DocumentPERFORMANCE RESTRICTED STOCK UNIT AGREEMENT
UNDER THE
AAON, INC. 2016 LONG-TERM INCENTIVE PLAN
1. Award of Awarded Units. Pursuant to the AAON, Inc. 2016 Long-Term Incentive Plan (the “Plan”) of AAON, Inc., a Nevada corporation (the “Company”) and its Subsidiaries,
_______________
(the “Participant”)
as an employee of the Company, has been granted an Award under the Plan for ________________ (_____________) Awarded Units (the “Awarded Units”), which may be converted into the number of whole shares of Common Stock (as determined under Section 4 below) equal to the number of vested Awarded Units (determined in accordance with Section 3 below), subject to the terms and conditions of the Plan and this Performance Restricted Stock Unit Agreement (this “Agreement”). The Date of Grant of this Award is _____________, 2021. The maximum number of shares of Common Stock that could be issued with respect to the Awarded Units is ______________ (capped at 200%). Each Awarded Unit shall be a notional share of Common Stock, with the value of each Awarded Unit being equal to the Fair Market Value of a share of Common Stock at any time.
2. Subject to Plan. This Agreement is subject to the terms and conditions of the Plan, and the terms of the Plan shall control to the extent inconsistent with the provisions of this Agreement. The capitalized terms used herein that are defined in the Plan shall have the same meanings assigned to them in the Plan. This Agreement is subject to any rules promulgated pursuant to the Plan by the Board or the Committee and communicated to the Participant in writing.
3. Vesting; Forfeiture. Awarded Units which have become vested pursuant to the terms of this Section 3 are collectively referred to herein as “Vested Units.” All other Awarded Units are collectively referred to herein as “Unvested Units.” The Participant shall be eligible to receive shares of Common Stock with respect to the Vested Units in accordance with Section 4 below.
a. Except as otherwise provided in this Section 3, the Awarded Units will vest on the date the Committee determines whether the vesting conditions set forth on Exhibit A hereto have been achieved (which date shall be after the end of the Performance Period (as defined in Exhibit A) and no later than March 15, 2024).
b. Except as otherwise provided by Section 3.c., Section 3.d., Section 3.e., and Section 3.f. hereof, immediately upon the Participant’s Termination of Service for any reason whatsoever, the Participant shall be deemed to have forfeited all of the Participant’s Unvested Units.
c. Notwithstanding the foregoing, if the Participant’s employment with the Company or any of its Subsidiaries terminates by reason of the Participant’s death or Total and Permanent Disability, all Unvested Units shall immediately become Vested Units upon such termination (with Awarded Units vesting at the target (100%) performance level).
d. In the event of the Participant’s Termination of Service by the Company without Cause, then the Awarded Units shall continue to vest in accordance with Section 3.a., Section
3.c., Section 3.e., and Section 3.f. as if the Participant had remained in active employment, pro-rated based on the number of days the Participant was employed during the Performance Period through his or her Termination of Service.
e. In the event of the Participant’s Termination of Service on or after the one-year anniversary of the Date of Grant as a result of his or her Retirement, then the Awarded Units shall continue to vest in accordance with Section 3.a., Section 3.c., and Section 3.f. as if the Participant had remained in active employment, pro-rated based on the number of days the Participant was employed during the Performance Period though his or her Termination of Service. Notwithstanding the foregoing, no Awarded Units shall remain eligible to vest under this Section 3.e. if the Participant’s Termination of Service is (x) by the Company for Cause or (y) due to his or her Retirement if such termination occurs prior to the one-year anniversary of the Date of Grant.
f. Notwithstanding the foregoing and regardless of whether the performance criteria set forth in Exhibit A have been achieved, in the event that a Change in Control occurs and on or after the date of the Change in Control, the Participant incurs a Termination of Service by the Company (or by its successor following the Change in Control) without Cause (as defined in Section 3.e. below) then 100% of the Unvested Units shall immediately become Vested Units upon such termination (with the Awarded Units vesting at the target (100%) performance level).
g. For purposes hereof, “Change in Control” shall have the meaning set forth in the Plan, provided that such event is a “change in control” within the meaning of Section 409A of the Code, and the regulations and other applicable guidance issued thereunder.
4. Delivery of Common Stock. Subject to the provisions of Section 29 below, the Vested Units shall be converted into the number of whole shares of Common Stock equal to the number of Vested Units and the Company shall electronically register such shares of Common Stock in the Participant’s name (or in the name of his or her estate or beneficiary) or deliver certificates for the such shares of Common Stock to the Participant in accordance with the following schedule:
a. March 15, 2024; or
b. If earlier, the date of the Participant’s Termination of Service without Cause on or after a Change in Control.
To the extent an Awarded Unit does not vest in accordance with the provisions of Section 3 hereof by March 15, 2024, such Awarded Unit shall be forfeited and no shares of Common Stock shall be delivered with respect to such forfeited Awarded Unit.
5. Who May Receive Common Stock with Respect to Vested Units. During the lifetime of the Participant, the Common Stock received upon conversion of the Vested Units may only be received by the Participant or his or her legal representative. If the Participant dies prior to the date his or her Awarded Units are converted into shares of Common Stock as described in Section 4 above, the Common Stock relating to such converted Awarded Units may be received by any individual who is entitled to receive the property of the Participant pursuant to the applicable laws of descent and distribution.
6. Rights as Shareholder. The Participant will have no rights as a shareholder with respect to the Awarded Units until the issuance of a certificate or certificates to the Participant or the registration of such shares of Common Stock in the Participant’s name. The Awarded Units shall be subject to the terms and conditions of this Agreement.
7. No Fractional Shares. Awarded Units may be converted only with respect to full shares, and no fractional share of Common Stock shall be issued.
8. Non-Assignability. The Awarded Units are not assignable or transferable by the Participant except by will or by the laws of descent and distribution.
9. The Participant’s Acknowledgments. The Participant acknowledges receipt of a copy of the Plan, which is annexed hereto, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Awarded Units subject to all the terms and provisions thereof. The Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee or the Board, as appropriate, upon any questions arising under the Plan or this Agreement.
10. Adjustment of Number of Awarded Units and Related Matters. The number of shares of Common Stock covered by the Awarded Units shall be subject to adjustment in accordance with Articles 11-13 of the Plan.
11. Execution of Documents. The Participant hereby agrees to execute any documents requested by the Company in connection with the payment of any amount in connection with the Awarded Units pursuant to this Agreement.
12. Specific Performance. The parties acknowledge that remedies at law will be inadequate remedies for breach of this Agreement and consequently agree that this Agreement shall be enforceable by specific performance. The remedy of specific performance shall be cumulative of all of the rights and remedies at law or in equity of the parties under this Agreement.
13. The Participant’s Representations. Notwithstanding any of the provisions hereof, the Participant hereby agrees that the Company will not be obligated to register any shares of Common Stock in the Participant’s name or issue any shares of Common Stock to the Participant hereunder, if the issuance of such shares shall constitute a violation by the Participant or the Company of any provision of any law or regulation of any governmental authority. Any determination by the Company under this Section 13 shall be final, binding, and conclusive. The obligations of the Company and the rights of the Participant are subject to all Applicable Laws, rules and regulations.
14. Investment Representation. Unless the shares of Common Stock are issued to the Participant in a transaction registered under applicable federal and state securities laws, by his execution hereof, the Participant represents and warrants to the Company that all Common Stock which may be acquired hereunder will be acquired by the Participant for investment purposes for his own account and not with any intent for resale or distribution in violation of federal or states securities laws, all certificates issued with respect to the Common Stock shall bear an appropriate
restrictive investment legend and shall be held indefinitely, unless they are subsequently registered under the applicable federal and state securities laws or the Participant obtains an opinion of counsel, in form and substance satisfactory to the Company and its counsel, that such registration is not required.
15. Law Governing. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Oklahoma (excluding any conflict of laws rule or principle of Oklahoma law that might refer the governance, construction, or interpretation of this agreement to the laws of another state).
16. Claims. The Participant’s sole remedy for any Claim shall be against the Company, and the Participant shall not have any claim or right of any nature against any Subsidiary of the Company or any shareholder or existing or former director, officer or Employee of the Company or any Subsidiary of the Company. The Participant hereby releases and covenants not to sue any Person other than the Company over any Claims. The individuals and entities described above in this Section 16 (other than the Company) shall be third-party beneficiaries of the Plan and this Agreement for purposes of enforcing the terms of this Section 16.
17. No Right to Continue Service or Employment. Nothing herein shall be construed to confer upon the Participant the right to continue in the employ or to provide services to the Company or any Subsidiary, whether as an Employee, Contractor, consultant or Outside Director, or interfere with or restrict in any way the right of the Company or any Subsidiary to discharge the Participant as an Employee, Contractor, consultant or Outside Director at any time.
18. Legal Construction. In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been contained herein.
19. Covenants and Agreements as Independent Agreements. Each of the covenants and agreements set forth in this Agreement shall be construed as a covenant and agreement independent of any other provision of this Agreement. The existence of any claim or cause of action of the Participant against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.
20. Entire Agreement. This Agreement, together with the Plan, supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter in this Agreement and constitute the only agreements between the parties with respect to the subject matter in this Agreement. All prior negotiations and agreements between the parties with respect to the subject matter in this Agreement are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by
anyone acting on behalf of any party, which are not embodied in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect. Except for the specific representations expressly made by the Company in this Agreement, the Participant specifically disclaims that the Participant is relying upon or has relied upon any communications, promises, statements, inducements, or representation(s) that may have been made, oral or written, regarding the subject matter of this Agreement. The parties represent that they are relying solely and only on their own judgment in entering into this Agreement.
21. Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
22. Parties Bound. The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns, subject to the limitation on assignment expressly set forth herein.
23. Modification. No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties (electronically or otherwise); provided, however, that the Company may change or modify this Agreement without the Participant’s consent or signature if the Company determines, in its sole discretion, that such change or modification is necessary for purposes of compliance with or exemption from the requirements of Section 409A of the Code or any regulations or other guidance issued thereunder.
24. Headings. The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement.
25. Gender and Number. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.
26. Notice. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company or by the Participant, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith:
a. Notice to the Company shall be addressed and delivered as follows:
AAON, Inc.
2425 South Yukon Ave.
Tulsa, OK 74107
Attn:
Fax: (918) 583-6094
b. Notice to the Participant shall be addressed and delivered to the most recent address in the Company’s records.
27. Clawback. The Participant acknowledges, understands and agrees, with respect to any shares of Common Stock delivered to the Participant (or registered in the Participant’s name) pursuant to this Agreement, that such shares of Common Stock shall be subject to recovery by the Company, and the Participant shall be required to repay such compensation or shares of Common Stock, in accordance with the Company’s recoupment or clawback policy, as in effect from time to time. The Participant further acknowledges, understands, and agrees that the Board retains the right to modify the Company’s recoupment or clawback policy at any time.
28. Tax Requirements. The Participant is hereby advised to consult immediately with his or her own tax advisor regarding the tax consequences of this Agreement, including, without limitation, any possible tax consequences of this Agreement in connection with Section 409A of the Code. The Company, or if applicable, any Subsidiary (for purposes of this Section 28, the term “Company” shall be deemed to include any applicable Subsidiary) has the authority and the right to deduct or withhold, or require the Participant to remit to the employer, an amount sufficient to satisfy federal, state, and local taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any taxable event arising as a result of the vesting or conversion of the RSUs. Unless otherwise determined by the Committee at the time the Award is granted or thereafter, the Company shall satisfy any such withholding requirement by withholding the number of Awarded Units having a Fair Market Value on the date of withholding equal to the amount required to be withheld for tax purposes.
29. Section 409A.
a To the extent (i) any shares of Common Stock to which the Participant becomes entitled under this Agreement, or any agreement or plan referenced herein, in connection with the Participant's termination of employment with the Company constitutes deferred compensation subject to Section 409A of the Code; (ii) the Participant is deemed at the time of his separation from service to be a “specified employee” under Section 409A of the Code; and (iii) at the time of the Participant’s separation from service the Company is publicly traded (as defined in Section 409A of the Code), then such shares of Common Stock (other than any delivery of Common Stock permitted by Section 409A of the Code to be paid or delivered within six months of the Participant’s separation from service) shall not be made until the earlier of (x) the first day of the seventh month following the Participant’s separation from service or (y) the date of the Participant’s death following such separation from service. Upon the expiration of the applicable deferral period, any shares of Common Stock which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this Section 29 (together with, as applicable, accrued interest thereon) shall be delivered to the Participant or the Participant's beneficiary in one lump sum.
b. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” (within the meaning of Section 409A of the Code).
c. It is intended that this Agreement comply with the provisions of Section 409A of the Code so as to not subject the Participant to the payment of additional interest and taxes under
Section 409A of the Code, and in furtherance of this intent, this Agreement shall be interpreted, operated and administered in a manner consistent with these intentions.
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Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Participant, to evidence his or her consent and approval of all the terms hereof, has duly executed this Agreement, as of the date specified in Section 1 hereof.
COMPANY:
AAON, INC.
By:
Name:
Title:
PARTICIPANT:
Signature
Name:
Address:
Signature Page to Performance RSU Agreement
EXHIBIT A
The Awarded Units will be eligible to vest based on the achievement of performance conditions as described herein. The number of Awarded Units eligible for vesting will be determined by the Committee or its delegee by comparing the Company’s 3-Year Total Shareholder Return (TSR) ranking, as described herein, measured on a relative basis versus the TSR of the companies included in the Capital Goods sector of the S&P 600 SmallCap Companies. The “Performance Period” for purposes of measuring the relative TSR (rTSR) shall be the period beginning on January 1, 2021 and ending on December 31, 2023.
| | | | | | | | |
Awarded Units Vesting Levels |
Performance | AAON 3-Year rTSR Ranking | Payout % of Target* |
Above Maximum | >80th percentile | 200% |
Maximum | 80th percentile | 200% |
Target | 55th percentile | 100% |
Threshold | 30th percentile | 50% |
Below Threshold | <30th percentile | 0% |
* Payout levels are interpolated linearly between noted percentile ranks.
Total Shareholder Return (TSR). The Company’s TSR ranking will be measured by the Company’s volume weighted average price (VWAP) for the 20 consecutive trading days prior to January 1, 2024 less the Company’s VWAP for the 20 consecutive trading days prior to January 1, 2021, plus the cumulative dividend paid per share during the Performance Period. This amount will then be divided by the January 1, 2021 stock price to determine TSR. This calculation will be compared to the companies in the Capital Goods sector of the S&P 600 SmallCap Companies to determine the Company’s quartile performance.
All calculations will be done by the Committee on or before March 1, 2024 and will be final, binding, and conclusive on all persons and entities for all purposes under the Award Agreement The Committee has the full authority and discretion to adjust the calculations set forth in this Exhibit A for any unusual and/or nonrecurring items (including, but not limited to, merger costs, gain or loss on sales, or any other expenses charges out of the ordinary course or that would not reasonably be expected to have been incurred by the Company during the Performance Period).
Exhibit A to 2016 LTIP Performance RSU Award Agreement