Exhibit 10.14

SURGICAL CARE AFFILIATES, INC.

2013 OMNIBUS LONG-TERM INCENTIVE PLAN

(Dated of as October 24, 2013)

 

1. Purpose of the Plan

This Plan is intended to promote the interests of the Company and its
shareholders by providing employees, directors and consultants of the Company
and its Subsidiaries, who are largely responsible for the management, growth and
protection of the business of the Company and its Subsidiaries, with appropriate
incentives and rewards to encourage them to continue in the service of the
Company and its Subsidiaries.

 

2. Definitions

As used in the Plan or in any instrument governing the terms of any Incentive
Award, the following definitions apply to the terms indicated below:

(a) “Affiliate” means, with respect to a specified person, a person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the specified person.

(b) “Award Agreement” means a written agreement, in a form determined by the
Committee from time to time, entered into by each Participant and the Company,
evidencing the grant of an Incentive Award under the Plan.

(c) “Board of Directors” means the Board of Directors of the Company.

(d) “Cash Incentive Award” means an award granted to a Participant pursuant to
Section 8 of the Plan.

(e) “Change in Control” means (i) any one person, or more than one person acting
as a group (as defined under Treasury Regulation § 1.409A-3(i)(5)(v)(B)), other
than the Company, TPG or any employee benefit plan sponsored by the Company,
acquires ownership of stock of the Company that, together with stock held by
such person or group, constitutes more than fifty percent (50%) of the total
fair market value or total Voting Power of the stock of the Company; or (ii) any
one person, or more than one person acting as a group (as defined under Treasury
Regulation § 1.409A-3(i)(5)(v)(B)), other than the Company or any employee
benefit plan sponsored by the Company, acquires (or has acquired during the
twelve (12) month period ending on the date of the most recent acquisition by
such person or persons) ownership of stock of the Company possessing fifty
percent (50%) or more of the total Voting Power of the stock of the Company; or
(iii) a majority of members of the Board of Directors is replaced during any
twelve (12) month period by directors whose appointment or election is not
endorsed by a majority of the members of the Board of Directors before the date
of each appointment or election; or (iv) any one person, or more than one person
acting as a group (as defined in Treasury Regulation § 1.409A-3(i)(5)(v)(B))
acquires (or has acquired during the twelve (12)

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month period ending on the date of the most recent acquisition by such person or
persons) assets from the Company that have a total gross fair market value equal
to or more than 40 percent of the total gross fair market value of all of the
assets of the Company immediately before such acquisition or acquisitions. For
purposes of subsection (iv), gross fair market value means the value of the
assets of the Company, or the value of the assets being disposed of, determined
without regard to any liabilities associated with such assets. The foregoing
subsections (i) through (iv) shall be interpreted in a manner that is consistent
with the Treasury Regulations promulgated pursuant to Section 409A of the Code
so that all, and only, such transactions or events that could qualify as a
“change in control event” within the meaning of Treasury Regulation
§1.409A-3(i)(5)(i) will be deemed to be a Change in Control for purposes of this
Plan.

(f) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and all regulations, interpretations and administrative guidance issued
thereunder.

(g) “Committee” means the Compensation Committee of the Board of Directors or
such other committee as the Board of Directors shall appoint from time to time
to administer the Plan and to otherwise exercise and perform the authority and
functions assigned to the Committee under the terms of the Plan.

(h) “Common Stock” means the Company’s common stock, $0.01 par value per share,
or any other security into which the common stock shall be changed pursuant to
the adjustment provisions of Section 10 of the Plan.

(i) “Company” means Surgical Care Affiliates, Inc., a Delaware corporation and
any successors thereto.

(j) “Covered Employee” means each Participant who is an executive officer
(within the meaning of Rule 3b-7 under the Exchange Act) of the Company.

(k) “Deferred Compensation Plan” means any plan, agreement or arrangement
maintained by the Company from time to time that provides opportunities for
deferral of compensation.

(l) “Effective Date” means the date the Plan is adopted.

(m) “Employment” means the period during which an individual is classified or
treated by the Company as an employee or other service provider of the Company,
as applicable.

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

(o) “Fair Market Value” means, with respect to a share of Common Stock, as of
the applicable date of determination or if the market is not open for trading on
such date, the immediately preceding day on which the market is open for
trading, (i) the average of the high and low sales prices as reported on the
date of determination on the principal securities exchange

 

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on which shares of Common Stock are then listed or admitted to trading or
(ii) if not so reported, the average volume-weighted trading price as reported
on NYSE on the date of determination. In the event that the price of a share of
Common Stock shall not be so reported, the Fair Market Value of a share of
Common Stock shall be determined by the Committee in its sole discretion.

(p) “Incentive Award” means one or more Stock Incentive Awards and/or Cash
Incentive Awards, collectively.

(q) “Option” means a stock option to purchase shares of Common Stock granted to
a Participant pursuant to Section 6.

(r) “Other Stock-Based Award” means an award granted to a Participant pursuant
to Section 7.

(s) “Participant” means an employee, consultant or director of the Company or
one of its Subsidiaries who is eligible to participate in the Plan and to whom
one or more Incentive Awards have been granted pursuant to the Plan and have not
been fully settled or cancelled and, following the death of any such Person, his
successors, heirs, executors and administrators, as the case may be.

(t) “Performance-Based Award” means any Incentive Award pursuant to which any
compensation paid is intended to be Performance-Based Compensation.

(u) “Performance-Based Compensation” means compensation that satisfies the
requirements of Section 162(m) of the Code for deductibility of “qualified
performance-based compensation.”

(v) “Performance Measures” means such measures as are described in Section 9 on
which performance goals are based in order to qualify certain awards granted
hereunder as Performance-Based Compensation.

(w) “Performance Percentage” means the factor determined pursuant to a
Performance Schedule that is to be applied to a Target Award and that reflects
actual performance compared to the Performance Target.

(x) “Performance Period” means the period of time during which the performance
goals must be met in order to determine the degree of payout and/or vesting with
respect to an Incentive Award that is intended to qualify as Performance-Based
Compensation. Performance Periods may be overlapping.

(y) “Performance Schedule” means a schedule or other objective method for
determining the applicable Performance Percentage to be applied to each Target
Award.

(z) “Performance Target” means performance goals and objectives with respect to
a Performance Period.

 

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(aa) “Person” means a “person” as such term is used in Section 13(d) and 14(d)
of the Exchange Act, including any “group” within the meaning of
Section 13(d)(3) under the Exchange Act.

(bb) “Plan” means this 2013 Omnibus Long-Term Incentive Plan, as it may be
amended from time to time.

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

(dd) “Stock Incentive Award” means an Option or Other Stock-Based Award granted
pursuant to the terms of the Plan.

(ee) “Subsidiary” means any “subsidiary” within the meaning of Rule 405 under
the Securities Act.

(ff) “Target Award” means target payout amount for an Incentive Award.

(gg) “TPG” means TPG Partners V, L.P., TPG FOF V-A, L.P., TPG FOF V-B, L.P. and
their respective Affiliates.

(hh) “Voting Power” means the number of votes available to be cast (determined
by reference to the maximum number of votes entitled to be cast by the holders
of Voting Securities, or by the holders of any Voting Securities for which other
Voting Securities may be convertible, exercisable or exchangeable, upon any
matter submitted to stockholders where the holders of all Voting Securities vote
together as a single class) by the holders of Voting Securities.

(ii) “Voting Securities” means any securities or other ownership interests of an
entity entitled, or which may be entitled, to matters submitted to Persons
holding such securities or other ownership interests in such entity generally
(whether or not entitled to vote in the general election of directors), or
securities or other ownership interests which are convertible into, or
exercisable in exchange for, such Voting Securities, whether or not subject to
the passage of time or any contingency.

 

3. Stock Subject to the Plan and Limitations on Cash Incentive Awards

(a) Stock Subject to the Plan

(i) The maximum number of shares of Common Stock that may be covered by
Incentive Awards granted under the Plan shall not exceed 2,220,000 shares of
Common Stock in the aggregate. Out of such aggregate, the maximum number of
shares of Common Stock that may be covered by Options that are designated as
“incentive stock options” within the meaning of Section 422 of the Code shall
not exceed 2,220,000 shares of Common Stock. The maximum number of shares
referred to in the preceding sentences of this Section 3(a)(i) shall in each
case be subject to adjustment as provided in Section 10 and the following

 

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provisions of this Section 3. Of the shares described, one hundred percent
(100%) may be delivered in connection with “full-value Awards,” meaning Awards
other than Options, SARs, or Awards for which the Participant pays the intrinsic
value either directly or in exchange for (or by foregoing) a right to receive a
cash payment from the Company equal to the intrinsic value of the Award. Shares
of Common Stock issued under the Plan may be either authorized and unissued
shares, treasury shares, shares purchased by the Company in the open market, or
any combination of the preceding categories as the Committee determines in its
sole discretion.

(ii) For purposes of Section 3(a)(i), shares of Common Stock covered by
Incentive Awards shall only be counted as used to the extent they are actually
issued and delivered to a Participant (or such Participant’s permitted
transferees as described in the Plan) pursuant to the Plan. In addition, if
shares of Common Stock are issued subject to conditions which may result in the
forfeiture, cancellation or return of such shares to the Company, any portion of
the shares forfeited, cancelled or returned shall be treated as not issued
pursuant to the Plan. In addition, if shares of Common Stock owned by a
Participant (or such Participant’s permitted transferees as described in the
Plan) are tendered (either actually or through attestation) to the Company in
payment of any obligation in connection with an Incentive Award, the number of
shares tendered shall be added to the number of shares of Common Stock that are
available for delivery under the Plan. Shares of Common Stock covered by
Incentive Awards granted pursuant to the Plan in connection with the assumption,
replacement, conversion or adjustment of outstanding equity-based awards in the
context of a corporate acquisition or merger (within the meaning of NASDAQ
Listing Rule 5635) shall not count as used under the Plan for purposes of this
Section 3.

(b) Individual Award Limits

Subject to adjustment as provided in Section 10, the maximum number of shares of
Common Stock that may be covered by Incentive Awards granted under the Plan to
any Covered Employee in any calendar year shall not exceed 450,000 shares. The
amount payable to any Covered Employee with respect to any calendar year for all
Cash Incentive Awards shall not exceed $3,500,000. For purposes of the preceding
sentences, the phrase “amount payable with respect to any calendar year” means
the amount of cash, or value of other property, required to be paid based on the
achievement of applicable Performance Measures during a Performance Period that
ends in such calendar year, disregarding any deferral pursuant to the terms of a
Deferred Compensation Plan unless the terms of the deferral are intended to
comply with the requirements for qualified performance-based compensation under
Section 162(m) of the Code.

 

4. Administration of the Plan

(a) The Plan shall be administered by a Committee of the Board of Directors
consisting of two or more persons, each of whom, solely to the extent required
by applicable law,

 

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qualifies as a “non-employee director” (within the meaning of Rule 16b-3
promulgated under Section 16 of the Exchange Act), an “outside director” within
the meaning of Treasury Regulation Section 1.162-27(e)(3) and as “independent”
as required by NASDAQ or any security exchange on which the Common Stock is
listed. From time to time, the Board may increase or decrease the size of the
Committee, add additional members to, remove members (with or without cause)
from, appoint new members in substitution therefor, and fill vacancies, however
caused, in the Committee. The Committee shall, consistent with the terms of the
Plan, from time to time designate those individuals who shall be granted
Incentive Awards under the Plan and the amount, type and other terms and
conditions of such Incentive Awards. All of the powers and responsibilities of
the Committee under the Plan may be delegated by the Committee, in writing, to
any subcommittee thereof, in which case the acts of such subcommittee shall be
deemed to be acts of the Committee hereunder. The Committee may also from time
to time authorize a subcommittee consisting of one or more members of the Board
of Directors (including members who are employees of the Company or one of its
Subsidiaries) or employees of the Company or one of its Subsidiaries to grant
Incentive Awards to persons who are not “executive officers” of the Company
(within the meaning of Rule 16a-1 under the Exchange Act), subject to such
restrictions and limitations as the Committee may specify and to the
requirements of Section 157 of the Delaware General Corporation Law.

(b) The Committee shall have full discretionary authority to administer the
Plan, including discretionary authority to interpret and construe any and all
provisions of the Plan and any Award Agreement thereunder, and to adopt, amend
and rescind from time to time such rules and regulations for the administration
of the Plan, including rules and regulations related to sub-plans established
for the purpose of satisfying applicable foreign laws and/or qualifying for
preferred tax treatment under applicable foreign tax laws, as the Committee may
deem necessary or appropriate. Decisions of the Committee shall be final,
binding and conclusive on all parties. For the avoidance of doubt, the Committee
may exercise all discretion granted to it under the Plan in a non-uniform manner
among Participants.

(c) The Committee may delegate the administration of the Plan to one or more
officers or employees of the Company or one of its Subsidiaries, and such
administrator(s) may have the authority to execute and distribute Award
Agreements, to maintain records relating to Incentive Awards, to process or
oversee the issuance of Common Stock under Incentive Awards, to interpret and
administer the terms of Incentive Awards, and to take such other actions as may
be necessary or appropriate for the administration of the Plan and of Incentive
Awards under the Plan, provided that in no case shall any such administrator be
authorized (i) to grant Incentive Awards under the Plan (except in connection
with any delegation made by the Committee pursuant to Section 4(a)), (ii) to
take any action that would cause Incentive Awards intended to qualify as
Performance-Based Compensation to fail to so qualify, (iii) to take any action
inconsistent with Section 409A of the Code or (iv) to take any action
inconsistent with applicable provisions of the Delaware General Corporation Law.
Any action by any such administrator within the scope of its delegation shall be
deemed for all purposes to have been taken by the Committee and, except as
otherwise specifically provided, references in this Plan to the Committee shall
include any such administrator. The Committee and, to the extent it so provides,

 

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any subcommittee, shall have sole authority to determine whether to review any
actions and/or interpretations of any such administrator, and if the Committee
shall decide to conduct such a review, any such actions and/or interpretations
of any such administrator shall be subject to approval, disapproval, or
modification by the Committee.

(d) On or after the date of grant of an Incentive Award under the Plan, the
Committee may (i) accelerate the date on which any such Incentive Award becomes
vested, exercisable or transferable, as the case may be, (ii) extend the term of
any such Incentive Award, including, without limitation, extending the period
following a termination of a Participant’s Employment during which any such
Incentive Award may remain outstanding, (iii) waive any conditions to the
vesting, exercisability or transferability, as the case may be, of any such
Incentive Award or (iv) provide for the payment of dividends or dividend
equivalents with respect to any such Incentive Award; provided, that the
Committee shall not have any such authority to the extent that the grant of such
authority would cause any tax to become due under Section 409A of the Code.
Notwithstanding anything herein to the contrary, the Company shall not reprice
any stock option (within the meaning of NASDAQ Listing Rule 5635(c) and any
other formal or informal guidance issued by NASDAQ) without the approval of the
shareholders of the Company.

(e) The Company shall pay any amount payable with respect to an Incentive Award
in accordance with the terms of such Incentive Award, provided that the
Committee may, in its discretion, defer the payment of amounts payable with
respect to an Incentive Award subject to and in accordance with the terms of a
Deferred Compensation Plan.

(f) No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated, against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, unless, in either case, such action,
omission or determination was taken or made by such member, director or employee
in bad faith and without reasonable belief that it was in the best interests of
the Company.

 

5. Eligibility

The Persons who shall be eligible to receive Incentive Awards pursuant to the
Plan shall be those employees, consultants and directors of the Company or one
of its Subsidiaries whom the Committee shall select from time to time, including
officers of the Company or one of its Subsidiaries, whether or not they are
directors. Each Incentive Award granted under the Plan shall be evidenced by an
Award Agreement.

 

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6. Options

The Committee may from time to time grant Options on such terms as it shall
determine, subject to the terms and conditions set forth in the Plan. The Award
Agreement shall clearly identify such Option as either an “incentive stock
option” within the meaning of Section 422 of the Code or as a non-qualified
stock option.

(a) Exercise Price

The exercise price per share of Common Stock covered by any Option shall be not
less than one hundred percent (100%) of the Fair Market Value of a share of
Common Stock on the date on which such Option is granted.

(b) Term and Exercise of Options

(i) Each Option shall become vested and exercisable on such date or dates,
during such period and for such number of shares of Common Stock as shall be
determined by the Committee on or after the date such Option is granted;
provided, however that no Option shall be exercisable after the expiration of
ten (10) years from the date such Option is granted; and, provided, further,
that each Option shall be subject to earlier termination, expiration or
cancellation as provided in the Plan or the Award Agreement.

(ii) Each Option shall be exercisable in whole or in part; provided, however
that no partial exercise of a Option shall be for an aggregate exercise price of
less than $1,000. The partial exercise of an Option shall not cause the
expiration, termination or cancellation of the remaining portion thereof.

(iii) An Option shall be exercised by such methods and procedures as the
Committee determines from time to time, including without limitation through net
physical settlement or other method of cashless exercise.

(c) Special Rules for Incentive Stock Options

(i) The aggregate Fair Market Value of shares of Common Stock with respect to
which “incentive stock options” (within the meaning of Section 422 of the Code)
are exercisable for the first time by a Participant during any calendar year
under the Plan and any other stock option plan of the Company or any of its
“subsidiaries” (within the meaning of Section 424 of the Code) shall not exceed
$100,000. Such Fair Market Value shall be determined as of the date on which
each such incentive stock option is granted. In the event that the aggregate
Fair Market Value of shares of Common Stock with respect to such incentive stock
options exceeds $100,000, then incentive stock options granted hereunder to such
Participant shall, to the extent and in the order required by regulations
promulgated under the Code (or any other authority having the force of
regulations), automatically be deemed to be non-qualified stock options, but all

 

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other terms and provisions of such incentive stock options shall remain
unchanged. In the absence of such regulations (and authority), or in the event
such regulations (or authority) require or permit a designation of the Options
which shall cease to constitute incentive stock options, incentive stock options
granted hereunder shall, to the extent of such excess and in the order in which
they were granted, automatically be deemed to be non-qualified stock options,
but all other terms and provisions of such incentive stock options shall remain
unchanged.

(ii) Incentive stock options may only be granted to individuals who are
employees of the Company or its “subsidiaries” (within the meaning of
Section 424 of the Code). No incentive stock option may be granted to an
individual if, at the time of the proposed grant, such individual owns stock
possessing more than ten percent of the total combined Voting Power of all
classes of stock of the Company or any of its “subsidiaries” (within the meaning
of Section 424 of the Code), unless (A) the exercise price of such incentive
stock option is at least one hundred and ten percent (110%) of the Fair Market
Value of a share of Common Stock at the time such incentive stock option is
granted and (B) such incentive stock option is not exercisable after the
expiration of five (5) years from the date such incentive stock option is
granted.

 

7. Other Stock-Based Awards

The Committee may from time to time grant equity-based or equity-related awards
not otherwise described herein in such amounts and on such terms as it shall
determine, subject to the terms and conditions set forth in the Plan. Without
limiting the generality of the preceding sentence, each such Other Stock-Based
Award may (i) involve the transfer of actual shares of Common Stock to
Participants, either at the time of grant or thereafter, or payment in cash or
otherwise of amounts based on the value of shares of Common Stock, (ii) be
subject to performance-based and/or service-based conditions, (iii) be in the
form of stock appreciation rights, phantom stock, restricted stock, restricted
stock units, performance shares, deferred share units or share-denominated
performance units, (iv) be designed to comply with applicable laws, including
jurisdictions other than the United States and (v) be designed to qualify as
Performance-Based Compensation; provided, that each Other Stock-Based Award
shall be denominated in, or shall have a value determined by reference to, a
number of shares of Common Stock that is specified at the time of the grant of
such Incentive Award; and provided, further, that the exercise price applicable
to stock appreciation rights shall not be less than one hundred percent
(100%) of the Fair Market Value of a share of Common Stock on the date on which
such Other Stock-Based Award is granted.

 

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8. Cash Incentive Awards

The Committee may from time to time grant Cash Incentive Awards on such terms as
it shall determine, subject to the terms and conditions set forth in the Plan.
Cash Incentive Awards may be settled in cash or in other property, including
shares of Common Stock, provided that the term “Cash Incentive Award” shall
exclude any Option or Other Stock-Based Award.

 

9. Performance-Based Compensation

(a) Calculation

The amount payable with respect to an Incentive Award that is intended to
qualify as Performance-Based Compensation shall be determined in any manner
permitted by Section 162(m) of the Code.

(b) Discretionary Reduction

Unless otherwise specified in the Award Agreement, the Committee may, in its
discretion, reduce or eliminate the amount payable to any Participant with
respect to the Incentive Award, based on such factors as the Committee may deem
relevant, but the Committee may not increase any such amount above the amount
established in accordance with the relevant Performance Schedule. For purposes
of clarity, the Committee may exercise the discretion provided for by the
foregoing sentence in a non-uniform manner among Participants.

(c) Performance Measures

(i) The performance goals upon which the payment or vesting of any Incentive
Award (other than Options and stock appreciation rights) that is intended to
qualify as Performance-Based Compensation depends shall (A) be objective
business criteria and shall otherwise meet the requirements of Section 162(m) of
the Code, including the requirement that the level or levels of performance
targeted by the Committee result in the achievement of performance goals being
“substantially uncertain,” and (B) relate to one or more of the following
Performance Measures: market price of Common Stock, earnings per share of Common
Stock, adjusted earnings per share of Common Stock, adjusted cash earnings per
share of Common Stock, income, net income or profit (before or after taxes),
economic profit, operating income, return on equity or stockholder equity, total
shareholder return, market capitalization, enterprise value, cash flow
(including but not limited to operating cash flow and free cash flow), cash
position, return on assets or net assets, return on capital, return on invested
capital, stockholder returns, economic value added, cash value added, earnings
or net earnings (before or after interest, taxes, depreciation and/or
amortization and allowing for the inclusion or exclusion of non-controlling
interest expense), earnings from continuing operations, operating earnings,
controllable profits, net patient revenues or net operating revenues, revenues,
revenues growth, capital or

 

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investment, ratio of debt to debt plus equity, ratio of operating earnings to
capital spending, new product or service line innovation, market share, cost
reduction goals, inventory or supply chain management initiatives, budget
comparisons, implementation or completion of specified projects or processes,
objective measures of customer, physician or employee satisfaction,
productivity, expense, margins, operating efficiency, working capital, the
formation of joint ventures, research or development collaborations, the
completion of other transactions, any other measure of financial performance
that can be determined pursuant to United States generally accepted accounting
principles, or any combination of any of the foregoing.

(ii) A Performance Measure (A) may relate to the performance of the Participant,
the Company, a Subsidiary, any business group, business unit or other
subdivision of the Company, or any combination of the foregoing, as the
Committee deems appropriate and (B) may be expressed as an amount, as an
increase or decrease over a specified period, as a relative comparison to the
performance of a group of comparator companies or a published or special index,
or any other measure of the selected performance criteria, as the Committee
deems appropriate. Unless otherwise determined by the Committee during the
period referred to in Section 9(d), the Committee shall retain the ability to
use negative discretion to reduce the amount of an Incentive Award or to exclude
any adverse impact and include the positive impact of unusual, nonrecurring or
extraordinary items or expenses; items relating to financing activities; charges
for restructurings; other non-operating items; discontinued operations; items
related to the disposal of a business or segment of a business; the cumulative
effect of changes in accounting treatment; items related to a change in
accounting principle; items related to changes in applicable laws or business
conditions; any impact of changes in foreign exchange rates and other changes in
currency; any impact of impairment of tangible or intangible assets; any impact
of the issuance or repurchase of equity securities or other changes in the
number of outstanding shares of any class of Company equity securities; any
gain, loss, income or expense attributable to acquisitions or dispositions of
stock or assets; items attributable to the business operations of any entity
acquired by the Company during a Performance Period; stock-based compensation
expense; in-process research and development expense; gain or loss from all or
certain claims and/or litigation and insurance recoveries; and any other items,
each determined by the Committee according to Section 9(d) in accordance with
generally accepted accounting principles and as identified in the Company’s
audited financial statements, including the notes thereto.

 

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(d) Performance Schedules

Within ninety (90) days after the beginning of a Performance Period, and in any
case before twenty-five (25%) of the Performance Period has elapsed, the
Committee shall establish (i) Performance Targets for such Performance Period,
(ii) Target Awards for each Participant, and (iii) Performance Schedules for
such Performance Period.

(e) Committee Discretion

Nothing in this Plan is intended to limit the Committee’s discretion to adopt
conditions with respect to any Incentive Award that is not intended to qualify
as Performance-Based Compensation that relate to performance other than the
Performance Measures. Furthermore, nothing in this Plan shall be construed to
require the Committee to grant any Award intended to qualify as
Performance-Based Compensation. The Committee may, subject to the terms of the
Plan, amend previously granted Incentive Awards in a way that disqualifies them
as Performance-Based Compensation.

 

10. Adjustment Upon Certain Changes

Subject to any action by the shareholders of the Company required by law,
applicable tax rules or the rules of any exchange on which shares of common
stock of the Company are listed for trading:

(a) Shares Available for Grants

In the event of any change in the number of shares of Common Stock outstanding
by reason of any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares or similar corporate change,
the maximum aggregate number of shares of Common Stock with respect to which the
Committee may grant Incentive Awards and the maximum aggregate number of shares
of Common Stock with respect to which the Committee may grant Incentive Awards
to any individual Participant in any year shall be appropriately adjusted or
substituted by the Committee. In the event of any change in the number of shares
of common stock of the Company outstanding by reason of any other event or
transaction, the Committee shall, to the extent deemed appropriate by the
Committee, make such adjustments to the type or number of shares of Common Stock
with respect to which Incentive Awards may be granted.

 

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(b) Increase or Decrease in Issued Shares Without Consideration

In the event of any increase or decrease in the number of issued shares of
Common Stock resulting from a subdivision or consolidation of shares of Common
Stock or the payment of a stock dividend (but only on the shares of Common
Stock), or any other increase or decrease in the number of such shares effected
without receipt or payment of consideration by the Company, the Committee shall,
to the extent deemed appropriate by the Committee, adjust the type or number of
shares of Common Stock subject to each outstanding Incentive Award and the
exercise price per share of Common Stock of each such Incentive Award.

(c) Certain Mergers and Other Transactions

(i) In the event of any merger, consolidation or similar transaction as a result
of which the holders of shares of Common Stock receive consideration consisting
exclusively of securities of the surviving corporation in such transaction, the
Committee shall, to the extent deemed appropriate by the Committee, adjust each
Incentive Award outstanding on the date of such merger or consolidation so that
it pertains and applies to the securities which a holder of the number of shares
of Common Stock subject to such Incentive Award would have received in such
merger or consolidation.

(ii) In the event of (A) a dissolution or liquidation of the Company, (B) a sale
of all or substantially all of the Company’s assets (on a consolidated basis),
(C) a merger, consolidation or similar transaction involving the Company in
which the holders of shares of Common Stock receive securities and/or other
property, including cash, other than shares of the surviving corporation in such
transaction, the Committee shall, to the extent deemed appropriate by the
Committee, have the power to: (1) cancel, effective immediately prior to the
occurrence of such event, each Incentive Award (whether or not then exercisable
or vested), and, in full consideration of such cancellation, pay to the
Participant to whom such Incentive Award was granted an amount in cash, for each
share of Common Stock subject to such Incentive Award, equal to the value, as
determined by the Committee, of such Incentive Award, provided that with respect
to any outstanding Option such value shall be equal to the excess of (x) the
value, as determined by the Committee, of the property (including cash) received
by the holder of a share of Common Stock as a result of such event over (y) the
exercise price of such Option; or (2) provide for the exchange of each Incentive
Award (whether or not then exercisable or vested) for an Incentive Award with
respect to (x) some or all of the property which a holder of the number of
shares of Common Stock subject to such Incentive Award would have received in
such transaction or (y) securities of the acquiror or surviving entity and,
incident thereto, make an equitable adjustment as determined by the Committee in
the exercise price of the Incentive Award, or the number of shares or amount of
property subject to the Incentive Award or provide for a payment (in cash or
other property) to the Participant to whom such Incentive Award was granted in
partial consideration for the exchange of the Incentive Award.

 

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(e) Other Changes

In the event of any change in the capitalization of the Company or corporate
change other than those specifically referred to in Sections 10(b), (c) or (d),
the Committee shall, to the extent deemed appropriate by the Committee, make
such adjustments in the number and class of shares subject to Incentive Awards
outstanding on the date on which such change occurs and in such other terms of
such Incentive Awards as the Committee may consider appropriate.

(f) Cash Incentive Awards

In the event of any transaction or event described in this Section 10, including
without limitation any corporate change referred to in paragraph (e) hereof, the
Committee shall, to the extent deemed appropriate by the Committee, make such
adjustments in the terms and conditions of any Cash Incentive Award.

(g) No Other Rights

Except as expressly provided in the Plan or any Award Agreement, no Participant
shall have any rights by reason of any subdivision or consolidation of shares of
stock of any class, the payment of any dividends or dividend equivalents, any
increase or decrease in the number of shares of stock of any class or any
dissolution, liquidation, merger or consolidation of the Company or any other
corporation. Except as expressly provided in the Plan, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number of shares or amount of other property
subject to, or the terms related to, any Incentive Award.

(h) Savings Clause

(i) No provision of this Section 10 shall be given effect to the extent that
such provision would cause any tax to become due under Section 409A of the Code.

(ii) With respect to Incentive Awards which are granted to Covered Employees and
are intended to qualify as Performance-Based Compensation, no provision of this
Section 10 shall be given effect to the extent that such provision would cause
such Incentive Award to fail to so qualify as Performance-Based Compensation
under Section 162(m) of the Code.

(iii) Furthermore, no provision of this Section 10 shall be given effect to the
extent such provision would result in short-swing profits liability under
Section 16 of the Exchange Act or violate the exemptive conditions of Rule 16b-3
of the Exchange Act.

 

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11. Change in Control; Termination of Employment

(a) Change in Control

The consequences of a Change in Control, if any, will be set forth in the Award
Agreement in addition to what is provided in Section 10 hereof.

(b) Termination of Employment

(i) Except as to any awards constituting stock rights subject to Section 409A of
the Code, termination of Employment shall mean a separation from service within
the meaning of Section 409A, unless the Participant is retained as a consultant
pursuant to a written agreement and such agreement provides otherwise. The
Employment of a Participant with the Company shall be deemed to have terminated
for all purposes of the Plan if such person is employed by or provides services
to a Person that is a Subsidiary of the Company and such Person ceases to be a
Subsidiary of the Company, unless the Committee determines otherwise. A
Participant who ceases to be an employee of the Company but continues, or
simultaneously commences, services as a director of the Company shall be deemed
to have had a termination of Employment for purposes of the Plan. Without
limiting the generality of the foregoing, the Committee shall determine whether
an authorized leave of absence, or absence in military or government service,
shall constitute termination of Employment, provided that a Participant who is
an employee will not be deemed to cease employment in the case of any leave of
absence approved by the Company. Furthermore, no payment shall be made with
respect to any Incentive Awards under the Plan that are subject to Section 409A
of the Code as a result of any such authorized leave of absence or absence in
military or government service unless such authorized leave or absence
constitutes a separation from service for purposes of Section 409A of the Code
and the regulations promulgated thereunder.

(ii) The Award Agreement shall specify the consequences with respect to such
Option of the termination of Employment of the Participant holding the Option.

(iii) The consequences with respect to a Performance-Based Award of the
termination of Employment of the Participant holding the Performance-Based Award
shall be determined by the Committee in its sole discretion and set forth in the
Award Agreement, it being intended that no agreement providing for a payment to
a Participant upon termination of Employment shall be given effect to the extent
that it would cause an Incentive Award that was intended to qualify as a
Performance-Based Award to fail to so qualify.

 

12. Rights Under the Plan

(a) The Committee shall have full discretionary authority to administer the
Plan, including discretionary authority to interpret and construe any and all
provisions of the Plan and any Award Agreement thereunder, and to adopt, amend
and rescind from time to time such rules and regulations for the administration
of the Plan, including rules and regulations related to

 

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sub-plans established for the purpose of satisfying applicable foreign laws
and/or qualifying for preferred tax treatment under applicable foreign tax laws,
as the Committee may deem necessary or appropriate. Decisions of the Committee
shall be final, binding and conclusive on all parties. For the avoidance of
doubt, the Committee may exercise all discretion granted to it under the Plan in
a non-uniform manner among Participants.

(b) No Person shall have any rights as a stockholder with respect to any shares
of Common Stock covered by or relating to any Incentive Award until the date of
the issuance of such shares on the books and records of the Company. Except as
otherwise expressly provided in Section 10 hereof, no adjustment of any
Incentive Award shall be made for dividends or other rights for which the record
date occurs prior to the date of such issuance. Nothing in this Section 12 is
intended, or should be construed, to limit authority of the Committee to cause
the Company to make payments based on the dividends that would be payable with
respect to any share of Common Stock if it were issued or outstanding, or from
granting rights related to such dividends.

(c) The Company shall not have any obligation to establish any separate fund or
trust or other segregation of assets to provide for payments under the Plan. To
the extent any person acquires any rights to receive payments hereunder from the
Company, such rights shall be no greater than those of an unsecured creditor.

 

13. No Special Employment Rights; No Right to Incentive Award

(a) Nothing contained in the Plan or any Award Agreement shall confer upon any
Participant any right with respect to the continuation of his or her Employment
by the Company or interfere in any way with the right of the Company at any time
to terminate such Employment or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of an Incentive
Award.

(b) No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee’s granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other person.

 

14. Securities Matters

(a) The Company shall be under no obligation to effect the registration pursuant
to the Securities Act of any shares of Common Stock to be issued hereunder or to
effect similar compliance under any state or local laws. Notwithstanding
anything herein to the contrary, the Company shall not be obligated to cause to
be issued shares of Common Stock pursuant to the Plan unless and until the
Company is advised by its counsel that the issuance is in compliance with all
applicable laws, regulations of governmental authority and the requirements of
any securities exchange on which shares of Common Stock are traded. The
Committee may require, as a condition to the issuance of shares of Common Stock
pursuant to the terms hereof, that the recipient of such shares make such
covenants, agreements and representations, and that any related certificates
representing such shares bear such legends, as the Committee, in its sole
discretion, deems necessary or desirable.

 

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(b) The exercise of any Incentive Award (including, without limitation, any
Option) granted hereunder shall only be effective at such time as counsel to the
Company shall have determined that the issuance and delivery of shares of Common
Stock pursuant to such exercise is in compliance with all applicable laws,
regulations of governmental authority and the requirements of any securities
exchange on which shares of Common Stock are traded. The Company may, in its
sole discretion, defer the effectiveness of any exercise of an Incentive Award
granted hereunder in order to allow the issuance of shares pursuant thereto to
be made pursuant to registration or an exemption from registration or other
methods for compliance available under federal or state or local securities
laws. The Company shall inform the Participant in writing of its decision to
defer the effectiveness of the exercise of an Incentive Award granted hereunder.
During the period that the effectiveness of the exercise of an Incentive Award
has been deferred, the Participant may, by written notice, withdraw such
exercise and obtain the refund of any amount paid with respect thereto.

 

15. Withholding Taxes

(a) Cash Remittance

Whenever withholding tax obligations are incurred in connection with any
Incentive Award, the Company shall have the right to require the Participant to
remit to the Company in cash an amount sufficient to satisfy federal, state and
local withholding tax requirements, if any, attributable to such event. In
addition, upon the exercise or settlement of any Incentive Award in cash, or the
making of any other payment with respect to any Incentive Award (other than in
shares of Common Stock), the Company shall have the right to withhold from any
payment required to be made pursuant thereto an amount sufficient to satisfy the
federal, state and local withholding tax requirements, if any, attributable to
such exercise, settlement or payment.

(b) Stock Remittance

At the election of the Participant, subject to the approval of the Committee,
whenever withholding tax obligations are incurred in connection with any
Incentive Award, the Participant may tender to the Company a number of shares of
Common Stock that have been owned by the Participant for at least six (6) months
(or such other period as the Committee may determine) having a Fair Market Value
at the tender date determined by the Committee to be sufficient to satisfy the
minimum federal, state and local withholding tax requirements, if any,
attributable to such event. Such election shall satisfy the Participant’s
obligations under Section 15(a) hereof, if any.

(c) Stock Withholding

At the election of the Participant, subject to the approval of the Committee,
whenever withholding tax obligations are incurred in connection with any
Incentive Award, the Company

 

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shall withhold a number of such shares having a Fair Market Value determined by
the Committee to be sufficient to satisfy the minimum federal, state and local
withholding tax requirements, if any, attributable to such event. Such election
shall satisfy the Participant’s obligations under Section 15(a) hereof, if any.

 

16. Amendment or Termination of the Plan

The Board of Directors may at any time suspend or discontinue the Plan or revise
or amend it in any respect whatsoever; provided, however, that to the extent
that any applicable law, tax requirement, or rule of a stock exchange requires
shareholder approval in order for any such revision or amendment to be
effective, such revision or amendment shall not be effective without such
approval. The preceding sentence shall not restrict the Committee’s ability to
exercise its discretionary authority hereunder pursuant to Section 4 hereof,
which discretion may be exercised without amendment to the Plan. No provision of
this Section 16 shall be given effect to the extent that such provision would
cause any tax to become due under Section 409A of the Code. Except as expressly
provided in the Plan, no action hereunder may, without the consent of a
Participant, adversely affect the Participant’s rights under any previously
granted and outstanding Incentive Award. Nothing herein shall cause a
Performance-Based Award to cease to qualify under Section 162(m). Nothing in the
Plan shall limit the right of the Company to pay compensation of any kind
outside the terms of the Plan.

 

17. Recoupment

Notwithstanding anything in the Plan or in any Award Agreement to the contrary,
the Company will be entitled to the extent permitted or required by applicable
law (including, without limitation, the Dodd-Frank Wall Street Reform and
Consumer Protection Act), Company policy and/or the requirements of an exchange
on which the Company’s shares are listed for trading, in each case, as in effect
from time to time to recoup compensation of whatever kind paid or awarded by the
Company at any time to a Participant under this Plan.

 

18. No Obligation to Exercise

The grant to a Participant of an Incentive Award shall impose no obligation upon
such Participant to exercise such Incentive Award.

 

19. Transfers

Incentive Awards may not be sold, pledged, assigned, hypothecated, transferred,
or disposed of in any manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of a Participant, only by
the Participant; provided, however that the Committee may permit Options that
are not incentive stock options to be sold, pledged, assigned, hypothecated,
transferred, or disposed of, on a general or specific basis, subject to such
conditions and limitations as the Committee may determine. Upon the death of a
Participant, outstanding Incentive Awards granted to such Participant may be
exercised only by the executors or administrators of the Participant’s estate or
by any person or persons who shall have acquired

 

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such right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Incentive Award,
or the right to exercise any Incentive Award, shall be effective to bind the
Company unless the Committee shall have been furnished with (i) written notice
thereof and with a copy of the will and/or such evidence as the Committee may
deem necessary to establish the validity of the transfer and (ii) an agreement
by the transferee to comply with all the terms and conditions of the Incentive
Award that are or would have been applicable to the Participant and to be bound
by the acknowledgements made by the Participant in connection with the grant of
the Incentive Award.

 

20. Expenses and Receipts

The expenses of the Plan shall be paid by the Company. Any proceeds received by
the Company in connection with any Incentive Award will be used for general
corporate purposes.

 

21. Failure to Comply

In addition to the remedies of the Company elsewhere provided for herein,
failure by a Participant to comply with any of the terms and conditions of the
Plan or any Award Agreement, unless such failure is remedied by such Participant
within ten days after having been notified of such failure by the Committee,
shall be grounds for the cancellation and forfeiture of such Incentive Award, in
whole or in part, as the Committee, in its absolute discretion, may determine.

 

22. Governing Law

The Plan and the rights of all persons under the Plan shall be construed and
administered in accordance with the laws of the State of Delaware without regard
to its conflict of law principles.

 

23. Severability

If all or any part of this Plan is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any portion of this Plan not declared to be unlawful or
invalid. Any Section or part of a Section so declared to be unlawful or invalid
shall, if possible, be construed in a manner that will give effect to the terms
of such Section or part of a Section to the fullest extent possible while
remaining lawful and valid.

 

24. Effective Date and Term of Plan

The Effective Date of the Plan is October 24, 2013, subject to the approval of
the Plan by the shareholders of the Company. No grants of Incentive Awards may
be made under the Plan after October 24, 2023.

 

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