Exhibit 10.1

 

 

HEICO Corporation

 

2012 INCENTIVE COMPENSATION PLAN

 

1

 

 

HEICO Corporation

2012 INCENTIVE COMPENSATION PLAN

 

1. Purpose 3       2. Definitions 3       3. Administration. 7       4. Shares
Subject to Plan. 8       5. Eligibility; Per-Person Award Limitations 9       6.
Specific Terms of Awards. 9       7. Certain Provisions Applicable to Awards. 13
      8. Code Section 162(m) Provisions. 15       9. Change in Control. 16      
10. General Provisions. 17

 

2

 

 

 

HEICO Corporation

2012 INCENTIVE COMPENSATION PLAN

 

 

1.          Purpose. The purpose of this 2012 INCENTIVE COMPENSATION PLAN (the
“Plan”) is to assist HEICO Corporation, a Florida corporation (the “Company”)
and its Related Entities (as hereinafter defined) in attracting, motivating,
retaining and rewarding high-quality executives and other employees, officers,
directors, consultants and other persons who provide services to the Company or
its Related Entities by enabling such persons to acquire or increase a
proprietary interest in the Company in order to strengthen the mutuality of
interests between such persons and the Company's shareholders, and providing
such persons with performance incentives to expend their maximum efforts in the
creation of shareholder value.

 

2.          Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof and elsewhere herein.

 

 

(a)          “Award” means any Option, Stock Appreciation Right, Restricted
Stock Award, Restricted Stock Unit Award, Share granted as a bonus or in lieu of
another Award, Dividend Equivalent, Other Stock-Based Award or Performance
Award, together with any other right or interest, granted to a Participant under
the Plan.

 

(b)          “Award Agreement” means any written agreement, contract or other
instrument or document evidencing any Award granted by the Committee hereunder.

 

(c)          “Beneficiary” means the person, persons, trust or trusts that have
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan upon such Participant's death or to which Awards or other rights are
transferred if and to the extent permitted under Section 10(b) hereof. If, upon
a Participant's death, there is no designated Beneficiary or surviving
designated Beneficiary, then the term Beneficiary means the person, persons,
trust or trusts entitled by will or the laws of descent and distribution to
receive such benefits.

 

(d)          “Beneficial Owner” and “Beneficial Ownership” shall have the
meaning ascribed to such term in Rule 13d-3 under the Exchange Act and any
successor to such Rule.

 

(e)          “Board” means the Company's Board of Directors.

 

(f)          “Cause” shall, with respect to any Participant, have the meaning
specified in the Award Agreement. In the absence of any definition in the Award
Agreement, “Cause” shall have the equivalent meaning or the same meaning as
“cause” or “for cause” set forth in any employment, consulting, or other
agreement for the performance of services between the Participant and the
Company or a Related Entity or, in the absence of any such agreement or any such
definition in such agreement, such term shall mean (i) the failure by the
Participant to perform, in a reasonable manner, his or her duties as assigned by
the Company or a Related Entity, (ii) any violation or breach by the Participant
of his or her employment, consulting or other similar agreement with the Company
or a Related Entity, if any, (iii) any violation or breach by the Participant of
any non-competition, non-solicitation, non-disclosure and/or other similar
agreement with the Company or a Related Entity, (iv) any act by the Participant
of dishonesty or bad faith with respect to the Company or a Related Entity, (v)
use of alcohol, drugs or other similar substances in a manner that adversely
affects the Participant’s work performance, or (vi) the commission by the
Participant of any act, misdemeanor, or crime reflecting unfavorably upon the
Participant or the Company or any Related Entity. The good faith determination
by the Committee of whether the Participant’s Continuous Service was terminated
by the Company for “Cause” shall be final and binding for all purposes
hereunder.

 

(g)          “Change in Control” means a Change in Control as defined in Section
9(b) of the Plan.

 

(h)          “Class A Common Stock” means the shares of Class A Common Stock of
the Company, par value $0.01 per share.

 

3

 

 

(i)          “Code” means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.

 

(j)          “Committee” means a committee designated by the Board to administer
the Plan; provided, however, that if the Board fails to designate a committee or
if there are no longer any members on the committee so designated by the Board,
or for any other reason determined by the Board, then the Board shall serve as
the Committee. While it is intended that the Committee shall consist of at least
two directors, each of whom shall be (i) a “non-employee director” within the
meaning of Rule 16b-3 (or any successor rule) under the Exchange Act, unless
administration of the Plan by “non-employee directors” is not then required in
order for exemptions under Rule 16b-3 to apply to transactions under the Plan,
(ii) an “outside director” within the meaning of Section 162(m) of the Code, and
(iii) “Independent”. The failure of the Committee to be so comprised shall not
invalidate any Award that otherwise satisfies the terms of the Plan.

 

(k)          “Common Stock” means the shares of Common Stock of the Company, par
value $0.01 per share.

 

(l)          “Consultant” means any Person (other than an Employee or a
Director, solely with respect to rendering services in such Person’s capacity as
a director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.

 

(m)          “Continuous Service” means the uninterrupted provision of services
to the Company or any Related Entity in any capacity of Employee, Director,
Consultant or other service provider. Continuous Service shall not be considered
to be interrupted in the case of (i) any approved leave of absence, (ii)
transfers among the Company, any Related Entities, or any successor entities, in
any capacity of Employee, Director, Consultant or other service provider, or
(iii) any change in status as long as the individual remains in the service of
the Company or a Related Entity in any capacity of Employee, Director,
Consultant or other service provider (except as otherwise provided in the Award
Agreement). An approved leave of absence shall include sick leave, military
leave, or any other authorized personal leave.

 

(n)          “Covered Employee” means the Person who, as of the end of the
taxable year, either is the principal executive officer of the Company or is
serving as the acting principal executive officer of the Company, and each other
Person whose compensation is required to be disclosed in the Company’s filings
with the Securities and Exchange Commission by reason of that person being among
the three highest compensated officers of the Company as of the end of a taxable
year, or such other person as shall be considered a “covered employee” for
purposes of Section 162(m) of the Code.

 

(o)          “Director” means a member of the Board or the board of directors of
any Related Entity.

 

(p)          “Disability” means a permanent and total disability (within the
meaning of Section 22(e) of the Code), as determined by a medical doctor
satisfactory to the Committee.

 

(q)          “Discounted Option” means any Option Awarded under Section 6(b)
hereof with an exercise price that is less than the Fair Market Value of a Share
on the date of grant.

 

(r)          “Discounted Stock Appreciation Right” means any Stock Appreciation
Right Awarded under Section 6(c) hereof with an exercise price that is less than
the Fair Market Value of a Share on the date of grant.

 

(s)          “Dividend Equivalent” means a right, granted to a Participant under
Section 6(g) hereof, to receive cash, Shares, other Awards or other property
equal in value to dividends paid with respect to a specified number of Shares,
or other periodic payments.

 

(t)          “Effective Date” means the effective date of the Plan, which shall
be March 26, 2012.

 

4

 

 

(u)          “Eligible Person” means each officer, Director, Employee,
Consultant and other person who provides services to the Company or any Related
Entity. The foregoing notwithstanding, only Employees of the Company, or any
parent corporation or subsidiary corporation of the Company (as those terms are
defined in Sections 424(e) and (f) of the Code, respectively), shall be Eligible
Persons for purposes of receiving any Incentive Stock Options. An Employee on
leave of absence may, in the discretion of the Committee, be considered as still
in the employ of the Company or a Related Entity for purposes of eligibility for
participation in the Plan.

 

(v)          “Employee” means any person, including an officer or Director, who
is an employee of the Company or any Related Entity. The payment of a director’s
fee by the Company or a Related Entity shall not be sufficient to constitute
“employment” by the Company.

 

(w)          “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.

 

(x)          “Fair Market Value” means the fair market value of Shares, Awards
or other property as determined by the Committee, or under procedures
established by the Committee. Unless otherwise determined by the Committee, the
Fair Market Value of a Share as of any given date shall be the closing sale
price per Share reported on a consolidated basis for stock listed on the
principal stock exchange or market on which Shares are traded on the date as of
which such value is being determined (or as of such later measurement date as
determined by the Committee on the date the Award is authorized by the
Committee), or, if there is no sale on that date, then on the last previous day
on which a sale was reported.

 

(y)          “Incentive Stock Option” means any Option intended to be designated
as an incentive stock option within the meaning of Section 422 of the Code or
any successor provision thereto.

 

(z)          “Independent”, when referring to either the Board or members of the
Committee, shall have the same meaning as used in the rules of the Listing
Market.

 

(aa)          “Incumbent Board” means the Incumbent Board as defined in Section
9(b)(ii) hereof.

 

(bb)          “Listing Market” means the New York Stock Exchange or any other
national securities exchange on which any securities of the Company are listed
for trading, and if not listed for trading, by the rules of the Nasdaq Market.

 

(cc)          “Option” means a right granted to a Participant under Section 6(b)
hereof, to purchase Shares or other Awards at a specified price during specified
time periods.

 

(dd)          “Optionee” means a person to whom an Option is granted under this
Plan or any person who succeeds to the rights of such person under this Plan.

 

(ee)          “Other Stock-Based Awards” means Awards granted to a Participant
under Section 6(i) hereof.

 

(ff)          “Participant” means a person who has been granted an Award under
the Plan which remains outstanding, including a person who is no longer an
Eligible Person.

 

(gg)          “Performance Award” means any Award of Performance Shares or
Performance Units granted pursuant to Section 6(h) hereof.

 

(hh)          “Performance Period” means that period established by the
Committee at the time any Performance Award is granted or at any time thereafter
during which any performance goals specified by the Committee with respect to
such Award are to be measured.

 

(ii)          “Performance Share” means any grant pursuant to Section 6(h)
hereof of a unit valued by reference to a designated number of Shares, which
value may be paid to the Participant by delivery of such

 

5

 

 

property as the Committee shall determine, including cash, Shares, other
property, or any combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish at the time of
such grant or thereafter.

 

(jj)          “Performance Unit” means any grant pursuant to Section 6(h) hereof
of a unit valued by reference to a designated amount of property (including
cash) other than Shares, which value may be paid to the Participant by delivery
of such property as the Committee shall determine, including cash, Shares, other
property, or any combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish at the time of
such grant or thereafter.

 

(kk)          “Person” shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, and shall include a “group” as defined in Section 13(d) thereof.

 

(ll)          “Prior Plans” means the Company’s 2002 Amended and Restated Stock
Option Plan and the Company’s Non-Qualified Stock Option Plan.

 

(mm)          “Related Entity” means any Subsidiary, and any business,
corporation, partnership, limited liability company or other entity designated
by the Board, in which the Company or a Subsidiary holds a substantial ownership
interest, directly or indirectly.

 

(nn)          “Restricted Stock” means any Share issued with the restriction
that the holder may not sell, transfer, pledge or assign such Share and with
such risks of forfeiture and other restrictions as the Committee, in its sole
discretion, may impose (including any restriction on the right to vote such
Share and the right to receive any dividends), which restrictions may lapse
separately or in combination at such time or times, in installments or
otherwise, as the Committee may deem appropriate.

 

(oo)          “Restricted Stock Award” means an Award granted to a Participant
under Section 6(d) hereof.

 

(pp)          “Restricted Stock Unit” means a right to receive Shares, including
Restricted Stock, cash measured based upon the value of Shares or a combination
thereof, at the end of a specified deferral period.

 

(qq)          “Restricted Stock Unit Award” means an Award of Restricted Stock
Unit granted to a Participant under Section 6(e) hereof.

 

(rr)          “Restriction Period” means the period of time specified by the
Committee that Restricted Stock Awards shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any, as the
Committee may impose.

 

(ss)          “Rule 16b-3” means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.

 

(tt)          “Shareholder Approval Date” means the date on which this Plan is
approved by shareholders of the Company eligible to vote in the election of
directors, by a vote sufficient to meet the requirements Sections 162(m) and 422
of the Code, Rule 16b-3 under the Exchange Act applicable requirements under the
rules of the Listing Market.

 

(uu)          “Shares” means shares of Common Stock or Class A Common Stock, and
such other securities as may be substituted (or resubstituted) for Shares
pursuant to Section 10(c) hereof.

 

(vv)          “Stock Appreciation Right” means a right granted to a Participant
under Section 6(c) hereof.

 

6

 

 

(ww)          “Subsidiary” means any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the total
combined voting power of the then outstanding securities or interests of such
corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or
dissolution.

 

(xx)          “Substitute Awards” means Awards granted or Shares issued by the
Company in assumption of, or in substitution or exchange for, awards previously
granted, or the right or obligation to make future awards, by a company (i)
acquired by the Company or any Related Entity, (ii) which becomes a Related
Entity after the date hereof, or (iii) with which the Company or any Related
Entity combines.

 

3.          Administration.

 

(a)          Authority of the Committee. The Plan shall be administered by the
Committee, except to the extent (and subject to the limitations imposed by
Section 3(b) hereof) the Board elects to administer the Plan, in which case the
Plan shall be administered by only those members of the Board who are
Independent members of the Board, in which case references herein to the
“Committee” shall be deemed to include references to the Independent members of
the Board. The Committee shall have full and final authority, subject to and
consistent with the provisions of the Plan, to select Eligible Persons to become
Participants, grant Awards, determine the type, number and other terms and
conditions of, and all other matters relating to, Awards, prescribe Award
Agreements (which need not be identical for each Participant) and rules and
regulations for the administration of the Plan, construe and interpret the Plan
and Award Agreements and correct defects, supply omissions or reconcile
inconsistencies therein, and to make all other decisions and determinations as
the Committee may deem necessary or advisable for the administration of the
Plan. In exercising any discretion granted to the Committee under the Plan or
pursuant to any Award, the Committee shall not be required to follow past
practices, act in a manner consistent with past practices, or treat any Eligible
Person or Participant in a manner consistent with the treatment of any other
Eligible Persons or Participants.

 

(b)          Manner of Exercise of Committee Authority: The Committee, and not
the Board, shall exercise sole and exclusive discretion (i) on any matter
relating to a Participant then subject to Section 16 of the Exchange Act with
respect to the Company to the extent necessary in order that transactions by
such Participant shall be exempt under Rule 16b-3 under the Exchange Act, (ii)
with respect to any Award that is intended to qualify as “performance-based
compensation” under Section 162(m), to the extent necessary in order for such
Award to so qualify; and (iii) with respect to any Award to an Independent
Director. Any action of the Committee shall be final, conclusive and binding on
all persons, including the Company, its Related Entities, Eligible Persons,
Participants, Beneficiaries, transferees under Section 10(b) hereof or other
persons claiming rights from or through a Participant, and shareholders. The
express grant of any specific power to the Committee, and the taking of any
action by the Committee, shall not be construed as limiting any power or
authority of the Committee. The Committee may delegate to officers or managers
of the Company or any Related Entity, or committees thereof, the authority,
subject to such terms and limitations as the Committee shall determine, to
perform such functions, including administrative functions as the Committee may
determine to the extent that such delegation will not result in the loss of an
exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to
Section 16 of the Exchange Act in respect of the Company and will not cause
Awards intended to qualify as “performance-based compensation” under Code
Section 162(m) to fail to so qualify. The Committee may appoint agents to assist
it in administering the Plan. Any such delegations shall be set forth in a
written instrument that specifies the persons authorized to act thereunder and
the terms and limitations of such authority, which writing shall be delivered to
the Company’s Chief Financial Officer, Principal Accounting Officer and General
Counsel before any authority may be exercised.

 

(c)           Limitation of Liability. The Committee and the Board, and each
member thereof, shall be entitled to, in good faith, rely or act upon any report
or other information furnished to it, him or her by any officer or Employee, the
Company's independent auditors, Consultants or any other agents assisting in the
administration of the Plan. Members of the Committee and the Board, and any
officer or Employee acting at the direction or on behalf of the Committee or the
Board, shall not be personally liable for any action or determination taken or
made in good faith with respect to the Plan, and shall, to the extent permitted
by law, be fully indemnified and protected by the Company with respect to any
such action or determination.

  

7

 

 

4.          Shares Subject to Plan.

 

(a)          Limitation on Overall Number of Shares Available for Delivery Under
Plan. Subject to adjustment as provided in Section 10(c) hereof, the total
number of Shares reserved and available for delivery under the Plan shall be
1,700,000, plus any Shares subject to any Awards under the Prior Plans that are
outstanding on the Shareholder Approval Date that are forfeited, expire or
otherwise terminate without issuance of such Shares after the Shareholder
Approval Date. The Awards granted under the Plan may be with respect to Common
Stock and/or Class A Common Stock, in such proportions as shall be determined by
the Board or the Committee in its sole discretion. Any Shares that are subject
to Awards of Options or Stock Appreciation Rights shall be counted against this
limit as one (1) Share for every one (1) Share granted. Any Shares that are
subject to Awards other than Options or Stock Appreciation Rights shall be
counted against this limit as two and one-half (2.5) Shares for every one (1)
Share granted. Any Shares delivered under the Plan may consist, in whole or in
part, of authorized and unissued shares or treasury shares.

 

(b)          Application of Limitation to Grants of Awards. No Award may be
granted if the number of Shares to be delivered in connection with such an Award
exceeds the number of Shares remaining available for delivery under the Plan,
minus the number of Shares deliverable in settlement of or relating to then
outstanding Awards. The Committee may adopt reasonable counting procedures to
ensure appropriate counting, avoid double counting (as, for example, in the case
of tandem or substitute awards) and make adjustments if the number of Shares
actually delivered differs from the number of Shares previously counted in
connection with an Award.

 

(c)          Availability of Shares Not Delivered under Awards and Adjustments
to Limits.

 

(i)          If any Awards are forfeited, expire or otherwise terminate without
issuance of such Shares, or any Award is settled for cash or otherwise does not
result in the issuance of all or a portion of the Shares subject to such Award,
the Shares to which those Awards were subject, shall, to the extent of such
forfeiture, expiration, termination, cash settlement or non-issuance, again be
available for delivery with respect to Awards under the Plan, subject to Section
4(c)(iv) below, provided, however, that Shares tendered or withheld to pay the
exercise price for any Award or to pay taxes relating to any Award shall not
again be available for delivery with respect to Awards under the Plan and,
provided further, that Stock Appreciation Rights that are settled in Shares
shall count against the limit in Section 4(a) of this Plan based upon the full
number of Shares that are subject to the Award.

 

(ii)          Substitute Awards shall not reduce the Shares authorized for
delivery under the Plan or authorized for delivery to a Participant in any
period. Additionally, in the event that a company acquired by the Company or any
Related Entity or with which the Company or any Related Entity combines has
shares available under a pre-existing plan approved by its shareholders, the
shares available for delivery pursuant to the terms of such pre-existing plan
(as adjusted, to the extent appropriate, using the exchange ratio or other
adjustment or valuation ratio or formula used in such acquisition or combination
to determine the consideration payable to the holders of common stock of the
entities party to such acquisition or combination) may be used for Awards under
the Plan and shall not reduce the Shares authorized for delivery under the Plan
if and to the extent that the use of such Shares would not require approval of
the Company’s shareholders under the rules of the Listing Market.

 

(iii)          Any Share that again becomes available for delivery pursuant to
this Section 4(c) shall be added back as one (1) Share if such Share was subject
to an Option or Stock Appreciation Right granted under the Plan and as two and
one-half (2.5) Shares if such Share was subject to an Award other than an Option
or Stock Appreciation Right granted under the Plan.

 

(iv)          Notwithstanding anything in this Section 4(c) to the contrary but
subject to adjustment as provided in Section 10(c) hereof, the maximum aggregate
number of Shares that may be delivered under the Plan as a result of the
exercise of the Incentive Stock Options shall be 1,700,000 Shares.

 

(d)          No Further Awards Under Prior Plans. In light of the adoption of
this Plan, no further awards shall be made under the Prior Plans after the
Shareholder Approval Date.

 

 

8

 

  

5.          Eligibility; Per-Person Award Limitations. Awards may be granted
under the Plan only to Eligible Persons. Subject to adjustment as provided in
Section 10(c), in any fiscal year of the Company during any part of which the
Plan is in effect, no Participant may be granted (i) Options or Stock
Appreciation Rights with respect to more than 375,000 Shares or (ii) Restricted
Stock, Restricted Stock Units, Performance Shares and/or Other Stock-Based
Awards with respect to more than 250,000 Shares. In addition, the maximum dollar
value payable to any one Participant with respect to Performance Units is (x)
$5,000,000, with respect to any 12 month Performance Period (pro-rated for any
Performance Period that is less than 12 months based upon the ratio of the
number of days in the Performance Period as compared to 365), and (y) with
respect to any Performance Period that is more than 12 months, $5,000,000
multiplied by the number of full 12 months periods that are in the Performance
Period.

 

6.          Specific Terms of Awards.

 

(a)          General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any Award or
the exercise thereof, at the date of grant or thereafter (subject to Section
10(e)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of the Participant’s
Continuous Service and terms permitting a Participant to make elections relating
to his or her Award. Except as otherwise expressly provided herein, the
Committee shall retain full power and discretion to accelerate, waive or modify,
at any time, any term or condition of an Award that is not mandatory under the
Plan. Except in cases in which the Committee is authorized to require other
forms of consideration under the Plan, or to the extent other forms of
consideration must be paid to satisfy the requirements of Florida law, no
consideration other than services may be required for the grant (as opposed to
the exercise) of any Award.

 

(b)          Options. The Committee is authorized to grant Options to any
Eligible Person on the following terms and conditions:

 

(i)          Exercise Price. Other than in connection with Substitute Awards,
the exercise price per Share purchasable under an Option shall be determined by
the Committee, provided that such exercise price shall not be less than 100% of
the Fair Market Value of a Share on the date of grant of the Option and shall
not, in any event, be less than the par value of a Share on the date of grant of
the Option. If an Employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than 10% of
the combined voting power of all classes of stock of the Company (or any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f) of the Code, respectively) and an Incentive Stock
Option is granted to such Employee, the exercise price of such Incentive Stock
Option (to the extent required by the Code at the time of grant) shall be no
less than 110% of the Fair Market Value of a Share on the date such Incentive
Stock Option is granted. Other than pursuant to Section 10(c)(i) and (ii), the
Committee shall not be permitted to (A) lower the exercise price per Share of an
Option after it is granted, (B) cancel an Option when the exercise price per
Share exceeds the Fair Market Value of the underlying Shares in exchange for
another Award (other than in connection with Substitute Awards), or (C) take any
other action with respect to an Option that may be treated as a repricing
pursuant to the applicable rules of the Listing Market, without approval of the
Company's shareholders.

 

(ii)          Time and Method of Exercise. The Committee shall determine the
time or times at which or the circumstances under which an Option may be
exercised in whole or in part (including based on achievement of performance
goals and/or future service requirements), the time or times at which Options
shall cease to be or become exercisable following termination of Continuous
Service or upon other conditions, the methods by which the exercise price may be
paid or deemed to be paid (including in the discretion of the Committee a
cashless exercise procedure), the form of such payment, including, without
limitation, cash, Shares (including without limitation the withholding of Shares
otherwise deliverable pursuant to the Award), other Awards or awards granted
under other plans of the Company or a Related Entity, or other property
(including notes or other contractual obligations of Participants to make
payment on a deferred basis provided that such deferred payments are not in
violation of Section 13(k) of the Exchange Act, or any rule or regulation
adopted thereunder or any other applicable law), and the methods by or forms in
which Shares will be delivered or deemed to be delivered to Participants.

 

9

 

 

(iii)          Incentive Stock Options. The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the provisions of
Section 422 of the Code. Anything in the Plan to the contrary notwithstanding,
no term of the Plan relating to Incentive Stock Options (including any Stock
Appreciation Right issued in tandem therewith) shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify either the Plan or any Incentive Stock Option
under Section 422 of the Code, unless the Participant has first requested, or
consents to, the change that will result in such disqualification. Thus, if and
to the extent required to comply with Section 422 of the Code, Options granted
as Incentive Stock Options shall be subject to the following special terms and
conditions:

 

(A)          the Option shall not be exercisable for more than ten years after
the date such Incentive Stock Option is granted; provided, however, that if a
Participant owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Company (or any parent corporation or subsidiary
corporation of the Company, as those terms are defined in Sections 424(e) and
(f) of the Code, respectively) and the Incentive Stock Option is granted to such
Participant, the term of the Incentive Stock Option shall be (to the extent
required by the Code at the time of the grant) for no more than five years from
the date of grant; and

 

(B)          The aggregate Fair Market Value (determined as of the date the
Incentive Stock Option is granted) of the Shares with respect to which Incentive
Stock Options granted under the Plan and all other option plans of the Company
(and any parent corporation or subsidiary corporation of the Company, as those
terms are defined in Sections 424(e) and (f) of the Code, respectively) that
become exercisable for the first time by the Participant during any calendar
year shall not (to the extent required by the Code at the time of the grant)
exceed $100,000.

 

(c)          Stock Appreciation Rights. The Committee may grant Stock
Appreciation Rights to any Eligible Person in conjunction with all or part of
any Option granted under the Plan or at any subsequent time during the term of
such Option (a “Tandem Stock Appreciation Right”), or without regard to any
Option (a “Freestanding Stock Appreciation Right”), in each case upon such terms
and conditions as the Committee may establish in its sole discretion, not
inconsistent with the provisions of the Plan, including the following:

 

(i)          Right to Payment. A Stock Appreciation Right shall confer on the
Participant to whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one Share on the date of exercise over
(B) the grant price of the Stock Appreciation Right as determined by the
Committee. The grant price of a Stock Appreciation Right shall not be less than
100% of the Fair Market Value of a Share on the date of grant, in the case of a
Freestanding Stock Appreciation Right, or less than the associated Option
exercise price, in the case of a Tandem Stock Appreciation Right. Other than
pursuant to Section 10(c)(i) and (ii), the Committee shall not be permitted to
(A) lower the grant price per Share of a Stock Appreciation Right after it is
granted, (B) cancel a Stock Appreciation Right when the grant price per Share
exceeds the Fair Market Value of the underlying Shares in exchange for another
Award (other than in connection with Substitute Awards), or (C) take any other
action with respect to a Stock Appreciation Right that may be treated as a
repricing pursuant to the applicable rules of the Listing Market, without
shareholder approval.

 

(ii)          Other Terms. The Committee shall determine at the date of grant or
thereafter, the time or times at which and the circumstances under which a Stock
Appreciation Right may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), the time
or times at which Stock Appreciation Rights shall cease to be or become
exercisable following termination of Continuous Service or upon other
conditions, the method of exercise, method of settlement, form of consideration
payable in settlement, method by or forms in which Shares will be delivered or
deemed to be delivered to Participants, whether or not a Stock Appreciation
Right shall be in tandem or in combination with any other Award, and any other
terms and conditions of any Stock Appreciation Right.

 

(iii)          Tandem Stock Appreciation Rights. Any Tandem Stock Appreciation
Right may be granted at the same time as the related Option is granted or, for
Options that are not Incentive Stock Options, at any time thereafter before
exercise or expiration of such Option. Any Tandem Stock Appreciation Right
related to an Option may be exercised only when the related Option would be
exercisable and the Fair Market Value of the Shares subject to the related
Option exceeds the exercise price at which Shares can be acquired pursuant to
the

 

10

 

 

Option. In addition, if a Tandem Stock Appreciation Right exists with respect to
less than the full number of Shares covered by a related Option, then an
exercise or termination of such Option shall not reduce the number of Shares to
which the Tandem Stock Appreciation Right applies until the number of Shares
then exercisable under such Option equals the number of Shares to which the
Tandem Stock Appreciation Right applies. Any Option related to a Tandem Stock
Appreciation Right shall no longer be exercisable to the extent the Tandem Stock
Appreciation Right has been exercised, and any Tandem Stock Appreciation Right
shall no longer be exercisable to the extent the related Option has been
exercised.

 

(d)          Restricted Stock Awards. The Committee is authorized to grant
Restricted Stock Awards to any Eligible Person on the following terms and
conditions:

 

(i)          Grant and Restrictions. Restricted Stock Awards shall be subject to
such restrictions on transferability, risk of forfeiture and other restrictions,
if any, as the Committee may impose, or as otherwise provided in this Plan
during the Restricted Period. The terms of any Restricted Stock Award granted
under the Plan shall be set forth in a written Award Agreement which shall
contain provisions determined by the Committee and not inconsistent with the
Plan. The restrictions may lapse separately or in combination at such times,
under such circumstances (including based on achievement of performance goals
and/or future service requirements), in such installments or otherwise, as the
Committee may determine at the date of grant or thereafter. Except to the extent
restricted under the terms of the Plan and any Award Agreement relating to a
Restricted Stock Award, a Participant granted Restricted Stock shall have all of
the rights of a shareholder, including the right to vote the Restricted Stock
and the right to receive dividends thereon (subject to any mandatory
reinvestment or other requirement imposed by the Committee). During the period
that the Restriction Stock Award is subject to a risk of forfeiture, subject to
Section 10(b) below and except as otherwise provided in the Award Agreement, the
Restricted Stock may not be sold, transferred, pledged, hypothecated, margined
or otherwise encumbered by the Participant.

 

(ii)          Forfeiture. Except as otherwise determined by the Committee, upon
termination of a Participant's Continuous Service during the applicable
Restriction Period, the Participant's Restricted Stock that is at that time
subject to a risk of forfeiture that has not lapsed or otherwise been satisfied
shall be forfeited and reacquired by the Company; provided that the Committee
may provide, by rule or regulation or in any Award Agreement, or may determine
in any individual case, that forfeiture conditions relating to Restricted Stock
Awards shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in other cases waive in
whole or in part the forfeiture of Restricted Stock.

 

(iii)          Certificates for Stock. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of the
Participant, the Committee may require that such certificates bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain physical possession
of the certificates, and that the Participant deliver a stock power to the
Company, endorsed in blank, relating to the Restricted Stock.

 

(iv)          Dividends and Splits. As a condition to the grant of a Restricted
Stock Award, the Committee may require or permit a Participant to elect that any
cash dividends paid on a Share of Restricted Stock be automatically reinvested
in additional Shares of Restricted Stock or applied to the purchase of
additional Awards under the Plan. Unless otherwise determined by the Committee,
Shares distributed in connection with a stock split or stock dividend, and other
property distributed as a dividend, shall be subject to restrictions and a risk
of forfeiture to the same extent as the Restricted Stock with respect to which
such Shares or other property have been distributed.

 

(e)          Restricted Stock Unit Award. The Committee is authorized to grant
Restricted Stock Unit Awards to any Eligible Person on the following terms and
conditions:

 

(i)          Award and Restrictions. Satisfaction of a Restricted Stock Unit
Award shall occur upon expiration of the deferral period specified for such
Restricted Stock Unit Award by the Committee (or, if permitted by the Committee,
as elected by the Participant). In addition, a Restricted Stock Unit Award shall
be subject to such restrictions (which may include a risk of forfeiture) as the
Committee may impose, if any, which restrictions may lapse at the expiration of
the deferral period or at earlier specified times (including based on

 

11

 

 

achievement of performance goals and/or future service requirements), separately
or in combination, in installments or otherwise, as the Committee may determine.
A Restricted Stock Unit Award may be satisfied by delivery of Shares, cash equal
to the Fair Market Value of the specified number of Shares covered by the
Restricted Stock Unit, or a combination thereof, as determined by the Committee
at the date of grant or thereafter. Prior to satisfaction of a Restricted Stock
Unit Award, a Restricted Stock Unit Award carries no voting or dividend or other
rights associated with Share ownership.

 

(ii)          Forfeiture. Except as otherwise determined by the Committee, upon
termination of a Participant's Continuous Service during the applicable deferral
period or portion thereof to which forfeiture conditions apply (as provided in
the Award Agreement evidencing the Restricted Stock Unit Award), the
Participant's Restricted Stock Unit Award that is at that time subject to a risk
of forfeiture that has not lapsed or otherwise been satisfied shall be
forfeited; provided that the Committee may provide, by rule or regulation or in
any Award Agreement, or may determine in any individual case, that forfeiture
conditions relating to a Restricted Stock Unit Award shall be waived in whole or
in part in the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part the forfeiture of any
Restricted Stock Unit Award.

 

(iii)          Dividend Equivalents. Unless otherwise determined by the
Committee at the date of grant, any Dividend Equivalents that are granted with
respect to any Restricted Stock Unit Award shall be either (A) paid with respect
to such Restricted Stock Unit Award at the dividend payment date in cash or in
Shares of unrestricted stock having a Fair Market Value equal to the amount of
such dividends, or (B) deferred with respect to such Restricted Stock Unit Award
and the amount or value thereof automatically deemed reinvested in additional
Restricted Stock Units, other Awards or other investment vehicles, as the
Committee shall determine or permit the Participant to elect. The applicable
Award Agreement shall specify whether any Dividend Equivalents shall be paid at
the dividend payment date, deferred or deferred at the election of the
Participant. If the Participant may elect to defer the Dividend Equivalents,
such election shall be made within 30 days after the grant date of the
Restricted Stock Unit Award, but in no event later than 12 months before the
first date on which any portion of such Restricted Stock Unit Award vests (or at
such other times prescribed by the Committee as shall not result in a violation
of Section 409A of the Code).

 

(f)          Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant Shares to any Eligible Persons as a bonus, or to grant
Shares or other Awards in lieu of obligations to pay cash or deliver other
property under the Plan or under other plans or compensatory arrangements,
provided that, in the case of Eligible Persons subject to Section 16 of the
Exchange Act, the amount of such grants remains within the discretion of the
Committee to the extent necessary to ensure that acquisitions of Shares or other
Awards are exempt from liability under Section 16(b) of the Exchange Act. Shares
or Awards granted hereunder shall be subject to such other terms as shall be
determined by the Committee.

 

(g)          Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to any Eligible Person entitling the Eligible Person to receive
cash, Shares, other Awards, or other property equal in value to the dividends
paid with respect to a specified number of Shares, or other periodic payments.
Dividend Equivalents may be awarded on a free-standing basis or in connection
with another Award. The Committee may provide that Dividend Equivalents shall be
paid or distributed when accrued or shall be deemed to have been reinvested in
additional Shares, Awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Committee may
specify.

 

(h)          Performance Awards. The Committee is authorized to grant
Performance Awards to any Eligible Person payable in cash, Shares, or other
Awards, on terms and conditions established by the Committee, subject to the
provisions of Section 8 if and to the extent that the Committee shall, in its
sole discretion, determine that an Award shall be subject to those provisions.
The performance criteria to be achieved during any Performance Period and the
length of the Performance Period shall be determined by the Committee upon the
grant of each Performance Award. Except as provided in Section 9 or as may be
provided in an Award Agreement, Performance Awards will be distributed only
after the end of the relevant Performance Period. The performance goals to be
achieved for each Performance Period shall be conclusively determined by the
Committee and may be based upon the criteria set forth in Section 8(b), or in
the case of an Award that the Committee determines shall not be subject to
Section 8 hereof, any other criteria that the Committee, in its sole discretion,
shall determine should be used for that purpose. The amount of the Award to be
distributed shall be conclusively determined by the Committee.

 

12

 

 

Performance Awards may be paid in a lump sum or in installments following the
close of the Performance Period or, in accordance with procedures established by
the Committee, on a deferred basis in a manner that does not violate the
requirements of Section 409A of the Code.

 

(i)          Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to any Eligible Person 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, Shares, as deemed by the
Committee to be consistent with the purposes of the Plan. Other Stock-Based
Awards may be granted to Participants either alone or in addition to other
Awards granted under the Plan, and such Other Stock-Based Awards shall also be
available as a form of payment in the settlement of other Awards granted under
the Plan. The Committee shall determine the terms and conditions of such Awards.
Shares delivered pursuant to an Award in the nature of a purchase right granted
under this Section 6(i) shall be purchased for such consideration, (including
without limitation loans from the Company or a Related Entity provided that such
loans are not in violation of Section 13(k) of the Exchange Act, or any rule or
regulation adopted thereunder or any other applicable law) paid for at such
times, by such methods, and in such forms, including, without limitation, cash,
Shares, other Awards or other property, as the Committee shall determine.

 

7.          Certain Provisions Applicable to Awards.

 

(a)          Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company, any
Related Entity, or any business entity to be acquired by the Company or a
Related Entity, or any other right of a Participant to receive payment from the
Company or any Related Entity. Such additional, tandem, and substitute or
exchange Awards may be granted at any time. If an Award is granted in
substitution or exchange for another Award or award, the Committee shall require
the surrender of such other Award or award in consideration for the grant of the
new Award. In addition, Awards may be granted in lieu of cash compensation,
including in lieu of cash amounts payable under other plans of the Company or
any Related Entity, in which the value of Shares subject to the Award is
equivalent in value to the cash compensation (for example, Restricted Stock or
Restricted Stock Units), or in which the exercise price, grant price or purchase
price of the Award in the nature of a right that may be exercised is equal to
the Fair Market Value of the underlying Shares minus the value of the cash
compensation surrendered (for example, Options or Stock Appreciation Right
granted with an exercise price or grant price “discounted” by the amount of the
cash compensation surrendered), provided that any such determination to grant an
Award in lieu of cash compensation must be made in a manner intended to comply
with Section 409A of the Code.

 

(b)          Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided that in no event shall the term of
any Option or Stock Appreciation Right exceed a period of ten years (or in the
case of an Incentive Stock Option such shorter term as may be required under
Section 422 of the Code).

 

(c)          Form and Timing of Payment Under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Award Agreement, payments to be made by the
Company or a Related Entity upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee shall
determine, including, without limitation, cash, Shares, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis. Any installment or deferral provided for in the preceding
sentence shall, however, be subject to the Company’s compliance with applicable
law and all applicable rules of the Listing Market, and in a manner intended to
be exempt from or otherwise satisfy the requirements of Section 409A of the
Code. The settlement of any Award may be accelerated (to the extent such
acceleration would not violate the requirements of Section 409A of the Code),
and cash paid in lieu of Shares in connection with such settlement, in the sole
discretion of the Committee or upon the occurrence of one or more specified
events (in addition to a Change in Control). Any such settlement shall be at a
value determined by the Committee in its sole discretion, which, without
limitation, may in the case of an Option or Stock Appreciation Right be limited
to the amount if any by which the Fair Market Value of a Share on the settlement
date exceeds the exercise or grant price. Installment or deferred payments may
be required by the Committee (subject to Section 7(e) of the Plan, including the
consent provisions thereof in the case of any deferral of an outstanding Award
not provided for in the original Award Agreement) or permitted at the election
of the Participant on terms and conditions established by the

 

13

 

 

Committee, all in a manner that is intended to be exempt from or otherwise
satisfy the requirements of Section 409A of the Code. The Committee may, without
limitation, make provision for the payment or crediting of a reasonable interest
rate on installment or deferred payments or the grant or crediting of Dividend
Equivalents or other amounts in respect of installment or deferred payments
denominated in Shares.

 

(d)          Exemptions from Section 16(b) Liability. It is the intent of the
Company that the grant of any Awards to or other transaction by a Participant
who is subject to Section 16 of the Exchange Act shall be exempt from Section 16
pursuant to an applicable exemption (except for transactions acknowledged in
writing to be non-exempt by such Participant). Accordingly, if any provision of
this Plan or any Award Agreement does not comply with the requirements of Rule
16b-3 then applicable to any such transaction, such provision shall be construed
or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 so that such Participant shall avoid liability under
Section 16(b).

 

(e)          Code Section 409A .

 

(i)          The Award Agreement for any Award that the Committee reasonably
determines to constitute a Section 409A Plan, as defined in Section 7(e)(ii)
hereof, and the provisions of the Plan applicable to that Award, shall be
construed in a manner consistent with the applicable requirements of Section
409A of the Code, and the Committee, in its sole discretion and without the
consent of any Participant, may amend any Award Agreement (and the provisions of
the Plan applicable thereto) if and to the extent that the Committee determines
that such amendment is necessary or appropriate to comply with the requirements
of Section 409A of the Code.

 

(ii)          If any Award constitutes a “nonqualified deferred compensation
plan” under Section 409A of the Code (a “Section 409A Plan”), then the Award
shall be subject to the following additional requirements, if and to the extent
required to comply with Section 409A of the Code:

 

(A)          Payments under the Section 409A Plan may not be made earlier than
(u) the Participant’s “separation from service”, (v) the date the Participant
becomes “disabled”, (w) the Participant’s death, (x) a “specified time (or
pursuant to a fixed schedule)” specified in the Award Agreement at the date of
the deferral of such compensation, (y) a “change in the ownership or effective
control of the corporation, or in the ownership of a substantial portion of the
assets” of the corporation, or (z) the occurrence of an “unforeseeble
emergency”;

 

(B)          The time or schedule for any payment of the deferred compensation
may not be accelerated, except to the extent provided in applicable Treasury
Regulations or other applicable guidance issued by the Internal Revenue Service;

 

(C)          Any elections with respect to the deferral of such compensation or
the time and form of distribution of such deferred compensation shall comply
with the requirements of Section 409A(a)(4) of the Code; and

 

(D)          In the case of any Participant who is a “specified employee”, a
distribution on account of a “separation from service” may not be made before
the date which is six months after the date of the Participant’s “separation
from service” (or, if earlier, the date of the Participant’s death).

 

For purposes of the foregoing, the terms in quotations shall have the same
meanings as those terms have for purposes of Section 409A of the Code, and the
limitations set forth herein shall be applied in such manner (and only to the
extent) as shall be necessary to comply with any requirements of Section 409A of
the Code that are applicable to the Award.

 

(iii)          Notwithstanding the foregoing, or any provision of this Plan or
any Award Agreement, the Company does not make any representation to any
Participant or Beneficiary that any Awards made pursuant to this Plan are exempt
from, or satisfy, the requirements of, Section 409A, and the Company shall have
no liability or other obligation to indemnify or hold harmless the Participant
or any Beneficiary for any tax, additional tax, interest or penalties that the
Participant or any Beneficiary may incur in the event that any provision of this
Plan,

 

14

 

 

or any Award Agreement, or any amendment or modification thereof, or any other
action taken with respect thereto, is deemed to violate any of the requirements
of Section 409A.

 

8.          Code Section 162(m) Provisions.

 

(a)          Covered Employees. Unless otherwise specified by the Committee, the
provisions of this Section 8 shall be applicable to any Performance Award
granted to an Eligible Person who is, or is likely to be, as of the end of the
tax year in which the Company would claim a tax deduction in connection with
such Award, a Covered Employee.

 

(b)          Performance Criteria. If an Award is subject to this Section 8,
then the payment or distribution thereof or the lapsing of restrictions thereon
and the distribution of cash, Shares or other property pursuant thereto, as
applicable, shall be contingent upon achievement of one or more objective
performance goals. Performance goals shall be objective and shall otherwise meet
the requirements of Section 162(m) of the Code and regulations thereunder
including the requirement that the level or levels of performance targeted by
the Committee result in the achievement of performance goals being
“substantially uncertain.” One or more of the following business criteria for
the Company, on a consolidated basis, and/or for Related Entities, or for
business or geographical units of the Company and/or a Related Entity (except
with respect to the total shareholder return and earnings per share criteria),
shall be used by the Committee in establishing performance goals for such
Awards: (1) earnings per share; (2) revenues or margins; (3) cash flow;
(4) operating margin; (5) return on net assets, investment, capital, or equity;
(6) economic value added; (7) direct contribution; (8) net income; pretax
earnings; earnings before interest and taxes; earnings before interest, taxes,
depreciation and amortization; earnings after interest expense and before
extraordinary or special items; operating income or income from operations;
income before interest income or expense, unusual items and income taxes, local,
state or federal and excluding budgeted and actual bonuses which might be paid
under any ongoing bonus plans of the Company; (9) working capital;
(10) management of fixed costs or variable costs; (11) identification or
consummation of investment opportunities or completion of specified projects in
accordance with corporate business plans, including strategic mergers,
acquisitions or divestitures; (12) total shareholder return; (13) debt
reduction; (14) market share; (15) entry into new markets, either geographically
or by business unit; (16) customer retention and satisfaction; (17) strategic
plan development and implementation, including turnaround plans; and/or (18) the
Fair Market Value of a Share. Any of the above goals may be determined on an
absolute or relative basis or as compared to the performance of a published or
special index deemed applicable by the Committee including, but not limited to,
the Standard & Poor’s 500 Stock Index or a group of companies that are
comparable to the Company. At the time that the Committee establishes the
performance goals in respect of an Award subject to this Section 8, the
Committee may provide that in determining the achievement of such performance
goals, the Committee shall exclude the impact of any (i) restructurings,
discontinued operations, extraordinary items (as defined pursuant to generally
accepted accounting principles), and other unusual or non-recurring charges,
(ii) change in accounting standards required by generally accepted accounting
principles; or (iii) such other exclusions or adjustments as the Committee
specifies at the time the Award is granted.

 

(c)          Performance Period; Timing For Establishing Performance Goals.
Achievement of performance goals in respect of Performance Awards shall be
measured over a Performance Period, as specified by the Committee. Performance
goals shall be established not later than 90 days after the beginning of any
Performance Period applicable to such Performance Awards, or at such other date
as may be required or permitted for “performance-based compensation” under
Section 162(m) of the Code.

 

(d)          Adjustments. The Committee may, in its discretion, reduce the
amount of a settlement otherwise to be made in connection with Awards subject to
this Section 8, but may not exercise discretion to increase any such amount
payable to a Covered Employee in respect of an Award subject to this Section 8
if and to the extent that such adjustment would cause the Award to fail to
qualify as performance based compensation under Section 162(m) of the Code. The
Committee shall specify the circumstances in which such Awards shall be paid or
forfeited in the event of termination of Continuous Service by the Participant
prior to the end of a Performance Period or settlement of Awards.

 

(e)          Committee Certification. No Participant shall receive any payment
under the Plan that is subject to this Section 8 unless and until the Committee
has certified, by resolution or other appropriate action in

 

15

 

 

writing, that the performance criteria and any other material terms previously
established by the Committee or set forth in the Plan, have been satisfied to
the extent necessary to qualify as "performance based compensation" under
Section 162(m) of the Code.

 

9.          Change in Control.

 

(a)          Effect of “Change in Control.” If and only to the extent provided
in any employment or other agreement between the Participant and the Company or
any Related Entity, or in any Award Agreement, or to the extent otherwise
determined by the Committee in its sole discretion and without any requirement
that each Participant be treated consistently, upon the occurrence of a “Change
in Control,” as defined in Section 9(b) hereof:

 

(i)          Any Option or Stock Appreciation Right that was not previously
vested and exercisable as of the time of the Change in Control, shall become
immediately vested and exercisable, subject to applicable restrictions set forth
in Section 10(a) hereof.

 

(ii)          Any restrictions, deferral of settlement, and forfeiture
conditions applicable to a Restricted Stock Award, Restricted Stock Unit Award
or an Other Stock-Based Award subject only to future service requirements
granted under the Plan shall lapse and such Awards shall be deemed fully vested
as of the time of the Change in Control, except to the extent of any waiver by
the Participant and subject to applicable restrictions set forth in Section
10(a) hereof.

 

(iii)          With respect to any outstanding Award subject to achievement of
performance goals and conditions under the Plan, the Committee may, in its
discretion, deem such performance goals and conditions as having been met as of
the date of the Change in Control.

 

 

(b)          Definition of “Change in Control”. Unless otherwise specified in
any employment agreement between the Participant and the Company or any Related
Entity, or in an Award Agreement, a “Change in Control” shall mean the
occurrence of any of the following:

 

(i)          The acquisition by any Person of Beneficial Ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty
percent (50%) of either (A) the value of then outstanding equity securities of
the Company (the “Outstanding Company Stock”) or (B) the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities) (the foregoing Beneficial Ownership hereinafter being referred to as
a "Controlling Interest"); provided, however, that for purposes of this Section
9(b), the following acquisitions of Outstanding Company Stock or Outstanding
Company Voting Securities shall not constitute or result in a Change in Control:
(u) any acquisition directly from the Company; (v) any acquisition by the
Company; (w) any acquisition by any Person that as of the Effective Date owns
Beneficial Ownership of a Controlling Interest; (x) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Related Entity; (y) the Mendelson Group; or (z) any acquisition by any
entity pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii) below. For this purpose, the term “Mendelson Group” means
Laurans A. Mendelson and his immediate family, which shall include his spouse,
parents, descendants and spouses of descendants. The Mendelson Group shall also
include trusts, partnerships, limited liability companies, corporations, or
other entities in which a member or members of the Mendelson Group own, directly
or indirectly, more than fifty percent (50%) of the voting power or value; or

 

(ii)          During any period of two (2) consecutive years (not including any
period prior to the Effective Date) individuals who constitute the Board on the
Effective Date (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or

 

16

 

 

(iii)          Consummation of (A) a reorganization, merger, statutory share
exchange or consolidation or similar transaction involving (x) the Company or
(y) any of its Subsidiaries, but in the case of this clause (y) only if equity
securities of the Company are issued or issuable in connection with the
transaction (each of the events referred to in this clause (A) being hereinafter
referred to as a “Business Reorganization”), or (B) a sale or other disposition
of all or substantially all of the assets of the Company, or the acquisition of
assets or equity of another entity by the Company or any of its Subsidiaries
(each an “Asset Sale”), in each case, unless, following such Business
Reorganization or Asset Sale, (1) all or substantially all of the individuals
and entities who were the Beneficial Owners, respectively, of the Outstanding
Company Stock and Outstanding Company Voting Securities immediately prior to
such Business Reorganization or Asset Sale beneficially own, directly or
indirectly, more than fifty percent (50%) of the value of the then outstanding
equity securities and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of members of the board of
directors (or comparable governing body of an entity that does not have such a
board), as the case may be, of the entity resulting from such Business
Reorganization or Asset Sale (including, without limitation, an entity which as
a result of such transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries) (the
“Continuing Entity”) in substantially the same proportions as their ownership,
immediately prior to such Business Reorganization or Asset Sale, of the
Outstanding Company Stock and Outstanding Company Voting Securities, as the case
may be (excluding any outstanding equity or voting securities of the Continuing
Entity that such Beneficial Owners hold immediately following the consummation
of the Business Reorganization or Asset Sale as a result of their ownership,
prior to such consummation, of equity or voting securities of any company or
other entity involved in or forming part of such Business Reorganization or
Asset Sale other than the Company), (2) no Person (excluding any employee
benefit plan (or related trust) of the Company or any Continuing Entity or any
entity controlled by the Continuing Corporation or any Person that as of the
Effective Date owns Beneficial Ownership of a Controlling Interest) beneficially
owns, directly or indirectly, fifty percent (50%) or more of the value of the
then outstanding equity securities of the Continuing Entity or the combined
voting power of the then outstanding voting securities of the Continuing Entity
except to the extent that such ownership existed prior to the Business
Reorganization or Asset Sale and (3) at least a majority of the members of the
Board of Directors or other governing body of the Continuing Entity were members
of the Incumbent Board at the time of the execution of the initial agreement, or
of the action of the Board, providing for such Business Reorganization or Asset
Sale; or

 

(iv)          Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.

 

10.          General Provisions.

 

(a)          Compliance With Legal and Other Requirements. The Company may, to
the extent deemed necessary or advisable by the Committee, postpone the issuance
or delivery of Shares or payment of other benefits under any Award until
completion of such registration or qualification of such Shares or other
required action under any federal or state law, rule or regulation, listing or
other required action with respect to the Listing Market, or compliance with any
other obligation of the Company, as the Committee, may consider appropriate, and
may require any Participant to make such representations, furnish such
information and comply with or be subject to such other conditions as it may
consider appropriate in connection with the issuance or delivery of Shares or
payment of other benefits in compliance with applicable laws, rules, and
regulations, listing requirements, or other obligations.

 

(b)          Limits on Transferability; Beneficiaries. No Award or other right
or interest granted under the Plan shall be pledged, hypothecated or otherwise
encumbered or subject to any lien, obligation or liability of such Participant
to any party, or assigned or transferred by such Participant otherwise than by
will or the laws of descent and distribution or to a Beneficiary upon the death
of a Participant, and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the Participant or his
or her guardian or legal representative, except that Awards and other rights
(other than Incentive Stock Options and Stock Appreciation Rights in tandem
therewith) may be assigned, pledged, hypothecated or transferred to one or more
Beneficiaries or other transferees during the lifetime of the Participant, and
may be exercised by such transferees in accordance with the terms of such Award,
but only if and to the extent (i) such transfers are permitted by the Committee
pursuant to the express terms of an Award Agreement (subject to any terms and
conditions which the Committee may impose thereon), (ii) do not violate the
requirements of Rule 16b-3 and (iii) are not inconsistent with requirements of
any form of registration statement under the Securities Act of 1933, as amended,
pursuant to which Shares issuable

 

17

 

 

under this Plan are then registered. A Beneficiary, transferee, or other person
claiming any rights under the Plan from or through any Participant shall be
subject to all terms and conditions of the Plan and any Award Agreement
applicable to such Participant, except as otherwise determined by the Committee,
and to any additional terms and conditions deemed necessary or appropriate by
the Committee.

 

(c)          Adjustments.

 

(i)          Adjustments to Awards. In the event that any extraordinary dividend
or other distribution (whether in the form of cash, Shares, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Shares
and/or such other securities of the Company or any other issuer to which the
Award relates, then the Committee shall, in such manner as it may deem
equitable, substitute, exchange or adjust any or all of (A) the number and kind
of Shares which may be delivered in connection with Awards granted thereafter,
(B) the number and kind of Shares by which annual per-person Award limitations
are measured under Section 5 hereof, (C) the number and kind of Shares subject
to or deliverable in respect of outstanding Awards, (D) the exercise price,
grant price or purchase price relating to any Award and/or make provision for
payment of cash or other property in respect of any outstanding Award, and (E)
any other aspect of any Award that the Committee determines to be appropriate.

 

(ii)          Adjustments in Case of Certain Transactions. Except as otherwise
provided in any employment agreement or in any Award Agreement, in the event of
any merger, consolidation or other reorganization in which the Company does not
survive, or in the event of any Change in Control, any outstanding Awards may be
dealt with in accordance with any of the following approaches, without the
requirement of obtaining any consent or agreement of a Participant as such, as
determined by the agreement effectuating the transaction or, if and to the
extent not so determined, as determined by the Committee in its sole discretion
and without any requirement that Participants be treated consistently: (a) the
continuation of the outstanding Awards by the Company, if the Company is a
surviving entity, (b) the assumption or substitution for, as those terms are
defined below, the outstanding Awards by the surviving entity or its parent or
subsidiary, (c) full exercisability or vesting and accelerated expiration of the
outstanding Awards, or (d) settlement of the value of the outstanding Awards in
cash or cash equivalents or other property followed by cancellation of such
Awards (which value, in the case of Options or Stock Appreciation Rights, shall
be measured by the amount, if any, by which the Fair Market Value of a Share
exceeds the exercise or grant price of the Option or Stock Appreciation Right as
of the effective date of the transaction). For the purposes of this Section
10(c)(ii), an Option, Stock Appreciation Right, Restricted Stock Award,
Restricted Stock Unit Award or Other Stock-Based Award shall be considered
assumed or substituted for if following the Change in Control, the Award confers
the right to purchase or receive, for each Share subject to the Option, Stock
Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other
Stock-Based Award immediately prior to the Change in Control, on substantially
the same vesting and other terms and conditions as were applicable to the Award
immediately prior to the Change in Control, the consideration (whether stock,
cash or other securities or property) received in the transaction constituting a
Change in Control by holders of Shares for each Share held on the effective date
of such transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
shares); provided, however, that if such consideration received in the
transaction constituting a Change in Control is not solely common stock of the
successor company or its parent or subsidiary, the Committee may, with the
consent of the successor company or its parent or subsidiary, provide that the
consideration to be received upon the exercise or vesting of an Option, Stock
Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other
Stock-Based Award, for each Share subject thereto, will be solely common stock
of the successor company or its parent or subsidiary substantially equal in fair
market value to the per share consideration received by holders of Shares in the
transaction constituting a Change in Control. The determination of such
substantial equality of value of consideration shall be made by the Committee in
its sole discretion and its determination shall be conclusive and binding. The
Committee shall give written notice of any proposed transaction referred to in
this Section 10(c)(ii) a reasonable period of time prior to the closing date for
such transaction (which notice may be given either before or after the approval
of such transaction), in order that Participants may have a reasonable period of
time prior to the closing date of such transaction within which to exercise any
Awards that are then exercisable (including any Awards that may become
exercisable upon the closing date of such transaction). A Participant may
condition his exercise of any Awards upon the consummation of the transaction.

 

18

 

 

(iii)          Other Adjustments. The Committee (and the Board if and only to
the extent such authority is not required to be exercised by the Committee to
comply with Section 162(m) of the Code) is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards (including
Performance Awards, or performance goals and conditions relating thereto) in
recognition of unusual or nonrecurring events (including, without limitation,
acquisitions and dispositions of businesses and assets) affecting the Company,
any Related Entity or any business unit, or the financial statements of the
Company or any Related Entity, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations or business
conditions or in view of the Committee's assessment of the business strategy of
the Company, any Related Entity or business unit thereof, performance of
comparable organizations, economic and business conditions, personal performance
of a Participant, and any other circumstances deemed relevant; provided that no
such adjustment shall be authorized or made if and to the extent that such
authority or the making of such adjustment would cause Options, Stock
Appreciation Rights, or Performance Awards granted pursuant to Section 8(b)
hereof to Participants designated by the Committee as Covered Employees and
intended to qualify as “performance-based compensation” under Code Section
162(m) and the regulations thereunder to otherwise fail to qualify as
“performance-based compensation” under Code Section 162(m) and regulations
thereunder. Adjustments permitted hereby may include, without limitation,
increasing the exercise price of Options and Stock Appreciation Rights,
increasing performance goals, or other adjustments that may be adverse to the
Participant. Notwithstanding the foregoing, no adjustments may be made with
respect to any Performance Awards subject to Section 8 if and to the extent that
such adjustment would cause the Award to fail to qualify as “performance-based
compensation” under Section 162(m) of the Code.

 

(d)          Taxes. The Company and any Related Entity are authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Shares, or any payroll or other payment
to a Participant, amounts of withholding and other taxes due or potentially
payable in connection with any transaction involving an Award, and to take such
other action as the Committee may deem advisable to enable the Company or any
Related Entity and Participants to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Award. This
authority shall include authority to withhold or receive Shares or other
property and to make cash payments in respect thereof in satisfaction of a
Participant's tax obligations, either on a mandatory or elective basis in the
discretion of the Committee.

 

(e)          Changes to the Plan and Awards. The Board may amend, alter,
suspend, discontinue or terminate the Plan, or the Committee's authority to
grant Awards under the Plan, without the consent of shareholders or
Participants, except that any amendment or alteration to the Plan shall be
subject to the approval of the Company's shareholders not later than the annual
meeting next following such Board action if such shareholder approval is
required by any federal or state law or regulation (including, without
limitation, Rule 16b-3 or Code Section 162(m)) or the rules of the Listing
Market, and the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to shareholders for approval; provided that,
except as otherwise permitted by the Plan or Award Agreement, without the
consent of an affected Participant, no such Board action may materially and
adversely affect the rights of such Participant under the terms of any
previously granted and outstanding Award. The Committee may waive any conditions
or rights under, or amend, alter, suspend, discontinue or terminate any Award
theretofore granted and any Award Agreement relating thereto.

 

(f)          Limitation on Rights Conferred Under Plan. Neither the Plan nor any
action taken hereunder or under any Award shall be construed as (i) giving any
Eligible Person or Participant the right to continue as an Eligible Person or
Participant or in the employ or service of the Company or a Related Entity;
(ii) interfering in any way with the right of the Company or a Related Entity to
terminate any Eligible Person's or Participant's Continuous Service at any time,
(iii) giving an Eligible Person or Participant any claim to be granted any Award
under the Plan or to be treated uniformly with other Participants and Employees,
or (iv) conferring on a Participant any of the rights of a shareholder of the
Company or any Related Entity including, without limitation, any right to
receive dividends or distributions, any right to vote or act by written consent,
any right to attend meetings of shareholders or any right to receive any
information concerning the Company’s or any Related Entity’s business, financial
condition, results of operation or prospects, unless and until such time as the
Participant is duly issued Shares on the stock books of the Company or any
Related Entity in accordance with the terms of an Award. None of the Company,
its officers or its directors shall have any fiduciary obligation to the
Participant with respect to any Awards unless and until the Participant is duly
issued Shares pursuant to the Award on the stock books of the Company in
accordance with the terms of an Award. Neither the Company, nor any Related
Entity, nor any of the

 

19

 

 

their respective officers, directors, representatives or agents is granting any
rights under the Plan to the Participant whatsoever, oral or written, express or
implied, other than those rights expressly set forth in this Plan or the Award
Agreement.

 

(g)          Unfunded Status of Awards; Creation of Trusts. The Plan is intended
to constitute an “unfunded” plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
Shares pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give any such Participant any rights that are greater than those
of a general creditor of the Company or Related Entity that issues the Award;
provided that the Committee may authorize the creation of trusts and deposit
therein cash, Shares, other Awards or other property, or make other arrangements
to meet the obligations of the Company or Related Entity under the Plan. Such
trusts or other arrangements shall be consistent with the “unfunded” status of
the Plan unless the Committee otherwise determines with the consent of each
affected Participant. The trustee of such trusts may be authorized to dispose of
trust assets and reinvest the proceeds in alternative investments, subject to
such terms and conditions as the Committee may specify and in accordance with
applicable law.

 

(h)          Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of the Company for approval shall
be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements as it may deem
desirable including incentive arrangements and awards which do not qualify under
Section 162(m) of the Code.

 

(i)          Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of an Award
with respect to which a Participant paid cash or other consideration, the
Participant shall be repaid the amount of such cash or other consideration. No
fractional Shares shall be issued or delivered pursuant to the Plan or any
Award. The Committee shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.

 

(j)          Governing Law. Except as otherwise provided in any Award Agreement,
the validity, construction and effect of the Plan, any rules and regulations
under the Plan, and any Award Agreement shall be determined in accordance with
the laws of the State of Florida without giving effect to principles of conflict
of laws, and applicable federal law.

 

(k)          Non-U.S. Laws. The Committee shall have the authority to adopt such
modifications, procedures, and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or
its Related Entities may operate to assure the viability of the benefits from
Awards granted to Participants performing services in such countries and to meet
the objectives of the Plan.

 

(l)          Plan Effective Date and Shareholder Approval; Termination of Plan.
The Plan shall become effective on the Effective Date, subject to subsequent
approval, within 12 months of its adoption by the Board, by shareholders of the
Company eligible to vote in the election of directors, by a vote sufficient to
meet the requirements of Code Sections 162(m) (if applicable) and 422, Rule
16b-3 under the Exchange Act (if applicable), applicable requirements under the
rules of any stock exchange or automated quotation system on which the Shares
may be listed or quoted, and other laws, regulations, and obligations of the
Company applicable to the Plan. Awards may be granted subject to shareholder
approval, but may not be exercised or otherwise settled in the event the
shareholder approval is not obtained. The Plan shall terminate at the earliest
of (a) such time as no Shares remain available for issuance under the Plan,
(b) termination of this Plan by the Board, or (c) the tenth anniversary of the
Shareholder Approval Date. Awards outstanding upon expiration of the Plan shall
remain in effect until they have been exercised or terminated, or have expired.

 

20