EXHBIT 10.1

 

UNITI GROUP INC.

2015 EQUITY INCENTIVE PLAN

(as amended and restated effective March 28, 2018)

1. Purpose of the Plan. The purpose of this 2015 Equity Incentive Plan (this
“Plan”) is to attract, retain and motivate the consultants, directors, officers
and other key employees of Uniti Group Inc. (the “Company”) and its Affiliates
and to provide to such persons incentives and rewards for superior performance
and contribution.

The Plan is hereby amended and restated as of March 28, 2018.

2. Definitions. Capitalized terms used herein have the meanings assigned to such
terms in this Section 2.

“Affiliate” means any corporation that is a Subsidiary of the Company and, for
purposes other than the grant of Incentive Stock Options, any limited liability
company, partnership, corporation, joint venture, or any other entity in which
the Company or any such Subsidiary owns an equity interest.

“Applicable Laws” means the requirements relating to the administration of
equity-based compensation plans under U.S. state corporate laws, U.S. federal
and state securities laws, the Code, any stock exchange or quotation system on
which the Common Shares are listed or quoted and the applicable laws of any
other country or jurisdiction where awards are granted under this Plan, in each
case as applicable to an award made hereunder.

“Appreciation Right” means a right granted pursuant to Section 5 or Section 9 of
this Plan, and shall include both Tandem Appreciation Rights and Free-Standing
Appreciation Rights.

“Base Price” means the price to be used as the basis for determining the Spread
upon the exercise of a Free-Standing Appreciation Right or a Tandem Appreciation
Right.

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

“Cause” means, except as otherwise provided in an Evidence of Award: (a) the
failure of the Participant to make a good faith effort to substantially perform
his or her duties (other than any such failure due to the Participant’s
Disability) or Participant’s insubordination with respect to a specific
directive of the Participant’s supervisor or officer (or, if such Participant
reports directly to the Board, the Board) to which the Participant reports
directly or indirectly; (b) Participant’s dishonesty, gross negligence in the
performance of the duties of his or her employment or engaging in willful
misconduct, which in the case of any such gross negligence, has caused or is
reasonably expected to result in direct or indirect material injury to the
Company or any of its Affiliates; (c) breach by Participant of any material
provision of any written agreement with the Company or any of its Affiliates or
material violation of any Company policy applicable to Participant; or (d)
Participant’s commission of a crime that constitutes a felony or other crime of
moral turpitude or fraud. If, subsequent to Participant’s termination of
employment hereunder for other than Cause, it is determined in good faith by the
Company that Participant’s employment could have been terminated for Cause
hereunder, Participant’s employment shall, at the election of the Company, be
deemed to have been terminated for Cause retroactively to the date the events
giving rise to Cause occurred.

“Change in Control” means, except as otherwise provided in an Evidence of Award,
the

 

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occurrence of any of the following:

a. any sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all of the assets of the
Company to any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act (a “Group”), together with any affiliates thereof;

b. the commencement of the liquidation or dissolution of the Company that occurs
following the approval by the holders of capital stock of the Company of any
plan or proposal for such liquidation or dissolution of the Company;

c. any Person or Group becomes the beneficial owner (within the meaning of
Section 13(d) of the Exchange Act), directly or indirectly, of shares
representing more than 50% of the aggregate voting power of the issued and
outstanding stock entitled to vote in the election of directors, managers or
trustees of the Company and such Person or Group actually has the power to vote
such shares in any such election;

d. the replacement of a majority of the Board over a two-year period from the
directors who constituted the Board at the beginning of such period, and such
replacement shall not have been approved by a vote of at least a majority of the
Board then still in office who either were members of such Board at the
beginning of such period; or

e. a merger or consolidation of the Company with another entity in which holders
of the Common Shares immediately prior to the consummation of the transaction
hold, directly or indirectly, immediately following the consummation of the
transaction, 50% or less of the common equity interest in the surviving
corporation in such transaction.

Notwithstanding anything herein to the contrary, an event described above shall
be considered a Change in Control hereunder only if it also constitutes a
“change in control event” under Section 409A of the Code, to the extent
necessary to avoid the adverse tax consequences thereunder with respect to any
award subject to Section 409A of the Code.

“Code” means the Internal Revenue Code of 1986 and the rules and regulations
promulgated thereunder, as such law, rules and regulations may be amended,
supplemented or replaced from time to time.

“Committee” means the committee of directors appointed by the Board to
administer this Plan. In the absence of a specific appointment, “Committee”
means the Compensation Committee of the Board.

“Common Shares” means shares of common stock, par value $0.0001, of the Company
or any security into which such Common Shares may be changed by reason of any
transaction or event of the type referred to in Section 12 of this Plan.

“Covered Employee” means a Participant who is, or is determined by the Committee
to be likely to become, a “covered employee” within the meaning of Section
162(m) of the Code (or any successor provision).

“Date of Grant” means the date specified by the Committee on which a grant of
Option Rights, Appreciation Rights, Performance Units or Performance Shares or a
grant or sale of Restricted Shares or Restricted Stock Units, or awards granted
under Section 10 of this Plan shall become effective (which date will not be
earlier than the date on which the Committee takes action with respect thereto).

 

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“Director” means a member of the Board.

“Disability” means, except as otherwise provided in an Evidence of Award, that
the Participant is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months, provided, however, for purposes of
determining the term of an Incentive Stock Option, the term Disability shall
have the meaning ascribed to it under Section 22(e)(3) of the Code. The
determination of whether an individual has a Disability shall be determined
under procedures established by the Committee. Except in situations where the
Committee is determining Disability for purposes of the term of an Incentive
Stock Option within the meaning of Section 22(e)(3) of the Code, the Committee
may rely on any determination that a Participant is disabled for purposes of
benefits under any long-term disability plan maintained by the Company or any
Affiliate in which a Participant participates, provided that the definition of
disability applied under such disability plan meets the requirements of a
Disability in the first sentence hereof.

“Evidence of Award” means an agreement, certificate, resolution or other type or
form of writing or other evidence approved by the Committee which sets forth the
terms and conditions of the Option Rights, Appreciation Rights, Performance
Units, Performance Shares, Restricted Shares, Restricted Stock Units, or awards
granted under Section 10 of this Plan. An Evidence of Award may be in an
electronic medium, may be limited to a notation on the books and records of the
Company and, with the approval of the Committee, need not be signed by a
representative of the Company or a Participant.

“Exchange Act” means the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder, as such law, rules and regulations may be
amended, supplemented or replaced from time to time.

“Free-Standing Appreciation Right” means an Appreciation Right granted pursuant
to Section 5 or Section 9 of this Plan that is not granted in tandem with an
Option Right.

“Good Reason” means any one of the following: (a) a material diminution in
Participant’s base compensation; (b) a material diminution in authority, duties,
or responsibilities of Participant; (c) a material diminution in the budget over
which Participant retains authority; (d) a material change in the geographic
location (i.e., to a location more than 50 miles from the Participant’s primary
work location prior to such change) at which Participant is required to perform
services; and (e) any other action or inaction that constitutes a material
breach of the Participant’s employment agreement, if any, with the Company or
any Affiliate; provided, however, that for the Participant to be able to resign
for “Good Reason,” the Participant must give the Company and the applicable
Affiliate, if any, notice of the above conditions within 90 days after the
condition first exists, the Company and/or Affiliate must not have not remedied
the condition within 30 days after receiving written notice, and the Participant
must resign within 60 days after the Company’s and/or Affiliate’s failure to
remedy.

“Incentive Stock Options” means Option Rights that are intended to qualify as
“incentive stock options” under Section 422 of the Code or any successor
provision.

“Management Objectives” means the measurable performance objective or objectives
established pursuant to this Plan for Participants who have received grants of
Performance Units or Performance Shares or, when so determined by the Committee,
Option Rights, Appreciation Rights, Restricted Shares and Restricted Stock Units
pursuant to this Plan. Management Objectives may be described in terms of
Company-wide objectives or objectives that are related to the performance of the
individual Participant or of the Affiliate, Subsidiary, division, department,
region or function within the Company, Affiliate or Subsidiary in which the
Participant is employed and may be made relative to the

 

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performance of other companies. The Management Objectives applicable to any
award to a Covered Employee that is intended to qualify for the
performance-based compensation exception to Section 162(m) of the Code shall be
based on specified levels of or growth in one or more of the following criteria:
revenues, weighted average revenue per unit, earnings from operations, operating
income, earnings before or after interest and taxes, operating income before or
after interest and taxes, net income, cash flow, earnings per share, debt to
capital ratio, economic value added, return on total capital, return on invested
capital, return on equity, return on assets, total return to stockholders,
earnings before or after interest, taxes, depreciation, amortization or
extraordinary or special items, operating income before or after interest,
taxes, depreciation, amortization or extraordinary or special items, return on
investment, free cash flow, cash flow return on investment (discounted or
otherwise), net cash provided by operations, funds from operations, adjusted
funds from operations, cash flow in excess of cost of capital, operating margin,
operating expenses, gross expense management, profit margin, contribution
margin, stock price and/or strategic business criteria consisting of one or more
objectives based on meeting specified product development, strategic partnering,
research and development, market penetration, geographic business expansion
goals (e.g., opening of new offices in new geographic areas) cost targets,
customer satisfaction, gross or net additional customers, average customer life,
employee satisfaction, management of employment practices and employee benefits,
supervision of litigation and information technology, and goals relating to
acquisitions or divestitures of subsidiaries, affiliates and joint ventures.
Management Objectives may be stated as a combination of the listed factors. If
the Committee determines that a change in the business, operations, corporate
structure or capital structure of the Company, or the manner in which it
conducts its business, or other events or circumstances (including those events
and circumstances described in Section 12 of this Plan) render the Management
Objectives unsuitable, the Committee may, at its discretion, modify such
Management Objectives or the related minimum acceptable level of achievement, in
whole or in part, as the Committee deems appropriate and equitable, except in
the case of a Covered Employee to the extent that such action would result in
the loss of the otherwise available exemption of the award under Section 162(m)
of the Code.

“Market Value per Share” means, as of any particular date, (i) the closing sale
price per Common Share as reported on the principal exchange on which Common
Shares are then trading, or if there are no sales on such day, on the next
preceding trading day during which a sale occurred, or (ii) if the Common Shares
are not then-currently traded on an exchange, the fair market value of a Common
Share as determined by the Committee in discretion.

“Non-Employee Director” means a member of the Board who is a “non-employee
director” within the meaning of Rule 16b-3 under the Exchange Act.

“Optionee” means the optionee named in an agreement evidencing an outstanding
Option Right.

“Option Price” means the purchase price payable on exercise of an Option Right.

“Option Right” means the right to purchase Common Shares upon exercise of an
option granted pursuant to Section 4 or Section 9 of this Plan.

“Participant” means a person who is selected by the Committee to receive
benefits under this Plan and who is at the time an officer, consultant or other
key employee of the Company or any Affiliate and also includes each Non-Employee
Director who receives an award of Option Rights, Appreciation Rights, Restricted
Shares, Restricted Stock Units or any awards under Section 10 of this Plan.

“Performance Period” means, in respect of a Performance Unit or Performance
Share, a period of time established pursuant to Section 6 of this Plan within
which the Management Objectives relating to

 

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such Performance Share or Performance Unit are to be achieved.

“Performance Share” means a bookkeeping entry that records the equivalent of one
Common Share awarded pursuant to Section 6 of this Plan.

“Performance Unit” means a bookkeeping entry that records a unit equivalent to
$1.00 awarded pursuant to Section 6 of this Plan.

“Person” means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof.

“Restricted Shares” means Common Shares granted or sold pursuant to Section 7 or
Section 9 of this Plan as to which neither the substantial risk of forfeiture
nor the prohibition on transfers referred to in such Section 7 has expired.

“Restricted Stock Units” means an award made pursuant to Section 8 or Section 9
of this Plan.

“Restriction Period” means the period of time during which Restricted Stock
Units are subject to deferral limitations under Section 8 of this Plan.

“Spread” means the excess of the Market Value of a Share on the date when an
Appreciation Right is exercised, or on the date when Option Rights are
surrendered in payment of the Option Price of other Option Rights, over the per
share Option Price or per share Base Price provided for in the related Option
Right or Free-Standing Appreciation Right, respectively.

“Subsidiary” means a “subsidiary corporation,” as that term is defined in
Section 424(f) of the Code, or any successor provision.

“Tandem Appreciation Right” means an Appreciation Right granted pursuant to
Section 5 or Section 9 of this Plan that is granted in tandem with an Option
Right.

3. Shares Available Under the Plan.  

a. Subject to adjustment as provided in Section 12 of this Plan, the number of
Common Shares that may be issued or transferred (i) upon the exercise of Option
Rights or Appreciation Rights, (ii) as Restricted Shares, (iii) in payment of
Restricted Stock Units, (iv) in payment of Performance Units or Performance
Shares that have been earned, (v) as awards to Non-Employee Directors, (vi) in
payment of awards granted under Section 10 of this Plan or (vii) in payment of
dividend equivalents paid with respect to awards made under the Plan shall not
exceed in the aggregate 6,000,000 Common Shares, plus any shares relating to
awards that expire, are forfeited or cancelled. Notwithstanding anything to the
contrary contained herein: (A) Common Shares tendered in payment of the Option
Price of an Option Right shall not be added to the aggregate Plan limit
described above; (B) Common Shares withheld by the Company to satisfy the tax
withholding obligation shall not be added to the aggregate Plan limit described
above; (C) Common Shares that are repurchased by the Company with Option Right
proceeds shall not be added to the aggregate Plan limit described above; and (D)
all Common Shares covered by an Appreciation Right, to the extent that it is
exercised and settled in Common Shares, and whether or not Common Shares are
actually issued to the Participant upon exercise of the right, shall be
considered issued or transferred pursuant to the Plan. Such Common Shares may be
shares of original issuance or treasury shares or a combination of the
foregoing.

 

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b. If, under this Plan, a Participant has elected to give up the right to
receive compensation in exchange for Common Shares based on fair market value,
such Common Shares will not count against the number of shares available in
Section 3(a) above.

c. Notwithstanding anything in this Section 3, or elsewhere in this Plan, to the
contrary and subject to adjustment as provided in Section 12 of this Plan, (i)
the aggregate number of Common Shares actually issued or transferred by the
Company upon the exercise of Incentive Stock Options shall not exceed 2,000,000
Common Shares; and (ii) no Participant shall be granted Option Rights and
Appreciation Rights, in the aggregate, for more than 2,000,000 Common Shares
during any calendar year.

d. Notwithstanding any other provision of this Plan to the contrary, in no event
shall any Participant in any calendar year receive an award of (i) Performance
Shares, Restricted Shares or Restricted Stock Units that specify Management
Objectives, in the aggregate, for more than 1,000,000 Common Shares or (ii)
Performance Units having an aggregate maximum value as of their respective Dates
of Grant in excess of $5,000,000.

e. Notwithstanding any other provision of this Plan to the contrary, but subject
to any provision accelerating vesting due to death, Disability, or qualifying
termination in connection with a Change in Control, awards granted under this
Plan shall vest no earlier than the first anniversary of the Date of Grant.

4. Option Rights. The Committee may, from time to time and upon such terms and
conditions as it may determine, authorize the granting to Participants of Option
Rights. Each such grant may utilize any or all of the authorizations, and shall
be subject to all of the limitations, contained in the following provisions:

a. Each grant shall specify the number of Common Shares to which it pertains.

b. Each grant shall specify an Option Price per share, which may not be less
than the Market Value per Share on the Date of Grant.

c. Each grant shall specify whether the Option Price shall be payable (i) in
cash or by check acceptable to the Company, (ii) by the actual or constructive
transfer to the Company of nonforfeitable, unrestricted Common Shares owned by
the Optionee having a value at the time of exercise equal to the total Option
Price, on such basis as the Committee may determine, (iii) in any other legal
consideration that the Committee may deem appropriate, on such basis as the
Committee may determine, or (iv) by a combination of such methods of payment.

d. To the extent permitted by law, any grant may provide for (i) deferred
payment of the Option Price from the proceeds of sale through a bank or broker
on a date satisfactory to the Company of some or all of the shares to which such
exercise relates; (ii) payment of the Option Price, at the election of the
Optionee, in installments or using a promissory note, upon terms determined by
the Committee in its discretion; or (iii) any combination of such methods.

e. Successive grants may be made to the same Participant whether or not any
Option Rights previously granted to such Participant remain unexercised.

f. Each grant shall specify the period or periods of continuous service by the
Optionee with the Company or any Affiliate that is necessary before the Option
Rights or installments thereof will become exercisable and may provide for
accelerated vesting of such Option Rights in the event of a Change in Control,
retirement, death or Disability of the Optionee or other similar transaction or
event as approved

 

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by the Committee; provided that in no event will any Option Right vest or become
exercisable early solely as the result of a Change in Control.

g. Any grant of Option Rights may specify Management Objectives that must be
achieved as a condition to the exercise of such rights.

h. Option Rights granted under this Plan may be (i) Incentive Stock Options,
that are intended to qualify under Section 422 of the Code (or any successor to
such section), (ii) “nonqualified stock options” that are not intended to so
qualify, or (iii) a combination of the foregoing. Incentive Stock Options may
only be granted to Participants who meet the definition of “employees” under
Section 3401(c) of the Code on the Date of Grant.

i. The exercise of an Option Right shall result in the cancellation on a
share-for-share basis of any Tandem Appreciation Right authorized under Section
5 of this Plan.

j. No Option Right shall be exercisable more than 10 years from the Date of
Grant.

k. Each grant of Option Rights shall be evidenced by an Evidence of Award which
shall contain such terms and provisions, consistent with this Plan and
applicable sections of the Code, as the Committee may approve.

l. The Committee may, at the Date of Grant of any Option Rights (other than
Incentive Stock Options), provide for the payment of dividend equivalents to the
Optionee on either a current or deferred or contingent basis or may provide that
such equivalents shall be credited against the Option Price.

5. Appreciation Rights.  

a. The Committee may authorize the granting (i) to any Optionee, of Tandem
Appreciation Rights in respect of Option Rights granted hereunder, and (ii) to
any Participant, of Free-Standing Appreciation Rights. A Tandem Appreciation
Right shall be a right of the Optionee, exercisable by surrender of the related
Option Right, to receive from the Company an amount determined by the Committee,
which shall be expressed as a percentage of the Spread (not exceeding 100
percent) at the time of exercise. Tandem Appreciation Rights may be granted at
any time prior to the exercise or termination of the related Option Rights;
provided, however, that a Tandem Appreciation Right awarded in relation to an
Incentive Stock Option must be granted concurrently with such Incentive Stock
Option. A Free-Standing Appreciation Right shall be a right of the Participant
to receive from the Company an amount determined by the Committee, which shall
be expressed as a percentage of the Spread (not exceeding 100 percent) at the
time of exercise.

b. Each grant of Appreciation Rights may utilize any or all of the
authorizations, and shall be subject to all of the requirements, contained in
the following provisions:

(i) Any grant may specify that the amount payable on exercise of an Appreciation
Right may be paid by the Company in cash, in Common Shares or in any combination
thereof and may either grant to the Participant or retain in the Committee the
right to elect among those alternatives.

(ii) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum specified by the Committee at the
Date of Grant.

(iii) Each grant shall specify the period or periods of continuous service by
the Participant with the Company or any Affiliate that is necessary before the
Appreciation Right or

 

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installments thereof will become exercisable and may provide for accelerated
vesting of such Appreciation Rights in the event of a Change in Control,
retirement, death or Disability of the Participant or other similar transaction
or event as approved by the Committee; provided that in no event will any
Appreciation Right vest or become exercisable early solely as the result of a
Change in Control.

(iv) Each grant of an Appreciation Right shall be evidenced by an Evidence of
Award, which shall describe such Appreciation Right, identify any related Option
Right, state that such Appreciation Right is subject to all the terms and
conditions of this Plan, and contain such other terms and provisions, consistent
with this Plan and applicable sections of the Code, as the Committee may
approve.

(v) Any grant may provide for the payment to the Participant of dividend
equivalents thereon in cash or Common Shares on a current, deferred or
contingent basis.

c. Any grant of Tandem Appreciation Rights shall provide that such Rights may be
exercised only at a time when the related Option Right is also exercisable and
at a time when the Spread is positive, and by surrender of the related Option
Right for cancellation.

 d. Regarding Free-Standing Appreciation Rights only:

(i) Each grant shall specify in respect of each Free-Standing Appreciation Right
a Base Price, which shall not be less than the Market Value per Share on the
Date of Grant;

(ii) Successive grants may be made to the same Participant regardless of whether
any Free-Standing Appreciation Rights previously granted to the Participant
remain unexercised; and

(iii) No Free-Standing Appreciation Right granted under this Plan may be
exercised more than 10 years from the Date of Grant.

e. Any grant of Appreciation Rights may specify Management Objectives that must
be achieved as a condition to exercise such rights.

6. Performance Units and Performance Shares. The Committee may also authorize
the granting to Participants of Performance Units and Performance Shares that
will become payable to a Participant upon achievement of specified Management
Objectives. Each such grant may utilize any or all of the authorizations, and
shall be subject to all of the limitations, contained in the following
provisions:

a. Each grant shall specify the number of Performance Units or Performance
Shares to which it pertains, which number may be subject to adjustment to
reflect changes in compensation or other factors; provided, however, that no
such adjustment shall be made in the case of a Covered Employee where such
action would result in the loss of the otherwise available exemption of the
award under Section 162(m) of the Code.

b. The Performance Period with respect to each Performance Unit or Performance
Share shall be such period of time commencing with the Date of Grant as shall be
determined by the Committee at the time of grant. Each grant may provide for the
earlier lapse or other modification of such Performance Period in the event of a
Change in Control, retirement, or death or Disability of the Participant or
other similar transaction or event as approved by the Committee.

c. Any grant of Performance Units or Performance Shares shall specify Management
Objectives which, if achieved, will result in payment of the award, and each
grant may specify in respect of such specified Management Objectives a minimum
acceptable level of achievement and shall set forth

 

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a formula for determining the number of Performance Units or Performance Shares
that will be earned if performance is at or above the minimum level, but falls
short of full achievement of the specified Management Objectives. Each grant of
Performance Units or Performance Shares shall specify that, before any
Performance Shares or Performance Units are earned and paid, the Committee must
determine that at least the minimum level of Management Objectives has been
satisfied.

d. Each grant shall specify the time and manner of payment of Performance Units
or Performance Shares that have been earned. Any grant may specify that the
amount payable with respect thereto may be paid by the Company to the
Participant in cash, in Common Shares or in any combination thereof, and may
either grant to the Participant or retain in the Committee the right to elect
among those alternatives.

e. Any grant of Performance Units may specify that the amount payable or the
number of Common Shares issued with respect thereto may not exceed maximums
specified by the Committee at the Date of Grant. Any grant of Performance Shares
may specify that the amount payable with respect thereto may not exceed a
maximum specified by the Committee at the Date of Grant.

f. Each grant of Performance Units or Performance Shares shall be evidenced by
an Evidence of Award, which shall contain such terms and provisions, consistent
with this Plan and applicable sections of the Code, as the Committee may
approve.

g. The Committee may, at the Date of Grant of Performance Shares, provide for
the payment of dividend equivalents to the holder thereof on either a current or
deferred or contingent basis, either in cash or in additional Common Shares.

7. Restricted Shares. The Committee may also authorize the grant or sale of
Restricted Shares to Participants. Each such grant or sale may utilize any or
all of the authorizations, and shall be subject to all of the limitations,
contained in the following provisions:

a. Each such grant or sale shall constitute an immediate transfer of the
ownership of Common Shares to the Participant in consideration of the
performance of services, entitling such Participant to voting, dividend and
other ownership rights (unless otherwise determined by the Committee), but
subject to the substantial risk of forfeiture and restrictions on transfer
hereinafter referred to.

b. Each such grant or sale may be made without additional consideration or in
consideration of a payment by such Participant that is less than Market Value
per Share at the Date of Grant.

c. Each such grant or sale shall provide that the Restricted Shares covered by
such grant or sale shall be subject to a “substantial risk of forfeiture” within
the meaning of Section 83 of the Code for a period to be determined by the
Committee at the Date of Grant and may provide for the earlier lapse of such
substantial risk of forfeiture in the event of a Change in Control, retirement,
or death or Disability of the Participant or other similar transaction or event
as approved by the Committee; provided that in no event will such substantial
risk of forfeiture lapse early solely as the result of a Change in Control.

d. Each such grant or sale shall provide that during the period for which such
substantial risk of forfeiture is to continue, the transferability of the
Restricted Shares shall be prohibited or restricted in the manner and to the
extent prescribed by the Committee at the Date of Grant (which restrictions may
include, without limitation, rights of repurchase or first refusal in the
Company or provisions subjecting the Restricted Shares to a continuing
substantial risk of forfeiture in the hands of any transferee).

e. Any grant of Restricted Shares may specify Management Objectives that, if
achieved, will

 

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result in termination or early termination of the restrictions applicable to
such shares. Each grant may specify in respect of such Management Objectives a
minimum acceptable level of achievement and may set forth a formula for
determining the number of Restricted Shares on which restrictions will terminate
if performance is at or above the minimum level, but falls short of full
achievement of the specified Management Objectives.

f. Any such grant or sale of Restricted Shares may require that any or all
dividends or other distributions paid thereon during the period of such
restrictions be automatically deferred and reinvested in additional Restricted
Shares, which may be subject to the same restrictions as the underlying award.

g. Each grant or sale of Restricted Shares shall be evidenced by an Evidence of
Award, which shall contain such terms and provisions, consistent with this Plan
and applicable sections of the Code, as the Committee may approve. Unless
otherwise directed by the Committee, all certificates representing Restricted
Shares shall be held in custody by the Company until all restrictions thereon
shall have lapsed, together with a stock power or powers executed by the
Participant in whose name such certificates are registered, endorsed in blank
and covering such Shares.

8. Restricted Stock Units. The Committee may also authorize the grant or sale of
Restricted Stock Units to Participants. Each such grant or sale may utilize any
or all of the authorizations, and shall be subject to all of the requirements
contained in the following provisions:

a. Each such grant or sale shall constitute the agreement by the Company to
deliver Common Shares, pay an amount in cash, or pay a combination of Common
Shares and cash to the Participant in the future in consideration of the
performance of services, but subject to the fulfillment of such conditions
during the Restriction Period as the Committee may specify.

b. Each such grant or sale may be made without additional consideration or in
consideration of a payment by such Participant that is less than the Market
Value per Share at the Date of Grant.

c. Each such grant or sale shall be subject to a Restriction Period as
determined by the Committee at the Date of Grant, and may provide for the
earlier lapse or other modification of such Restriction Period in the event of a
Change in Control, retirement, or death or Disability of the Participant or
other similar transaction or event as approved by the Committee; provided that
in no event will a Restriction Period lapse early solely as the result of a
Change in Control.

d. Any grant of Restricted Stock Units may specify Management Objectives that,
if achieved, will result in termination or early termination of the Restriction
Period applicable to such shares. Each grant may specify in respect of such
Management Objectives a minimum acceptable level of achievement and may set
forth a formula for determining the number of Restricted Stock Units on which
restrictions will terminate if performance is at or above the minimum level, but
falls short of full achievement of the specified Management Objectives.

e. During the Restriction Period, the Participant shall have no right to
transfer any rights under his or her award and shall have no rights of ownership
in the Restricted Stock Units and shall have no right to vote them, but the
Committee may, at the Date of Grant, authorize the payment of dividend
equivalents on such Restricted Stock Units on either a current or deferred or
contingent basis, either in cash or in additional Common Shares.

f. Each grant or sale of Restricted Stock Units shall be evidenced by an
Evidence of Award, which shall contain such terms and provisions, consistent
with this Plan and applicable sections of the Code, as the Committee may
approve.

 

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9. Awards to Non-Employee Directors. The Board may, from time to time and upon
such terms and conditions as it may determine, authorize the granting to
Non-Employee Directors of Option Rights under Section 4 of this Plan or
Appreciation Rights under Section 5 of this Plan, and may also authorize the
grant or sale of Restricted Shares under Section 7 of this Plan, Restricted
Stock Units under Section 8 of this Plan or other awards under Section 10 of
this Plan, or any combination of the foregoing. For clarity, the authority to
grant awards to Non-Employee Directors pursuant to this Plan rests exclusively
with the Board (and, for the avoidance of doubt, not with the Committee), except
to the extent expressly delegated by the Board to a committee or person(s)
pursuant to Section 16.

10. Other Awards.  

a. The Committee is authorized, subject to limitations under applicable law, to
grant to any Participant such other awards that may be denominated or payable
in, valued in whole or in part by reference to, or otherwise based on, or
related to, Common Shares or factors that may influence the value of Common
Shares, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Common Shares,
purchase rights for Common Shares, awards with value and payment contingent upon
performance of the Company or business units thereof or any other factors
designated by the Committee, and awards valued by reference to the book value of
Common Shares or the value of securities of, or the performance of specified
Subsidiaries or Affiliates or other business units of, the Company. The
Committee shall determine the terms and conditions of such awards. Common Shares
delivered pursuant to an award in the nature of a purchase right granted under
this Section 10 shall be purchased for such consideration, paid for at such
times, by such methods, and in such forms, including, without limitation, cash,
Common Shares, other awards, notes or other property, as the Committee shall
determine.

b. Cash awards, as an element of or supplement to any other award granted under
this Plan, may also be granted pursuant to this Section 10 of this Plan.

c. The Committee is authorized to grant Common Shares as a bonus, or to grant
Common Shares or other awards in lieu of obligations of the Company or an
Affiliate to pay cash or deliver other property under the Plan or under other
plans or compensatory arrangements, subject to such terms as shall be determined
by the Committee.

11. Transferability.  

a. Except as otherwise determined by the Committee, no Option Right,
Appreciation Right or other derivative security granted under the Plan shall be
transferable by a Participant other than by will or the laws of descent and
distribution. Except as otherwise determined by the Committee, Option Rights and
Appreciation Rights shall be exercisable during the Optionee’s lifetime only by
him or her or by his or her guardian or legal representative.

b. The Committee may specify at the Date of Grant that part or all of the Common
Shares that are (i) to be issued or transferred by the Company upon the exercise
of Option Rights or Appreciation Rights, upon the termination of the Restriction
Period applicable to Restricted Stock Units or upon payment under any grant of
Performance Units or Performance Shares or (ii) no longer subject to the
substantial risk of forfeiture and restrictions on transfer referred to in
Section 7 of this Plan, shall be subject to further restrictions on transfer.

12. Adjustments. The Committee shall make or provide for such adjustments in the
numbers of Common Shares covered by outstanding Option Rights, Appreciation
Rights, Performance Shares, Restricted Stock Units and share-based awards
described in Section 10 of this Plan granted hereunder, in

 

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the Option Price and Base Price provided in outstanding Option Rights and
Appreciation Rights, and in the kind of shares covered thereby, as the
Committee, in its discretion, exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the rights of
Participants or Optionees that otherwise would result from (a) any stock
dividend, stock split, combination of shares, recapitalization or other change
in the capital structure of the Company, or (b) any merger, consolidation,
spin-off, split-off, spin-out, split-up, reorganization, partial or complete
liquidation or other distribution of assets (including, without limitation, a
special or large non-recurring dividend), issuance of rights or warrants to
purchase securities, or (c) any other corporate transaction or event having an
effect similar to any of the foregoing. Moreover, in the event of any such
transaction or event, the Committee, in its discretion, may provide in
substitution for any or all outstanding awards under this Plan such alternative
consideration (including cash) as it, in good faith, may determine to be
equitable in the circumstances and may require in connection therewith the
surrender of all awards so replaced. The Committee may also make or provide for
such adjustments in the numbers of shares specified in Section 3 of this Plan as
the Committee, in its discretion, exercised in good faith, may determine is
appropriate to reflect any transaction or event described in this Section 12;
provided, however, that any such adjustment to the number specified in Section
3(c)(i) shall be made only if and to the extent that such adjustment would not
cause any Option intended to qualify as an Incentive Stock Option to fail so to
qualify. In no event shall any adjustment be required under this Section 12 if
the Committee determines that such action could cause an award to fail to
satisfy the conditions of an applicable exception from the requirements of
Section 409A of the Code or otherwise could subject a Participant to the
additional tax imposed under Section 409A in respect of an outstanding award.

13. Fractional Shares. The Company shall not be required to issue any fractional
Common Shares pursuant to this Plan. The Committee may provide for the
elimination of fractions or for the settlement of fractions in cash.

14. Withholding Taxes. The Company shall have the right to deduct from any
payment or benefit realized under this Plan an amount equal to the federal,
state, local, foreign and other taxes which in the opinion of the Company are
required to be withheld by it with respect to such payment or benefit. To the
extent that the amounts available to the Company for such withholding are
insufficient, it shall be a condition to the receipt of such payment or the
realization of such benefit that the Participant or other recipient make
arrangements satisfactory to the Company for payment of the balance of such
taxes required to be withheld. At the discretion of the Committee, such
arrangements may include relinquishment of a portion of such benefit pursuant to
procedures adopted by the Committee from time to time. The Company and a
Participant or such other recipient may also make similar arrangements with
respect to the payment of any taxes with respect to which withholding is not
required.

15. Foreign Employees. In order to facilitate the making of any grant or
combination of grants under this Plan, the Committee may provide for such
special terms for awards to Participants who are foreign nationals or who are
employed by the Company or any Affiliate outside of the United States of America
as the Committee may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. Moreover, the Committee may
approve such supplements to or amendments, restatements or alternative versions
of this Plan as it may consider necessary or appropriate for such purposes,
without thereby affecting the terms of this Plan as in effect for any other
purpose, and the Corporate Secretary or other appropriate officer of the Company
may certify any such document as having been approved and adopted in the same
manner as this Plan. No such special terms, supplements, amendments or
restatements, however, shall include any provisions that are inconsistent with
the terms of this Plan as then in effect unless this Plan could have been
amended to eliminate such inconsistency without further approval by the
stockholders of the Company.

16. Administration of the Plan.  

 

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a. The Committee shall administer this Plan or delegate its authority to do so
as provided in Section 16(c) hereof or, in the Board’s sole discretion or in the
absence of the Committee, the Board shall administer this Plan; provided that
the authority to grant awards to Non-Employee Directors pursuant to this Plan
rests exclusively with the Board (and, for the avoidance of doubt, not with the
Committee), and each reference in this Plan to the Committee shall be deemed,
when used in the context of any award(s) made or to be made to a Non-Employee
Director, a reference to the Board. The Committee, or if no Committee has been
appointed, the Board, may delegate administration of the Plan to a committee or
committees of one or more members of the Board, and the term “Committee” shall
apply to any such committee, person(s) to whom such authority has been
delegated. The Committee shall have the power to delegate to a subcommittee any
of the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Committee shall thereafter be to the committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish, suspend or supersede the Committee at any time and revest in
the Board the administration of the Plan.

b. Subject to the express provisions of the Plan, the Committee shall have
plenary authority, in its discretion, to determine the individuals to whom, and
the time or times at which, awards shall be granted and the number of shares, if
applicable, to be subject to each award. In making such determinations, the
Committee may take into account the nature of services rendered by the
respective individuals, their present and potential contributions to the
Company’s success and such other factors as the Committee deems relevant.
Subject to the express provisions of the Plan, the Committee shall also have
plenary discretionary authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, to determine the terms and
provisions of the respective Evidence of Award (which need not be identical) and
to make all other determinations necessary or advisable for the administration
of the Plan. The interpretation and construction by the Committee of any
provision of this Plan or of any Evidence of Award and any determination by the
Board pursuant to any provision of this Plan or of any such Evidence of Award
shall be final, conclusive and binding on the Company and the Participants,
unless such decisions are determined by a court having jurisdiction to be
arbitrary and capricious. No member of the Board or the Committee shall be
liable for any such action or determination made in good faith.

c. To the extent permitted by applicable law, the Committee may delegate to one
or more of its members or to one or more officers of the Company, or to one or
more agents or advisors, such administrative duties or powers as it may deem
advisable, and the Committee, or any person(s) or committee to whom duties or
powers have been delegated as aforesaid, may employ one or more persons to
render advice with respect to any responsibility the Committee or such person or
committee may have under the Plan. To the extent permitted by applicable law,
the Committee may, by resolution, authorize one or more officers of the Company
to do one or both of the following on the same basis as the Committee: (i)
designate employees to be recipients of awards under this Plan; (ii) determine
the size of any such awards; provided, however, that (A) the Committee shall not
delegate such responsibilities to any such officer for awards granted to an
employee who is an officer, Director, or more than 10% beneficial owner of any
class of the Company’s equity securities that is registered pursuant to Section
12 of the Exchange Act, as determined by the Committee in accordance with
Section 16 of the Exchange Act; (B) the resolution providing for such
authorization sets forth the total number of Common Shares such officer(s) may
grant; and (iii) the officer(s) shall report periodically to the Committee, as
the case may be, regarding the nature and scope of the awards granted pursuant
to the authority delegated.

d. Any authority granted to the Committee may also be exercised by the Board or
another committee of the Board duly appointed for such purpose, except to the
extent that the grant or exercise of such authority would cause any award
intended to qualify for favorable treatment under Section 162(m) of the Code to
cease to qualify for the favorable treatment under Section 162(m) of the Code.
To the

 

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extent that any permitted action taken by the Board conflicts with action taken
by the Committee, the Board action shall control. Without limiting the
generality of the foregoing, to the extent the Board has delegated any authority
under this Plan to another committee of the Board, such authority shall not be
exercised by the Committee unless expressly permitted by the Board in connection
with such delegation.

e. The Board shall have discretion to determine whether or not it intends to
comply with the exemption requirements of Rule 16b-3 and/or Section 162(m) of
the Code. Nothing herein shall create an inference that an award is not validly
granted under the Plan in the event awards are granted under the Plan by a
compensation committee of the Board that does not at all times consist solely of
two or more Non-Employee Directors who are also “outside directors” within the
meaning of Section 162(m) of the Code.

17. Amendments and Other Matters.  

a. The Board may at any time and from time to time amend the Plan in whole or in
part; provided, however, that any amendment which must be approved by the
stockholders of the Company in order to comply with applicable law or the rules
of the NASDAQ Global Stock Market shall not be effective unless and until such
approval has been obtained. Presentation of this Plan or any amendment thereof
for stockholder approval shall not be construed to limit the Company’s authority
to offer similar or dissimilar benefits under other plans or otherwise with or
without stockholder approval. Without limiting the generality of the foregoing,
the Board may amend this Plan to eliminate provisions which are no longer
necessary as a result in changes in tax or securities laws or regulations, or in
the interpretation thereof.

b. Neither the Board nor the Committee shall, without the further approval of
the stockholders of the Company, authorize the amendment of any outstanding
Option Right or Appreciation Right to reduce the Option Price or Base Price.
Furthermore, no Option Right or Appreciation Right shall be, without further
approval of the stockholders of the Company, (i) cancelled and replaced with
awards having a lower Option Price or Base Price, or (ii) cancelled in exchange
for cash if the per share Option Price or per share Base Price exceeds the
Market Value per Share on the date of such cancellation. This Section 17(b) is
intended to prohibit the repricing of “underwater” Option Rights and
Appreciation Rights and shall not be construed to prohibit the adjustments
provided for in Section 12 of this Plan.

c. To the extent consistent with Section 409A of the Code, the Committee also
may permit Participants to elect to defer the issuance of Common Shares or the
settlement of awards in cash under the Plan pursuant to such rules, procedures
or programs as it may establish for purposes of this Plan. The Committee also
may provide that deferred issuances and settlements include the payment or
crediting of dividend equivalents or interest on the deferral amounts.

d. If permitted by Section 409A of the Code, in case of termination of
employment by reason of death, Disability or normal or early retirement, or in
the case of hardship or other special circumstances, of a Participant who holds
an Option Right or Appreciation Right not immediately exercisable in full, or
any Restricted Shares as to which the substantial risk of forfeiture or the
prohibition or restriction on transfer has not lapsed, or any Restricted Stock
Units as to which the Restriction Period has not been completed, or any
Performance Shares or Performance Units which have not been fully earned, or any
other awards made pursuant to Section 10 subject to any vesting schedule or
transfer restriction, or who holds Common Shares subject to any transfer
restriction imposed pursuant to Section 11(b) of this Plan, the Committee may,
at its discretion, accelerate the time at which such Option Right, Appreciation
Right or other award may be exercised or the time at which such substantial risk
of forfeiture or prohibition or restriction on transfer will lapse or the time
when such Restriction Period will end or the time at which such Performance
Shares or Performance Units will be deemed to have been

 

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fully earned or the time when such transfer restriction will terminate or may
waive any other limitation or requirement under any such award.

e. This Plan shall not confer upon any Participant any right with respect to
continuance of employment or other service with the Company or any Affiliate,
nor shall it interfere in any way with any right the Company or any Affiliate
would otherwise have to terminate such Participant’s employment or other service
at any time.

f. To the extent that any provision of this Plan would prevent any Option Right
that was intended to qualify as an Incentive Stock Option from qualifying as
such, that provision shall be null and void with respect to such Option Right.
Such provision, however, shall remain in effect for other Option Rights and
there shall be no further effect on any provision of this Plan.

g. Subject to Section 20, this Plan shall continue in effect until the date on
which all Common Shares available for issuance or transfer under this Plan have
been issued or transferred and the Company has no further obligation hereunder.

h. Neither a Participant nor any other person shall, by reason of participation
in the Plan, acquire any right or title to any assets, funds or property of the
Company or any Affiliate, including without limitation, any specific funds,
assets or other property which the Company or any Affiliate may set aside in
anticipation of any liability under the Plan. A Participant shall have only a
contractual right to an award or the amounts, if any, payable under the Plan,
unsecured by any assets of the Company or any Affiliate, and nothing contained
in the Plan shall constitute a guarantee that the assets of the Company or any
Affiliate shall be sufficient to pay any benefits to any person.

i. This Plan and each Evidence of Award shall be governed by the laws of the
State of Maryland, excluding any conflicts or choice of law rule or principle
that might otherwise refer construction or interpretation of the Plan to the
substantive law of another jurisdiction.

j. In the event any provision of this Plan shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining parts of
this Plan, and this Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.

18. Compliance with Section 409A of the Code. Awards granted under this Plan
shall be designed and administered in such a manner that they are either exempt
from the application of, or comply with, the requirements of Section 409A of the
Code. To the extent that the Committee determines that any award granted under
the Plan is subject to Section 409A of the Code, the Evidence of Award shall
incorporate the terms and conditions necessary to avoid the imposition of an
additional tax under Section 409A of the Code upon a Participant.
Notwithstanding any other provision of the Plan or any Evidence of Award (unless
the Evidence of Award provides otherwise with specific reference to this
Section), an award shall not be granted, deferred, accelerated, extended, paid
out, settled, substituted or modified under this Plan in a manner that would
result in the imposition of an additional tax under Section 409A of the Code
upon a Participant. Although the Company intends to administer the Plan so that
awards will be exempt from, or will comply with, the requirements of Section
409A of the Code, the Company does not warrant that any award under the Plan
will qualify for favorable tax treatment under Section 409A of the Code or any
other provision of federal, state, local, or non-United States law. Neither the
Company, its Affiliates, nor their respective directors, officers, employees or
advisers shall be liable to any Participant (or any other individual claiming a
benefit through the Participant) for any tax, interest, or penalties the
Participant might owe as a result of the grant, holding, vesting, exercise, or
payment of any award under the Plan. Any reference in this Plan to Section 409A
of the Code will also include the applicable proposed, temporary or final
regulations, or any other guidance, issued with respect to such Section by the

 

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U.S. Department of the Treasury or the Internal Revenue Service.

19. Applicable Laws. To the extent that federal laws do not otherwise control,
this Plan and all determinations made and actions taken pursuant to this Plan
shall be governed by the laws of Maryland, without giving effect to principles
of conflicts of laws, and construed accordingly.

20. Term and Termination. This Plan shall terminate 10 years after the date on
which it is approved and adopted by the Board and no award(s) shall be made
hereunder after the expiration of such 10 year period. Awards outstanding at the
termination of the Plan will continue in accordance with their terms and will
not be affected by such termination.