaning assigned to it in Section 4.

 

 

 

      “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

 

 

      “Excluded Director” has the meaning assigned to it in Section 8(b)(1).

 

 

 

      “Expiration Date” means the date upon which an Award, or any portion thereof, is scheduled to expire or terminate if not exercised or vested prior thereto, as determined by the Committee.

 

 

 

 

 

      “Independent Director” shall mean a Director who meets all of the following criteria: (1) meets the independence requirements of Nasdaq, or if Nasdaq shall cease to be the principal exchange or quotation system upon which the shares of Common Stock are listed or quoted, then such exchange or quotation system as the Company elects to list or quote its shares of Common Stock and that the Committee designates as the Company’s principal exchange or quotation system; (2) qualifies as an “outside director” under Section 162(m) of the Code; (3) qualifies as a “non-employee director” under Rule 16b-3 promulgated under the Exchange Act; and (4) satisfies independence criteria under any other applicable laws or regulations relating to the issuance of Stock to employees of the Company.

 

 

 

 

 

      “Initial Grant” has the meaning assigned to it in Section 7(a).

 

 

 

      “Investment Intent” has the meaning assigned to it in Section 8(b)(1).

 

 

 

      “Nasdaq” shall mean The Nasdaq Stock Market, Inc.

 

 

 

      “Participant” means an Eligible Person who holds an outstanding Award granted under the Plan.

 

 

 

      “Performance-Based Restricted Stock” means an Award of Restricted Stock, which will vest upon the achievement of Performance Goals established by or under the direction of the Committee and set forth in the related Award Agreement and which is intended to qualify for the exemption from the limitation on deductibility imposed by Section 162(m) of the Code.

 

 

 

      “Performance Goals” means the performance goals established by the Committee with respect to any Award. Performance goals may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure. To the extent that awards are intended to qualify as “performance-based” compensation under Section 162(m), the performance goals will be based on the following criteria, either individually, alternatively, or in any combination, applied to either the Company as a whole or to a Subsidiary or Affiliate, either individually or by or in any combination, and in each case as specified by the Compensation Committee in the award. The performance criteria may be (i) cash flow, (ii) earnings, including before interest and taxes, earnings before taxes, and net income, (iii) earnings per share, (iv) growth in earnings per share, (v) share price, (vi) return on equity or average shareholders’ equity, (vii) total shareholder return, (viii) return on capital, (ix) revenue, (x) capital expenditures, (xi) operating income or net operating income, (xii) operating profit or net operating profit, (xiii) securing new sources of capital or increasing the amount of capital provided by third-party container owners, (xiv) overhead and/or expense reduction, (xv) achieving an enhanced credit rating, (xvi) strategic plan development and implementation, (xvii) the meeting of targets with respect to the development of financial and disclosure controls and procedures, and (xviii) such other similar criteria as may be determined by the Compensation Committee.

 

 

 

      “Plan” means The Cronos Group 2005 Equity Incentive Plan, as amended from time to time.

 

 

 

      “Potential Change in Control” has the meaning assigned to it in Section 8(c).

 

 

 

      “Qualified Retirement” shall mean any termination of a Participant’s employment with the Company or its Subsidiaries or Affiliates for any reason (other than death, Disability or an involuntary termination for Cause) if, at or immediately prior to the date of such termination, the Participant satisfies both of the following conditions:

 

 

 

 

      (1) the participant is 55 years of age or older; and

 

 

 

      (2) the sum of the Participant’s age and completed years of service as an employee of the Company or its Subsidiaries or Affiliates (disregarding fractions in both cases) shall total 70 or more.

 

 

 

 

      “Qualified Retirement Date” shall mean the date as of which the Participant’s employment with the Company or its Subsidiaries or Affiliates shall terminate pursuant to a Qualified Retirement.

 

 

 

      “Restricted Stock” means an Award of shares of Stock that is made pursuant to Section 5 or Section 7 and is subject to restrictions.

 

 

 

      “Section 16 Participant” means a Participant under the Plan who is then subject to Section 16 of the Exchange Act.

      “Section 409A Requirements” shall have the meaning assigned to the term in Section 2(c).

      “Securities Act” means the Securities Act of 1933, as amended.

      “Stock” means the common shares, $2.00 par value per share, of the Company.

      “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (other than the last corporation in the unbroken

chain) owns Stock possessing more than 50% of the total combined voting power of all classes of stock in one of the other corporations in such chain.

      “Succeeding Grant” has the meaning assigned to it in Section 7(b).

      “Time-Based Restricted Stock” means an Award of Restricted Stock that will vest on the fourth anniversary of the date of grant unless a different schedule is specified by the Committee in the related Award Agreement.

 

 

2.

ADMINISTRATION.

      (a) The Plan shall be administered by the Committee. The Committee shall consist of not less than three Directors of the Company, all of whom shall be Independent Directors. Committee members shall be appointed by the Board and shall serve on the Committee at the pleasure of the Board. The functions of the Committee specified in the Plan shall be exercised by the Board if and to the extent that no Committee exists which has the authority to so administer the Plan.

      (b) The Committee shall have full power to interpret and administer the Plan and, except for automatic grants to Independent Directors pursuant to Section 7 and the award of Director’s Stock Units pursuant to Section 6, full authority to select the individuals to whom Awards will be granted and to determine the type and amount of Awards to be granted to each Participant, the consideration, if any, to be paid for such Awards, the timing of such Awards, the terms and conditions of Awards granted under the Plan and the terms and conditions of the related Award Agreements which will be entered into with Participants. As to the selection of and grant of Awards to Participants who are not Section 16 Participants, the Committee may delegate its responsibilities to members of the Company’s management, consistent with applicable law.

      (c) The Committee shall have the authority to adopt, alter, change and repeal such rules, regulations, guidelines and practices governing the Plan, from time to time, as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreement relating thereto); to direct employees of the Company or other advisors to prepare such materials or perform such analyses as the Committee deems necessary or appropriate; and otherwise to supervise the administration of the Plan. The Committee shall interpret and apply the provisions of the Plan in a manner the Committee determines is in compliance with the provisions of Section 409A of the Code and the regulations and guidance promulgated thereunder by the Department of Treasury (collectively, the “Section 409A Requirements”). Notwithstanding anything contained herein or in any Award to the contrary, any provision hereof or thereof which is inconsistent with the Section 409A Requirements or any provision not set forth herein or therein which should be included herein or therein in order to comply with the Section 409A Requirements automatically, without any action of the Company, the Committee or a Participant, shall be deemed revised, or included herein or therein, as the case may be, in a manner consistent therewith.

      (d) Any interpretation and administration of the Plan by the Committee, and all actions and determinations of the Committee, shall be final, binding and conclusive on the Company, its shareholders, Subsidiaries, Affiliates, all Participants in the Plan, their respective legal representatives, successors and assigns and all persons claiming under or through any of them. No member of the Board or of the Committee shall incur any liability for any action taken or omitted, or any determination made, in good faith in connection with the Plan.

 

 

3.     

STOCK SUBJECT TO THE PLAN.

      (a) Aggregate Stock Subject to the Plan. Subject to adjustment as provided in Section 3(c) below, the total number of shares of Stock reserved and available for Awards under the Plan is 300,000. Any Stock issued hereunder may consist, in whole or in part, of authorized and unissued shares or treasury shares.

      (b) Forfeiture or Termination of Awards or Stock. If any Stock subject to any Award granted hereunder is forfeited or an Award otherwise terminates or expires without the issuance of Stock, the Stock that is subject to such Award shall again be available for distribution in connection with future Awards under the Plan as set forth in Section 3(a).

      (c) Adjustment. In the event of any merger, reorganization, consolidation, recapitalization, share dividend, share split, reverse share split, combination of shares or other change in the corporate or capital structure of the Company affecting the Stock, such substitution or adjustment shall be made in the aggregate number of shares of Stock reserved for issuance under the Plan, in the maximum number of shares that may be subject to Awards granted to any Participant during any calendar year or other period, in the number and price of shares subject to outstanding Awards granted under the Plan as may be approved by the Committee, in its sole discretion, to prevent dilution or enlargement of rights; provided that the number of shares subject to any Award shall always be a whole number. Any fractional shares shall be eliminated.

      (d) Annual Award Limitation. Other than with respect to Independent Directors, no Participant may be granted Awards under the Plan with respect to an aggregate of more than 15,000 shares of Stock (subject to adjustment as provided in Section 3(c) hereof) during any calendar year. No Independent Director may be granted an Award of Restricted Stock under the Plan of more than 1,500 shares of Stock (subject to adjustment as provided in Section 3(c) hereof) during any calendar year. No more than 75,000 shares of Stock (subject to adjustment as provided in Section 3(c) hereof) may be granted pursuant to Awards of Restricted Stock to all Participants during any calendar year. The restrictions of this subsection (d) on Awards of Restricted Stock do not apply to the issuance of shares of Stock in settlement of Director’s Stock Units pursuant to Section 6 hereof.

 

 

4.

ELIGIBILITY.

      Independent Directors and officers and other key employees of the Company and its Subsidiaries and Affiliates who are responsible for or contribute to the management, growth or profitability of the business of the Company or its Subsidiaries or Affiliates (“Eligible Persons”) are eligible to be granted Awards under the Plan.

 

 

5.

RESTRICTED STOCK.

      (a) Grant.

 

 

 

      (1) Subject to the terms and conditions of the Plan, Restricted Stock may be awarded to Eligible Persons at any time and from time to time as shall be determined by the Committee. The Committee shall determine the individuals to whom, and the time or times at which, grants of Restricted Stock will be made; the number of shares of Restricted Stock to be awarded to each Participant; the price (if any) to be paid by the Participant; whether the Awards will consist of Performance-Based Restricted Stock or Time-Based Restricted Stock or a combination thereof; the date or dates or conditions upon which Restricted Stock Awards will vest, whether through lapse of time or the achievement of specified Performance Goals; the Performance Goal or Goals, if any, that must be satisfied as a condition to the vesting of any Restricted Stock Award; the period or periods within which such Restricted Stock Awards may be subject to forfeiture; and the other terms and conditions of such Awards in addition to those set forth in Section 5(b) (including, but not limited to, voting rights).

 

 

 

      (2) The Committee may condition the grant or vesting of Restricted Stock upon the lapse of time or the attainment of specified Performance Goals or such other factors as the Committee may determine in its sole discretion; provided that, unless otherwise determined by the Committee, all Time-Based Restricted Stock Awards granted under this Section 5 shall vest, in full, on the fourth anniversary of the date of grant.

      (b) Terms and Conditions. Restricted Stock awarded under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable. A Participant who receives a Restricted Stock Award shall not have any rights with respect to such Award, unless and until such Participant has executed an Award Agreement evidencing the Award in the form approved from time to time by the Committee and has delivered a fully executed copy thereof to the Company, and has otherwise complied with the applicable terms and conditions of such Award.

 

 

 

      (1) The purchase price for shares of Restricted Stock shall be zero unless otherwise determined by the Committee.

 

 

 

      (2) Awards of Restricted Stock must be accepted by executing the related Award Agreement, delivering an executed copy of such Award Agreement to the Company and paying the applicable price (if any) that is required under Section 5(b)(1).

 

 

 

      (3) Subject to Section 5(b)(5), each Participant receiving a Restricted Stock Award shall be issued a stock certificate in respect of such shares of Restricted Stock. Such certificate shall be registered in the name of such Participant, and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Award.

 

 

 

      (4) Subject to Section 5(b)(5), the stock certificates evidencing such shares of Restricted Stock shall be delivered to and held in custody by the Company, or its designee, until the restrictions thereon shall have lapsed or any conditions to the vesting of such Award have been satisfied. As a condition of any Restricted Stock Award, the Participant shall deliver to the Company a stock power, endorsed in blank, relating to the Stock covered by such Award.

 

 

 

      (5) In the discretion of the Company, any shares of Restricted Stock awarded to any Participant may be issued and held in book entry form. In such event, no stock certificates evidencing such shares will be issued and the applicable restrictions will be noted in the records of the Company’s transfer agent and in the book entry system.

 

 

 

      (6) A Participant may be granted an Award of Time-Based Restricted Stock or Performance-Based Restricted Stock, or a combination thereof. Time-Based Restricted Stock Awards will vest and all restrictions thereon will terminate upon the fourth anniversary of the date of grant, subject to a different schedule as specified by the Committee, provided all other conditions to vesting have been met. Performance-Based Restricted Stock Awards will vest and all restrictions thereon will terminate upon the certification by the Committee of the achievement of the specified Performance Goals, provided all other conditions to vesting have been met.

 

 

 

      (7) Subject to the provisions of this Plan and the related Award Agreement, during the period set by the Committee commencing with the date of grant of a Restricted Stock Award, the Participant who has received such Award shall not be permitted to sell, transfer, pledge, assign or otherwise encumber the shares of Restricted Stock which are subject to such Award until such shares have vested. The Committee, in its sole discretion, may provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions, in whole or in part, based on service, performance or such other factors and criteria as the Committee may determine, in its sole discretion; provided that any such action does not affect any Award held by any Participant who is subject to Section 162(m) of the Code.

 

 

 

      (8) Except as otherwise provided by the Committee, cash dividends shall only be paid on Restricted Stock that has vested, and the Participant shall not have the right to vote with respect to the shares of Restricted Stock until such shares have vested. Stock dividends issued with respect to Restricted Stock shall be treated as additional shares of Restricted Stock that are subject to the same restrictions and other terms and conditions that apply to the shares with respect to which such dividends are issued. In the event that, for any reason, the foregoing restriction on the voting of shares of Restricted Stock is not effective, then and in such an event each Participant shall, by the terms of the Award Agreement, grant to the Chief Executive Officer, President, and Secretary of the Company, and to each of them, an irrevocable proxy to vote the Participant’s shares of Restricted Stock and to grant consents with respect to the Participant’s shares of Restricted Stock until such time as such shares have vested.

 

 

 

      (9) Any Participant who is then eligible to participate in any other deferral plan hereafter adopted or maintained by the Company (a “Deferral Plan”) may elect to defer all or any portion of any Restricted Stock Awards granted to him or her under this Plan, subject to and in compliance with the terms of the applicable Deferral Plan and the Section 409A Requirements.

6.     DIRECTOR’S STOCK UNITS.

      (aGeneral. A Director’s Stock Unit shall represent the right to receive one share of Stock upon satisfaction of the conditions to vesting and settlement specified in the Plan. Director’s Stock Units will be settled exclusively in Stock.

      (bGrants of Director’s Stock Units. Director’s Stock Units shall be awarded under the Plan as follows:

 

 

 

      (1) An Independent Director may elect to reduce all or part of the cash compensation otherwise payable for services to be rendered by him or her as a Director (including the annual retainer fee and any fees payable for services on the Board or any committee thereof) (such reduction in compensation referred to herein as “Director’s Deferred Compensation”) and to receive in lieu thereof Director’s Stock Units; provided, however, that if an Independent Director elects not to receive part of the cash compensation otherwise payable to him or her, and to receive, instead, Director’s Stock Units, then the election shall not be for less than fifty percent (50%) of the Independent Director’s annual retainer fee as a Director. Any such election shall be made prior to the beginning of, and will be effective for, the calendar year in which the compensation to the Independent Director will be paid; provided, however, that for the first year in which the Plan is in effect, any Independent Director may, at any time within thirty (30) days of the date the Plan is approved by the shareholders of the Company, make an election to participate in the Plan with respect to compensation payable to the Independent Director for services to be performed by the Independent Director subsequent to the date of the election; and provided further, however, that any Independent Director not serving on the Board prior to the date the Plan is approved by the shareholders of the Company may, at any time within thirty (30) days of his or her original election to the Board, make an election to participate in the Plan, effective with respect to compensation payable to the Independent Director for services to be performed by the Independent Director subsequent to the date of the election. All elections made hereunder shall become irrevocable as of the last day such election may be made. Unless the Independent Director notifies the Secretary of the Company otherwise prior to the beginning of each subsequent calendar year, an election will renew automatically for an additional calendar year. Any election made hereunder shall be in writing and shall specify the amount of compensation to be received in the form of Director’s Stock Units.

 

 

 

      (2) With respect to each Independent Director who elects to receive a portion of his or her cash compensation in Director’s Stock Units pursuant to Section 6(b)(1) above, the number of Director’s Stock Units to be credited to the Director’s Account shall be equal to the quotient obtained by multiplying the Director’s Deferred Compensation by One Hundred Twenty-Five Percent (125%) and by then dividing the resultant product by the average of the Fair Market Value of a share of Stock of the Company for the 20 trading days preceding the date that the Director’s Deferred Compensation would otherwise have been payable to the Independent Director had the Director not made the election referred to in this Section 6.

      (c) Director’s Accounts. The Director’s Account for each Independent Director who elects to receive Director’s Stock Units in lieu of all or a portion of the Director’s cash compensation, calculated in accordance with paragraph (b)(2) above, shall be credited at such times as the Director’s Stock Units are awarded to the Independent Director and by the number of Director’s Stock Units awarded to the Independent Director. In the event that the Company pays any cash or other dividend or makes any other distribution in respect of its Stock, then each Director’s Account will be credited with an additional number of Director’s Stock Units (including fractions thereof) determined by dividing (1) the amount of cash, or the value (as determined by the Board) of any securities or other property, paid or distributed in respect of one outstanding share of Stock by (2) the Fair Market Value of a share of Stock for the first date on which the Stock of the Company trades “ex-dividend” with respect to the dividend or distribution made by the Company with respect to its Stock, and multiplying the result of such division by (3) the number of Director’s Stock Units that were credited to the Director’s Account immediately prior to the date of the dividend or other distribution. Notwithstanding the foregoing, if, at the time of the declaration of the dividend, there is an insufficient number of shares of Stock authorized under this Plan for issuance in accordance herewith, each Director’s Account shall be credited, in

cash, with an amount equal to the product of (A) the amount of cash, or the value (as determined by the Board) of any securities or other property, paid or distributed in respect of one outstanding share of Stock and (B) the number of Director’s Stock Units that were credited to the Director’s Account immediately prior to the date of the dividend or other distribution. Such cash credits shall be held in accordance with the terms herewith. Credits shall be made effective as of the date of the dividend or other distribution in respect of the Stock.

      (d) Vesting; Accelerated Vesting; Deferral; Nontransferability.

 

 

 

      (1) Director’s Stock Units granted to an Independent Director, and any additional Director’s Stock Units credited to a Director’s Account in respect of earnings or other distributions on such Director’s Stock Units as provided in Section 6(c) hereof, shall vest on the business day preceding the next annual meeting of shareholders of the Company at which the term of such Director is to expire (notwithstanding whether such Director is nominated for re-election or elected at such annual meeting), and shall be settled as soon as practicable thereafter, provided that the Independent Director shall have remained a member of the Board continuously from the date of grant to said date.

 

 

 

      (2) Notwithstanding the provisions of Section 6(d)(1) above, all Director’s Stock Units granted to an Independent Director shall immediately vest upon the first to occur of (A) an Independent Director ceasing to be a member of the Board by resignation or removal, (B) an Independent Director ceasing to be a member of the Board as a result of death or Disability, or (C) a Change in Control occurring with respect to the Company, as defined in Section 8(b) hereof.

 

 

 

      (3) Notwithstanding the provisions of Sections 6(d)(1) and 6(d)(2) above, an Independent Director may, in his or her election to participate in the Plan pursuant to Section 6(b)(1) hereof, elect to defer settlement of any or all Director’s Stock Units to a date subsequent to the vesting date of such Director’s Stock Units, provided that no such deferral may extend beyond the earlier of (A) the Independent Director’s termination of service on the Board, or, if later, the Independent Director’s 70th birthday, or (B) the Independent Director’s death. Settlement of any deferred Director’s Stock Units shall be made on or as soon as practicable following the date specified by the Independent Director in the relevant deferral election.

 

 

 

      (4) An Independent Director who has been awarded Director’s Stock Units shall not be permitted to sell, transfer, pledge, assign or otherwise encumber the Director’s Stock Units or the shares of Stock issuable in settlement thereof until such Director’s Stock Units have vested. The Committee, in its sole discretion, may provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions, in whole or in part, based upon such criteria as the Committee may determine, in its sole discretion; provided that any such action complies with the Section 409A Requirements.

      (e) Delivery of Share Certificates. As soon as practicable following the vesting of Director’s Stock Units as provided in Sections 6(d)(1) and 6(d)(2) above, or the date for deferred settlement as provided in Section 6(d)(3) above, Director’s Stock Units shall be settled by delivery to the Independent Director of a share certificate for the number of shares of Stock of the Company corresponding to such Director’s Stock Units. Shares delivered in settlement of Director’s Stock Units shall be free of all such restrictions, except any that may be imposed under Applicable Law or the Company’s trading policy.

      (f) No Shareholder Rights. The crediting of Director’s Stock Units to a Director’s Account shall not confer on the relevant Independent Director any rights as a shareholder of the Company.

 

 

7.

AUTOMATIC GRANTS OF RESTRICTED STOCK TO INDEPENDENT DIRECTORS.

      (a) Initial Grant. Each Independent Director who became a member of the Board prior to the Effective Date will receive a grant of 1,500 shares of Restricted Stock as of the Effective Date. Each Independent Director who first becomes a member of the Board on or after the Effective Date will automatically be granted 1,500 shares of Restricted Stock on the date such Independent Director first becomes a member of the Board. Each grant pursuant to this Section 7(a) shall be called an “Initial Grant”.

      (b) Succeeding Grant. On each anniversary of an Initial Grant under this Plan each Independent Director who has served continuously as a member of the Board during that period will automatically be granted an additional 1,500 shares of Restricted Stock. Each grant pursuant to this Section 7(b) shall be called a “Succeeding Grant”.

      (c) Vesting and Exercisability. Initial Grants and Succeeding Grants shall become exercisable, in full, on the business day preceding the next annual meeting of shareholders of the Company at which the term of such Independent Director is to expire (notwithstanding whether such Director is nominated for re-election or elected at such annual meeting), so long as the Director continuously remains a Director or a consultant to the Company until such date.

      (d) Form of Grant. Each grant under this Section 7 shall be evidenced by an Award Agreement in such form as the Committee shall from time to time approve and which shall comply with and be subject to the terms and conditions of this Plan.

      (e) Exercise Price. The purchase price for shares of Restricted Stock granted under this Section 7 shall be zero.

      (f) Termination of Option. Section 9 (other than Section 9(b)) shall apply equally to Restricted Stock granted to an Independent Director, except that any references therein to “employment” shall be considered references to membership on the Board.

      (g) Other Terms and Conditions. Except as specifically set forth above, Restricted Stock awarded under this Section 7 shall also be subject to the terms and conditions set forth in Section 5 hereof.

 

 

8.

CHANGE IN CONTROL PROVISION.

      (a) Impact of Event. In the event of and upon: (1) a “Change in Control” as defined in Section 8(b) or (2) a “Potential Change in Control” as defined in Section 8(c), one or more of the following provisions may apply, as determined by the Committee in its sole discretion:

 

 

 

      (1) All restrictions, limitations and Performance Goals, if any, applicable to any Restricted Stock shall terminate and such Stock shall be deemed fully vested;

 

 

 

      (2) The value of all outstanding Awards (excluding Awards of Director’s Stock Units which are governed by Section 6 hereof), in each case to the extent vested, shall, unless otherwise determined by the Committee in its sole discretion at or after grant but prior to any Change in Control or Potential Change in Control, be cashed out on the basis of the “Change in Control Price,” as defined in Section 8(d), as of the date such Change in Control or such Potential Change in Control is determined to have occurred; or

 

 

 

      (3) The Committee may provide for the assumption or substitution of, or adjustment to, each outstanding Award (excluding Awards of Director’s Stock Units which are governed by Section 6 hereof).

      (b) Definition of Change in Control. For purposes of Section 8(a), a “Change in Control” means the happening of any of the following:

 

 

 

      (1) When any “person” as defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) of the Exchange Act, but excluding the Company and any Subsidiary and any employee benefit plan sponsored or maintained by the Company or any Subsidiary (including any trustee of such plan acting as trustee), directly or indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act, as amended from time to time), of securities of the Company representing 50 percent or more of the combined voting power of the Company’s then outstanding securities; provided, however, that the terms “person” and “group” shall not include any “Excluded Director,” and the term “Excluded Director” means any Director who, on the Effective Date, is the beneficial owner of or has the right to acquire an amount of Stock equal to or greater than five percent of the number of shares of Stock outstanding on the

 

 

 

Effective Date; and provided further, however, that, unless otherwise determined by the Board or any committee thereof, the terms “person” and “group” shall not include any entity or group of entities which has acquired Stock of the Company in the ordinary course of business for investment purposes only and not with the purpose or effect of changing or influencing the control of the Company, or in connection with or as a participant in any transaction having such purpose or effect (“Investment Intent”), as demonstrated by the filing by such entity or group of a statement on Schedule 13G (including amendments thereto) pursuant to Regulation 13D under the Exchange Act, as long as such entity or group continues to hold such Stock with an Investment Intent;

 

 

 

 

 

      (2) When, during any period of 12 consecutive months during the existence of the Plan, a majority of the individuals who, at the beginning of such period constitute the Board, are replaced by Directors whose appointment or election is not endorsed by a majority of the Directors prior to the date of appointment or election; or

 

 

 

 

 

 

 

      (3) The occurrence of a transaction requiring shareholder approval for the acquisition, consolidation or merger of the Company by an entity other than the Company or a Subsidiary, through purchase of Stock or assets, by merger or otherwise, other than a transaction in which the holders of Stock immediately before such transaction will, immediately following such transaction, hold as a group both the ability to elect at least a majority of the directors of the surviving corporation and at least a majority of the voting power in the surviving corporation.

 

 

      (c) Definition of Potential Change in Control. For purposes of Section 8(a), a “Potential Change in Control” means the acquisition of beneficial ownership, directly or indirectly, by any entity, person or group (other than the Company or a Subsidiary or any Company employee benefit plan (including any trustee of such plan acting as such trustee)) of securities of the Company representing 35 percent or more of the combined voting power of the Company’s outstanding securities and the adoption by the Board of a resolution to the effect that a Potential Change in Control of the Company has occurred for purposes of this Plan; provided, however, that a Potential Change in Control shall not be deemed to occur as a result of the acquisition of securities by the Company which, by reducing the outstanding securities of the Company, increases the securities beneficially owned by such entity, person or group to an amount representing 35 percent or more of the voting power of the Company’s outstanding securities (as long as such entity, person or group does not thereafter acquire any additional Stock (or securities convertible or exchangeable into Stock)).

      (dChange in Control Price. For purposes of this Section 8, “Change in Control Price” means the highest price per share paid in any transaction reported on the Nasdaq Composite Index, or paid or offered in any bona fide transaction related to a Change in Control or Potential Change in Control of the Company, at any time during the 60-day period immediately preceding the occurrence of the Change in Control (or, where applicable, the occurrence of the Potential Change in Control event), in each case as determined by the Committee.

 

 

9.

TERMINATION OF AWARDS.

      (a) Termination due to Death, Disability or by the Company for Other than Cause. If a Participant’s employment by the Company or any Subsidiary or Affiliate terminates by reason of death, Disability or by the Company for reasons other than Cause, any Award held by such Participant (other than Awards of Director’s Stock Units, with respect to which the provisions of Section 6(d) hereof govern) shall vest, and any restrictions shall lapse, as to 100% of the number of shares of Stock granted pursuant to such Award on the date of termination, provided that, if the vesting of such Award is conditioned upon or subject to the achievement of specified Performance Goals, such Performance Goals are achieved prior to the earlier of the expiration of one year from the date of death, Disability or termination or the Expiration Date of such Award.

      (b) Termination due to Qualified Retirement. If a Participant’s employment with the Company or any Subsidiary or Affiliate terminates due to a Qualified Retirement, a portion of the Restricted Stock subject to the Award held by such Participant and not then vested shall nevertheless vest, and any restrictions on such stock shall lapse, that portion determined by multiplying the number of shares of Restricted Stock subject to

such Award and not vested by a percentage, the numerator of which is equal to the number of full months of service since the date of grant and the denominator of which is 48, rounded down to the nearest whole share of Stock; provided that, if the vesting of such Award is conditioned upon or subject to the achievement of specified Performance Goals, such Performance Goals are achieved prior to the earlier of the expiration of one year from the date of the Participant’s Qualified Retirement or the Expiration Date of such Award; provided further that, if the Committee determines during such year that the Participant is or has engaged in any Disqualifying Activity, then to the extent that any Restricted Stock Award held by such Participant would have vested as of the Disqualification Date, the Participant shall have the right to receive all shares of Restricted Stock which are vested as of such date, and (2) to the extent that any Restricted Stock Award held by such Participant has not vested as of the Disqualification Date, the Award shall terminate, and all related shares shall be forfeited, as of such date. Any determination by the Committee, which may act upon the recommendation of the Chief Executive Officer or other senior officer of the Company, that the Participant is or has engaged in any Disqualifying Activity, and as to the Disqualification Date, shall be final and conclusive. The provisions of this subsection (b) do not apply to Independent Directors.

      (c) Termination by the Company for Cause or for Any Other Reason. If a Participant’s employment with the Company or any Subsidiary or Affiliate terminates for any reason other than those set forth in paragraphs (a) and (b) above, any Award held by such Participant (other than Awards of Director’s Stock Units, with respect to which the provisions of Section 6(d) hereof govern) which has not yet vested shall terminate, and all related shares shall be forfeited, as of the date of Participant’s termination.

 

 

10.

AMENDMENTS AND TERMINATION.

      (a) The Board may at any time, in its sole discretion, amend, supplement, alter or discontinue the Plan, including, without limitation, to comply with the Section 409A Requirements, but no such amendment, alteration or discontinuation shall be made which would impair the rights of a Participant under a Restricted Stock Award theretofore granted, without the Participant’s consent. The Board may, at any time, in its sole discretion, amend, supplement, or alter the provisions of the Plan governing Director’s Stock Units to comply with the Section 409A Requirements, but no such amendment or alteration that would modify the number of Director’s Stock Units theretofore granted to an Independent Director or the number of shares of Stock issuable upon settlement of such Director’s Stock Units shall be made without the Independent Director’s consent. The Company shall submit to the shareholders of the Company for their approval, any amendments to the Plan which are required to be approved by shareholders by law or the rules and regulations of any governmental authority, any stock exchange or any quotation system upon which the Stock is then traded.

      (b) Subject to changes in law or other legal requirements that would permit otherwise, the Plan may not be amended without the approval of the shareholders, to (a) increase the total number of shares of Stock that may be issued under the Plan or to any Participant during any calendar year (except for adjustments pursuant to Section 3(c)), or (b) modify the Plan’s eligibility requirements. Further, no Performance-Based Award may be amended if such amendment would adversely affect the Award’s qualification as qualified performance-based compensation under Section 162(m) of the Code.

      (c) The Committee may at any time, in its sole discretion, amend the terms of any outstanding Award including, without limitation, to comply with the Section 409A Requirements, but no such amendment shall be made which would impair the rights of a Participant under a Restricted Stock Award theretofore granted, without the Participant’s consent, or which would reduce the number of Director’s Stock Units theretofore granted to an Independent Director or the number of shares of Stock issuable upon settlement thereof without the Independent Director’s consent; nor reduce the purchase price (if any) of the Stock which is subject to an outstanding Award; nor shall any such amendment be made which would make the applicable exemptions provided by Rule 16b-3 under the Exchange Act unavailable to any Section 16 Participant holding an Award without the Participant’s consent.

      (d) Subject to the above provisions, the Board shall have all necessary authority to amend the Plan to take into account changes in applicable securities and tax laws and accounting rules, as well as other developments.

      (e) The Committee shall have the authority to adopt such modifications, procedures, and sub-plans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company or its Subsidiaries may operate to assure the viability of the benefits from Awards granted to Participants performing services in such countries and to meet objectives of the Plan.

 

 

11.

UNFUNDED STATUS OF PLAN.

      Insofar as it provides for Awards, the Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants who are granted Awards of Stock under this Plan, any such accounts will be used merely as a bookkeeping convenience. Except for the holding of Restricted Stock pursuant to Section 5(b)(4), the Company shall not be required to segregate any assets which may at any time be represented by Awards, nor shall this Plan be construed as providing for such segregation, nor shall the Company or the Committee be deemed to be a trustee of Stock to be awarded under the Plan. Any liability of the Company to any Participant with respect to an Award shall be based solely upon any contractual obligations which may be created by the Plan; no such obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Committee shall be required to give any security or bond for the performance of any obligation which may be created by this Plan. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver the Stock with respect to Awards hereunder.

 

 

12.

GENERAL PROVISIONS.

      (a) The Committee may require each Participant acquiring Stock pursuant to an Award under the Plan to represent to and agree with the Company in writing that the Participant is acquiring the Stock without a view to distribution thereof. Any certificates for such shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer.

      (b) All shares of Stock or other securities issued under the Plan shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange or quotation system upon which the Stock is then listed, and any applicable federal or state securities laws, and the Committee may cause a legend or legends to be placed on any certificates for such shares to make appropriate reference to such restrictions or to cause such restrictions to be noted in the records of the Company’s stock transfer agent and any applicable book entry system.

      (c) Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

      (d) Neither the adoption of the Plan, nor its operation, nor any document describing, implementing or referring to the Plan, or any part thereof, shall confer upon any Participant under the Plan any right to continue in the employ, or as a Director, of the Company or any Subsidiary or Affiliate, or shall in any way affect the right and power of the Company or any Subsidiary or Affiliate to terminate the employment, or service as a director, or change the job title, duties, authority, position or compensation of any Participant in the Plan at any time with or without assigning a reason therefor, to the same extent as the Company or any Subsidiary or Affiliate might have done if the Plan had not been adopted.

      (e) For purposes of this Plan, a transfer of a Participant between the Company and any of its Subsidiaries or Affiliates, or between such Subsidiaries or Affiliates, shall not be deemed a termination of employment or adversely affect or enlarge the rights of any Participant under this Plan or with respect to any Award.

      (f) No later than the date as of which an amount first becomes includable in the gross income of the Participant for federal income tax purposes with respect to any Award under the Plan, the Participant shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, any

federal, state, local or foreign taxes or other items of any kind required by law to be withheld with respect to such amount. Subject to the following sentence, unless otherwise determined by the Committee, withholding obligations may be settled with Stock, including unrestricted Stock previously owned by the Participant or Stock that is part of the Award that gives rise to the withholding requirement. Notwithstanding the foregoing, any election by a Section 16 Participant to settle such tax withholding obligation with Stock that is previously owned by the Participant or part of such Award shall be subject to prior approval by the Committee, in its sole discretion. The obligations of the Company under the Plan shall be conditional on such payment or arrangements and the Company and its Subsidiaries and Affiliates to the extent permitted by law shall have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant.

      (g) In the event any Award is transferred or assigned pursuant to a court order, such transfer or assignment shall be without liability to the Company and the Company shall have the right to offset against such Award any expenses (including attorneys’ fees) incurred by the Company in connection with such transfer or assignment.

      (h) All Award Agreements entered into with Participants pursuant to the Plan shall be subject to the Plan. A Participant who receives an Award under the Plan shall not have any rights with the respect to such Award, unless and until such Participant has executed an Award Agreement evidencing the Award, in the form approved by the Committee; has delivered a fully-executed copy of such Award Agreement to the Company; and has otherwise complied with the applicable terms and conditions of such Award.

      (i) The provisions of Awards need not be the same with respect to each Participant.

 

 

13.

LEGAL COMPLIANCE.

      (a) Stock shall not be issued pursuant to the settlement of Director’s Stock Units unless the settlement of such Director’s Stock Units, and the issuance and delivery of such Stock, shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance, as determined to be necessary or appropriate by the Committee.

      (b) As soon as practicable after the Effective Date, the Company shall register the Stock that may be granted under this Plan under the Securities Act, and shall, as required by the Securities Act, maintain from time to time the effectiveness of such registration.

 

 

14.

INABILITY TO OBTAIN AUTHORITY.

      To the extent the Company is unable to or the Committee deems it infeasible to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Stock hereunder, the Company shall be relieved of any liability with respect to the failure to issue or sell such Stock as to which such requisite authority shall not have been obtained.

 

 

15.

RESERVATION OF SHARES.

      The Company, during the term of this Plan, will at all times reserve and keep available such number of shares of Stock as shall be sufficient to satisfy the requirements of the Plan. To the extent required by the laws of the Company’s place of organization, the authorized but unissued shares of Stock reserved for issuance under the Plan shall be re-submitted to the shareholders of the Company for their approval and, if not approved, then no further shares of Stock shall be issued under this Plan.

 

 

16.

SHAREHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.

      The Plan was adopted by the Board on March 17, 2005 and is subject to approval by the holders of the Company’s outstanding common shares, in accordance with applicable law. The Plan will become effective on the date of such approval. The holders of the Company’s outstanding Stock shall be deemed to have approved and adopted the Plan only if it is approved and adopted at a meeting of the holders duly held by a vote taken in the manner required by the laws of Luxembourg.

 

 

17.

TERM OF PLAN.

      No Award shall be granted pursuant to the Plan on or after the seventh anniversary of the date the Plan is approved by the shareholders of the Company, but Awards granted prior to such date may extend beyond that date.