STOCK PERFORMANCE GRAPH
The following data compares the value of $100 invested on October 1,
2007
in the Company's Class A Common Shares, the Nasdaq Composite Index, and
the
Nasdaq Industrial Index. The Nasdaq Composite Index represents a broad
market
group in which the Company participates, and the Nasdaq Industrial
Index
was chosen as having a representative peer group of companies. The
total return
includes reinvestment of dividends. The comparisons in this graph are
not
intended to forecast, or be indicative of, possible future performance.
The above graph was prepared using the following data:
SEPTEMBER 30
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2007
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2008
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2009
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2010
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2011
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2012
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|
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|
|
|
|
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HICKOK
|
$100
|
$72
|
$40
|
$34
|
$14
|
$10
|
|
|
|
|
|
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|
NASDAQ COMPOSITE
|
100
|
77
|
78
|
87
|
89
|
115
|
|
|
|
|
|
|
|
NASDAQ INDUSTRIAL
|
100
|
73
|
71
|
83
|
89
|
111
|
Profit Sharing
Plans
The Company had a formula-based profit sharing bonus plan that was
in
place for over 30 years. The shareholders approved the Amended Articles
of Incorporation and the Amended and Restated Code of Regulations that
eliminated this formula plan. In the past, the Board of Directors
from time to time installed special bonus
plans and could do so in the future under the Company's revised Charter
Documents. Any future bonus distribution would be determined
by
the Compensation Committee of the Board of Directors after considering
such
factors as the employee's influence on Company results, performance
during
the preceding years (with emphasis on the previous year) and employee
long-term
anticipated contribution to corporate goals. The
Company's
formula-based profit sharing bonus plan produced no bonuses in 2012 or
in
2011.
APPROVAL AND
ADOPTION OF THE HICKOK
INCORPORATED
2013 OMNIBUS EQUITY PLAN
Introduction
Historically,
stock options have been an essential part of the Company’s compensation
program for executive officers, key employees and Directors. Stock
options align executive compensation with the amount of appreciation
realized by the Company’s shareholders over comparable periods. Stock
options also provide officers, employees and Directors with the
opportunity to acquire and build a meaningful ownership interest in the
Company.
Recently,
however, the
price of our Class A Common Shares has been significantly impacted by
both the worldwide economic downturn and Company-specific challenges.
The Company believes that this decline in share value, in combination
with an insufficient pool of available options under our existing
equity plans, poses a significant impediment to the Company’s overall
goal of retaining and motivating employees and Directors upon whom the
Company and its shareholders rely to help execute the Company’s
restructuring and continued improvement of operating results. the last
reported bid price of our Class A Common Shares was $1.60 per share on January 9, 2013.
In
order maintain the
current management structure, the Company believes that it is critical
that the value of the Company’s stock option program be restored and
that the Company’s officers, employees and Directors be appropriately
compensated. The imbalance between the high level of commitment
required of our officers, employees and Directors to achieve the
Company’s goals and the low level of equity compensation received by
such individuals must be corrected because the loss of one or more of
these individuals could result in significant setbacks for the Company.
If such a loss were to occur, it is unlikely that a suitable
replacement would be available given the current economic climate and
the significant individual efforts that are required to increase the
Company’s revenues and improve the Company’s operating results.
Currently,
there are no Class A
Common Shares available for issuance under the
Company’s existing share-based award plans under which common
shares
are available for future grants. Considering the current imbalance
between the significant demands being placed on the Company’s
management and Directors and the compensation received by such
individuals, the lack of Class A Common Shares currently available for
issuance
under our plans is insufficient to address this imbalance as well as
ensure the retention of the Company’s current management team.
Therefore, the Board of Directors is requesting that shareholders
approve the Hickok Incorporated 2013 Omnibus Equity Plan (the “2013
Omnibus Plan”) under which a total of 150,000 Class A Common Shares
will be
available for issuance.
Purpose of the 2013 Omnibus Plan
The
Board of Directors believes that share-based awards are an important
component of the Company’s overall compensation programs. As discussed
above, the Board of Directors believes that providing substantial new
equity awards at the present time is critical to retaining the current
management team and maintaining continuity on the Board of Directors.
Adoption of the 2013 Omnibus Plan will provide the Compensation
Committee with an increased pool of share-based awards, and the
flexibility to grant a wide variety of awards (including performance
awards intended to comply with Section 162(m) of the Internal Revenue
Code (the “Code”)). The 2013 Omnibus Plan provides access to a broad
variety of share-based awards with the mix of awards determined by
taking
into account such factors as the type and level of employee, relevant
business and performance goals and the prevailing tax and accounting
treatments. The goals of the 2013 Omnibus Plan are to: (i) attract
and
retain skilled and qualified officers, employees, consultants and
Directors who are expected to contribute to the Company’s success by
providing long-term incentive compensation opportunities competitive
with those made available by other companies; (ii) motivate
participants to achieve the long-term success and growth of the
Company; (iii) facilitate ownership of Class A Common Shares; and
(iv)
align the interests of the participants with those of the Company’s
shareholders.
Key Terms
The
key terms of the 2013 Omnibus Plan are summarized below:
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Shares Authorized:
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150,000,
which may be treasury shares
or authorized but unissued Class A Common Shares.
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Types of Awards:
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Stock
options , stock appreciation rights, restricted shares, restricted
share units, performance shares and Class A Common Shares.
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Limitations on Awards:
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The
aggregate number of Class A Common Shares underlying awards granted to
any participant in any plan year may not exceed 50,000.
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Award Terms:
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Options
and stock appreciation rights will have ten year maximum terms. For all
awards, vesting and performance vesting criteria, if applicable, will
be established in the award agreement.
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Eligible Participants:
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Employees of the Company or any of
its affiliates, executive officers, non-employee Directors and
consultants.
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Actions That are
Prohibited by the Plan Include:
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•
Reducing the exercise price of an award absent shareholder approval,
subject to the anti-dilution provisions of the 2013 Omnibus Plan.
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•
Increasing the aggregate number of Class A Common Shares available for
issuance under the 2013 Omnibus Plan absent shareholder approval.
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•
Granting stock options and stock appreciation rights at a below fair
market value price at the grant date, subject to the anti-dilution
provisions of the 2013 Omnibus Plan.
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Description of the 2013 Omnibus Plan
If
approved, the 2013 Omnibus Plan will act as the Company’s share-based
award program for covered employees, consultants and Directors. The
2013 Omnibus Plan will provide the Company with flexibility to grant a
variety of share-based awards. The 2013 Omnibus Plan is also designed
to permit the Company to grant performance-based awards that comply
with Section 162(m) of the Code, as described below.
The
following paragraphs provide a summary of the principal features of the
2013 Omnibus Plan and its operation. The 2013 Omnibus Plan is set forth
in its entirety as
Appendix A
to
this Proxy
Statement. This summary is qualified in its entirety by reference to
Appendix A
.
The
2013 Omnibus Plan provides for the grant of the following types of
incentive awards: (i) stock options, (ii) stock appreciation
rights,
(iii) restricted shares, (iv) restricted share units,
(v) performance
shares and (vi) Class A Common Shares. Those who will be eligible
for
awards under the 2013 Omnibus Plan include employees who provide
services to the Company and its affiliates, executive officers,
non-employee Directors and consultants designated by the Compensation
Committee. As of January 9, 2013, approximately 22 employees and
non-employee
Directors would be eligible to participate in the 2013 Omnibus Plan.
Number of Common Shares Available Under the
2013 Omnibus Plan and Adjustments
The
Board of Directors has reserved 150,000 Class A Common Shares for
issuance
under the 2013 Omnibus Plan. The Class A Common Shares may be either
authorized, but unissued, common shares or treasury shares.
If
any outstanding award expires or is terminated, canceled or forfeited,
the Class A Common Shares that would otherwise be issuable with respect
to the unexercised portion of the award will become available for
subsequent awards under the 2013 Omnibus Plan (unless the 2013 Omnibus
Plan has terminated). Awards paid out in cash rather than Class A
Common Shares will not reduce the number of Class A Common Shares
available for issuance under the 2013 Omnibus Plan. If
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•
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the exercise price of a stock
option is paid in common shares,
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•
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common shares underlying the
exercised portion of a stock appreciation right are not issued upon
such exercise,
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•
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common shares are withheld to
satisfy an individual participant’s tax obligations, or
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•
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common shares are repurchased by
the Company on the open market with respect to awards under the 2013
Omnibus Plan,
|
then
the common shares received, not issued, withheld or repurchased by the
Company will not be added to the maximum aggregate number of common
shares which may be issued.
If
the Company declares a dividend or other distribution or engages in a
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or
exchange of Class A Common Shares or other securities of the Company,
or other similar change in the corporate structure of the Company
affecting the Class A Common Shares, the Committee shall adjust the
number and class of Class A Common Shares that may be delivered under
the 2013 Omnibus Plan, the number, class, and price of Class A Common
Shares covered by each outstanding award, and the numerical per-person
limits on awards.
Potential Dilution (“Overhang”)
“Overhang”
is an analysis of potential
dilution to shareholders from the equity being transferred to executive
officers, employees and Directors under equity incentive plans.
Overhang is calculated by dividing (a) the sum of the Class A
Common
Shares available for issuance and all outstanding but unexercised
options by (b) the number of Class A Common Shares described in
clause
(a) above plus the total number of Class A Common Shares outstanding.
As of January 9, 2013, the Company’s overhang on a fully diluted basis
was 2.5%.
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Prior to
Approval
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Following
Approval
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Total Number of Class A Common Shares
Outstanding
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1,163,349
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1,163,349
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Total
Number of Class A Common Shares Covered by All Outstanding Options
(including options held by all employees, executive officers and
Directors)
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30,000
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30,000
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Prior to
Approval
|
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Following
Approval
|
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Total Number of Class A Common Shares Available
for Future
Grants Under the Company’s Equity Plan
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0
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150,000
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Overhang from Company’s Equity Plan
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2.5
|
%
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11.5
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%
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Administration of the 2013 Omnibus
Plan
The
2013 Omnibus Plan will be administered by
the Compensation Committee on the basis of a plan year ending on
December 31. The Board of Directors has discretion and authority
to
appoint a different committee to administer the 2013 Omnibus
Plan. Each member of the Compensation Committee is a “non-employee
director”
within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934 and an “outside director” as set forth in Section
162(m) of the Code. The Compensation Committee’s authority under the
2013 Omnibus Plan includes, but is not limited to, the authority to:
(i) grant awards under the 2013 Omnibus Plan; (ii) select the
officers,
employees, consultants and eligible Directors to whom awards are
granted; (iii) determine the types of awards granted and the
timing of
such awards; (iv) determine whether an award is, or is intended to
be,
“performance-based compensation” within the meaning of
Section 162(m);
(v) determine or modify the terms and conditions of any award, to
the
extent not inconsistent with the terms of the 2013 Omnibus Plan and any
operative employment or other agreement; (vi) determine whether
any
conditions or objectives relating to awards have been met;
(vii) adopt,
alter and repeal such administrative rules, guidelines, practices and
administrative forms governing the 2013 Omnibus Plan as it deems
advisable; (viii) construe, interpret, administer and implement
the
terms of the 2013 Omnibus Plan, any award and related agreements;
(ix) correct any defect, supply any omission and reconcile any
inconsistency in or between the 2013 Omnibus Plan, any award and
related agreements; (x) prescribe any legends to be affixed to
certificates representing Class A Common Shares or other interests
granted or issued under the 2013 Omnibus Plan; (xi) promulgate
such
administrative forms as they from time to time deem necessary or
appropriate for administration of the 2013 Omnibus Plan; and
(xii) otherwise supervise the administration of the 2013 Omnibus
Plan.
Options
The
Compensation Committee is able to grant
non-qualified stock options under the 2013 Omnibus Plan. The Committee
determines the number of Class A Common Shares subject to stock
options. The Compensation Committee determines the exercise price of
options granted under the 2013 Omnibus Plan, provided the exercise
price must be at least equal to 100% of the fair market value of the
Class A Common Shares on the date of grant. The term of an option may
not exceed ten years.
If
an
optionee’s employment or directorship with the Company or its
affiliates is terminated for reasons other than his or her death,
disability or retirement, all stock options (or portions thereof) which
have not been exercised, whether vested or not, are automatically
forfeited immediately upon termination, except as otherwise provided in
the relevant agreement evidencing the stock options. Upon a termination
of service with the Company as a result of death, disability or
retirement, all stock options held by such participant become
immediately vested and such participant, or such participant’s estate
as applicable, will be able to exercise the options for the period of
time stated in the 2013 Omnibus Plan or as otherwise stated in the
agreement governing his or her award. In no event may an option
be
exercised later than the expiration of its term.
Stock Appreciation Rights
The
Compensation Committee will be able to
grant stock appreciation rights, which are the rights to receive the
appreciation in fair market value of Class A Common Shares between the
exercise date and the date of grant. The Company shall pay the
appreciation in Class A Common Shares. Stock appreciation rights will
become exercisable at the times and on the terms established by the
Compensation Committee, subject to the terms of the 2013 Omnibus Plan.
The Compensation Committee, subject to the terms of the 2013 Omnibus
Plan, will have discretion to determine the terms and conditions of
stock appreciation rights granted under the 2013 Omnibus Plan;
provided, however, that the exercise price may not be less than 100% of
the fair market value of a Class A Common Share on the date of grant.
The term of a stock appreciation right may not exceed ten years.
Unless
otherwise provided in an award, employment or other agreement entered
into between the holder of the stock appreciation right and the Company
and approved by the Compensation Committee, either before or after the
date of grant, the early termination provisions set forth above with
respect to stock options will apply to stock appreciation rights.
Restricted Shares
Awards
of restricted shares are Class A
Common Shares that are issued to a participant at no cost or at a
purchase price determined by the Compensation Committee and vest in
accordance with the terms and conditions established by the
Compensation Committee in its sole discretion. For example, the
Compensation Committee may set restrictions based upon continued
employment or service with the Company, the achievement of specific
performance goals, or any other basis determined by the Compensation
Committee in its discretion. Subject to the provisions of the 2013
Omnibus Plan, after the grant of restricted shares, the Compensation
Committee, in its sole discretion, may reduce or waive any restrictions
for such award and may accelerate the time at which any restrictions
will lapse at a rate determined by the Compensation Committee.
The
Compensation Committee will determine the number of Class A
Common
Shares granted pursuant to an award of restricted shares. With respect
to restricted shares intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the Compensation
Committee, in its discretion, may set restrictions based upon the
achievement of specific performance objectives, subject to the
provisions of the 2013 Omnibus Plan.
Restricted Share Units
Awards
of restricted share units result in a
distribution of Class A Common Shares to a participant only if the
vesting criteria the Compensation Committee establishes are satisfied.
For example, the Compensation Committee may set restrictions based on
the achievement of specific performance goals or upon continued
employment or service with the Company. Upon satisfying the applicable
vesting criteria, the participant will be entitled to the payout
specified in the award agreement. Subject to the provisions of the 2013
Omnibus Plan, after the grant of restricted share units, the
Compensation Committee, in its sole discretion, may reduce or waive any
performance objectives or other vesting provisions for such award and
may accelerate the time at which any restrictions will lapse at a rate
determined by the Compensation Committee.
The
Compensation Committee will pay earned restricted stock units in Class
A Common Shares, cash or a combination of both. On the date set forth
in the award agreement, all unearned restricted share units will be
forfeited to the Company. The Compensation Committee determines the
number of restricted share units granted to any participant. With
respect to restricted share units intended to qualify as
“performance-based compensation” under Section 162(m) of the Code, the
Compensation Committee, in its discretion, may set restrictions based
upon the achievement of specific performance objectives, subject to the
provisions of the 2013 Omnibus Plan.
Performance Shares
The
Compensation Committee will be able to
grant performance shares, which are awards that will result in a
distribution of Class A Common Shares to a participant only if the
performance goals or other vesting criteria the Compensation Committee
may establish are achieved or the awards otherwise vest. Subject to the
terms of the 2013 Omnibus Plan, the Compensation Committee will
establish performance or other vesting criteria in its discretion,
which, depending on the extent to which they are met, will determine
the number and/or the value of performance shares to be paid out to
participants. Subject to the provisions of the 2013 Omnibus Plan, after
the grant of performance shares, the Compensation Committee, in its
sole discretion, may reduce or waive any performance objectives or
other vesting provisions for such award and may accelerate the time at
which any restrictions will lapse at a rate determined by the
Compensation Committee.
The
Compensation Committee determines the number of performance shares
granted to any participant. With respect to performance shares intended
to qualify as “performance-based compensation” under Section 162(m) of
the Code, the Compensation Committee, in its discretion, may determine
that the performance objectives applicable to the performance shares
will be based on the achievement of performance objectives.
Performance Objectives
At
the time of grant of a performance share
award, the Compensation Committee will specify the performance
objectives which, depending on the extent to which they are met, will
determine the number of Class A Common Shares that will be distributed
to the participant. The Compensation Committee will also specify the
time period or periods during which the performance objectives must be
met. With respect to awards to Section 162(m) persons intended to be
“performance-based compensation,” the Compensation Committee may use
performance objectives based on one or more of the following: stock
price, market share, sales, earnings per share, return on equity,
costs, earnings, capital adjusted pre-tax earnings (economic profit),
net income, operating income, performance profit (operating income
minus an allocated charge approximating the Company’s cost of capital,
before or after tax), gross margin, revenue, working capital, total
assets, net assets, shareholders’ equity and cash flow. The
Compensation Committee may designate a single goal criterion or
multiple goal criteria for performance measurement purposes.
Performance measurement may be based on absolute Company, business unit
or divisional performance and/or on performance as compared with that
of other publicly-traded companies. The performance objectives and
periods need not be the same for each participant nor for each award.
Common Shares
The
Compensation Committee may grant Class A
Common Share awards to participants in consideration of services
rendered to the Company. Common share awards will be fully vested on
the date of grant.
Transferability of Awards
Subject
to the terms of the 2013 Omnibus
Plan, all awards, other than common share awards, are non-transferable
and may be exercised only by the grantee and may not be transferred
other than by will or by the laws of descent and distribution.
Non-transferable awards are exercisable during a participant’s lifetime
only by the participant or, as permitted by applicable law, the
participant’s guardian or other legal representative. Other than
pursuant to a permitted transfer, no such award may be assigned,
pledged, hypothecated or otherwise alienated or encumbered (whether by
operation of law or otherwise) and any attempts to do so will be null
and void.
Amendment and Termination
of the 2013 Omnibus Plan
The
Board of Directors has discretionary
authority to amend the 2013 Omnibus Plan. However, generally an
amendment cannot materially and adversely affect the rights of grantees
without their written consent. The Company’s shareholders must approve
any amendment to increase the maximum aggregate number of common shares
that may be issued under the 2013 Omnibus Plan if such approval is
required under applicable laws, regulations or exchange requirements.
Change of Control
Except
as otherwise provided in the 2013
Omnibus Plan or an award agreement, upon a “change in control” (as
defined in the 2013 Omnibus Plan) all awards generally become fully
exercisable, vested, earned and payable.
New Plan Benefits
The
future benefits or specific amounts that would be
received by employees, consultants and Directors under the 2013 Omnibus
Plan have not yet been determined. In addition, the benefits or amounts
which would have been received by or allocated to such persons for the
last completed fiscal year if the 2013 Omnibus Plan had been in effect
cannot be determined.
Federal Tax Aspects
The
Company has been advised that under current law certain of the income
tax consequences under U.S. laws to participants and the Company should
generally be as set forth in the following summary. This summary only
addresses income tax consequences for participants and the Company.
A
grant of Class A Common Shares will be taxable as ordinary income.
There
are no Federal income tax consequences
to a participant or the Company upon the grant of stock options and
stock appreciation rights. When a non-qualified stock option or stock
appreciation right is exercised, the participant realizes taxable
compensation (ordinary income) at that time equal to, for a
non-qualified stock option, the difference between the aggregate option
exercise price and the fair market value of the stock on the date of
exercise and, for stock appreciation rights, the aggregate fair market
value of any Class A Common Shares received upon exercise. The Company
is entitled to a tax deduction to the extent, and at the time, that the
participant realizes compensation income. The participant’s tax
treatment upon a disposition of Class A Common Shares acquired through
the exercise of a non-qualified stock option is dependent upon the
length of time the Class A Common Shares have been held. Upon the
exercise of an incentive stock option, a participant recognizes no
immediate taxable income, except that the excess of the fair market
value of the Class A Common Shares acquired over the option exercise
price will constitute a tax preference item for the purpose of
computing the participant’s alternative minimum tax liability. Income
recognition is deferred until the Class A Common Shares acquired are
disposed of. The gain realized upon the participant’s disposition of
Class A Common Shares acquired under an incentive stock option will be
treated as long-term capital gain if the minimum holding period is met
(two years from the date of grant and one year from the date of
exercise), but otherwise will be treated as ordinary income in an
amount determined under the applicable tax rules. There is no tax
deduction for the Company when an incentive stock option is exercised
and the participant is eligible for capital gain tax treatment. If the
minimum holding period is not met for capital gain tax treatment, the
participant will realize ordinary income and the Company will be
entitled to a deduction as described above for non-qualified stock
options.
Generally,
no taxes are due upon a grant of
restricted shares, restricted share units or performance shares. An
award of restricted shares or performance shares becomes taxable when
it is no longer subject to a “substantial risk of forfeiture” (
i.e.
,
it becomes vested or transferable). Income tax is paid at ordinary
income rates on the value of the restricted shares or performance
shares when the restrictions lapse, and then at capital gain rates with
respect to any further gain (or loss) when the Class A Common Shares
are sold. In the case of restricted share units, the participant has
taxable ordinary income upon receipt of payment. In all cases, the
Company has a tax deduction when the participant recognizes ordinary
income subject to other applicable limitations and restrictions. The
taxation of restricted shares and performance shares may be accelerated
by an “83(b) election” under Section 83 of the Code, if permitted
by
the applicable agreement.
The
2013 Omnibus Plan is designed to permit
compliance with Section 162(m) of the Code relating to the
deductibility of performance-based compensation. It is intended that
stock options and awards under the 2013 Omnibus Plan with a performance
component generally will satisfy the requirements for performance-based
compensation under Section 162(m) while providing the Compensation
Committee the authority to grant non-performance-based awards where it
deems appropriate. Section 162(m) generally places a $1,000,000 limit
on the tax deduction allowable for compensation paid (or accrued for
tax purposes) with respect to each of the Principal Executive Officer
and the three other highest-paid executives during a tax year (other
than the Principal Financial Officer) unless the compensation meets
certain requirements. To qualify for favorable tax treatment, grants
must be made by a committee consisting solely of two or more “outside
directors” (as defined under Section 162 regulations) and satisfy
the
limit on the total number of Class A Common Shares that may be awarded
to any one participant during any calendar year. In addition, for
grants other than options to qualify, the granting, issuance, vesting
or retention of the grant must be contingent upon satisfying one or
more performance criteria, as established and certified by a committee
consisting solely of two or more “outside directors.”
Finally,
the 2013 Omnibus
Plan is designed to be compliant with, or meet requirements for
exemptions from, Section 409A of the Code governing nonqualified
deferred compensation.
Required Vote
Provided
that a quorum is present, the
affirmative vote of a majority of the common shares voted at the Annual
Meeting on this proposal is required for approval and adoption of the
2013 Omnibus Plan. Shareholders present at the Annual Meeting, either
in person or by proxy, will be eligible to vote for or against adoption
of the 2013 Omnibus Plan. Abstentions and broker non-votes will have
the same effect as votes against the proposal.
The Board of Directors
unanimously recommends that the shareholders vote “FOR”
the proposal to approve and adopt our 2013 Omnibus
Plan.
Proposal to Approve an Advisory Resolution on
Executive Compensation
In
accordance with recent legislation, the Company is providing
shareholders with an advisory (non-binding) vote on compensation
programs for our Named Executive Officers (sometimes referred to as
"say on pay"). Accordingly, you may vote on the following resolution at
the 2013 annual meeting:
"Resolved, that the shareholders
approve, on an advisory basis, the compensation of the Company's Named
Executive Officers as disclosed in the compensation tables and the
related narrative disclosure in this Proxy Statement."
This
vote is nonbinding. The Board and the Compensation Committee, which is
comprised of independent directors, expect to take into account the
outcome of the vote when considering future executive compensation
decisions to the extent they can determine the cause or causes of any
significant negative voting results.
We believe that our
compensation program is aligned with long-term shareholder interests.
Shareholders are encouraged to read the accompanying compensation
tables, and the related narrative disclosure.
The
Board of Directors unanimously recommends that you vote FOR the
approval, on an advisory basis, of the compensation of our Named
Executive Officers as disclosed in the accompanying compensation
tables, and the related narrative disclosure. The persons named in the
accompanying proxy or their substitutes will vote such Proxy for such
approval unless it is marked to the contrary.
Proposal to Provide an Advisory Vote on the
Frequency of Shareholder Votes on Executive Compensation
The following proposal will be presented for action at the Annual
Meeting by direction of the Board:
Resolved:
that the shareholders wish the Company to include an advisory vote on
the compensation of the Company's named executive officers pursuant to
Section 14A of the Securities Exchange Act every: year; two years; or
three years. The final vote will not be binding on the Company and is
advisory in nature.
The
Board of Directors recommends that an advisory vote on the compensation
of named executive officers be held every three years. The persons
named in the accompanying Proxy or their substitutes will vote such
Proxy for a three year frequency unless it is marked to the contrary. A
favorable vote of a majority of the combined outstanding Class A and
Class B Shares on the record date is required for adoption of the
proposal.
SHAREHOLDER PROPOSALS AND OTHER MATTERS
The Board of Directors of the Company is not aware of any matter to
come
before the meeting other than those mentioned in the accompanying
Notice.
However, if other matters shall properly come before the meeting, it is
the
intention of the persons named in the accompanying Proxy to vote in
accordance
with their best judgment on such matters.
Any shareholder proposal intended to be presented at the 2014 Annual
Meeting
of Shareholders must be received by the Company's Secretary at its
principal
executive offices no later than September 19, 2013, for inclusion in
the Board of Directors' Proxy
Statement
and form of Proxy relating to that meeting. Each proposal submitted
should
be accompanied by the name and address of the shareholder submitting
the
proposal and the number of Common Shares owned. If the proponent is not
a shareholder of record, proof of beneficial ownership should also be
submitted.
All proposals must be a proper subject for action and comply with the
Proxy
rules of the Securities and Exchange Commission.
The Company may use its discretion in voting Proxies with respect to
Shareholders'
proposals not included in the Proxy Statement for fiscal year ended
September
30, 2013, unless the Company receives notice of such proposals prior to
December 3, 2013.
Upon the receipt of a written request
from
any shareholder entitled to vote at the forthcoming Annual Meeting, the
Company
will mail, at no charge to the shareholder, a copy of the Company's
Annual
Report on Form 10-K, including the financial statements and schedules
required to be filed with the Securities and Exchange Commission
pursuant to Rule
13a-1 under the Securities Exchange Act of 1934, as amended, for the
Company's
most recent fiscal year. Requests from beneficial owners of the
Company's
voting securities must set forth a good-faith representation that, as
of
the record date for the Annual Meeting, the person making the request
was
the beneficial owner of securities entitled to vote at such meeting.
Written
requests for such report should be directed to:
Mr. Gregory M. Zoloty
Hickok Incorporated
10514 Dupont Avenue
Cleveland, Ohio 44108
In addition, all
shareholders will have the ability to access this Proxy Statement and
the
Company's Annual Report on Form 10-K for the fiscal year ended
September
30, 2012 by visiting our website: www.hickok-inc.com/about/financial
You are urged to sign and return your Proxy promptly in order to make
certain
your shares will be voted at the Annual Meeting. For your convenience,
a
return envelope is enclosed requiring no additional postage if mailed
in
the United States.
By Order of the Board of Directors.
/s/ Robert L. Bauman
Robert L. Bauman
President and Chief Executive Officer
|
Dated January 28, 2013
APPENDIX
A
HICKOK
INCORPORATED
2013 OMNIBUS EQUITY PLAN
ARTICLE 1
General Purpose of Plan; Definitions
1.1 Name
and Purposes. The name of this plan is the Hickok Incorporated 2013
Omnibus Equity Plan. The purpose of this Plan is to enable Hickok
Incorporated and its Affiliates to: (i) attract and retain skilled and
qualified officers, employees, consultants and directors who are
expected to contribute to the Company’s success by providing long-term
incentive compensation opportunities competitive with those made
available by other companies; (ii) motivate participants to achieve the
long-term success and growth of the Company; (iii) facilitate ownership
of shares of the Company; and (iv) align the interests of the
participants with those of the Company’s Shareholders.
1.2
Certain Definitions. Unless the context otherwise indicates, the
following words used herein shall have the following meanings whenever
used in this instrument:
(a)
“Affiliate” means, with respect to any entity, any entity directly or
indirectly controlling, controlled by, or under common control with
such entity within the meaning of Section 414(b) or 414(c) of the Code.
(b)
“Award” means any grant under this Plan of a Common Share, Stock
Option, Stock Appreciation Right, Restricted Share, Restricted Share
Unit or Performance Share to any Plan participant.
(c)
“Board of Directors” means the Board of Directors of the Company, as
constituted from time to time.
(d)
“Change in Control” is defined in Section 11.1.
(e)
“Code” means the Internal Revenue Code of 1986, as amended, and any
lawful regulations or guidance promulgated thereunder. Whenever
reference is made to a specific Internal Revenue Code section, such
reference shall be deemed to be a reference to any successor Internal
Revenue Code section or sections with the same or similar purpose.
(f)
“Committee” means the entity administering this Plan as provided in
Section 2.1.
(g)
“Common Shares” means the Class A common shares, without par value, of
the Company.
(h)
“Company” means Hickok Incorporated, a corporation organized under the
laws of the State of Ohio and, except for purposes of determining
whether a Change in Control has occurred, any corporation or entity
that is a successor to Hickok Incorporated or substantially all of the
assets of Hickok Incorporated and that assumes the obligations of
Hickok Incorporated under this Plan by operation of law or otherwise.
(i)
“Date of Grant” means the date on which the Committee grants an Award.
(j)
“Director”
means a member of the Board of Directors.
(k)
“Disability” means a 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 which: (i)
renders a participant unable to engage in any substantial gainful
activity; or (ii) results in a participant receiving income replacement
benefits for at least 3 months under an accident and health plan
sponsored by the Company or an Affiliate.
(l)
“Early Retirement” means a participant’s retirement from active
employment or active directorship with the Company or an Affiliate on
and after the later of attainment of age 62 or the completion of 20
years of service.
(m)
“Effective Date” is defined in Section 17.1.
(n)
“Eligible Director” is defined in Article 4.
(o)
“Employment” as used herein (whether or not capitalized) shall be
deemed to refer to (i) a participant’s employment if the participant is
an employee of the Company or any of its Affiliates, (ii) a
participant’s services as a consultant, if the participant as a
consultant to the Company or its Affiliates and (iii) a participant’s
services as a non-employee director, if the participant is a
non-employee member of the Board of Directors; provided that, for any
Award that is or becomes subject to Section 409A of the Code,
termination of employment means a “separation from service” under
Section 409A of the Code.
(p)
“Exchange Act” means the Securities Exchange Act of 1934, as amended,
and any lawful regulations or guidance promulgated thereunder.
(q)
“Exercise Price” means the purchase price of a Share pursuant to a
Stock Option or the base value for measuring the appreciation of a
Stock Appreciation Right.
(r)
“Fair Market Value” means the closing price of a Share displayed on the
OTC Markets, or, if applicable, on a national securities exchange on
which the Common Shares are principally traded, on the date for which
the determination of Fair Market Value is made, or, if there are no
sales of Common Shares on such date, then on the most recent
immediately preceding date on which there were any sales of Common
Shares. If the Common Shares are not, or cease to be, traded on a
national securities exchange, or displayed or published on the OTC
Markets, the “Fair Market Value” of Common Shares shall be determined
pursuant to a reasonable valuation method prescribed by the Committee.
Notwithstanding the foregoing, as of any date, the “Fair Market Value”
of Common Shares shall be determined in a manner consistent with
Section 409A of the Code and the guidance thereunder.
(s)
“Non-Qualified Stock Option” means a Stock Option that: (i) is governed
by Section 83 of the Code; and (ii) does not meet the requirements of
Section 422 of the Code.
(t)
“Normal Retirement” means retirement from active employment or active
directorship with the Company or an Affiliate on or after attainment of
age 65.
(u)
“Outside Director” means a Director who meets the definitions of the
terms “outside director” set forth in Section 162(m) of the Code and
“non-employee director” set forth in Rule 16b 3, or any successor
definitions adopted by the Internal Revenue Service and Securities and
Exchange Commission, respectively, and similar requirements under any
other applicable laws and regulations.
(v)
“Performance Shares” is defined in Article 8.
(w)
“Plan” means this Hickok Incorporated 2013 Omnibus Equity Plan, as
amended from time to time.
(x)
“Plan Year” means the calendar year.
(y)
“Restricted Share Units” is defined in Article 7.
(z)
“Restricted Shares” is defined in Article 7.
(aa)
“Retirement” means Normal Retirement or Early Retirement.
(bb)
“Rule 16b-3” is defined in Article 16.
(cc)
“Section 16 Person” means a person subject to potential liability under
Section 16(b) of the Exchange Act with respect to transactions
involving equity securities of the Company.
(dd)
“Section 162(m) Person” means, for any taxable year, a person who is a
“covered employee” within the meaning of Section 162(m)(3) of the Code.
(ee)
“Share” or “Shares” mean one or more of the Common Shares.
(ff )
“Shareholder” means an individual or entity that owns one or more
Shares.
(gg)
“Stock Appreciation Rights” and “SARs” mean any right pursuant to an
Award granted under Article 6.
(hh)
“Stock Option” means any right to purchase a specified number of Shares
at a specified price which is granted pursuant to Article 5.
(ii)
“Stock
Power” means a power of attorney executed by a participant and
delivered to the Company which authorizes the Company to transfer
ownership of Restricted Shares, Performance Shares or Common Shares
from the participant to the Company or a third party.
(jj)
“Vested” means, with respect to a Common Share, when the Common Share
has been awarded; with respect to a Stock Option, that the time has
been reached when the option to purchase Shares first becomes
exercisable; with respect to a Stock Appreciation Right, when the Stock
Appreciation Right first becomes exercisable for payment; with respect
to Restricted Shares, when the Shares are no longer subject to
forfeiture and restrictions on transferability; with respect to
Restricted Share Units and Performance Shares, when the units or Shares
are no longer subject to forfeiture and are convertible to Shares. The
words “Vest” and “Vesting” have meanings correlative to the foregoing.
ARTICLE 2
Administration
2.1
Authority and Duties of the Committee.
(a)
The Plan shall be administered by a Committee of at least three who are
appointed by the Board of Directors from time to time. Unless otherwise
determined by the Board of Directors, the Compensation Committee shall
serve as the Committee, and all of the members of the Committee shall
be Outside Directors. Notwithstanding the requirement that the
Committee consist exclusively of Outside Directors, no action or
determination by the Committee or an individual then considered to be
an Outside Director shall be deemed void because a member of the
Committee or such individual fails to satisfy the requirements for
being an Outside Director, except to the extent required by applicable
law.
(b)
The Committee has the power and authority to grant Awards pursuant to
the terms of this Plan to officers, employees, consultants and Eligible
Directors.
(c)
The Committee has the sole and exclusive authority, subject to any
limitations specifically set forth in this Plan, to:
(i)
select the officers, employees, consultants and Eligible Directors to
whom Awards are granted;
(ii)
determine the types of Awards granted and the timing of such Awards;
(iii)
determine the number of Shares to be covered by each Award granted
hereunder;
(iv)
determine
whether an Award is, or is intended to be, “performance-based
compensation” within the meaning of Section 162(m) of the Code;
(v)
determine the other terms and conditions, not inconsistent with the
terms of this Plan and any operative employment or other agreement, of
any Award granted hereunder; such terms and conditions include, but are
not limited to, the Exercise Price, the time or times when Options or
Stock Appreciation Rights may be exercised (which may be based on
performance objectives), any Vesting, acceleration or waiver of
forfeiture restrictions, any performance criteria (including any
performance criteria as described in Section 162(m)(4)(C) of the Code)
applicable to an Award, and any restriction or limitation regarding any
Option or Stock Appreciation Right or the Common Shares relating
thereto, based in each case on such factors as the Committee, in its
sole discretion, shall determine;
(vi)
determine whether any conditions or objectives related to Awards have
been met, including any such determination required for compliance with
Section 162(m) of the Code;
(vii)
subsequently modify or waive any terms and conditions of Awards, not
inconsistent with the requirements under Section 409A of the Code or
the terms of this Plan and any operative employment or other agreement;
(viii)
adopt, alter and repeal such administrative rules, guidelines and
practices governing this Plan as it deems advisable from time to time;
(ix)
promulgate such administrative forms as they from time to time deem
necessary or appropriate for administration of the Plan;
(x)
construe, interpret, administer and implement the terms and provisions
of this Plan, any Award and any related agreements;
(xi)
correct any defect, supply any omission and reconcile any inconsistency
in or between the Plan, any Award and any related agreements;
(xii)
prescribe any legends to be affixed to certificates representing Shares
or other interests granted or issued under the Plan; and
(xiii)
otherwise supervise the administration of this Plan.
(d)
The Committee shall confer with the Board of Directors regarding the
Committee’s intentions prior to making grants under this Plan.
Notwithstanding the foregoing, all decisions made by the Committee
pursuant to the provisions of this Plan are final and binding on all
persons, including the Company, its Shareholders and participants, but
may be made by their terms subject to ratification or approval by, the
Board of Directors, another committee of the Board of Directors or
Shareholders.
(e)
The
Company shall furnish the Committee with such clerical and other
assistance as is necessary for the performance of the Committee’s
duties under the Plan.
2.2
Delegation of Duties. The Committee may delegate ministerial duties to
any other person or persons, and it may employ attorneys, consultants,
accountants or other professional advisers for purposes of plan
administration at the expense of the Company.
2.3
Limitation of Liability. Members of the Board of Directors, members of
the Committee and Company employees who are their designees acting
under this Plan shall be fully protected in relying in good faith upon
the advice of counsel and shall incur no liability except for gross or
willful misconduct in the performance of their duties hereunder.
ARTICLE 3
Stock Subject to Plan
3.1
Total Shares Limitation. Subject to the provisions of this Article, the
maximum number of Shares that may be issued pursuant to Awards granted
under this Plan is 150,000,
which may be treasury or authorized but unissued Shares.
3.2
Participant Limitation. The aggregate number of Shares underlying
Awards granted under this Plan to any participant in any Plan Year
(including but not limited to Awards of Options and SARs), regardless
of whether such Awards are thereafter canceled, forfeited or
terminated, shall not exceed 50,000 Shares. The foregoing annual
limitation is intended to include the grant of all Awards, including
but not limited to, Awards representing “performance-based
compensation” as described in Section 162(m)(4)(C) of the Code.
3.3
Awards Not Exercised; Effect of Receipt of Shares. If any outstanding
Award, or portion thereof, expires, or is terminated, canceled or
forfeited, the Shares that would otherwise be issuable with respect to
the unexercised portion of such expired, terminated, canceled or
forfeited Award shall be available for subsequent Awards under this
Plan. If the Exercise Price of an Award is paid in Shares, Shares
underlying the exercised portion of an SAR are not issued upon exercise
of the SAR, Shares are withheld to satisfy an individual participant’s
tax obligations or Shares are repurchased by the Company on the open
market with respect to Awards under this Plan, the Shares received, not
issued, withheld or repurchased by the Company in connection therewith
shall not be added to the maximum aggregate number of Shares which may
be issued under Section 3.1.
3.4
Dilution and Other Adjustments. In the event that the Committee
determines that any dividend or other distribution (whether in the form
of cash, Shares, other securities or other property), recapitalization,
stock split, reverse stock split, reorganization, redesignation,
reclassification, merger, consolidation, liquidation, split-up, reverse
split, spin-off, combination, repurchase or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company or other similar
corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under this Plan, then the Committee
shall, in such manner as it deems equitable, adjust any or all of (i)
the number and type of Shares (or other securities or other property)
which thereafter may be made the subject of Awards, (ii) the number and
type of Shares (or other securities or other property) subject to
outstanding Awards, (iii) the limitations set forth above and (iv) the
purchase or Exercise Price or any performance objective with respect to
any Award; provided, however, that the number of Shares or other
securities covered by any Award or to which such Award relates is
always a whole number. Notwithstanding the foregoing, the foregoing
adjustments shall be made in compliance with: (i) Section 409A of the
Code, to the extent necessary to avoid its application or avoid adverse
tax consequences thereunder and (ii) Section 162(m) of the Code with
respect to Awards granted to Section 162(m) Persons that are intended
to be “performance-based compensation,” unless specifically determined
otherwise by the Committee.
ARTICLE 4
Participants
4.1
Eligibility. Officers, all other active common law employees of the
Company or any of its Affiliates, consultants and Outside Directors
(each an “Eligible Director”) who are selected by the Committee in its
sole discretion are eligible to participate in this Plan. (See Article
13 and Article 17 with respect to the Shareholder approval requirement).
4.2
Award Agreements. Awards are contingent upon the participant’s
execution of a written agreement in a form prescribed by the Committee.
Execution of an award agreement shall constitute the participant’s
irrevocable agreement to, and acceptance of, the terms and conditions
of the Award set forth in such agreement and of the terms and
conditions of the Plan applicable to such Award. Award agreements may
differ from time to time and from participant to participant.
ARTICLE 5
Stock Option Awards
5.1
Option Grant. Each Stock Option granted under this Plan will be
evidenced by minutes of a meeting, or by a unanimous written consent
without a meeting, of the Committee and by a written agreement dated as
of the Date of Grant and executed by the Company and by the appropriate
participant.
5.2
Terms and Conditions of Grants. Stock Options granted under this Plan
are subject to the following terms and conditions and may contain such
additional terms, conditions, restrictions and contingencies with
respect to exercisability and/or with respect to the Shares acquired
upon exercise as may be provided in the relevant agreement evidencing
the Stock Options, so long as such terms and conditions are not
inconsistent with the terms of this Plan and any operative employment
or other agreement, as the Committee deems desirable:
(a)
Exercise Price. Subject to Section 3.4, the Exercise Price will never
be less than 100% of the Fair Market Value of the Shares on the Date of
Grant. If a variable Exercise Price is specified at the time of grant,
the Exercise Price may vary pursuant to a formula or other method
established by the Committee; provided, however, that such formula or
method will provide for a minimum Exercise Price equal to the Fair
Market Value of the Shares on the Date of Grant. Except as otherwise
provided in Section 3.4, no subsequent amendment of an outstanding
Stock Option may reduce the Exercise Price to less than 100% of the
Fair Market Value of the Shares on the Date of Grant. Nothing in this
Section 5.2(a) shall be construed as limiting the Committee’s authority
to grant premium price Stock Options which do not become exercisable
until the Fair Market Value of the underlying Shares exceeds a
specified percentage (e.g., 110%) of the Exercise Price; provided,
however, that such percentage will never be less than 100%.
(b)
Option Term. Any unexercised portion of a Stock Option granted
hereunder shall expire at the end of the stated term of the Stock
Option. The Committee shall determine the term of each Stock Option at
the time of grant, which term shall not exceed 10 years from the Date
of Grant. If a definite term is not specified by the Committee at the
time of grant, then the term is deemed to be 10 years. Nothing in this
Section 5.2(b) shall be construed as limiting the Committee’s authority
to grant Stock Options with a term shorter than 10 years.
(c)
Vesting. Stock Options, or portions thereof, are exercisable at such
time or times as determined by the Committee in its discretion at or
after grant. If the Committee provides that any Stock Option becomes
Vested over a period of time, in full or in installments, the Committee
may waive or accelerate such Vesting provisions at any time.
(d)
Method of Exercise. Vested portions of any Stock Option may be
exercised in whole or in part at any time during the option term by
giving written notice of exercise to the Company specifying the number
of Shares to be purchased. The notice must be given by or on behalf of
a person entitled to exercise the Stock Option, accompanied by payment
in full of the Exercise Price, along with any tax withholding pursuant
to Article 15. Subject to the approval of the Committee, the Exercise
Price may be paid:
(i )
in cash in any manner satisfactory to the Committee;
(ii)
by tendering (by either actual delivery of Shares or by attestation)
unrestricted Shares that are owned on the date of exercise by the
person entitled to exercise the Stock Option having an aggregate Fair
Market Value on the date of exercise equal to the Exercise Price
applicable to such Stock Option exercise;
(iii)
by a combination of cash and unrestricted Shares that are owned on the
date of exercise by the person entitled to exercise the Stock Option;
and
(iv)
by another method permitted by law and affirmatively approved by the
Committee which assures full and immediate payment or satisfaction of
the Exercise Price.
The
Committee may withhold its approval for any method of payment for any
reason, in its sole discretion, including but not limited to concerns
that the proposed method of payment will result in adverse financial
accounting treatment or adverse tax treatment for the Company or a
participant.
(e)
Issuance of Shares. The Company will issue or cause to be issued Shares
as soon as practicable upon exercise of the Option. No Shares will be
issued until full payment has been made. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any
other rights as a Shareholder will exist with respect to the Shares,
notwithstanding the exercise of the Option.
(f)
Limitation
on Gain. Nothing in this Article 5 shall be construed as prohibiting
the Committee from granting Stock Options subject to a limit on the
gain that may be realized upon exercise of such Stock Options. Any such
limit shall be explicitly provided for in the relevant plan agreement.
(g)
Form. Each Stock Option granted under the Plan shall be deemed to be a
Non-Qualified Stock Option and shall not be considered an “incentive
stock option” for purposes of Section 422 of the Code.
(h)
Special
Limitations on Stock Option Awards. Unless an Award agreement approved
by the Committee provides otherwise, Stock Options awarded under this
Plan are intended to meet the requirements for exclusion from coverage
under Section 409A of the Code and all Stock Option Awards shall be
construed and administered accordingly.
5.3
Termination of Grants Prior to Expiration. Unless otherwise provided in
an Award, employment or other agreement entered into between the
optionee and the Company and approved by the Committee, either before
or after the Date of Grant, the following early termination provisions
apply to all Stock Options:
(a)
Termination by Death. If an optionee’s employment or directorship with
the Company or its Affiliates terminates by reason of his or her death,
all Stock Options held by such optionee will immediately become Vested,
but thereafter may only be exercised (by the legal representative of
the optionee’s estate, or by the legatee or heir of the optionee
pursuant to a will or the laws of descent and distribution) for a
period of one year (or such other period as the Committee may specify
at or after the time of grant) from the date of such death, or until
the expiration of the original term of the Stock Option, whichever
period is shorter.
(b)
Termination by Reason of Disability. If an optionee’s employment or
directorship with the Company or its Affiliates terminates by reason of
his or her Disability, all Stock Options held by such optionee will
immediately become Vested, but thereafter may only be exercised for a
period of one year (or such other period as the Committee may specify
at or after the time of grant) from the date of such termination of
employment, or until the expiration of the original term of the Stock
Option, whichever period is shorter. If the optionee dies within such
one year period (or such other period as applicable), any unexercised
Stock Option held by such optionee will thereafter be exercisable by
the legal representative of the optionee’s estate, or by the legatee or
heir of the optionee pursuant to a will or the laws of descent and
distribution, for the greater of the remainder of the one year period
(or other period as applicable) or for a period of 12 months from the
date of such death, but in no event shall any portion of the Stock
Option be exercisable after its original stated expiration date.
(c)
Termination by Reason of Retirement. If an optionee’s employment or
directorship with the Company or its Affiliates terminates by reason of
his or her Retirement, all Stock Options held by such optionee
immediately become Vested but thereafter may only be exercised for a
period of two years (or such other period as the Committee may specify
at or after the time of grant) from the date of such Retirement, or
until the expiration of the original term of the Stock Option,
whichever period is shorter. If the optionee dies within such two year
period (or such other period as applicable), any unexercised Stock
Option held by such optionee will thereafter be exercisable by the
legal representative of the optionee’s estate, or by the legatee or
heir of the optionee pursuant to a will or the laws of descent and
distribution, for the greater of the remainder of the two year period
(or such other period as applicable) or for a period of 12 months from
the date of such death, but in no event shall any portion of the Stock
Option be exercisable after its original stated expiration date.
(d)
Other Terminations. If an optionee’s employment or directorship with
the Company or its Affiliates is terminated for reasons other than his
or her death, Disability or Retirement, all Stock Options (or portions
thereof) which have not been exercised, whether Vested or not, are
automatically forfeited immediately upon termination, except as
otherwise provided in the relevant agreement evidencing the Stock
Options.
ARTICLE 6
Stock Appreciation Rights
6.1
SAR
Grant and Agreement. Stock Appreciation Rights may be granted under
this Plan, either independently or in conjunction with the grant of a
Stock Option. Each SAR granted under this Plan will be evidenced by
minutes of a meeting, or by a unanimous written consent without a
meeting, of the Committee and by a written agreement dated as of the
Date of Grant and executed by the Company and by the appropriate
participant. Subject to Section 3.4, the Exercise Price of an SAR will
never be less than 100% of the Fair Market Value of the Shares on the
Date of Grant.
6.2
SARs
Granted in Conjunction with Option. Stock Appreciation Rights may be
granted in conjunction with all or part of any Stock Option granted
under this Plan at the same time, and subject to the same terms and
conditions, as the grant of the Stock Option, and will be subject to
the following terms and conditions:
(a)
Term. Each Stock Appreciation Right, or applicable portion thereof,
granted with respect to a given Stock Option or portion thereof
terminates and is no longer exercisable upon the termination or
exercise of the related Stock Option, or applicable portion thereof.
(b)
Exercisability. A Stock Appreciation Right is exercisable only at such
time or times and to the extent that the Stock Option to which it
relates is Vested and exercisable in accordance with the provisions of
Article 5 or otherwise as the Committee may determine at or after the
time of grant.
(c)
Method
of Exercise. A Stock Appreciation Right may be exercised by the
surrender of the applicable portion of the related Stock Option. Stock
Options which have been so surrendered, in whole or in part, are no
longer exercisable to the extent the related Stock Appreciation Rights
have been exercised and are deemed to have been exercised for the
purpose of the limitation set forth in Article 3 on the number of
Shares to be issued under this Plan, but only to the extent of the
number of Shares actually issued under the Stock Appreciation Right at
the time of exercise. Upon the exercise of a Stock Appreciation Right,
subject to satisfaction of tax withholding requirements pursuant to
Article 15, the holder of the Stock Appreciation Right is entitled to
receive Shares equal in value to the excess of the Fair Market Value of
a Share on the exercise date over the Exercise Price per Share
specified in the related Stock Option, multiplied by the number of
Shares in respect of which the Stock Appreciation Right is exercised.
At any time the Exercise Price per Share of the related Stock Option
exceeds the Fair Market Value of one Share, the holder of the Stock
Appreciation Right shall not be permitted to exercise such right.
6.3
Independent
SARs. Stock Appreciation Rights may be granted without related Stock
Options, and independent Stock Appreciation Rights will be subject to
the following terms and conditions:
(a)
Term.
Any unexercised portion of an independent Stock Appreciation Right
granted hereunder shall expire at the end of the stated term of the
Stock Appreciation Right. The Committee shall determine the term of
each Stock Appreciation Right at the time of grant, which term shall
not exceed ten years from the Date of Grant. The Committee may extend
the term of a Stock Appreciation Right, in its discretion, but not
beyond a date later than the earlier of (i) the latest date upon which
the Stock Appreciation Right could have expired by its original terms
under any circumstances or (ii) the date immediately prior to the tenth
anniversary of the original Date of Grant. If a definite term is not
specified by the Committee at the time of grant, then the term is
deemed to be ten years.
(b)
Exercisability. A Stock Appreciation Right is exercisable, in whole or
in part, at such time or times as determined by the Committee at or
after the time of grant.
(c)
Method of Exercise. A Stock Appreciation Right may be exercised in
whole or in part during the term by giving written notice of exercise
to the Company specifying the number of Shares in respect of which the
Stock Appreciation Right is being exercised. The notice must be given
by or on behalf of a person entitled to exercise the Stock Appreciation
Right. Upon the exercise of a Stock Appreciation Right, subject to
satisfaction of tax withholding requirements pursuant to Article 15,
the holder of the Stock Appreciation Right is entitled to receive
Shares equal in value to the excess of the Fair Market Value of a Share
on the exercise date over the Exercise Price multiplied by the number
of Stock Appreciation Rights being exercised. At any time the Fair
Market Value of a Share on a proposed exercise date does not exceed the
Exercise Price, the holder of the Stock Appreciation Right shall not be
permitted to exercise such right.
(d)
Early Termination Prior to Expiration. Unless otherwise provided in an
Award, employment or other agreement entered into between the holder of
the Stock Appreciation Right and the Company and approved by the
Committee, either before or after the Date of Grant, the early
termination provisions set forth in Section 5.3 as applied to Stock
Options will apply to independent Stock Appreciation Rights.
6.4
Other Terms and Conditions of SAR Grants. Stock Appreciation Rights are
subject to such other terms and conditions, not inconsistent with the
provisions of this Plan and any operative employment or other
agreement, as are determined from time to time by the Committee.
6.5
Special Limitations on SAR Awards. Unless an Award agreement approved
by the Committee provides otherwise, Stock Appreciation Rights awarded
under this Plan are intended to meet the requirements for exclusion
from coverage under Section 409A of the Code and all Stock Appreciation
Rights Awards shall be construed and administered accordingly.
ARTICLE 7
Restricted Share and Restricted Share Unit Awards
7.1
Restricted Share Grants and Agreements. Restricted Share Awards consist
of Shares which are issued by the Company to a participant at no cost
or at a purchase price determined by the Committee which may be below
their Fair Market Value but which are subject to forfeiture and
restrictions on their sale or other transfer by the participant. Each
Restricted Share Award granted under this Plan will be evidenced by
minutes of a meeting, or by a unanimous written consent without a
meeting, of the Committee and by a written agreement dated as of the
Date of Grant and executed by the Company and by the participant. The
timing of Restricted Share Awards and the number of Shares to be issued
(subject to Section 3.2) are to be determined by the Committee in its
discretion. By accepting a grant of Restricted Shares, the participant
consents to any tax withholding as provided in Article 15.
7.2
Terms and Conditions of Restricted Share Grants. Restricted Shares
granted under this Plan are subject to the following terms and
conditions, which, except as otherwise provided herein, need not be the
same for each participant, and may contain such additional terms,
conditions, restrictions and contingencies not inconsistent with the
terms of this Plan and any operative employment or other agreement, as
the Committee deems desirable:
(a)
Purchase Price. The Committee shall determine the prices, if any, at
which Restricted Shares are to be issued to a participant, which may
vary from time to time and from participant to participant and which
may be below the Fair Market Value of such Restricted Shares at the
Date of Grant.
(b)
Restrictions. All Restricted Shares issued under this Plan will be
subject to such restrictions as the Committee may determine, which may
include, without limitation, the following:
(i)
a prohibition against the sale, transfer, pledge or other encumbrance
of the Restricted Shares, such prohibition to lapse at such time or
times as the Committee determines (whether in installments, at the time
of the death, Disability or Retirement of the holder of such shares, or
otherwise, but subject to the Change in Control provisions in Article
11);
(ii)
a requirement that the participant forfeit such Restricted Shares in
the event of termination of the participant’s employment or
directorship with the Company or its Affiliates prior to Vesting;
(iii)
a prohibition against employment or retention of the participant by any
competitor of the Company or its Affiliates, or against dissemination
by the participant of any secret or confidential information belonging
to the Company or an Affiliate;
(iv)
any applicable requirements arising under the Securities Act of 1933,
as amended, other securities laws, the rules and regulations of the OTC
Markets or a national stock exchange or transaction reporting system
upon which such Restricted Shares are then listed or quoted and any
state laws, rules and regulations, including “blue sky” laws; and
(v)
such additional restrictions as are required to avoid adverse tax
consequences under Section 409A of the Code.
The
Committee may at any time waive such restrictions or accelerate the
date or dates on which the restrictions will lapse. However, if the
Committee determines that restrictions lapse upon the attainment of
specified performance objectives, then the provisions of Sections 8.2
and 8.3 will apply. If the written agreement governing an Award to a
Section 162(m) Person provides that such Award is intended to be
“performance based compensation,” the provisions of Section 8.4(d) will
also apply.
(c)
Delivery of Shares. Restricted Shares will be registered in the name of
the participant and deposited, together with a Stock Power, with the
Company. Each such certificate will bear a legend in substantially the
following form:
“The
transferability of this certificate and the Common Shares represented
by it are subject to the terms and conditions (including conditions of
forfeiture) contained in the Hickok Incorporated 2013 Omnibus Equity
Plan and an agreement entered into between the registered owner and the
Company. A copy of this Plan and agreement are on file in the office of
the Secretary of the Company.”
At
the end of any time period during which the Restricted Shares are
subject to forfeiture and restrictions on transfer, and after any tax
withholding, such Shares will be delivered free of all restrictions
(except for any pursuant to Section 14.2) to the participant or other
appropriate person and with the foregoing legend removed.
(d)
Forfeiture of Shares. If a participant who holds Restricted Shares
fails to satisfy the restrictions, Vesting requirements and other
conditions relating to the Restricted Shares prior to the lapse,
satisfaction or waiver of such restrictions and conditions, except as
may otherwise be determined by the Committee, the participant shall
forfeit the Shares and transfer them back to the Company in exchange
for a refund of any consideration paid by the participant or such other
amount which may be specifically set forth in the Award agreement. A
participant shall execute and deliver to the Company one or more Stock
Powers with respect to Restricted Shares granted to such participant.
(e)
Voting and Other Rights. Except as otherwise required for compliance
with Section 162(m) of the Code and the terms of the applicable
Restricted Share Agreement, during any period in which Restricted
Shares are subject to forfeiture and restrictions on transfer, the
participant holding such Restricted Shares shall have all the rights of
a Shareholder with respect to such Shares, including, without
limitation, the right to vote such Shares and the right to receive any
dividends paid with respect to such Shares.
7.3
Restricted Share Unit Awards and Agreements. Restricted Share Unit
Awards consist of Shares, cash or a combination of both that will be
issued or paid to a participant at a future time or times at no cost
or, or with respect to Shares, at a purchase price determined by the
Committee that may be below their Fair Market Value if continued
employment, continued directorship and/or other terms and conditions
specified by the Committee are satisfied. The Committee may determine
on the Date of Grant or at any time thereafter whether any payment made
with respect to a Restricted Share Unit granted under this Plan will be
paid in Shares, cash or a combination of Shares and cash. Each
Restricted Share Unit Award granted under this Plan will be evidenced
by minutes of a meeting, or by a unanimous written consent without a
meeting, of the Committee and by a written agreement dated as of the
Date of Grant and executed by the Company and the Plan participant. The
timing of Restricted Share Unit Awards and the number of Restricted
Share Units to be awarded (subject to Section 3.2) are to be determined
by the Committee in its sole discretion. By accepting a Restricted
Share Unit Award, the participant agrees to remit to the Company when
due any tax withholding as provided in Article 15.
7.4
Terms and Conditions of Restricted Share Unit Awards. Restricted Share
Unit Awards are subject to the following terms and conditions, which,
except as otherwise provided herein, need not be the same for each
participant, and may contain such additional terms, conditions,
restrictions and contingencies not inconsistent with the terms of this
Plan and any operative employment or other agreement, as the Committee
deems desirable:
(a)
Purchase Price. With respect to Restricted Share Units payable in
Shares, the Committee shall determine the purchase price, if any, at
which Shares are to be issued to a participant after the Vesting of the
Restricted Share Units, which purchase price may vary from time to time
and among participants and which may be below the Fair Market Value of
Shares at the Date of Grant.
(b)
Restrictions. All Restricted Share Units awarded under this Plan will
be subject to such restrictions as the Committee may determine, which
may include, without limitation, the following:
(i)
a prohibition against the sale, transfer, pledge or other encumbrance
of the Restricted Share Unit;
(ii)
a requirement that the participant forfeit such Restricted Share Unit
in the event of termination of the participant’s employment or
directorship with the Company or its Affiliates prior to Vesting;
(iii)
a prohibition against employment of the participant by, or provision of
services by the participant to, any competitor of the Company or its
Affiliates, or against dissemination by the participant of any secret
or confidential information belonging to the Company or an Affiliate;
(iv)
any applicable requirements arising under the Securities Act of 1933,
as amended, other securities laws, the rules and regulations of the OTC
Markets or a national stock exchange or transaction reporting system
upon which the Common Shares are then listed or quoted and any state
laws, rules and interpretations, including “blue sky” laws; and
(v)
such additional restrictions as are required to avoid adverse tax
consequences under Section 409A of the Code.
Subject to any requirements of Section 409A of the Code to avoid
adverse tax consequences thereunder, the Committee may at any time
waive such restrictions or accelerate the date or dates on which the
restrictions will lapse.
(c)
Performance-Based Restrictions. The Committee may, in its sole
discretion, provide restrictions that lapse upon the attainment of
specified performance objectives. In such case, the provisions of
Sections 8.2 and 8.3 will apply (including, but not limited to, the
enumerated performance objectives). If the written agreement governing
an Award to a Section 162(m) Person provides that such Award is
intended to be “performance-based compensation,” the provisions of
Section 8.4(d) will also apply.
(d)
Voting and Other Rights. A participant holding Restricted Share Units
shall not be deemed to be a Shareholder solely because of such units.
Such participant shall have no rights of a Shareholder with respect to
such units; provided, however, that an Award agreement may provide for
payment of an amount of money (or Shares with a Fair Market Value
equivalent to such amount) equal to the dividends paid from time to
time on the number of Common Shares that would become payable upon
vesting of a Restricted Share Unit Award.
(e)
Lapse of Restrictions. If a participant who holds Restricted Share
Units satisfies the restrictions and other conditions relating to the
Restricted Share Units prior to the lapse or waiver of such
restrictions and conditions, the Restricted Share Units shall be
converted to, or replaced with, Shares, which are free of all
restrictions except for any restrictions pursuant to Section 14.2, or
paid in cash or a combination of Shares and cash.
(f)
Delivery of Shares. Any Shares delivered or cash paid to a participant
with respect to any Restricted Stock Unit in which the restrictions
lapse, are satisfied or are waived shall be delivered or paid to such
participant prior to fifteenth day of the third month of the taxable
year following the taxable year in which such restrictions lapse, are
satisfied or waived. Any such Shares will be registered in the name of
the participant and will be free of all restrictions except for any
restrictions pursuant to Section 14.2.
(g)
Forfeiture of Restricted Share Units. If a participant who holds
Restricted Share Units fails to satisfy the restrictions, Vesting
requirements and other conditions relating to the Restricted Share
Units prior to the lapse, satisfaction or waiver of such restrictions
and conditions, except as may otherwise be determined by the Committee,
the participant shall forfeit the Restricted Share Units.
(h)
Termination. A Restricted Share Unit Award or unearned portion thereof
will terminate without the issuance of Shares on the termination date
specified on the Date of Grant or upon the termination of employment or
directorship of the participant during the time period or periods
specified by the Committee during which any performance objectives must
be met (the “Performance Period”). If a participant’s employment or
directorship with the Company or its Affiliates terminates by reason of
his or her death, Disability or Retirement, the Committee in its
discretion at or after the Date of Grant may determine that the
participant (or the heir, legatee or legal representative of the
participant’s estate) will receive a distribution of Shares or cash in
an amount which is not more than the number of Shares or cash amount
that would have been earned by the participant if 100% of the
performance objectives for the current Performance Period had been
achieved prorated based on the ratio of the number of months of active
employment in the Performance Period to the total number of months in
the Performance Period. However, with respect to Awards intended to be
performance-based compensation (as described in Section 8.4(d)),
distribution of the Shares shall be made only to the extent of, and
after, attainment of the relevant performance objectives. Subject to
16.8(c), any distribution of Shares or cash pursuant to this Section
7.4(h) shall be made no later than the fifteenth day of the third month
of the taxable year following the taxable year in which such
participant’s termination of employment occurs.
7.5
Special Limitations on Restricted Share and Restricted Share Unit
Awards. Unless an Award agreement approved by the Committee provides
otherwise, Restricted Share and Restricted Share Units awarded under
this Plan are intended to meet the requirements for exclusion from
coverage under Section 409A of the Code and all Restricted Share Unit
Awards shall be construed and administered accordingly.
7.6
Time Vesting of Restricted Share and Restricted Share Unit Awards.
Restricted Shares or Restricted Share Units, or portions thereof, are
exercisable at such time or times as determined by the Committee in its
discretion at or after grant, subject to the restrictions on time
Vesting set forth in this Section. If the Committee provides that any
Restricted Shares or Restricted Share Unit Awards become Vested over
time (with or without a performance component), the Committee may waive
or accelerate such Vesting provisions at any time, subject to the
restrictions on time Vesting set forth in this Section.
ARTICLE 8
Performance Share Awards
8.1
Performance Share Awards and Agreements. A Performance Share Award is a
right to receive Shares in the future conditioned upon the attainment
of specified performance objectives and such other conditions,
restrictions and contingencies as the Committee may determine. Each
Performance Share Award granted under this Plan will be evidenced by
minutes of a meeting, or by a unanimous written consent without a
meeting, of the Committee and by a written agreement dated as of the
Date of Grant and executed by the Company and by the Plan participant.
The time at which Performance Share Awards will Vest and the number of
Shares covered by each Award (subject to Section 3.2) are to be
determined by the Committee in its discretion. By accepting a grant of
Performance Shares, the participant agrees to remit to the Company when
due any tax withholding as provided in Article 15.
8.2
Performance Objectives. At the time of grant of a Performance Share
Award, the Committee will specify the performance objectives which,
depending on the extent to which they are met, will determine the
number of Shares that will be distributed to the participant. The
Committee will also specify the time period or periods (the
“Performance Period”) during which the performance objectives must be
met. With respect to awards to Section 162(m) Persons intended to be
“performance-based compensation,” the Committee may use performance
objectives based on one or more of the following: stock price, market
share, sales, earnings per share, return on equity, costs, earnings,
capital adjusted pre-tax earnings (economic profit), net income,
operating income, performance profit (operating income minus an
allocated charge approximating the Company’s cost of capital, before or
after tax), gross margin, revenue, working capital, total assets, net
assets, stockholders’ equity and cash flow. The Committee may designate
a single goal criterion or multiple goal criteria for performance
measurement purposes. Performance measurement may be based on absolute
Company, business unit or divisional performance and/or on performance
as compared with that of other publicly-traded companies. The
performance objectives and periods need not be the same for each
participant nor for each Award.
8.3
Adjustment of Performance Objectives. The Committee may modify, amend
or otherwise adjust the performance objectives specified for
outstanding Performance Share Awards if it determines that an
adjustment would be consistent with the objectives of this Plan and
taking into account the interests of the participants and the public
Shareholders of the Company and such adjustment complies with the
requirements of Section 162(m) of the Code for Section 162(m) Persons,
to the extent applicable, unless the Committee indicates a contrary
intention. The types of events which could cause an adjustment in the
performance objectives include, without limitation, accounting changes
which substantially affect the determination of performance objectives,
changes in applicable laws or regulations which affect the performance
objectives, and divisive corporate reorganizations, including spin-offs
and other distributions of property or stock.
8.4
Other Terms and Conditions. Performance Share Awards granted under this
Plan are subject to the following terms and conditions and may contain
such additional terms, conditions, restrictions and contingencies not
inconsistent with the terms of this Plan and any operative employment
or other agreement as the Committee deems desirable:
(a)
Delivery of Shares. As soon as practicable after the applicable
Performance Period has ended (but in no event later than the fifteenth
day of the third month of the taxable year following the taxable year
in which the Performance Period ends), the participant will receive a
distribution of the number of Shares earned during the Performance
Period, depending upon the extent to which the applicable performance
objectives were achieved. Such Shares will be registered in the name of
the participant and will be free of all restrictions except for any
restrictions pursuant to Section 14.2.
(b)
Termination. A Performance Share Award or unearned portion thereof will
terminate without the issuance of Shares on the termination date
specified at the time of grant or upon the termination of employment or
directorship of the participant during the Performance Period. If a
participant’s employment or directorship with the Company or its
Affiliates terminates by reason of his or her death, Disability or
Retirement (except with respect to Section 162(m) Persons), the
Committee in its discretion at or after the time of grant may
determine, notwithstanding any Vesting requirements under Section
8.4(a), that the participant (or the heir, legatee or legal
representative of the participant’s estate) will receive a distribution
of a portion of the participant’s then-outstanding Performance Share
Awards in an amount which is not more than the number of shares which
would have been earned by the participant if 100% of the performance
objectives for the current Performance Period had been achieved
prorated based on the ratio of the number of months of active
employment in the Performance Period to the total number of months in
the Performance Period. However, with respect to Awards intended to be
“performance-based compensation” (as described in Section 8.4(d)),
distribution of the Shares shall be made only to the extent of, and
after, attainment of the relevant performance objective. Subject to
16.8(c), any distribution of Shares pursuant to this Section 8.4(b)
shall be made no later than the fifteenth day of the third month of the
taxable year following the taxable year in which such participant’s
termination of employment occurs.
(c)
Voting and Other Rights. Awards of Performance Shares do not provide
the participant with voting rights or rights to dividends prior to the
participant becoming the holder of record of Shares issued pursuant to
an Award; provided, however, that an Award agreement may provide for
payment of an amount of money (or Shares with a Fair Market Value
equivalent to such amount) equal to the dividends paid from time to
time on the number of Common Shares that would become payable upon
vesting of a Performance Share Award. Prior to the issuance of Shares,
Performance Share Awards may not be sold, transferred, pledged,
assigned or otherwise encumbered.
(d)
Performance-Based Compensation. The Committee may designate Performance
Share Awards as being “remuneration payable solely on account of the
attainment of one or more performance goals” as described in Section
162(m)(4)(C) of the Code. Such Awards shall be automatically amended or
modified to comply with amendments to Section 162 of the Code to the
extent applicable, unless the Committee indicates a contrary intention.
8.5
Time Vesting of Performance Share Awards. Performance Share Awards, or
portions thereof, are exercisable at such time or times as determined
by the Committee in its discretion at or after grant, subject to the
restrictions on time Vesting set forth in this Section. If the
Committee provides that any Performance Shares become Vested over time
(accelerated by a performance component), the Committee may waive or
accelerate such Vesting provisions at any time, subject to the
restrictions on time Vesting set forth in this Section.
8.6
Special
Limitations on Performance Share Awards. Unless an Award agreement
approved by the Committee provides otherwise, Performance Shares
awarded under this Plan are intended to meet the requirements for
exclusion from coverage under Section 409A of the Code and all
Performance Share Awards shall be construed and administered
accordingly.
ARTICLE 9
Common Share Awards
9.1
Terms and
Conditions of Common Share Awards.
(a)
Purpose. Common Shares may be granted in consideration of services
rendered to the Company by a participant.
(b)
Vesting. Common Shares shall be fully vested upon their grant to a
participant.
(c)
Delivery. Common Shares granted to a participant shall be distributed
to such participant as soon as administratively practicable, but in no
event later than the fifteenth day of the third month of the taxable
year following the taxable year in which the Date of Grant occurs.
ARTICLE 10
Transfers and Leaves of Absence
10.1
Transfer of Participant. For purposes of this Plan, the transfer of a
participant among the Company and its Affiliates is deemed not to be a
termination of employment.
10.2
Effect of Leaves of Absence. For purposes of this Plan, the following
leaves of absence are deemed not to be a termination of employment:
(a)
a leave of absence, approved in writing by the Company, for military
service, sickness or any other purpose approved by the Company, if the
period of such leave does not exceed 90 days;
(b) a
leave of absence in excess of 90 days, approved in writing by the
Company, but only if the employee’s right to reemployment is guaranteed
either by a statute or by contract, and provided that, in the case of
any such leave of absence, the employee returns to work within 30 days
after the end of such leave; and
(c)
subject to Section 409A of the Code, any other absence determined by
the Committee in its discretion not to constitute a termination of
employment.
ARTICLE 11
Effect of Change in Control
11.1
Change in Control Defined. “Change in Control” means the occurrence of
any of the following: (i) the receipt by the Company of a Schedule 13D
or other advice indicating that a person, or any member of a “group,”
is the “beneficial owner” (as those terms are defined in Rule 13d 3
under the Exchange Act) of fifty percent (50%) or more of the voting
power of the Company; (ii) the first purchase of shares pursuant to a
tender offer or exchange (other than a tender offer of exchange by the
Company or its Affiliates) for all or any amount of Common Shares or
any class or any securities convertible into such Common Shares, the
results of which would make the offeror and/or its affiliates the
beneficial owners of fifty percent (50%) or more of the voting power
of the Company; (iii) the date of the approval by Shareholders of an
agreement providing for any consolidation or merger of the Company in
which the Company will not be the continuing or surviving corporation
or pursuant to which shares of capital stock of any class, or any
securities convertible into such capital stock, of the Company would be
converted into cash, securities, or other property, other than a merger
or consolidation of the Company with an Affiliate or in which the
holders of all of the Shares of all classes of the Company’s capital
stock immediately prior to the merger or consolidation would own at
least a majority of the voting power of the surviving corporation (or
the direct or indirect parent company of the surviving corporation)
immediately after the merger or consolidation; (iv) the date of the
approval by Shareholders of any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of
all or substantially all the assets of the Company; (v) the adoption of
any plan or proposal for the liquidation (but not a partial
liquidation) or dissolution of the Company; or (vi) such other event as
the Committee shall, in its sole and absolute discretion, deem to be a
“Change in Control.”
11.2
Acceleration of Award. Except as otherwise provided in this Plan or an
Award agreement and to the extent it would not trigger adverse taxation
under Section 409A of the Code, immediately upon the occurrence of a
Change in Control:
(a)
all outstanding Stock Options automatically become fully exercisable;
(b)
all Restricted Share Awards automatically become fully Vested;
(c)
all Restricted Share Unit Awards automatically become fully Vested (or,
if such Restricted Share Unit Awards are subject to performance-based
restrictions, shall become Vested on a pro-rated basis as described in
Section 11.2(d)) and, to the extent Vested, convertible to Shares at
the election of the holder;
(d)
all participants holding Performance Share Awards become entitled to
receive a partial payout in an amount which is the number of Shares
which would have been earned by the participant if 100% of the
performance objectives for the current Performance Period had been
achieved pro-rated based on the ratio of the number of months of active
employment in the Performance Period to the total number of months in
the Performance Period; and
(e)
Stock Appreciation Rights automatically become fully Vested and fully
exercisable.
ARTICLE 12
Transferability of Awards
12.1
Awards Are Non-Transferable. Except as provided in Sections 12.2 and
12.3, Awards are non-transferable and any attempts to assign, pledge,
hypothecate or otherwise alienate or encumber (whether by operation of
law or otherwise) any Award shall be null and void.
12.2
Inter-Vivos Exercise of Awards. During a participant’s lifetime, Awards
are exercisable only by the participant or, as permitted by applicable
law and notwithstanding Section 12.1 to the contrary, the participant’s
guardian or other legal representative.
12.3
Limited Transferability of Certain Awards. Notwithstanding Section 12.1
to the contrary, Awards may be transferred by will and by the laws of
descent and distribution. Moreover, the Committee, in its discretion,
may allow at or after the time of grant the transferability of Awards
which are Vested, provided that the permitted transfer is made (a) to
the Company (for example in the case of forfeiture of Restricted
Shares), an Affiliate or a person acting as the agent of the foregoing
or which is otherwise determined by the Committee to be in the
interests of the Company; or (b) by the participant for no
consideration to Immediate Family Members or to a bona fide trust,
partnership or other entity controlled by and for the benefit of one or
more Immediate Family Members. “Immediate Family Members” means the
participant’s spouse, children, stepchildren, parents, stepparents,
siblings (including half brothers and sisters), in-laws and other
individuals who have a relationship to the participant arising because
of a legal adoption. The Committee in its discretion may impose
additional terms and conditions upon transferability.
ARTICLE 13
Amendment and Discontinuation
13.1
Amendment or Discontinuation of this Plan. The Board of Directors may
amend, alter, or discontinue this Plan at any time, provided that no
amendment, alteration, or discontinuance may be made:
(a)
which would materially and adversely affect the rights of a participant
under any Award granted prior to the date such action is adopted by the
Board of Directors without the participant’s written consent thereto;
and
(b)
without Shareholder approval, if Shareholder approval is required under
applicable laws, regulations or exchange requirements (including for
the purpose of qualification as “performance-based compensation” under
Section 162(m) of the Code).
However,
unless Shareholder approval is obtained, no amendment shall increase
the aggregate number of Shares that may be issued under the Plan, or
shall permit the Exercise Price of outstanding Stock Options or Stock
Appreciation Rights to be reduced, except as permitted by Section 3.4.
Notwithstanding
the foregoing, this Plan may be amended without affecting participants’
consent to: (i) comply with any law; (ii) preserve any intended
favorable tax effects for the Company, the Plan or participants; or
(iii) avoid any unintended unfavorable tax effects for the Company, the
Plan or participants.
13.2
Amendment
of Grants. The Committee may amend, prospectively or retroactively, the
terms of any outstanding Award, provided that no such amendment may be
inconsistent with the terms of this Plan (specifically including the
prohibition on granting Stock Options or Stock Appreciation Rights with
an Exercise Price less than 100% of the Fair Market Value of the Common
Shares on the Date of Grant) or would materially and adversely affect
the rights of any holder without his or her written consent.
ARTICLE 14
Share Certificates
14.1
Delivery of Share Certificates. The Company is not required to issue or
deliver any certificates for Shares issuable with respect to Awards
under this Plan prior to the fulfillment of all of the following
conditions:
(a)
payment in full for the Shares and for any tax withholding (See Article
15);
(b)
completion of any registration or other qualification of such Shares
under any Federal or state laws or under the rulings or regulations of
the Securities and Exchange Commission or any other regulating body
which the Committee in its discretion deems necessary or advisable;
(c)
if applicable, admission of such Shares to listing on any stock
exchange on which the Shares are listed;
(d)
in the event the Shares are not registered under the Securities Act of
1933, qualification as a private placement under said Act;
(e)
obtaining of any approval or other clearance from any Federal or state
governmental agency which the Committee in its discretion determines to
be necessary or advisable; and
(f)
the Committee is fully satisfied that the issuance and delivery of
Shares under this Plan is in compliance with applicable Federal, state
or local law, rule, regulation or ordinance or any rule or regulation
of any other regulating body, for which the Committee may seek approval
of counsel for the Company.
14.2
Applicable
Restrictions on Shares. Shares issued with respect to Awards may be
subject to such stock transfer orders and other restrictions as the
Committee may determine necessary or advisable under any applicable
Federal or state securities law rules, regulations and other
requirements, the rules, regulations and other requirements of the OTC
Markets or any stock exchange upon which the Shares are then-listed,
and any other applicable Federal or state law and will include any
restrictive legends the Committee may deem appropriate to include.
14.3
Book Entry. In lieu of the issuance of stock certificates evidencing
Shares, the Company may use a “book entry” system in which a
computerized or manual entry is made in the records of the Company to
evidence the issuance of such Shares. Such Company records are, absent
manifest error, binding on all parties.
ARTICLE 15
Tax Withholding
15.1
In General. The Committee shall cause the Company or Affiliate to
withhold any taxes which it determines it is required by law or
required by the terms of this Plan to withhold in connection with any
payments incident to this Plan. The participant or other recipient
shall provide the Committee with such Stock Powers and additional
information or documentation as may be necessary for the Committee to
discharge its obligations under this Section.
15.2
Delivery of Withholding Proceeds. The Committee shall cause the Company
or Affiliate to deliver withholding proceeds to the Internal Revenue
Service and/or other taxing authority.
ARTICLE 16
General Provisions
16.1
No Implied Rights to Awards, Employment or Directorship. No potential
participant has any claim or right to be granted an Award under this
Plan, and there is no obligation of uniformity of treatment of
participants under this Plan. Neither this Plan nor any Award
thereunder shall be construed as giving any individual any right to
continued employment or continued directorship with the Company or any
Affiliate. The Plan does not constitute a contract of employment, and
the Company and each Affiliate expressly reserve the right at any time
to terminate employees free from liability, or any claim, under this
Plan, except as may be specifically provided in this Plan or in an
Award agreement.
16.2
Other Compensation Plans. Nothing contained in this Plan prevents the
Board of Directors 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.
16.3
Rule 16b-3 Compliance. The Plan is intended to comply with all
applicable conditions of Rule 16b 3 of the Exchange Act, as such rule
may be amended from time to time (“Rule 16b 3”). All transactions
involving any participant subject to Section 16(a) shall be subject to
the conditions set forth in Rule 16b 3, regardless of whether such
conditions are expressly set forth in this Plan. Any provision of this
Plan that is contrary to Rule 16b 3 does not apply to such participants.
16.4
Code Section 162(m) Compliance. The Plan is intended to comply with all
applicable requirements of Section 162(m) of the Code with respect to
“performance-based compensation” for Section 162(m) Persons. Unless the
Committee expressly determines otherwise, any provision of this Plan
that is contrary to such requirements does not apply to such
“performance-based compensation.”
16.5
Successors. All obligations of the Company with respect to Awards
granted under this Plan are binding on any successor to the Company,
whether as a result of a direct or indirect purchase, merger,
consolidation or otherwise of all or substantially all of the business
and/or assets of the Company.
16.6
Severability. In the event any provision of this Plan, or the
application thereof to any person or circumstances, is held illegal or
invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of this Plan, or other applications, and this Plan
is to be construed and enforced as if the illegal or invalid provision
had not been included.
16.7
Governing Law. To the extent not preempted by Federal law, this Plan
and all Award agreements pursuant thereto are construed in accordance
with and governed by the laws of the State of Ohio. This Plan is not
intended to be governed by the Employee Retirement Income Security Act
and shall be so construed and administered.
16.8
Compliance with Section 409A of the Code.
(a)
To the extent applicable, it is intended that this Plan and any Awards
made hereunder comply with, or be exempt from, the provisions of
Section 409A of the Code, so that the income inclusion provisions of
Section 409A(a)(1) of the Code do not apply to the participants. This
Plan and any Awards made hereunder will be administered in a manner
consistent with this intent. Any reference in this Plan to Section 409A
of the Code will also include any regulations or any other formal
guidance promulgated with respect to such section by the U.S.
Department of the Treasury or the Internal Revenue Service.
(b)
Neither a participant nor any of a participant’s creditors or
beneficiaries will have the right to subject any deferred compensation
(within the meaning of Section 409A of the Code) payable under this
Plan and Awards hereunder to any anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment.
Except as permitted under Section 409A of the Code, any deferred
compensation (within the meaning of Section 409A of the Code) payable
to a participant or for a participant’s benefit under this Plan and
Awards made hereunder may not be reduced by, or offset against, any
amount owing by a participant to the Company or any of its subsidiaries.
(c)
Notwithstanding any provision of this Plan and Awards made hereunder to
the contrary, if, at the time of a participant’s separation from
service (within the meaning of Section 409A of the Code), (i) the
participant is a specified employee (within the meaning of Section 409A
of the Code and using the identification methodology selected by the
Company from time to time) and (ii) the Company makes a good faith
determination that an amount payable hereunder constitutes deferred
compensation (within the meaning of Section 409A of the Code) the
payment of which is required to be delayed pursuant to the six-month
delay rule set forth in Section 409A of the Code in order to avoid
taxes or penalties under Section 409A of the Code, then the Company
will not pay such amount on the otherwise scheduled payment date but
will instead pay it, without interest, on the tenth business day of the
seventh month after such separation from service.
(d)
Notwithstanding any provision of this Plan and Awards hereunder to the
contrary, in light of the uncertainty with respect to the proper
application of Section 409A of the Code, the Company reserves the right
to make amendments to this Plan and Awards made hereunder as the
Company deems necessary or desirable to avoid the imposition of taxes
or penalties under Section 409A of the Code. In any case, each
participant will be solely responsible and liable for the satisfaction
of all taxes and penalties that may be imposed on such participant or
for such participant’s account in connection with this Plan and Awards
made hereunder (including any taxes and penalties under Section 409A of
the Code), and neither the Company nor any of its affiliates will have
any obligation to provide any gross-up for the tax consequences of any
provision of, or any payment under, this Plan or any Awards hereunder.
In addition, neither the Company nor any of its affiliates will have
any obligation to indemnify or otherwise hold any participant harmless
from any or all of such taxes or penalties.
ARTICLE 17
Effective Date and Term
17.1
Effective Date and Term. The effective date of this Hickok Incorporated
2013 Omnibus Equity Plan is the date on which the Shareholders of the
Company approve it at a duly held stockholders’ meeting (the “Effective
Date”). No Award will be granted under this Plan more than 10 years
after the Effective Date, but all Awards granted on or prior to such
date will continue in effect thereafter subject to the terms thereof
and of this Plan.
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