Exhibit 10.22

 

HAYNES INTERNATIONAL, INC.

 

AMENDED AND RESTATED STOCK OPTION PLAN

 

As adopted by the Board of Directors as of November 7, 2005

 

The Board of Directors of Haynes International, Inc. (the “Company”) has
determined that the best interests of the Company will be served by making
available to eligible employees and directors of the Company and its
Subsidiaries a means to acquire shares of the Company’s common stock (the
“Shares”) through the granting of stock options.  The Haynes International, Inc.
Stock Option Plan (the “Plan”) is intended to promote the growth of the Company
and its shareholders by attracting and motivating key employees and directors
whose efforts are deemed worthy of encouragement through the incentive effects
of stock options.

 

The Shares purchased pursuant to the Plan shall be subject to certain
restrictions, the details of which are set forth below.  There is currently no
public market for the Shares.  The future market price, if any, of the Shares
may be highly volatile depending on a number of factors.  In addition, the
ownership of the Company represented by Options may be diluted by the future
issuances of Shares or convertible securities.

 

Accordingly, the Company’s Board of Directors adopts this Plan in accordance
with the Plan of Reorganization (as defined below), effective as of the
Effective Date.

 

1.                                       DEFINITIONS.  FOR PURPOSES OF THE PLAN,
THE FOLLOWING TERMS, WHEN CAPITALIZED, SHALL HAVE THE MEANING SET FORTH BELOW:

 

(A)                                  “BOARD” OR “BOARD OF DIRECTORS” MEANS THE
BOARD OF DIRECTORS OF THE COMPANY.

 

(B)                                 “CEO” MEANS THE CHIEF EXECUTIVE OFFICER OF
THE COMPANY.

 

(C)                                  “CODE” MEANS THE INTERNAL REVENUE CODE OF
1986, AS AMENDED.

 

(D)                                 “COMMITTEE” MEANS THE COMPENSATION COMMITTEE
OF THE BOARD, AND THE COMPOSITION OF THE COMMITTEE SHALL BE GOVERNED BY THE
COMPENSATION COMMITTEE CHARTER AS ADOPTED BY THE BOARD AND AS AMENDED FROM TIME
TO TIME.

 

(E)                                  “COMPANY” MEANS HAYNES INTERNATIONAL, INC.

 

(F)                                    “DIRECTOR” MEANS ANY PERSON SERVING ON
THE BOARD OF DIRECTORS OF THE COMPANY.

 

(G)                                 “DISABILITY” MEANS TOTAL AND PERMANENT
DISABILITY AS DEFINED IN THE HAYNES INTERNATIONAL INC. PENSION PLAN.

 

(H)                                 “DISCRETIONARY PARTICIPANT” MEANS ANY
ADDITIONAL PARTICIPANT AS MAY BE DESIGNATED ON A LIMITED BASIS BY THE COMMITTEE
UPON THE RECOMMENDATION OF THE CEO TO ACCOMMODATE NEW HIRES, PROMOTIONS AND
OTHER SIMILAR CIRCUMSTANCES.

 

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(I)                                     “EFFECTIVE DATE” HAS THE MEANING SET
FORTH IN THE PLAN OF REORGANIZATION.

 

(J)                                     “EMPLOYEE” MEANS ANY PERSON, INCLUDING
OFFICERS, EMPLOYED BY THE COMPANY OR ANY SUBSIDIARY.  THE PAYMENT OF A
DIRECTOR’S FEE BY THE COMPANY SHALL NOT BE SUFFICIENT TO CONSTITUTE EMPLOYMENT”
BY THE COMPANY.

 

(K)                                  “EXCHANGE ACT” MEANS THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

 

(L)                                     “EXECUTIVE” MEANS EXECUTIVES OCCUPYING
THE MANAGEMENT POSITIONS LISTED ON EXHIBIT A ATTACHED HERETO.

 

(M)                               “FAIR MARKET VALUE” PER SHARE AS OF A
PARTICULAR DATE MEANS THE LAST REPORTED SALE PRICE (ON THE DAY IMMEDIATELY
PRECEDING SUCH DATE) OF THE SHARES QUOTED ON THE NASDAQ NATIONAL MARKET OR THE
NASDAQ SMALLCAP MARKET (OR ANY OTHER EXCHANGE OR NATIONAL MARKET SYSTEM UPON
WHICH PRICE QUOTATIONS FOR THE SHARES ARE REGULARLY AVAILABLE); PROVIDED,
HOWEVER, IF PRICE QUOTATIONS FOR THE SHARES ARE NOT REGULARLY AVAILABLE ON ANY
EXCHANGE OR NATIONAL MARKET SYSTEM, FAIR MARKET VALUE PER SHARE SHALL MEAN, AS
OF ANY DATE, THE FAIR MARKET VALUE OF SUCH SHARES ON SUCH DATE AS DETERMINED IN
GOOD FAITH BY THE BOARD OR COMMITTEE.

 

(N)                                 “GOOD REASON” MEANS THE OCCURRENCE OF ANY OF
THE FOLLOWING ACTIONS OR FAILURES TO ACT, BUT IN EACH CASE ONLY IF IT IS NOT
CONSENTED TO BY THE OPTIONEE IN WRITING: (A) A MATERIAL ADVERSE CHANGE IN THE
OPTIONEE’S DUTIES, REPORTING RESPONSIBILITIES, TITLES OR ELECTED OR APPOINTED
OFFICES AS IN EFFECT IMMEDIATELY PRIOR TO THE EFFECTIVE DATE OF SUCH CHANGE;
(B) A MATERIAL REDUCTION BY THE COMPANY IN THE OPTIONEE’S BASE SALARY OR ANNUAL
BONUS OPPORTUNITY IN EFFECT IMMEDIATELY PRIOR TO THE EFFECTIVE DATE OF SUCH
REDUCTION, NOT INCLUDING ANY REDUCTION RESULTING FROM CHANGES IN THE MARKET
VALUE OF SECURITIES OR OTHER INSTRUMENTS PAID OR PAYABLE TO THE OPTIONEE;
(C) SOLELY IN THE CASE OF THE CEO, ANY CHANGE OF MORE THAN FIFTY (50) MILES IN
THE LOCATION OF THE PRINCIPAL PLACE OF EMPLOYMENT OF THE CEO IMMEDIATELY PRIOR
TO THE EFFECTIVE DATE OF SUCH CHANGE.  FOR PURPOSES OF THIS DEFINITION, NONE OF
THE ACTIONS DESCRIBED IN CLAUSES (A) AND (B) ABOVE SHALL CONSTITUTE “GOOD
REASON” WITH RESPECT TO THE OPTIONEE IF IT WAS AN ISOLATED AND INADVERTENT
ACTION NOT TAKEN IN BAD FAITH BY THE COMPANY AND IF IT IS REMEDIED BY THE
COMPANY WITHIN THIRTY (30) DAYS AFTER RECEIPT OF WRITTEN NOTICE THEREOF GIVEN BY
THE OPTIONEE (OR, IF THE MATTER IS NOT CAPABLE OF REMEDY WITHIN THIRTY (30)
DAYS, THEN WITHIN A REASONABLE PERIOD OF TIME FOLLOWING SUCH THIRTY (30) DAY
PERIOD, PROVIDED THAT THE COMPANY HAS COMMENCED SUCH REMEDY WITHIN SAID THIRTY
(30) DAY PERIOD); PROVIDED THAT “GOOD REASON” SHALL CEASE TO EXIST FOR ANY
ACTION DESCRIBED IN CLAUSES (A) AND (B) ABOVE ON THE SIXTIETH (60TH) FOLLOWING
THE LATER OF THE OCCURRENCE OF SUCH ACTION OR THE OPTIONEE’S KNOWLEDGE THEREOF,
UNLESS THE OPTIONEE HAS GIVEN THE COMPANY WRITTEN NOTICE THEREOF PRIOR TO SUCH
DATE.

 

(O)                                 “NEW COMMON STOCK” HAS THE MEANING SET FORTH
IN THE PLAN OF REORGANIZATION.

 

(P)                                 “NON-EMPLOYEE DIRECTOR” MEANS A DIRECTOR WHO
IS A “NON-EMPLOYEE DIRECTOR” WITHIN THE MEANING OF RULE 16B-3 AND WHO IS ALSO AN
“OUTSIDE DIRECTOR” WITHIN THE MEANING OF SECTION 162(M) OF THE CODE.

 

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(Q)                                 “OPTION” MEANS ANY STOCK OPTION ISSUED
PURSUANT TO THE PLAN.  OPTIONS WILL BE “NONQUALIFIED OPTIONS” WHICH ARE DEFINED
AS OPTIONS NOT INTENDED TO MEET THE REQUIREMENTS OF SECTION 422 OF THE CODE.

 

(R)                                    “OPTION AGREEMENT” MEANS THE WRITTEN
AGREEMENT BY AND BETWEEN THE PARTICIPANT AND THE COMPANY SETTING FORTH THE TERMS
AND CONDITIONS OF AN OPTION.  EACH OPTION AGREEMENT SHALL BE SUBJECT TO THE
TERMS AND CONDITIONS OF THE PLAN AND NEED NOT BE IDENTICAL.

 

(S)                                  “OPTIONEE” MEANS THE HOLDER OF AN
OUTSTANDING OPTION GRANTED UNDER THE PLAN.

 

(T)                                    “PARTICIPANT” MEANS THE CEO, EXECUTIVE,
NON-EMPLOYEE DIRECTOR OR DISCRETIONARY PARTICIPANT WHO HAS ENTERED INTO AN
OPTION AGREEMENT WITH THE COMPANY PURSUANT TO THIS PLAN.

 

(U)                                 “PLAN” MEANS THIS HAYNES INTERNATIONAL, INC.
STOCK OPTION PLAN AS PROVIDED HEREIN AND AS MAY BE AMENDED FROM TIME TO TIME.

 

(V)                                 “PLAN OF REORGANIZATION” MEANS THE FIRST
AMENDED PLAN OF REORGANIZATION FOR THE COMPANY THAT WAS FILED WITH THE UNITED
STATES BANKRUPTCY COURT SOUTHERN DISTRICT INDIANAPOLIS DIVISION AND APPROVED ON
AUGUST 16, 2004.

 

(W)                               “RETIREMENT” MEANS IN THE CASE OF THE CEO, A
RESIGNATION BY THE CEO AFTER HAVING REACHED AGE FIFTY-FIVE (55), BUT IN NO EVENT
PRIOR TO SEPTEMBER 30, 2007, AND, IN THE CASE OF ANY OTHER PARTICIPANT, A
RESIGNATION AFTER REACHING AGE FIFTY-FIVE (55) AND COMPLETING AT LEAST FIVE
(5) YEARS OF SERVICE WITH THE COMPANY, BUT IN NO EVENT PRIOR TO SEPTEMBER 30,
2007.

 

(X)                                   “RULE 16B-3” MEANS RULE 16B-3 PROMULGATED
UNDER THE EXCHANGE ACT OR ANY SUCCESSOR TO RULE 16B-3, AS IN EFFECT FROM TIME TO
TIME.

 

(Y)                                 “SHARE” MEANS A SHARE OF COMMON STOCK OF THE
COMPANY AUTHORIZED UNDER THE PLAN OF REORGANIZATION, AS MAY BE ADJUSTED IN
ACCORDANCE WITH SECTION 5(B) BELOW.

 

(Z)                                   “SHARES OUTSTANDING” MEANS THE TOTAL
NUMBER OF SHARES OUTSTANDING ON A FULLY DILUTED BASIS, AS REFLECTED IN THE
COMPANY’S FINANCIAL STATEMENTS FOR PURPOSES OF DETERMINING EARNINGS PER SHARE.

 

(AA)                            “SUBSIDIARY” AND “SUBSIDIARIES” USED HEREIN
MEANS A COMPANY OR COMPANIES OF WHICH 80% OR MORE OF THE TOTAL VOTING POWER OF
THE EQUITY OF EACH SUCH COMPANY AND 80% OR MORE OF THE TOTAL VALUE OF THE EQUITY
OF EACH SUCH COMPANY ARE OWNED BY THE COMPANY OR A SUBSIDIARY OF THE COMPANY.

 

(BB)                          “TERMINATED FOR CAUSE,” “TERMINATION FOR CAUSE” OR
“CAUSE” MEANS, (I) IF THE OPTIONEE IS A PARTY TO AN EMPLOYMENT OR SERVICE
AGREEMENT WITH THE COMPANY OR ITS SUBSIDIARIES AND SUCH AGREEMENT PROVIDES FOR A
DEFINITION OF CAUSE, THE DEFINITION THEREIN CONTAINED, OR, (II) IF NO SUCH
AGREEMENT EXISTS, A TERMINATION BY REASON OF THE GOOD FAITH

 

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DETERMINATION OF THE BOARD THAT THE OPTIONEE (A) CONTINUALLY FAILED TO
SUBSTANTIALLY PERFORM HIS DUTIES WITH THE COMPANY (OTHER THAN A FAILURE
RESULTING FROM THE OPTIONEE’S MEDICALLY DOCUMENTED INCAPACITY DUE TO PHYSICAL OR
MENTAL ILLNESS), INCLUDING, WITHOUT LIMITATION, REPEATED REFUSAL TO FOLLOW THE
REASONABLE DIRECTIONS OF THE BOARD, KNOWING VIOLATION OF THE LAW IN THE COURSE
OF PERFORMANCE OF THE OPTIONEE’S DUTIES WITH THE COMPANY OR A SUBSIDIARY,
REPEATED ABSENCES FROM WORK WITHOUT A REASONABLE EXCUSE, OR INTOXICATION WITH
ALCOHOL OR ILLEGAL DRUGS WHILE ON THE COMPANY’S OR A SUBSIDIARY’S PREMISES
DURING REGULAR BUSINESS HOURS, (B) ENGAGED IN CONDUCT WHICH CONSTITUTED A
MATERIAL BREACH OF SUCH OPTIONEE’S EMPLOYMENT AGREEMENT (IF APPLICABLE), (C) WAS
INDICTED (OR EQUIVALENT UNDER APPLICABLE LAW), CONVICTED OF OR ENTERED A PLEA OF
NOLO CONTENDERE TO THE COMMISSION OF A FELONY OR CRIME INVOLVING DISHONESTY OR
MORAL TURPITUDE, OR (D) ENGAGED IN CONDUCT WHICH IS DEMONSTRABLY AND MATERIALLY
INJURIOUS TO THE FINANCIAL CONDITION, BUSINESS REPUTATION, OR OTHERWISE OF THE
COMPANY OR ITS SUBSIDIARIES OR AFFILIATES, OR (E) PERPETUATED A FRAUD OR
EMBEZZLEMENT AGAINST THE COMPANY OR ITS SUBSIDIARIES OR AFFILIATES, AND IN EACH
CASE THE PARTICULAR ACT OR OMISSION WAS NOT CURED, IF CURABLE, IN ALL MATERIAL
RESPECTS BY THE OPTIONEE WITHIN THIRTY (30) DAYS AFTER RECEIPT OF WRITTEN NOTICE
FROM THE BOARD, WHICH SHALL SET FORTH IN REASONABLE DETAIL THE NATURE OF THE
FACTS AND CIRCUMSTANCES WHICH CONSTITUTE “CAUSE;” PROVIDED, HOWEVER, THE
OPTIONEE SHALL NOT BE DEEMED TO HAVE BEEN TERMINATED FOR CAUSE UNLESS THERE
SHALL HAVE BEEN DELIVERED TO THE OPTIONEE A COPY OF A RESOLUTION DULY ADOPTED BY
THE BOARD.  IF THE COMPANY HAS REASONABLE BELIEF THAT THE OPTIONEE HAS COMMITTED
ANY OF THE ACTS DESCRIBED ABOVE, IT MAY SUSPEND THE OPTIONEE (WITH OR WITHOUT
PAY) WHILE IT INVESTIGATES WHETHER IT HAS OR COULD HAVE CAUSE TO TERMINATE THE
OPTIONEE.  THE COMPANY MAY TERMINATE THE OPTIONEE FOR CAUSE PRIOR TO THE
COMPLETION OF ITS INVESTIGATION; PROVIDED, THAT, IF IT IS ULTIMATELY DETERMINED
THAT THE OPTIONEE HAS NOT COMMITTED AN ACT WHICH WOULD CONSTITUTE CAUSE,
OPTIONEE SHALL BE TREATED AS IF HE WERE TERMINATED WITHOUT CAUSE.

 

2.                                       ADMINISTRATION OF THE PLAN.

 

(A)                                  COMMITTEE.  THE PLAN SHALL BE ADMINISTERED
BY THE COMMITTEE.  THE COMMITTEE SHALL HAVE FULL AUTHORITY TO ADMINISTER THE
PLAN, AUTHORITY TO INTERPRET AND CONSTRUE ANY PROVISION OF THE PLAN AND TO ADOPT
SUCH RULES AND REGULATIONS FOR ADMINISTERING THE PLAN AS IT MAY DEEM NECESSARY
IN ORDER TO COMPLY WITH THE REQUIREMENTS OF THE PLAN, OR IN ORDER TO CONFORM TO
ANY REGULATION OR TO ANY CHANGE IN ANY LAW OR REGULATION APPLICABLE THERETO.

 

(B)                                 ACTIONS OF THE COMMITTEE.  ALL ACTIONS TAKEN
AND ALL INTERPRETATIONS AND DETERMINATIONS MADE BY THE COMMITTEE IN GOOD FAITH
(INCLUDING DETERMINATIONS OF FAIR MARKET VALUE) SHALL BE FINAL AND BINDING UPON
ALL PARTICIPANTS, THE COMPANY, AND ALL OTHER INTERESTED PERSONS.  NO MEMBER OF
THE COMMITTEE SHALL BE PERSONALLY LIABLE FOR ANY ACTION, DETERMINATION OR
INTERPRETATION MADE IN GOOD FAITH WITH RESPECT TO THE PLAN, AND ALL MEMBERS OF
THE COMMITTEE SHALL, IN ADDITION TO THEIR RIGHTS AS DIRECTORS, BE FULLY
PROTECTED TO THE EXTENT PERMITTED BY LAW BY THE COMPANY WITH RESPECT TO ANY SUCH
ACTION, DETERMINATION, OR INTERPRETATION.

 

(C)                                  POWERS OF THE COMMITTEE.  SUBJECT TO THE
PROVISIONS OF THE PLAN, THE COMMITTEE SHALL HAVE THE AUTHORITY, IN ITS
DISCRETION: (I) TO DETERMINE, UPON REVIEW OF

 

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THE RELEVANT INFORMATION, THE FAIR MARKET VALUE OF THE SHARES; (II) TO DETERMINE
THE PERSONS TO WHOM OPTIONS SHALL BE GRANTED, THE TIME OR TIMES AT WHICH OPTIONS
SHALL BE GRANTED, THE NUMBER OF SHARES TO BE REPRESENTED BY EACH OPTION, AND THE
EXERCISE PRICE PER SHARE; (III) TO INTERPRET THE PLAN; (IV) TO PRESCRIBE, AMEND,
AND RESCIND RULES AND REGULATIONS RELATING TO THE PLAN; (V) TO ACCELERATE OR
DEFER (WITH THE CONSENT OF THE PARTICIPANT UNLESS OTHERWISE PROVIDED HEREIN) THE
VESTING OF ANY OPTION; (VI) TO AUTHORIZE ANY PERSON TO EXECUTE ON BEHALF OF THE
COMPANY ANY INSTRUMENT REQUIRED TO EFFECTUATE THE GRANT OF AN OPTION PREVIOUSLY
GRANTED BY THE BOARD OR THE COMMITTEE; AND (VII) TO MAKE ALL OTHER
DETERMINATIONS DEEMED NECESSARY OR ADVISABLE FOR THE ADMINISTRATION OF THE PLAN.

 

3.                                       ELIGIBILITY AND PARTICIPATION.

 

(A)                                  ELIGIBILITY.  GRANTS OF OPTIONS SHALL BE
MADE TO THE CEO AND THE EXECUTIVES IN ACCORDANCE WITH EXHIBIT A AND, IN THE
DISCRETION OF THE COMMITTEE, MAY BE MADE TO ANY NON-EMPLOYEE DIRECTOR OR ANY
DISCRETIONARY PARTICIPANT.

 

(B)                                 PARTICIPATION BY DIRECTOR.  MEMBERS OF THE
COMMITTEE WHO ARE ELIGIBLE EITHER FOR OPTIONS OR HAVE BEEN GRANTED OPTIONS MAY
VOTE ON ANY MATTERS AFFECTING THE ADMINISTRATION OF THE PLAN OR THE GRANT OF ANY
OPTIONS PURSUANT TO THE PLAN, EXCEPT THAT NO SUCH MEMBER SHALL ACT UPON THE
GRANTING OF AN OPTION TO HIMSELF, BUT ANY SUCH MEMBER MAY BE COUNTED IN
DETERMINING THE EXISTENCE OF A QUORUM AT ANY MEETING OF THE COMMITTEE AND MAY BE
COUNTED AS PART OF AN ACTION BY UNANIMOUS WRITTEN CONSENT DURING OR WITH RESPECT
TO WHICH ACTION IS TAKEN TO GRANT OPTIONS TO HIM OR HER.

 

4.                                       EXERCISE PRICE, CONSIDERATION AND
FORM OF OPTION AGREEMENT.

 

(A)                                  EXERCISE PRICE.  THE PRICE TO BE PAID FOR
SHARES UPON THE EXERCISE OF AN OPTION (“EXERCISE PRICE”) SHALL BE DETERMINED BY
THE COMMITTEE AT THE TIME SUCH OPTION IS GRANTED.

 

(B)                                 PAYMENT OF EXERCISE PRICE.  THE EXERCISE
PRICE SHALL BE PAID IN FULL, AT THE TIME OF EXERCISE OF THE OPTION, (I) BY
PERSONAL OR BANK CASHIER’S CHECK, (II) IF THE PARTICIPANT MAY DO SO WITHOUT
VIOLATING SECTION 16(B) OR (C) OF THE EXCHANGE ACT, AND SUBJECT TO APPROVAL BY
THE COMMITTEE, BY TENDERING TO THE COMPANY WHOLE SHARES OWNED BY SUCH
PARTICIPANT HAVING A FAIR MARKET VALUE AT THE TIME OF EXERCISE EQUAL TO THE
EXERCISE PRICE OF THE SHARES TO WHICH THE OPTION IS BEING EXERCISED, (III) IF
THE PARTICIPANT MAY DO SO WITHOUT VIOLATING SECTION 16(B) OR (C) OF THE EXCHANGE
ACT, AND SUBJECT TO APPROVAL BY THE COMMITTEE, BY SURRENDERING SUFFICIENT VESTED
OPTIONS BASED ON THE DIFFERENCE BETWEEN THE EXERCISE PRICE AND THE FAIR MARKET
VALUE AT THE TIME OF EXERCISE OF THE SHARES TO EQUAL THE EXERCISE PRICE OF THE
SHARES TO WHICH THE OPTION IS BEING EXERCISED, OR (IV) ANY COMBINATION OF (I),
(II) OR (III).  UNLESS OTHERWISE SPECIFICALLY PROVIDED IN AN OPTION AGREEMENT,
THE PURCHASE PRICE OF SHARES ACQUIRED PURSUANT TO AN OPTION THAT IS PAID BY
DELIVERY TO THE COMPANY OF OTHER SHARES OR ATTESTATION OF OWNERSHIP THEREOF
ACQUIRED, DIRECTLY OR INDIRECTLY FROM THE COMPANY, SHALL BE PAID ONLY WITH
SHARES THAT HAVE BEEN HELD FOR MORE THAN SIX (6) MONTHS (OR SUCH LONGER OR
SHORTER PERIOD OF TIME REQUIRED TO AVOID A CHARGE TO EARNINGS FOR FINANCIAL
ACCOUNTING PURPOSES).

 

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(C)                                  FORM OF OPTION AGREEMENT.  EACH OPTION
SHALL BE EVIDENCED BY AN OPTION AGREEMENT SPECIFYING THE NUMBER OF SHARES WHICH
MAY BE PURCHASED UPON EXERCISE OF THE OPTION AND CONTAINING SUCH TERMS AND
PROVISIONS AS THE COMMITTEE MAY DETERMINE, SUBJECT TO THE PROVISIONS OF THE
PLAN.

 

5.                                       SHARES OF COMMON STOCK SUBJECT TO THE
PLAN.

 

(A)                                  NUMBER.  SUBJECT TO ADJUSTMENT AS PROVIDED
IN PARAGRAPH (B) OF THIS SECTION 5, THE MAXIMUM AGGREGATE NUMBER OF SHARES WHICH
MAY BE ISSUED PURSUANT TO OPTIONS GRANTED UNDER THE PLAN SHALL NOT EXCEED ONE
(1) MILLION SHARES.  TO THE EXTENT ANY OPTION GRANTED UNDER THE PLAN SHALL FOR
ANY REASON EXPIRE OR OTHERWISE TERMINATE OR BECOME UNEXERCISABLE, IN WHOLE OR IN
PART, WITHOUT HAVING BEEN EXERCISED IN FULL, THE SHARES NOT ACQUIRED UNDER SUCH
OPTION SHALL REVERT TO AND THEREAFTER BE AVAILABLE FOR FUTURE GRANTS UNDER THE
PLAN.

 

(B)                                 CAPITAL CHANGES.  IN THE EVENT OF ANY
EXTRAORDINARY DIVIDEND OR OTHER DISTRIBUTION (WHETHER IN THE FORM OF CASH,
SHARES, OTHER SECURITIES, OR OTHER PROPERTY), RECAPITALIZATION,
RECLASSIFICATION, STOCK SPLIT, REVERSE STOCK SPLIT, SPIN-OFF, 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 (AN “EVENT”), AND SUCH EVENT AFFECTS THE SHARES
SUCH THAT AN ADJUSTMENT IS REASONABLY 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 THE PLAN OR WITH RESPECT
TO AN OPTION, THEN THE COMMITTEE SHALL, IN SUCH MANNER AS IT MAY REASONABLY DEEM
EQUITABLE, TAKE ACTION TO MAKE THE APPROPRIATE ADJUSTMENT, INCLUDING, WITHOUT
LIMITATION, ADJUSTING ANY OR ALL OF THE FOLLOWING: (I) THE NUMBER AND KIND OF
SHARES (OR OTHER SECURITIES OR PROPERTY) WITH RESPECT TO WHICH OPTIONS MAY BE
GRANTED OR AWARDED; (II) THE NUMBER AND KIND OF SHARES (OR OTHER SECURITIES OR
PROPERTY) SUBJECT TO OUTSTANDING OPTIONS; AND (III) THE GRANT OR EXERCISE PRICE
WITH RESPECT TO ANY OPTION; PROVIDED, HOWEVER, THAT NO COMMITTEE ACTION UNDER
THIS SECTION 5(B) SHALL RESULT IN A REDUCTION IN THE AGGREGATE VALUE OF
OUTSTANDING OPTIONS (WHETHER OR NOT VESTED) HELD BY ANY PARTICIPANT IMMEDIATELY
PRIOR TO THE EVENT.  THE COMMITTEE’S DETERMINATION UNDER THIS SECTION 5(B) SHALL
BE FINAL, BINDING AND CONCLUSIVE.  IF ANY OF THE FOREGOING ADJUSTMENTS SHALL
RESULT IN A FRACTIONAL SHARE, THE FRACTION SHALL BE DISREGARDED, AND THE COMPANY
SHALL HAVE NO OBLIGATION TO MAKE ANY CASH OR OTHER PAYMENT WITH RESPECT TO SUCH
A FRACTIONAL SHARE.

 

(C)                                  SALE PROTECTION.  IN THE EVENT THAT THE
COMPANY’S SHARES ARE NOT READILY TRADED ON A NATIONAL EXCHANGE OR QUOTATIONS
SYSTEM, AND THE COMPANY IS SOLD IN A SALE OR MERGER, THE FAIR MARKET VALUE OF
THE SHARES RECEIVED UPON THE EXERCISE OF EACH VESTED OPTION SHALL BE THE VALUE
PER SHARE PAYABLE OR USED IN SUCH TRANSACTION.

 

(D)                                 TERMINATION OF OPTIONS. UNLESS OTHERWISE
PROVIDED IN AN OPTION AGREEMENT AND EXCEPT IN THE CASE OF A CHANGE IN CONTROL
(AS DEFINED BELOW) WHICH SHALL HAVE THE EFFECT PROVIDED BY SECTION 11, UPON THE
OCCURRENCE OF AN EVENT OR OTHER CORPORATE EVENT OR TRANSACTION IN WHICH
OUTSTANDING OPTIONS ARE NOT TO BE ASSUMED OR OTHERWISE CONTINUED FOLLOWING SUCH
AN EVENT OR OTHER CORPORATE EVENT OR TRANSACTION, THE

 

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COMMITTEE MAY, IN ITS DISCRETION, TERMINATE ANY OUTSTANDING OPTION WITHOUT A
PARTICIPANT’S CONSENT AND (I) PROVIDE FOR THE PURCHASE OF ANY SUCH OPTION FOR AN
AMOUNT OF CASH EQUAL TO THE POSITIVE AMOUNT (IF ANY) THAT COULD HAVE BEEN
ATTAINED UPON THE EXERCISE OF SUCH OPTION OR REALIZATION OF THE PARTICIPANT’S
RIGHTS HAD SUCH OPTION BEEN CURRENTLY EXERCISABLE OR PAYABLE OR FULLY VESTED,
NET OF THE EXERCISE PRICE FOR SUCH OPTION; AND/OR (II) PROVIDE THAT SUCH OPTION
SHALL BE EXERCISABLE (WHETHER OR NOT VESTED) AS TO ALL SHARES COVERED THEREBY
FOR AT LEAST THIRTY (30) DAYS PRIOR TO SUCH AN EVENT OR OTHER CORPORATE EVENT OR
TRANSACTION.

 

(E)                                  FUTURE TRANSACTIONS.  THE EXISTENCE OF THE
PLAN, ANY OPTION AGREEMENT AND THE OPTIONS GRANTED HEREUNDER SHALL NOT AFFECT OR
RESTRICT IN ANY WAY THE RIGHT OR POWER OF THE COMPANY OR THE SHAREHOLDERS OF THE
COMPANY TO MAKE OR AUTHORIZE ANY ADJUSTMENT, RECAPITALIZATION, REORGANIZATION OR
OTHER CHANGE IN THE COMPANY’S CAPITAL STRUCTURE OR ITS BUSINESS, ANY MERGER OR
CONSOLIDATION OF THE COMPANY, ANY ISSUE OF STOCK OR OF OPTIONS, WARRANTS OR
RIGHTS TO PURCHASE STOCK OR OF BONDS, DEBENTURES, PREFERRED OR PRIOR PREFERENCE
STOCKS WHOSE RIGHTS ARE SUPERIOR TO OR AFFECT THE SHARES OR THE RIGHTS THEREOF
OR WHICH ARE CONVERTIBLE INTO OR EXCHANGEABLE FOR SHARES, OR THE DISSOLUTION OR
LIQUIDATION OF THE COMPANY, OR ANY SALE OR TRANSFER OF ALL OR ANY PART OF ITS
ASSETS OR BUSINESS, OR ANY OTHER CORPORATE ACT OR PROCEEDING, WHETHER OF A
SIMILAR CHARACTER OR OTHERWISE.

 

6.                                       EXERCISE OF STOCK OPTIONS.

 

(A)                                  VESTING.  EXCEPT AS PROVIDED OTHERWISE IN
THIS PLAN OR THE APPLICABLE OPTION AGREEMENT, EACH OPTION SHALL BECOME VESTED
AND EXERCISABLE IN THREE (3) EQUAL INSTALLMENTS SUCH THAT THE OPTION MAY BE
EXERCISED AS TO SHARES COVERED BY THE FIRST INSTALLMENT FROM AND AFTER THE FIRST
ANNIVERSARY OF THE DATE OF THE GRANT OF THE OPTION, WITH THE SECOND AND THIRD
INSTALLMENTS BECOMING VESTED AND EXERCISABLE ON THE TWO SUCCEEDING ANNIVERSARY
DATES.  EXCEPT AS PROVIDED HEREIN, OR EXCEPT AS SPECIFICALLY RESTRICTED BY THE
COMMITTEE, ANY OPTION MAY BE EXERCISED IN WHOLE AT ANY TIME OR IN PART AT ANY
TIME TO THE EXTENT THAT SUCH SHARES UNDER THE OPTION ARE THEN VESTED AND
EXERCISABLE.  IN NO EVENT, HOWEVER, MAY ANY OPTION BE EXERCISED AFTER THE
EXPIRATION OF ITS EXERCISE PERIOD, AS DESCRIBED IN SECTION 6(B), BELOW.

 

(B)                                 EXERCISE PERIOD.  NOTWITHSTANDING ANY
PROVISION HEREIN TO THE CONTRARY, ANY OPTION GRANTED PURSUANT TO THIS PLAN SHALL
EXPIRE, TO THE EXTENT NOT EXERCISED, NO LATER THAN THE TENTH (10TH) ANNIVERSARY
OF THE DATE ON WHICH IT WAS GRANTED.  SUCH TIME OR TIMES SHALL BE SET FORTH IN
THE OPTION AGREEMENT EVIDENCING SUCH OPTION.

 

(C)                                  NOTICE OF EXERCISE.  A PARTICIPANT ELECTING
TO EXERCISE AN OPTION SHALL GIVE WRITTEN NOTICE TO THE COMPANY, AS SPECIFIED BY
THE OPTION AGREEMENT, OF HIS ELECTION TO PURCHASE A SPECIFIED NUMBER OF SHARES. 
SUCH NOTICE SHALL BE ACCOMPANIED BY THE INSTRUMENT EVIDENCING SUCH OPTION AND
ANY OTHER DOCUMENTS REQUIRED BY THE COMPANY, AND PAYMENT OF THE EXERCISE PRICE
OF THE SHARES THE PARTICIPANT HAS ELECTED TO PURCHASE.  IF THE NOTICE OF
ELECTION TO EXERCISE IS GIVEN BY THE EXECUTOR OR ADMINISTRATOR OF A DECEASED
PARTICIPANT, OR BY THE PERSON OR PERSONS TO WHOM THE OPTION HAS BEEN TRANSFERRED
BY THE PARTICIPANT’S WILL OR THE APPLICABLE LAWS OF DESCENT AND DISTRIBUTION,
THE

 

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COMPANY WILL BE UNDER NO OBLIGATION TO DELIVER SHARES PURSUANT TO SUCH EXERCISE
UNLESS AND UNTIL THE COMPANY IS SATISFIED THAT THE PERSON OR PERSONS GIVING SUCH
NOTICE IS OR ARE ENTITLED TO EXERCISE THE OPTION.

 

(D)                                 TERMINATION OF EMPLOYMENT WITHOUT CAUSE OR
FOR GOOD REASON.

 

(I)                                     UNLESS SPECIFICALLY PROVIDED OTHERWISE
IN THE OPTION AGREEMENT, IF THE CEO’S EMPLOYMENT IS TERMINATED WITHOUT CAUSE BY
THE COMPANY OR BY THE CEO FOR GOOD REASON DURING THE TERM OF HIS EMPLOYMENT
AGREEMENT, ALL UNVESTED OPTIONS OF THE CEO SHALL VEST IMMEDIATELY AND ALL
OPTIONS HELD BY THE CEO SHALL REMAIN EXERCISABLE FOR ONE (1) YEAR FOLLOWING
TERMINATION OF EMPLOYMENT, BUT IN NO EVENT LATER THAN THE EXPIRATION DATE OF
SUCH OPTION AS SPECIFIED IN THE APPLICABLE OPTION AGREEMENT.  IF THE OPTION IS
NOT EXERCISED DURING THIS PERIOD IT SHALL BE VOID AND DEEMED TO HAVE BEEN
FORFEITED AND BE OF NO FURTHER FORCE OR EFFECT.  IN THE CEO’S EMPLOYMENT
TERMINATES ON SEPTEMBER 30, 2007 UPON EXPIRATION OF THE EMPLOYMENT TERM UNDER
HIS EMPLOYMENT AGREEMENT, ANY UNVESTED OPTIONS SHALL TERMINATE IMMEDIATELY AND
ANY VESTED OPTIONS SHALL REMAIN EXERCISABLE FOR NINETY (90) DAYS FOLLOWING
TERMINATION OF EMPLOYMENT.  IF THE OPTION IS NOT EXERCISED DURING THIS PERIOD,
IT SHALL BE VOID AND DEEMED TO HAVE BEEN FORFEITED AND BE OF NO FURTHER FORCE OR
EFFECT.

 

(II)                                  UNLESS SPECIFICALLY PROVIDED OTHERWISE IN
THE OPTION AGREEMENT, IF THE EMPLOYMENT OF AN EXECUTIVE OR DISCRETIONARY
PARTICIPANT IS TERMINATED WITHOUT CAUSE BY THE COMPANY OR BY THE EXECUTIVE OR
DISCRETIONARY PARTICIPANT FOR GOOD REASON, ALL UNVESTED OPTIONS HELD BY THE
EXECUTIVE OR DISCRETIONARY PARTICIPANT, AS THE CASE MAY BE, SHALL TERMINATE
IMMEDIATELY AND ANY VESTED OPTIONS SHALL REMAIN EXERCISABLE FOR SIX (6) MONTHS
FOLLOWING THE DATE OF SUCH EVENT, BUT IN NO EVENT LATER THAN THE EXPIRATION OF
SUCH OPTIONS AS SPECIFIED IN THE APPLICABLE OPTION AGREEMENT.  IF THE OPTION IS
NOT EXERCISED DURING THIS PERIOD, IT SHALL BE VOID AND DEEMED TO HAVE BEEN
FORFEITED AND BE OF NO FURTHER FORCE OR EFFECT.

 

(E)                                  TERMINATION DUE TO DEATH, DISABILITY OR
RETIREMENT.

 

(I)                                     IN ADDITION TO ANY RIGHTS UNDER
SECTION 10, UPON THE DEATH, DISABILITY OR RETIREMENT OF THE CEO, ALL UNVESTED
OPTIONS SHALL VEST IMMEDIATELY AND ALL OPTIONS HELD BY THE CEO SHALL REMAIN
EXERCISABLE FOR ONE (1) YEAR IN THE EVENT OF DEATH OR DISABILITY AND SIX
(6) MONTHS IN THE EVENT OF RETIREMENT FOLLOWING THE DATE OF ANY SUCH EVENT, BUT
IN NO EVENT LATER THAN THE EXPIRATION DATE OF OPTION AS SPECIFIED IN THE
APPLICABLE OPTION AGREEMENT.  IF THE OPTION IS NOT EXERCISED DURING THIS PERIOD
IT SHALL BE VOID AND DEEMED TO HAVE BEEN FORFEITED AND BE OF NO FURTHER FORCE OR
EFFECT.

 

(II)                                  IN ADDITION TO ANY RIGHTS UNDER
SECTION 10, UPON THE DEATH OR DISABILITY OF AN EXECUTIVE, A DIRECTOR OR A
DISCRETIONARY PARTICIPANT, ALL UNVESTED OPTIONS SHALL VEST IMMEDIATELY AND ALL
OPTIONS HELD BY SUCH EXECUTIVE, DIRECTOR,

 

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OR DISCRETIONARY PARTICIPANT, AS THE CASE MAY BE, SHALL REMAIN EXERCISABLE FOR
SIX (6) MONTHS FOLLOWING THE DATE OF SUCH EVENT, BUT IN NO EVENT LATER THAN THE
EXPIRATION DATE OF SUCH OPTION AS SPECIFIED IN THE APPLICABLE OPTION AGREEMENT.
 IF THE OPTION IS NOT EXERCISED DURING THIS PERIOD, IT SHALL BE VOID AND DEEMED
TO HAVE BEEN FORFEITED AND BE OF NO FURTHER FORCE OR EFFECT.

 

(III)                               UPON THE RETIREMENT OF THE EXECUTIVE, A
NON-EMPLOYEE DIRECTOR, OR A DISCRETIONARY PARTICIPANT, ALL UNVESTED OPTIONS
SHALL TERMINATE IMMEDIATELY AND ALL VESTED OPTIONS HELD BY SUCH EXECUTIVE,
NON-EMPLOYEE DIRECTOR OR DISCRETIONARY PARTICIPANT, AS THE CASE MAY BE, SHALL
REMAIN EXERCISABLE FOR SIX (6) MONTHS FOLLOWING THE DATE OF SUCH EVENT, BUT IN
NO EVENT LATER THAN THE EXPIRATION DATE OF SUCH OPTIONS AS SPECIFIED IN THE
APPLICABLE OPTION AGREEMENT.  IF THE OPTION IS NOT EXERCISED DURING THIS PERIOD,
IT SHALL BE VOID AND DEEMED TO HAVE BEEN FORFEITED AND BE OF NO FURTHER FORCE OR
EFFECT.

 

(F)                                    FORFEITURE BY REASON OF TERMINATION FOR
CAUSE OR WITHOUT GOOD REASON.

 

(I)                                     NOTWITHSTANDING THE EXERCISE PERIOD
DESCRIBED IN SECTION 6(B), IF THE EMPLOYMENT OR SERVICE OF A PARTICIPANT OR A
DIRECTOR IS TERMINATED FOR CAUSE BY THE COMPANY, ALL RIGHTS OR INTERESTS IN ANY
OPTION, REGARDLESS OF THE EXTENT TO WHICH IT MIGHT OTHERWISE HAVE BEEN VESTED
AND EXERCISABLE ON THE DATE OF SUCH TERMINATION FOR CAUSE, SHALL BE VOID AND
FORFEITED EFFECTIVE ON THE DATE OF SUCH TERMINATION FOR CAUSE, AND SUCH OPTION
SHALL NO LONGER BE EXERCISABLE TO ANY EXTENT WHATSOEVER.

 

(II)                                  UNLESS SPECIFICALLY PROVIDED OTHERWISE IN
THE OPTION AGREEMENT, IF THE CEO’S EMPLOYMENT IS TERMINATED BY THE CEO WITHOUT
GOOD REASON, ALL UNVESTED OPTIONS HELD BY THE CEO SHALL TERMINATE IMMEDIATELY
AND ALL VESTED OPTIONS HELD BY THE CEO SHALL REMAIN EXERCISABLE FOR THIRTY (30)
DAYS FOLLOWING TERMINATION, BUT IN NO EVENT LATER THAN THE EXPIRATION DATEOF
SUCH OPTION AS SPECIFIED IN THE APPLICABLE OPTION AGREEMENT.  IF THE OPTION IS
NOT EXERCISED DURING THIS PERIOD, IT SHALL BE VOID AND DEEMED TO HAVE BEEN
FORFEITED AND BE OF NO FURTHER FORCE OR EFFECT.

 

(III)                               UNLESS SPECIFICALLY PROVIDED OTHERWISE IN
THE OPTION AGREEMENT, IF THE EMPLOYMENT OF ANY PARTICIPANT OTHER THAN THE CEO IS
TERMINATED BY THE PARTICIPANT WITHOUT GOOD REASON, ALL VESTED AND UNVESTED
OPTIONS HELD BY THE PARTICIPANT SHALL TERMINATE IMMEDIATELY AND ALL RIGHTS OR
INTERESTS THEREIN SHALL BE VOID AND FORFEITED EFFECTIVE ON THE DATE OF SUCH
TERMINATION.

 

(G)                                 DISPOSITION OF TERMINATED STOCK OPTIONS.
 ANY SHARES SUBJECT TO OPTIONS WHICH HAVE BEEN TERMINATED AND FORFEITED AS
PROVIDED ABOVE SHALL NOT THEREAFTER BE ELIGIBLE FOR PURCHASE BY THE PARTICIPANT
BUT SHALL AGAIN BE AVAILABLE FOR GRANT BY THE BOARD OR THE COMMITTEE TO OTHER
PARTICIPANTS.

 

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7.                                       RESTRICTIONS ON RESALE OR DISPOSITION
OF SHARES.

 

(A)                                  IN GENERAL.  EXCEPT AS SPECIFICALLY
PROVIDED IN SECTIONS 6(E) AND 10, ANY SHARES PURCHASED UNDER THIS PLAN SHALL NOT
BE ASSIGNED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
BY A PARTICIPANT.

 

(B)                                 ISSUANCE OF SHARES AND COMPLIANCE WITH
SECURITIES LAWS.  THE SHARES ARE BEING OFFERED IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION PROVIDED BY THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND AN EXEMPTION FROM REGISTRATION PROVIDED BY
APPLICABLE STATE SECURITIES LAWS.  ACCORDINGLY, A PARTICIPANT MAY NOT SELL OR
TRANSFER THE SHARES TO ANY PERSON OTHER THAN THE COMPANY WITHOUT REGISTERING THE
SHARES UNDER THE SECURITIES ACT OR UNTIL THE PARTICIPANT HAS OBTAINED AN OPINION
OF LEGAL COUNSEL SATISFACTORY TO THE COMPANY THAT THE SALE OR DISPOSITION IS
EXEMPT FROM SUCH REGISTRATION REQUIREMENTS.  A PARTICIPANT HAS NO RIGHT AT ANY
TIME TO REQUIRE THE COMPANY TO REGISTER THE SHARES UNDER FEDERAL OR STATE
SECURITIES LAWS.  ANY PERSON PURCHASING SHARES UPON EXERCISE OF AN OPTION ISSUED
PURSUANT TO THE PLAN MAY BE REQUIRED TO MAKE SUCH REPRESENTATIONS AND FURNISH
SUCH INFORMATION AS MAY, IN THE OPINION OF COUNSEL FOR THE COMPANY, BE
APPROPRIATE TO PERMIT THE COMPANY, IN LIGHT OF THE EXISTENCE OR NONEXISTENCE
WITH RESPECT TO SUCH SHARES OF AN EFFECTIVE REGISTRATION UNDER THE SECURITIES
ACT, OR ANY SIMILAR STATE STATUTE, TO ISSUE THE SHARES IN COMPLIANCE WITH THE
PROVISIONS OF THOSE OR ANY COMPARABLE ACTS.  THESE RESTRICTIONS ARE IMPOSED BY
FEDERAL AND STATE SECURITIES LAWS.

 

(C)                                  SECURITIES RESTRICTIONS.  ALL CERTIFICATES
FOR SHARES DELIVERED UNDER THE PLAN SHALL BE SUBJECT TO SUCH STOCK-TRANSFER
ORDERS AND OTHER RESTRICTIONS AS THE COMMITTEE MAY DEEM ADVISABLE UNDER THE
RULES, REGULATIONS, AND OTHER REQUIREMENTS OF THE SECURITIES AND EXCHANGE
COMMISSION, ANY STOCK EXCHANGE UPON WHICH THE SHARES ARE THEN LISTED, AND ANY
APPLICABLE FEDERAL OR STATE SECURITIES LAW, AND THE COMMITTEE MAY CAUSE A LEGEND
OR LEGENDS TO BE PUT ON ANY SUCH CERTIFICATES TO MAKE APPROPRIATE REFERENCE TO
SUCH RESTRICTIONS.  IF THE COMMITTEE DETERMINES THAT THE ISSUANCE OF SHARES
HEREUNDER IS NOT IN COMPLIANCE WITH, OR SUBJECT TO AN EXEMPTION FROM, ANY
APPLICABLE FEDERAL OR STATE SECURITIES LAWS, SUCH SHARES SHALL NOT BE ISSUED
UNTIL SUCH TIME AS THE COMMITTEE DETERMINES THAT THE ISSUANCE IS PERMISSIBLE.

 

8.                                       NO CONTRACT OF EMPLOYMENT.  UNLESS
OTHERWISE EXPRESSED IN A SEPARATE WRITING SIGNED BY AN AUTHORIZED OFFICER OF THE
COMPANY, ALL EMPLOYEES ARE EMPLOYED FOR AN UNSPECIFIED PERIOD OF TIME AND ARE
CONSIDERED TO BE “AT-WILL EMPLOYEES.” NOTHING IN THIS PLAN SHALL CONFER UPON ANY
PARTICIPANT THE RIGHT TO CONTINUE IN THE EMPLOY OF THE COMPANY OR ANY
SUBSIDIARY, NOR SHALL IT LIMIT OR RESTRICT IN ANY WAY THE RIGHT OF THE COMPANY
OR ANY SUBSIDIARY TO DISCHARGE THE PARTICIPANT AT ANY TIME FOR ANY REASON
WHATSOEVER, WITH OR WITHOUT CAUSE.

 

9.                                       NO RIGHTS AS A STOCKHOLDER.  A
PARTICIPANT SHALL HAVE NO RIGHTS AS A STOCKHOLDER WITH RESPECT TO ANY SHARES
SUBJECT TO AN OPTION UNLESS AND UNTIL THE PARTICIPANT DULY EXERCISES THE OPTION,
MAKES FULL PAYMENT OF THE OPTION PRICE AND CERTIFICATES EVIDENCING OWNERSHIP OF
SHARES ARE ISSUED TO THE PARTICIPANT.  THEREAFTER, CASH DIVIDENDS, STOCK
DIVIDENDS, STOCK SPLITS AND OTHER SECURITIES AND RIGHTS TO SUBSCRIBE SHALL BE
PAID OR DISTRIBUTED WITH RESPECT TO SHARES ACQUIRED PURSUANT TO THE PLAN IN THE
SAME MANNER AS SUCH ITEMS ARE PAID OR DISTRIBUTED TO OTHER SHAREHOLDERS OF THE
COMPANY.  ADJUSTMENTS TO THE NUMBER AND KIND OF SHARES IN THE EVENT OF CERTAIN
TRANSACTIONS SHALL BE MADE AS DESCRIBED IN SECTION 5(B).

 

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10.                                 NONTRANSFERABILITY OF OPTIONS; DEATH OR
DISABILITY OF PARTICIPANT.  NO OPTION ACQUIRED BY A PARTICIPANT UNDER THE PLAN
SHALL BE ASSIGNABLE OR TRANSFERABLE BY A PARTICIPANT, OTHER THAN BY WILL OR THE
LAWS OF DESCENT AND DISTRIBUTION, AND SUCH OPTIONS ARE EXERCISABLE, DURING HIS
LIFETIME, ONLY BY THE PARTICIPANT.  IN THE EVENT OF THE PARTICIPANT’S DEATH OR
DISABILITY, THE OPTION MAY BE EXERCISED BY THE PERSONAL REPRESENTATIVE OF THE
PARTICIPANT’S ESTATE OR IF NO PERSONAL REPRESENTATIVE HAS BEEN APPOINTED, BY THE
SUCCESSOR(S) IN INTEREST DETERMINED UNDER THE PARTICIPANT’S WILL OR UNDER THE
APPLICABLE LAWS OF DESCENT AND DISTRIBUTION DURING THE EXERCISE PERIOD SET FORTH
IN SECTION 6(E) HEREIN.  DURING SUCH EXERCISE PERIOD AND ONLY IF PRICE
QUOTATIONS FOR THE SHARES ARE NOT AVAILABLE ON ANY EXCHANGE OR NATIONAL MARKET
SYSTEM, IN THE CASE OF THE DEATH OR DISABILITY OF THE CEO, AN EXECUTIVE, OR A
DISCRETIONARY PARTICIPANT, SUCH INDIVIDUAL IN THE CASE OF DISABILITY, OR THE
BENEFICIAL HOLDER OF SUCH OPTION IN THE CASE OF DEATH, SHALL HAVE THE RIGHT
DURING THE EXERCISE PERIOD PROVIDED IN SECTION 6(E)(I) OR (II), AS APPLICABLE,
AND IN ACCORDANCE WITH PROCEDURES THAT THE COMMITTEE, IN ITS DISCRETION, MAY
ESTABLISH FROM TIME TO TIME, TO DEMAND THAT THE COMPANY PURCHASE EACH VESTED
OPTION AT A VALUE EQUAL TO THE VALUE OF THE DIFFERENCE BETWEEN THE FAIR MARKET
VALUE OF THE SHARES OF THE COMPANY AND THE EXERCISE PRICE OF SUCH OPTIONS.

 

11.                                 CHANGE IN CONTROL.  IN THE EVENT OF A
“CHANGE IN CONTROL” (AS DEFINED BELOW), ALL OPTIONS SHALL BECOME EXERCISABLE AS
TO ALL SHARES COVERED THEREBY WITHOUT REGARD TO THE NORMAL VESTING SCHEDULE OF
THE OPTIONS: (I) IMMEDIATELY UPON THE CHANGE IN CONTROL IF THE CHANGE IN CONTROL
IS OF THE NATURE DESCRIBED IN SECTIONS 11(A) OR (B); OR (II) STARTING ON A DATE
WHICH IS AT LEAST THIRTY (30) DAYS PRIOR TO SUCH CHANGE IN CONTROL IF THE CHANGE
IN CONTROL IS OF THE NATURE DESCRIBED IN SECTIONS 11(C) OR (D).  IF THE OPTIONS
WILL CONTINUE TO BE OUTSTANDING FOLLOWING THE CHANGE IN CONTROL, SUCH OPTIONS
WILL REMAIN FULLY EXERCISABLE FOLLOWING THE CHANGE IN CONTROL AND WILL NOT BE
SUBJECT TO ANY OTHER VESTING SCHEDULE, PROVIDED THAT SUCH OPTIONS WILL EXPIRE ON
THE EXPIRATION DATE AS SPECIFIED IN THE APPLICABLE OPTION AGREEMENT.  “CHANGE IN
CONTROL” SHALL MEAN THE OCCURRENCE OF ANY ONE OF THE FOLLOWING EVENTS:

 

(A)                                  ANY “PERSON” OTHER THAN AN EXISTING
SUBSTANTIAL SHAREHOLDER (AS DEFINED BELOW) BECOMES THE BENEFICIAL OWNER,
DIRECTLY OR INDIRECTLY, OF SECURITIES OF THE COMPANY REPRESENTING A MAJORITY OF
THE COMBINED VOTING POWER OF THE COMPANY’S THEN OUTSTANDING SECURITIES (ASSUMING
CONVERSION OF ALL OUTSTANDING NON-VOTING SECURITIES INTO VOTING SECURITIES AND
THE EXERCISE OF ALL OUTSTANDING OPTIONS OR OTHER CONVERTIBLE SECURITIES);

 

(B)                                 THE FOLLOWING INDIVIDUALS CEASE FOR ANY
REASON TO CONSTITUTE A MAJORITY OF THE NUMBER OF DIRECTORS THEN SERVING:
INDIVIDUALS WHO, ON THE EFFECTIVE DATE, CONSTITUTE THE BOARD AND ANY NEW
DIRECTOR (OTHER THAN A DIRECTOR WHOSE INITIAL ASSUMPTION OF OFFICE IS IN
CONNECTION WITH AN ACTUAL OR THREATENED ELECTION CONTEST, INCLUDING BUT NOT
LIMITED TO, A CONSENT SOLICITATION, RELATING TO THE ELECTION OF DIRECTORS OF THE
COMPANY) WHOSE APPOINTMENT OR ELECTION BY THE BOARD OR NOMINATION FOR ELECTION
BY THE COMPANY’S STOCKHOLDERS WAS APPROVED OR RECOMMENDED BY A VOTE OF AT LEAST
TWO-THIRDS (2/3) OF THE DIRECTORS THEN STILL IN OFFICE WHO EITHER WERE DIRECTORS
ON THE EFFECTIVE DATE OR WHOSE APPOINTMENT, ELECTION OR NOMINATION FOR ELECTION
WAS PREVIOUSLY SO APPROVED OR RECOMMENDED;

 

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(C)                                  THE CONSUMMATION OF A MERGER OR
CONSOLIDATION OF THE COMPANY OR ANY DIRECT OR INDIRECT SUBSIDIARY OF THE COMPANY
WITH ANY OTHER CORPORATION (OTHER THAN WITH AN EXISTING SUBSTANTIAL SHAREHOLDER
OR ANY OF ITS AFFILIATES), OTHER THAN (X) A MERGER OR CONSOLIDATION WHICH WOULD
RESULT IN THE VOTING SECURITIES OF THE COMPANY OUTSTANDING IMMEDIATELY PRIOR TO
SUCH MERGER OR CONSOLIDATION CONTINUING TO REPRESENT, EITHER BY REMAINING
OUTSTANDING OR BY BEING CONVERTED INTO VOTING SECURITIES OF THE SURVIVING ENTITY
OR ANY PARENT THEREOF, A MAJORITY OF THE COMBINED VOTING POWER OF THE SECURITIES
OF THE COMPANY OR SUCH SURVIVING ENTITY OR ANY PARENT THEREOF OUTSTANDING
IMMEDIATELY AFTER SUCH MERGER OR CONSOLIDATION, OR (Y) A MERGER OR CONSOLIDATION
EFFECTED TO IMPLEMENT A RECAPITALIZATION OF THE COMPANY (OR SIMILAR TRANSACTION)
IN WHICH NO PERSON, IS OR BECOMES THE BENEFICIAL OWNER, DIRECTLY OR INDIRECTLY,
OF SECURITIES OF THE COMPANY REPRESENTING A MAJORITY OF THE COMBINED VOTING
POWER OF THE COMPANY’S THEN OUTSTANDING SECURITIES; OR

 

(D)                                 THE STOCKHOLDERS OF THE COMPANY APPROVE A
PLAN OF COMPLETE LIQUIDATION OR DISSOLUTION OF THE COMPANY OR THERE IS
CONSUMMATED AN AGREEMENT FOR THE SALE OR DISPOSITION BY THE COMPANY OF ALL OR
SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS, OTHER THAN A SALE OR DISPOSITION BY
THE COMPANY OF ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS TO AN ENTITY
CONTROLLED BY AN EXISTING SUBSTANTIAL SHAREHOLDER OR ANY OF ITS AFFILIATES, OR
TO AN ENTITY A MAJORITY OF THE COMBINED VOTING POWER OF THE VOTING SECURITIES OF
WHICH IS OWNED BY SUBSTANTIALLY ALL OF THE STOCKHOLDERS OF THE COMPANY
IMMEDIATELY PRIOR TO SUCH SALE IN SUBSTANTIALLY THE SAME PROPORTIONS AS THEIR
OWNERSHIP OF THE COMPANY IMMEDIATELY PRIOR TO SUCH SALE.  AS USED HEREIN THE
TERM “EXISTING SUBSTANTIAL SHAREHOLDER” MEANS ANY PERSON THAT ALONE OR TOGETHER
WITH ITS AFFILIATES SHALL BE THE BENEFICIAL OWNER OF OR ENTITLED TO RECEIVE MORE
THAN 15% OF NEW COMMON STOCK AS OF THE EFFECTIVE DATE.  AS USED HEREIN THE TERM
“BENEFICIAL OWNER” SHALL HAVE THE MEANING SET FORTH IN RULE 13D-3 UNDER THE
EXCHANGE ACT.  AS USED HEREIN THE TERM “PERSON” SHALL HAVE THE MEANING GIVEN IN
SECTION 3(A)(9) OF THE EXCHANGE ACT AND USED IN SECTIONS 13(D) AND
14(D) THEREOF, EXCEPT THAT SUCH TERM SHALL NOT INCLUDE (I) THE COMPANY OR ANY
SUBSIDIARY OF THE COMPANY, (II) A TRUSTEE OR OTHER FIDUCIARY HOLDING SECURITIES
UNDER AN EMPLOYEE BENEFIT PLAN OF THE COMPANY OR ANY OF ITS AFFILIATES, (III) AN
UNDERWRITER TEMPORARILY HOLDING SECURITIES PURSUANT TO AN OFFERING OF SUCH
SECURITIES OR (IV) A CORPORATION OWNED, DIRECTLY OR INDIRECTLY, BY SUBSTANTIALLY
ALL OF THE STOCKHOLDERS OF THE COMPANY IN SUBSTANTIALLY THE SAME PROPORTIONS AS
THEIR OWNERSHIP OF STOCK OF THE COMPANY.

 

12.                                 AMENDMENTS; DISCONTINUANCE OF PLAN.  THE
BOARD MAY FROM TIME TO TIME ALTER, AMEND, SUSPEND, OR DISCONTINUE THE PLAN,
INCLUDING, WHERE APPLICABLE, ANY MODIFICATIONS OR AMENDMENTS AS IT SHALL DEEM
ADVISABLE FOR ANY REASON, INCLUDING SATISFYING THE REQUIREMENTS OF ANY LAW OR
REGULATION OR ANY CHANGE THEREOF; PROVIDED, HOWEVER, EXCEPT AS PROVIDED IN
SECTION 5, THAT NO SUCH ACTION SHALL ADVERSELY AFFECT THE RIGHTS AND OBLIGATIONS
WITH RESPECT TO OPTIONS AT THAT TIME OUTSTANDING UNDER THE PLAN; AND PROVIDED
FURTHER, THAT NO SUCH ACTION SHALL, WITHOUT THE APPROVAL OF THE STOCKHOLDERS OF
THE COMPANY, (A) INCREASE THE MAXIMUM NUMBER OF SHARES OF COMMON STOCK THAT MAY
BE MADE SUBJECT TO OPTIONS (UNLESS NECESSARY TO EFFECT THE ADJUSTMENTS REQUIRED
BY SECTION 5(B)).

 

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13.                                 WITHHOLDING TAXES; TAXES SATISFIED BY
WITHHOLDING OPTIONED SHARES.

 

(A)                                  GENERALLY.  THE COMPANY OR ANY SUBSIDIARY
MAY TAKE SUCH STEPS AS IT MAY DEEM NECESSARY OR APPROPRIATE FOR THE WITHHOLDING
OF ANY TAXES WHICH THE COMPANY OR ANY SUBSIDIARY IS REQUIRED BY LAW OR
REGULATION OF ANY GOVERNMENTAL AUTHORITY, WHETHER FEDERAL, STATE, OR LOCAL,
DOMESTIC OR FOREIGN, TO WITHHOLD IN CONNECTION WITH ANY OPTION INCLUDING, BUT
NOT LIMITED TO, REQUIRING THE PARTICIPANT TO PAY SUCH TAX AT THE TIME OF
EXERCISE OR THE WITHHOLDING OF ISSUANCE OF SHARES TO BE ISSUED UPON THE EXERCISE
OF ANY OPTION UNTIL THE PARTICIPANT REIMBURSES THE COMPANY FOR THE AMOUNT THE
COMPANY IS REQUIRED TO WITHHOLD WITH RESPECT TO SUCH TAXES, OR, AT THE COMPANY’S
SOLE DISCRETION, CANCELING ANY PORTION OF SUCH ISSUANCE OF SHARES IN ANY AMOUNT
SUFFICIENT TO REIMBURSE ITSELF FOR THE AMOUNT IT IS REQUIRED TO SO WITHHOLD.

 

(B)                                 SATISFYING TAXES BY WITHHOLDING OPTIONED
SHARES.  OPTION AGREEMENTS UNDER THE PLAN MAY, AT THE DISCRETION OF THE BOARD OR
THE COMMITTEE, CONTAIN A PROVISION TO THE EFFECT THAT ALL FEDERAL AND STATE
TAXES REQUIRED TO BE WITHHELD OR COLLECTED FROM A PARTICIPANT UPON EXERCISE OF
AN OPTION MAY BE SATISFIED BY THE WITHHOLDING OF A SUFFICIENT NUMBER OF
EXERCISED SHARES THAT ARE SUBJECT TO THE OPTION WHICH, VALUED AT FAIR MARKET
VALUE ON THE DATE OF EXERCISE, WOULD BE EQUAL TO THE TOTAL WITHHOLDING
OBLIGATION OF THE PARTICIPANT FOR THE EXERCISE OF SUCH OPTION; PROVIDED,
HOWEVER, THAT IF THE COMPANY IS A PUBLIC REPORTING CORPORATION, NO PERSON WHO IS
AN “OFFICER” OF THE COMPANY, AS SUCH TERM IS DEFINED IN RULE 3B-2 UNDER THE
EXCHANGE ACT, MAY ELECT TO SATISFY THE WITHHOLDING OF FEDERAL AND STATE TAXES
UPON THE EXERCISE OF AN OPTION BY THE WITHHOLDING OF EXERCISED SHARES THAT ARE
SUBJECT TO THE OPTION, UNLESS SUCH ELECTION IS MADE EITHER (I) AT LEAST SIX
(6) MONTHS PRIOR TO THE DATE THAT THE EXERCISE OF THE OPTION BECOMES A TAXABLE
EVENT OR (II) DURING ANY OF THE PERIODS BEGINNING ON THE THIRD BUSINESS DAY
FOLLOWING THE DATE ON WHICH THE COMPANY ISSUES A NEWS RELEASE CONTAINING THE
OPERATING RESULTS OF A FISCAL QUARTER OR FISCAL YEAR AND ENDING ON THE TWELFTH
BUSINESS DAY FOLLOWING SUCH DATE.  SUCH ELECTION SHALL BE DEEMED MADE UPON
RECEIPT OF NOTICE THEREOF BY AN OFFICER OF THE COMPANY, BY MAIL, PERSONAL
DELIVERY, OR BY FACSIMILE MESSAGE, AND SHALL (UNLESS NOTICE TO THE CONTRARY IS
PROVIDED TO THE COMPANY) BE OPERATIVE FOR ALL OPTION EXERCISES WHICH OCCUR
DURING THE TWELVE-MONTH PERIOD FOLLOWING THE ELECTION.

 

14.                                 EFFECTIVE DATE AND TERM OF PLAN.  THE PLAN
IS EFFECTIVE AS OF THE EFFECTIVE DATE AND OPTIONS MAY BE GRANTED AT ANY TIME ON
OR AFTER SUCH DATE.  NO OPTIONS SHALL BE GRANTED SUBSEQUENT TO AUGUST 30, 2014
(WHICH IS TEN (10) YEARS AFTER THE EFFECTIVE DATE OF THE PLAN).

 

[Exhibit A - List of Executives has been omitted from the Agreement as filed
with the Securities and Exchange Commission (the “SEC”).  The omitted
information is filed as Exhibit 10.22 to the Registration Statement.  The
Registrant will furnish supplementally a copy of any of the omitted exhibit to
the SEC upon request from the SEC.]

 

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