Exhibit 10.5

 

AMERICAN RENAL ASSOCIATES HOLDINGS, INC.
2016 OMNIBUS INCENTIVE PLAN

 

1.                                      Purpose.  The purpose of the American
Renal Associates Holdings, Inc. 2016 Omnibus Incentive Plan is to provide a
means through which the Company and the other members of the Company Group may
attract and retain key personnel and to provide a means whereby directors,
officers, employees, consultants and advisors of the Company and the other
members of the Company Group can acquire and maintain an equity interest in the
Company, or be paid incentive compensation, including incentive compensation
measured by reference to the value of Common Stock, thereby strengthening their
commitment to the welfare of the Company Group and aligning their interests with
those of the Company’s stockholders.

 

2.                                      Definitions.  The following definitions
shall be applicable throughout the Plan.

 

(a)                                       “Absolute Share Limit” has the meaning
given such term in Section 5(b) of the Plan.

 

(b)                                       “Adjustment Event” has the meaning
given such term in Section 12(a) of the Plan.

 

(c)                                        “Affiliate” means any Person that
directly or indirectly controls, is controlled by or is under common control
with the Company.  The term “control” (including, with correlative meaning, the
terms “controlled by” and “under common control with”), as applied to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting or other securities, by contract or otherwise.

 

(d)                                       “Award” means, individually or
collectively, any Incentive Stock Option, Nonqualified Stock Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit, Other Equity-Based
Award, Other Cash-Based Award and Performance Compensation Award granted under
the Plan.

 

(e)                                        “Award Agreement” means the document
or documents by which each Award (other than an Other Cash-Based Award) is
evidenced, which may be in written or electronic form.

 

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

 

(g)                                        “Cause” means, as to any Participant,
unless the applicable Award Agreement states otherwise, (i) “Cause,” as defined
in any employment or consulting agreement between the Participant and the
Service Recipient in effect at the time of such Termination; or (ii) in the
absence of any such employment or consulting agreement (or the absence of any
definition of “Cause” contained therein), the Participant’s (A) willful neglect
in the performance of the Participant’s duties for the Service Recipient or
willful or repeated failure or refusal to perform such duties; (B) engagement in
conduct in connection with the Participant’s employment or service with the
Service Recipient, which results in, or could reasonably be expected to result
in, material harm to the business or reputation of the Company or any other
member of the Company Group; (C) conviction of, or plea of guilty or no contest
to, (I) any felony; or (II) any

 

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other crime that results in, or could reasonably be expected to result in,
material harm to the business or reputation of the Company or any other member
of the Company Group; (D) material violation of the written policies of the
Service Recipient, including, but not limited to, those relating to sexual
harassment or the disclosure or misuse of confidential information, or those set
forth in the manuals or statements of policy of the Service Recipient; (E) fraud
or misappropriation, embezzlement or misuse of funds or property belonging to
the Company or any other member of the Company Group; or (F) act of personal
dishonesty that involves personal profit in connection with the Participant’s
employment or service to the Service Recipient.

 

(h)                                       “Change in Control” means:

 

(i)                                     the acquisition (whether by purchase,
merger, consolidation, combination or other similar transaction) by any Person
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than 50% (on a fully diluted basis) of either (A) the then
outstanding shares of Common Stock, taking into account as outstanding for this
purpose such Common Stock issuable upon the exercise of options or warrants, the
conversion of convertible stock or debt, and the exercise of any similar right
to acquire such Common 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; provided, however, that for purposes of this Plan, the
following acquisitions shall not constitute a Change in Control: (I) any
acquisition by the Company or any Affiliate; (II) any acquisition by any
employee benefit plan sponsored or maintained by the Company or any Affiliate;
or (III) in respect of an Award held by a particular Participant, any
acquisition by the Participant or any group of Persons including the Participant
(or any entity controlled by the Participant or any group of Persons including
the Participant);

 

(ii)                                  during any period of twelve (12) months,
individuals who, at the beginning of such period, constitute the Board (the
“Incumbent Directors”) cease for any reason to constitute at least a majority of
the Board, provided that any person becoming a director subsequent to the date
hereof, whose election or nomination for election was approved by a vote of at
least two-thirds of the Incumbent Directors then on the Board (either by a
specific vote or by approval of the proxy statement of the Company in which such
person is named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest, as such terms are used in
Rule 14a-12 of Regulation 14A promulgated under the Exchange Act, with respect
to directors or as a result of any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the Board shall be
deemed to be an Incumbent Director; or

 

(iii)                               the sale, transfer or other disposition of
all or substantially all of the assets of the Company Group (taken as a whole)
to any Person that is not an Affiliate of the Company.

 

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(i)                                           “Code” means the Internal Revenue
Code of 1986, as amended, and any successor thereto.  Reference in the Plan to
any section of the Code shall be deemed to include any regulations or other
interpretative guidance under such section, and any amendments or successor
provisions to such section, regulations or guidance.

 

(j)                                          “Committee” means the Compensation
Committee of the Board or any properly delegated subcommittee thereof or, if no
such Compensation Committee or subcommittee thereof exists, the Board.

 

(k)                                       “Common Stock” means the common stock
of the Company, par value $0.01 per share (and any stock or other securities
into which such Common Stock may be converted or into which it may be
exchanged).

 

(l)                                           “Company” means American Renal
Associates Holdings, Inc., a Delaware corporation, and any successor thereto.

 

(m)                                   “Company Group” means, collectively, the
Company and its Subsidiaries.

 

(n)                                       “Date of Grant” means the date on
which the granting of an Award is authorized, or such other date as may be
specified in such authorization.

 

(o)                                       “Designated Foreign Subsidiaries”
means all members of the Company Group that are organized under the laws of any
jurisdiction or country other than the United States of America that may be
designated by the Board or the Committee from time to time.

 

(p)                                       “Detrimental Activity” means any of
the following: (i) unauthorized disclosure of any confidential or proprietary
information of any member of the Company Group; (ii) any activity that would be
grounds to terminate the Participant’s employment or service with the Service
Recipient for Cause;  or (iii) a breach by the Participant of any restrictive
covenant by which such Participant is bound, including, without limitation, any
covenant not to compete or not to solicit, in any agreement with any member of
the Company Group.

 

(q)                                       “Disability” means, as to any
Participant, unless the applicable Award Agreement states otherwise,
(i) “Disability,” as defined in any employment or consulting agreement between
the Participant and the Service Recipient in effect at the time of such
Termination; or (ii) in the absence of any such employment or consulting
agreement (or the absence of any definition of “Disability” contained therein),
a condition entitling the Participant to receive benefits under a long-term
disability plan of the Service Recipient or other member of the Company Group in
which such Participant is eligible to participate, or, in the absence of such a
plan, the complete and permanent inability of the Participant by reason of
illness or accident to perform the duties of the occupation at which the
Participant was employed or served when such disability commenced.  Any
determination of whether Disability exists in the absence of a long-term
disability plan shall be made by the Company (or designee) in its sole and
absolute discretion.

 

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(r)                                          “Effective Date” means April 26,
2016.

 

(s)                                         “Eligible Person” means any
(i) individual employed by any member of the Company Group; provided, however,
that no such employee covered by a collective bargaining agreement shall be an
Eligible Person unless and to the extent that such eligibility is set forth in
such collective bargaining agreement or in an agreement or instrument relating
thereto; (ii) director or officer of any member of the Company Group; or
(iii) consultant or advisor to any member of the Company Group who may be
offered securities registrable pursuant to a registration statement on Form S-8
under the Securities Act, who, in the case of each of clauses (i) through
(iii) above has entered into an Award Agreement or who has received written
notification from the Committee or its designee that they have been selected to
participate in the Plan.

 

(t)                                          “Exchange Act” means the Securities
Exchange Act of 1934, as amended, and any successor thereto.  Reference in the
Plan to any section of (or rule promulgated under) the Exchange Act shall be
deemed to include any rules, regulations or other interpretative guidance under
such section or rule, and any amendments or successor provisions to such
section, rules, regulations or guidance.

 

(u)                                       “Exercise Price” has the meaning given
such term in Section 7(b) of the Plan.

 

(v)                                       “Fair Market Value” means, on a given
date, (i) if the Common Stock is listed on a national securities exchange, the
closing sales price of the Common Stock reported on the primary exchange on
which the Common Stock is listed and traded on such date, or, if there are no
such sales on that date, then on the last preceding date on which such sales
were reported; (ii) if the Common Stock is not listed on any national securities
exchange but is quoted in an inter-dealer quotation system on a last sale basis,
the average between the closing bid price and ask price reported on such date,
or, if there is no such sale on that date, then on the last preceding date on
which a sale was reported; or (iii) if the Common Stock is not listed on a
national securities exchange or quoted in an inter-dealer quotation system on a
last sale basis, the amount determined by the Committee in good faith to be the
fair market value of the Common Stock; provided, however, as to any Awards
granted on or with a Date of Grant of the date of the pricing of the Company’s
initial public offering, “Fair Market Value” shall be equal to the per share
price at which the Common Stock is offered to the public in connection with such
initial public offering.

 

(w)                                     “GAAP” has the meaning given such term
in Section 7(d) of the Plan.

 

(x)                                       “Immediate Family Members” has the
meaning given such term in Section 14(b) of the Plan.

 

(y)                                       “Incentive Stock Option” means an
Option which is designated by the Committee as an incentive stock option as
described in Section 422 of the Code and otherwise meets the requirements set
forth in the Plan.

 

(z)                                        “Indemnifiable Person” has the
meaning given such term in Section 4(e) of the Plan.

 

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(aa)                                “Negative Discretion” means the discretion
authorized by the Plan to be applied by the Committee to eliminate or reduce the
size of an Other Cash-Based Award that is designated as a Performance
Compensation Award consistent with Section 162(m) of the Code.

 

(bb)                                “Nonqualified Stock Option” means an Option
which is not designated by the Committee as an Incentive Stock Option.

 

(cc)                                  “Non-Employee Director” means a member of
the Board who is not an employee of any member of the Company Group.

 

(dd)                                “Option” means an Award granted under
Section 7 of the Plan.

 

(ee)                                  “Option Period” has the meaning given such
term in Section 7(c) of the Plan.

 

(ff)                                    “Other Cash-Based Award” means an Award
that is not a Stock Appreciation Right or Restricted Stock Unit granted under
Section 10 of the Plan that is denominated and/or payable in cash.

 

(gg)                                  “Other Equity-Based Award” means an Award
that is not an Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit or Performance Compensation Award, that is granted under Section 10
of the Plan and is (i) payable by delivery of Common Stock, and/or (ii) measured
by reference to the value of Common Stock.

 

(hh)                                “Participant” means an Eligible Person who
has been selected by the Committee to participate in the Plan and to receive an
Award pursuant to the Plan.

 

(ii)                                        “Performance Compensation Award”
means any Award designated by the Committee as a Performance Compensation Award
pursuant to Section 11 of the Plan.

 

(jj)                                      “Performance Criteria” means the
criterion or criteria that the Committee shall select for purposes of
establishing the Performance Goals for a Performance Period with respect to any
Performance Compensation Award under the Plan.

 

(kk)                                “Performance Formula” means, for a
Performance Period, the one or more objective formulae applied against the
relevant Performance Goal to determine, with regard to the Performance
Compensation Award of a particular Participant, whether all, some portion but
less than all, or none of the Performance Compensation Award has been earned for
the Performance Period.

 

(ll)                                        “Performance Goals” means, for a
Performance Period, the one or more goals established by the Committee for the
Performance Period based upon the Performance Criteria.

 

(mm)                        “Performance Period” means the one or more periods
of time of not less than 12 months, as the Committee may select, over which the
attainment of one or more Performance Goals will be measured for the purpose of
determining a Participant’s right to, and the payment of, a Performance
Compensation Award.

 

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(nn)                                “Permitted Transferee” has the meaning given
such term in Section 14(b) of the Plan.

 

(oo)                                “Person” means any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).

 

(pp)                                “Plan” means this American Renal Associates
Holdings, Inc. 2016 Omnibus Incentive Plan, as it may be amended and restated
from time to time.

 

(qq)                                “Qualifying Director” means a person who is
(i) with respect to actions intended to obtain an exemption from
Section 16(b) of the Exchange Act pursuant to Rule 16b-3 under the Exchange Act,
a “non-employee director” within the meaning of Rule 16b-3 under the Exchange
Act; and (ii) with respect to actions intended to obtain the exception for
performance-based compensation under 162(m) of the Code, an “outside director”
within the meaning of Section 162(m) of the Code.

 

(rr)                                      “Restricted Period” means the period
of time determined by the Committee during which an Award is subject to
restrictions, including vesting conditions.

 

(ss)                                    “Restricted Stock” means Common Stock,
subject to certain specified restrictions (which may include, without
limitation, a requirement that the Participant remain continuously employed or
provide continuous services for a specified period of time), granted under
Section 9 of the Plan.

 

(tt)                                      “Restricted Stock Unit” means an
unfunded and unsecured promise to deliver shares of Common Stock, cash, other
securities or other property, subject to certain restrictions (which may
include, without limitation, a requirement that the Participant remain
continuously employed or provide continuous services for a specified period of
time), granted under Section 9 of the Plan.

 

(uu)                                “SAR Period” has the meaning given such term
in Section 8(c) of the Plan.

 

(vv)                                “Securities Act” means the Securities Act of
1933, as amended, and any successor thereto.  Reference in the Plan to any
section of (or rule promulgated under) the Securities Act shall be deemed to
include any rules, regulations or other interpretative guidance under such
section or rule, and any amendments or successor provisions to such section,
rules, regulations or guidance.

 

(ww)                            “Service Recipient” means, with respect to a
Participant holding a given Award, the member of the Company Group by which the
original recipient of such Award is, or following a Termination was most
recently, principally employed or to which such original recipient provides, or
following a Termination was most recently providing, services, as applicable.

 

(xx)                                “Stock Appreciation Right” or “SAR” means an
Award granted under Section 8 of the Plan.

 

(yy)                                “Strike Price” has the meaning given such
term in Section 8(b) of the Plan.

 

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(zz)                                  “Subsidiary” means, with respect to any
specified Person:

 

(i)                                     any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
such entity’s voting securities (without regard to the occurrence of any
contingency and after giving effect to any voting agreement or stockholders’
agreement that effectively transfers voting power) is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and

 

(ii)                                  any partnership (or any comparable foreign
entity) (A) the sole general partner (or functional equivalent thereof) or the
managing general partner of which is such Person or Subsidiary of such Person or
(B) the only general partners (or functional equivalents thereof) of which are
that Person or one or more Subsidiaries of that Person (or any combination
thereof).

 

(aaa)                         “Substitute Award” has the meaning given such term
in Section 5(e) of the Plan.

 

(bbb)                         “Sub-Plans” means any sub-plan to this Plan that
has been adopted by the Board or the Committee for the purpose of permitting the
offering of Awards to employees of certain Designated Foreign Subsidiaries or
otherwise outside the United States of America, with each such sub-plan designed
to comply with local laws applicable to offerings in such foreign
jurisdictions.  Although any Sub-Plan may be designated a separate and
independent plan from the Plan in order to comply with applicable local laws,
the Absolute Share Limit and the other limits specified in Section 5(b) shall
apply in the aggregate to the Plan and any Sub-Plan adopted hereunder.

 

(ccc)                            “Termination” means the termination of a
Participant’s employment or service, as applicable, with the Service Recipient
for any reason (including death or Disability).

 

3.                                      Effective Date; Duration.  The Plan
shall be effective as of the Effective Date.  The expiration date of the Plan,
on and after which date no Awards may be granted hereunder, shall be the tenth
(10th) anniversary of the Effective Date; provided, however, that such
expiration shall not affect Awards then outstanding, and the terms and
conditions of the Plan shall continue to apply to such Awards.

 

4.                                      Administration.

 

(a)                                       The Committee shall administer the
Plan.  To the extent required to comply with the provisions of Rule 16b-3
promulgated under the Exchange Act (if the Board is not acting as the Committee
under the Plan) or necessary to obtain the exception for performance-based
compensation under Section 162(m) of the Code, as applicable, it is intended
that each member of the Committee shall, at the time such member takes any
action with respect to an Award under the Plan that is intended to qualify for
the exemptions provided by Rule 16b-3 promulgated under the Exchange Act or to
qualify as performance-based compensation under Section 162(m) of the Code, as
applicable, be a Qualifying Director.  However, the fact that a Committee member
shall fail to qualify as a Qualifying Director shall not invalidate any Award
granted by the Committee that is otherwise validly granted under the Plan.

 

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(b)                                       Subject to the provisions of the Plan
and applicable law, the Committee shall have the sole and plenary authority, in
addition to other express powers and authorizations conferred on the Committee
by the Plan, to (i) designate Participants; (ii) determine the type or types of
Awards to be granted to a Participant; (iii) determine the number of shares of
Common Stock to be covered by, or with respect to which payments, rights, or
other matters are to be calculated in connection with, Awards; (iv) determine
the terms and conditions of any Award; (v) determine whether, to what extent,
and under what circumstances Awards may be settled in, or exercised for, cash,
shares of Common Stock, other securities, other Awards or other property, or
canceled, forfeited, or suspended and the method or methods by which Awards may
be settled, exercised, canceled, forfeited, or suspended; (vi) determine
whether, to what extent, and under what circumstances the delivery of cash,
shares of Common Stock, other securities, other Awards or other property and
other amounts payable with respect to an Award shall be deferred either
automatically or at the election of the Participant or of the Committee;
(vii) interpret, administer, reconcile any inconsistency in, correct any defect
in and/or supply any omission in the Plan and any instrument or agreement
relating to, or Award granted under, the Plan; (viii) establish, amend, suspend,
or waive any rules and regulations and appoint such agents as the Committee
shall deem appropriate for the proper administration of the Plan; (ix) adopt
Sub-Plans; and (x) make any other determination and take any other action that
the Committee deems necessary or desirable for the administration of the Plan.

 

(c)                                        Except to the extent prohibited by
applicable law or the applicable rules and regulations of any securities
exchange or inter-dealer quotation system on which the securities of the Company
are listed or traded, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers to any person or persons
selected by it.  Any such allocation or delegation may be revoked by the
Committee at any time.  Without limiting the generality of the foregoing, the
Committee may delegate to one or more officers of any member of the Company
Group, the authority to act on behalf of the Committee with respect to any
matter, right, obligation, or election which is the responsibility of, or which
is allocated to, the Committee herein, and which may be so delegated as a matter
of law, except for grants of Awards to Non-Employee Directors.  Notwithstanding
the foregoing in this Section 4(c), it is intended that any action under the
Plan intended to qualify for an exemption provided by Rule 16b-3 promulgated
under the Exchange Act, and/or the exception under Section 162(m) of the Code
related to persons who are subject to Section 16 of the Exchange Act and/or who
are, or who are reasonably expected to be, “covered employees” for purposes of
Section 162(m) of the Code, will be taken only by the Board or by a committee or
subcommittee of two (2) or more Qualifying Directors.  However, the fact that
any member of such committee or subcommittee shall fail to qualify as a
Qualifying Director shall not invalidate any action that is otherwise valid
under the Plan.

 

(d)                                       Unless otherwise expressly provided in
the Plan, all designations, determinations, interpretations, and other decisions
under or with respect to the Plan, any Award or any Award Agreement shall be
within the sole discretion of the Committee, may be made at any time and shall
be final, conclusive and binding upon all Persons, including, without
limitation, any member of the Company Group, any Participant, any holder or
beneficiary of any Award, and any stockholder of the Company.

 

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(e)                                        No member of the Board, the Committee
or any employee or agent of any member of the Company Group (each such Person,
an “Indemnifiable Person”) shall be liable for any action taken or omitted to be
taken or any determination made with respect to the Plan or any Award hereunder
(unless constituting fraud or a willful criminal act or omission).  Each
Indemnifiable Person shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense (including attorneys’
fees) that may be imposed upon or incurred by such Indemnifiable Person in
connection with or resulting from any action, suit or proceeding to which such
Indemnifiable Person may be a party or in which such Indemnifiable Person may be
involved by reason of any action taken or omitted to be taken or determination
made with respect to the Plan or any Award hereunder and against and from any
and all amounts paid by such Indemnifiable Person with the Company’s approval,
in settlement thereof, or paid by such Indemnifiable Person in satisfaction of
any judgment in any such action, suit or proceeding against such Indemnifiable
Person, and the Company shall advance to such Indemnifiable Person any such
expenses promptly upon written request (which request shall include an
undertaking by the Indemnifiable Person to repay the amount of such advance if
it shall ultimately be determined, as provided below, that the Indemnifiable
Person is not entitled to be indemnified); provided, that the Company shall have
the right, at its own expense, to assume and defend any such action, suit or
proceeding and once the Company gives notice of its intent to assume the
defense, the Company shall have sole control over such defense with counsel of
the Company’s choice.  The foregoing right of indemnification shall not be
available to an Indemnifiable Person to the extent that a final judgment or
other final adjudication (in either case not subject to further appeal) binding
upon such Indemnifiable Person determines that the acts, omissions or
determinations of such Indemnifiable Person giving rise to the indemnification
claim resulted from such Indemnifiable Person’s fraud or willful criminal act or
omission or that such right of indemnification is otherwise prohibited by law or
by the organizational documents of any member of the Company Group.  The
foregoing right of indemnification shall not be exclusive of or otherwise
supersede any other rights of indemnification to which such Indemnifiable
Persons may be entitled under the organizational documents of any member of the
Company Group, as a matter of law, under an individual indemnification agreement
or contract or otherwise, or any other power that the Company may have to
indemnify such Indemnifiable Persons or hold such Indemnifiable Persons
harmless.

 

(f)                                         Notwithstanding anything to the
contrary contained in the Plan, the Board may, in its sole discretion, at any
time and from time to time, grant Awards and administer the Plan with respect to
such Awards.  Any such actions by the Board shall be subject to the applicable
rules of the securities exchange or inter-dealer quotation system on which the
Common Stock is listed or quoted.  In any such case, the Board shall have all
the authority granted to the Committee under the Plan.

 

5.                                      Grant of Awards; Shares Subject to the
Plan; Limitations.

 

(a)                                       The Committee may, from time to time,
grant Awards to one or more Eligible Persons.

 

(b)                                       Awards granted under the Plan shall be
subject to the following limitations:  (i) subject to Section 12 of the Plan, no
more than 4,000,000 shares of Common Stock (the “Absolute Share Limit”) shall be
available for Awards under the Plan; (ii) subject to Section 12

 

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of the Plan, grants of Options or SARs under the Plan in respect of no more than
1,000,000 shares of Common Stock may be made to any individual Participant
during any single fiscal year of the Company (for this purpose, if a SAR is
granted in tandem with an Option (such that the SAR expires with respect to the
number of shares of Common Stock for which the Option is exercised), only the
shares underlying the Option shall count against this limitation); (iii) subject
to Section 12 of the Plan, no more than the number of shares of Common Stock
equal to the Absolute Share Limit may be issued in the aggregate pursuant to the
exercise of Incentive Stock Options granted under the Plan; (iv) subject to
Section 12 of the Plan, no more than 1,000,000 shares of Common Stock may be
issued in respect of Performance Compensation Awards denominated in shares of
Common Stock granted pursuant to Section 11 of the Plan to any individual
Participant for a single fiscal year during a Performance Period (or with
respect to each single fiscal year in the event a Performance Period extends
beyond a single fiscal year), or in the event such share-denominated Performance
Compensation Award is paid in cash, other securities, other Awards or other
property, no more than the Fair Market Value of such shares of Common Stock on
the last day of the Performance Period to which such Award relates; (v) the
maximum number of shares of Common Stock subject to Awards granted during a
single fiscal year to any Non-Employee Director, taken together with any cash
fees paid to such Non-Employee Director during the fiscal year, shall not exceed
$500,000 in total value (calculating the value of any such Awards based on the
grant date fair value of such Awards for financial reporting purposes); and
(vi) the maximum amount that can be paid to any individual Participant for a
single fiscal year during a Performance Period (or with respect to each single
fiscal year in the event a Performance Period extends beyond a single fiscal
year) pursuant to a Performance Compensation Award denominated in cash
(described in Section 11(a) of the Plan) shall be $10,000,000.

 

(c)                                  Other than with respect to Substitute
Awards, to the extent that an Award expires or is canceled, forfeited,
terminated, settled in cash, or otherwise is settled without delivery to the
Participant of the full number of shares of Common Stock to which the Award
related, the undelivered shares will again be available for grant.  Shares of
Common Stock withheld in payment of the Exercise Price, or taxes relating to an
Award and shares equal to the number of shares surrendered in payment of any
Exercise Price, or taxes relating to an Award, shall be deemed to constitute
shares not issued to the Participant and shall be deemed to again be available
for Awards under the Plan; provided, however, that such shares shall not become
available for issuance hereunder if either (i) the applicable shares are
withheld or surrendered following the termination of the Plan; or (ii) at the
time the applicable shares are withheld or surrendered, it would constitute a
material revision of the Plan subject to stockholder approval under any
then-applicable rules of the national securities exchange on which the Common
Stock is listed.

 

(d)                                       Shares of Common Stock issued by the
Company in settlement of Awards may be authorized and unissued shares, shares
held in the treasury of the Company, shares purchased on the open market or by
private purchase or a combination of the foregoing.

 

(e)                                        Awards may, in the sole discretion of
the Committee, be granted under the Plan in assumption of, or in substitution
for, outstanding awards previously granted by an entity directly or indirectly
acquired by the Company or with which the Company combines (“Substitute
Awards”).  Substitute Awards shall not be counted against the Absolute Share

 

10

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Limit; provided, that Substitute Awards issued in connection with the assumption
of, or in substitution for, outstanding options intended to qualify as
“incentive stock options” within the meaning of Section 422 of the Code shall be
counted against the aggregate number of shares of Common Stock available for
Awards of Incentive Stock Options under the Plan.  Subject to applicable stock
exchange requirements, available shares under a stockholder-approved plan of an
entity directly or indirectly acquired by the Company or with which the Company
combines (as appropriately adjusted to reflect the acquisition or combination
transaction) may be used for Awards under the Plan and shall not reduce the
number of shares of Common Stock available for issuance under the Plan.

 

6.                                      Eligibility.  Participation in the Plan
shall be limited to Eligible Persons.

 

7.                                      Options.

 

(a)                                       General.  Each Option granted under
the Plan shall be evidenced by an Award Agreement, which agreement need not be
the same for each Participant.  Each Option so granted shall be subject to the
conditions set forth in this Section 7, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award
Agreement.  All Options granted under the Plan shall be Nonqualified Stock
Options unless the applicable Award Agreement expressly states that the Option
is intended to be an Incentive Stock Option.  Incentive Stock Options shall be
granted only to Eligible Persons who are employees of a member of the Company
Group, and no Incentive Stock Option shall be granted to any Eligible Person who
is ineligible to receive an Incentive Stock Option under the Code.  No Option
shall be treated as an Incentive Stock Option unless the Plan has been approved
by the stockholders of the Company in a manner intended to comply with the
stockholder approval requirements of Section 422(b)(1) of the Code, provided
that any Option intended to be an Incentive Stock Option shall not fail to be
effective solely on account of a failure to obtain such approval, but rather
such Option shall be treated as a Nonqualified Stock Option unless and until
such approval is obtained.  In the case of an Incentive Stock Option, the terms
and conditions of such grant shall be subject to, and comply with, such rules as
may be prescribed by Section 422 of the Code.  If for any reason an Option
intended to be an Incentive Stock Option (or any portion thereof) shall not
qualify as an Incentive Stock Option, then, to the extent of such
nonqualification, such Option or portion thereof shall be regarded as a
Nonqualified Stock Option appropriately granted under the Plan.

 

(b)                                       Exercise Price.  Except as otherwise
provided by the Committee in the case of Substitute Awards, the exercise price
(“Exercise Price”) per share of Common Stock for each Option shall not be less
than 100% of the Fair Market Value of such share (determined as of the Date of
Grant); provided, however, that in the case of an Incentive Stock Option granted
to an employee who, at the time of the grant of such Option, owns stock
representing more than 10% of the voting power of all classes of stock of any
member of the Company Group, the Exercise Price per share shall be no less than
110% of the Fair Market Value per share on the Date of Grant.

 

11

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(c)                                        Vesting and Expiration; Termination.

 

(i)                                     Options shall vest and become
exercisable in such manner and on such date or dates or upon such event or
events as determined by the Committee; provided, however, that notwithstanding
any such vesting dates or events, the Committee may, in its sole discretion,
accelerate the vesting of any Options at any time and for any reason. Options
shall expire upon a date determined by the Committee, not to exceed ten
(10) years from the Date of Grant (the “Option Period”); provided, that if the
Option Period (other than in the case of an Incentive Stock Option) would expire
at a time when trading in the shares of Common Stock is prohibited by the
Company’s insider trading policy (or Company-imposed “blackout period”), then
the Option Period shall be automatically extended until the thirtieth (30th) day
following the expiration of such prohibition.  Notwithstanding the foregoing, in
no event shall the Option Period exceed five (5) years from the Date of Grant in
the case of an Incentive Stock Option granted to a Participant who on the Date
of Grant owns stock representing more than 10% of the voting power of all
classes of stock of any member of the Company Group.

 

(ii)                                  Unless otherwise provided by the
Committee, whether in an Award Agreement or otherwise, in the event of (A) a
Participant’s Termination by the Service Recipient for Cause, all outstanding
Options granted to such Participant shall immediately terminate and expire;
(B) a Participant’s Termination due to death or Disability, each outstanding
unvested Option granted to such Participant shall immediately terminate and
expire, and each outstanding vested Option shall remain exercisable for one
(1) year thereafter (but in no event beyond the expiration of the Option
Period); and (C) a Participant’s Termination for any other reason, each
outstanding unvested Option granted to such Participant shall immediately
terminate and expire, and each outstanding vested Option shall remain
exercisable for ninety (90) days thereafter (but in no event beyond the
expiration of the Option Period).

 

(d)                                       Method of Exercise and Form of
Payment.  No shares of Common Stock shall be issued pursuant to any exercise of
an Option until payment in full of the Exercise Price therefor is received by
the Company and the Participant has paid to the Company an amount equal to any
Federal, state, local and non-U.S. income, employment and any other applicable
taxes required to be withheld.  Options which have become exercisable may be
exercised by delivery of written or electronic notice of exercise to the Company
(or telephonic instructions to the extent provided by the Committee) in
accordance with the terms of the Option accompanied by payment of the Exercise
Price.  The Exercise Price shall be payable: (i) in cash, check, cash equivalent
and/or shares of Common Stock valued at the Fair Market Value at the time the
Option is exercised (including, pursuant to procedures approved by the
Committee, by means of attestation of ownership of a sufficient number of shares
of Common Stock in lieu of actual issuance of such shares to the Company);
provided, that such shares of Common Stock are not subject to any pledge or
other security interest and have been held by the Participant for at least six
(6) months (or such other period as established from time to time by the
Committee in order to avoid adverse accounting treatment applying generally
accepted accounting principles (“ GAAP”)); or (ii) by such other method as the
Committee may permit, in its sole discretion, including, without limitation
(A) in other property having a fair market value on the date of exercise equal
to the Exercise Price; (B) if there is a public market for the shares of Common
Stock at such time, by means of a broker-assisted “cashless exercise” pursuant
to which the Company is delivered (including telephonically to the extent
permitted by the Committee) a

 

12

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copy of irrevocable instructions to a stockbroker to sell the shares of Common
Stock otherwise issuable upon the exercise of the Option and to deliver promptly
to the Company an amount equal to the Exercise Price; or (C) a “net exercise”
procedure effected by withholding the minimum number of shares of Common Stock
otherwise issuable in respect of an Option that are needed to pay the Exercise
Price and any Federal, state, local, and non-U.S. income, employment, and any
other applicable taxes required to be withheld.  Any fractional shares of Common
Stock shall be settled in cash.

 

(e)                                        Notification upon Disqualifying
Disposition of an Incentive Stock Option.  Each Participant awarded an Incentive
Stock Option under the Plan shall notify the Company in writing immediately
after the date the Participant makes a disqualifying disposition of any Common
Stock acquired pursuant to the exercise of such Incentive Stock Option.  A
disqualifying disposition is any disposition (including, without limitation, any
sale) of such Common Stock before the later of (i) the date that is two
(2) years after the Date of Grant of the Incentive Stock Option, or (ii) the
date that is one (1) year after the date of exercise of the Incentive Stock
Option.  The Company may, if determined by the Committee and in accordance with
procedures established by the Committee, retain possession, as agent for the
applicable Participant, of any Common Stock acquired pursuant to the exercise of
an Incentive Stock Option until the end of the period described in the preceding
sentence, subject to complying with any instructions from such Participant as to
the sale of such Common Stock.

 

(f)                                         Compliance With Laws, etc. 
Notwithstanding the foregoing, in no event shall a Participant be permitted to
exercise an Option in a manner which the Committee determines would violate the
Sarbanes-Oxley Act of 2002, as it may be amended from time to time, or any other
applicable law or the applicable rules and regulations of the Securities and
Exchange Commission or the applicable rules and regulations of any securities
exchange or inter-dealer quotation system on which the securities of the Company
are listed or traded.

 

8.                                      Stock Appreciation Rights.

 

(a)                                       General.  Each SAR granted under the
Plan shall be evidenced by an Award Agreement.  Each SAR so granted shall be
subject to the conditions set forth in this Section 8, and to such other
conditions not inconsistent with the Plan as may be reflected in the applicable
Award Agreement.  Any Option granted under the Plan may include tandem SARs. 
The Committee also may award SARs to Eligible Persons independent of any Option.

 

(b)                                       Strike Price.  Except as otherwise
provided by the Committee in the case of Substitute Awards, the strike price
(“Strike Price”) per share of Common Stock for each SAR shall not be less than
100% of the Fair Market Value of such share (determined as of the Date of
Grant).  Notwithstanding the foregoing, a SAR granted in tandem with (or in
substitution for) an Option previously granted shall have a Strike Price equal
to the Exercise Price of the corresponding Option.

 

(c)                                        Vesting and Expiration; Termination.

 

(i)                                     A SAR granted in connection with an
Option shall become exercisable and shall expire according to the same vesting
schedule and expiration provisions as the

 

13

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corresponding Option.  A SAR granted independent of an Option shall vest and
become exercisable in such manner and on such date or dates or upon such event
or events as determined by the Committee; provided, however, that
notwithstanding any such vesting dates or events, the Committee may, in its sole
discretion, accelerate the vesting of any SAR at any time and for any reason.
SARs shall expire upon a date determined by the Committee, not to exceed ten
(10) years from the Date of Grant (the “SAR Period”); provided, that if the SAR
Period would expire at a time when trading in the shares of Common Stock is
prohibited by the Company’s insider trading policy (or Company-imposed “blackout
period”), then the SAR Period shall be automatically extended until the 30th day
following the expiration of such prohibition.

 

(ii)                                  Unless otherwise provided by the
Committee, whether in an Award Agreement or otherwise, in the event of (A) a
Participant’s Termination by the Service Recipient for Cause, all outstanding
SARs granted to such Participant shall immediately terminate and expire; (B) a
Participant’s Termination due to death or Disability, each outstanding unvested
SAR granted to such Participant shall immediately terminate and expire, and each
outstanding vested SAR shall remain exercisable for one (1) year thereafter (but
in no event beyond the expiration of the SAR Period); and (C) a Participant’s
Termination for any other reason, each outstanding unvested SAR granted to such
Participant shall immediately terminate and expire, and each outstanding vested
SAR shall remain exercisable for ninety (90) days thereafter (but in no event
beyond the expiration of the SAR Period).

 

(d)                                       Method of Exercise.  SARs which have
become exercisable may be exercised by delivery of written or electronic notice
of exercise to the Company in accordance with the terms of the Award, specifying
the number of SARs to be exercised and the date on which such SARs were awarded.

 

(e)                                        Payment.  Upon the exercise of a SAR,
the Company shall pay to the Participant an amount equal to the number of shares
subject to the SAR that is being exercised multiplied by the excess of the Fair
Market Value of one (1) share of Common Stock on the exercise date over the
Strike Price, less an amount equal to any Federal, state, local and non-U.S.
income, employment and any other applicable taxes required to be withheld.  The
Company shall pay such amount in cash, in shares of Common Stock valued at Fair
Market Value, or any combination thereof, as determined by the Committee.  Any
fractional shares of Common Stock shall be settled in cash.

 

9.                                      Restricted Stock and Restricted Stock
Units.

 

(a)                                       General.  Each grant of Restricted
Stock and Restricted Stock Units shall be evidenced by an Award Agreement.  Each
Restricted Stock and Restricted Stock Unit so granted shall be subject to the
conditions set forth in this Section 9, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award
Agreement.

 

(b)                                       Stock Certificates and Book-Entry;
Escrow or Similar Arrangement.  Upon the grant of Restricted Stock, the
Committee shall cause a stock certificate registered in the name of the
Participant to be issued or shall cause share(s) of Common Stock to be
registered in the

 

14

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name of the Participant and held in book-entry form subject to the Company’s
directions and, if the Committee determines that the Restricted Stock shall be
held by the Company or in escrow rather than issued to the Participant pending
the release of the applicable restrictions, the Committee may require the
Participant to additionally execute and deliver to the Company (i) an escrow
agreement satisfactory to the Committee, if applicable; and (ii) the appropriate
stock power (endorsed in blank) with respect to the Restricted Stock covered by
such agreement.  If a Participant shall fail to execute and deliver (in a manner
permitted under Section 14(a) of the Plan or as otherwise determined by the
Committee) an agreement evidencing an Award of Restricted Stock and, if
applicable, an escrow agreement and blank stock power within the amount of time
specified by the Committee, the Award shall be null and void.  Subject to the
restrictions set forth in this Section 9 and the applicable Award Agreement, a
Participant generally shall have the rights and privileges of a stockholder as
to shares of Restricted Stock, including, without limitation, the right to vote
such Restricted Stock; provided, that if the lapsing of restrictions with
respect to any grant of Restricted Stock is contingent on satisfaction of
performance conditions (other than, or in addition to, the passage of time), any
dividends payable on such shares of Restricted Stock shall be held by the
Company and delivered (without interest) to the Participant within fifteen (15)
days following the date on which the restrictions on such Restricted Stock lapse
(and the right to any such accumulated dividends shall be forfeited upon the
forfeiture of the Restricted Stock to which such dividends relate).  To the
extent shares of Restricted Stock are forfeited, any stock certificates issued
to the Participant evidencing such shares shall be returned to the Company, and
all rights of the Participant to such shares and as a stockholder with respect
thereto shall terminate without further obligation on the part of the Company. 
A Participant shall have no rights or privileges as a stockholder as to
Restricted Stock Units.

 

(c)                                        Vesting; Termination.

 

(i)                                     Restricted Stock and Restricted Stock
Units shall vest, and any applicable Restricted Period shall lapse, in such
manner and on such date or dates or upon such event or events as determined by
the Committee; provided, however, that, notwithstanding any such dates or
events, the Committee may, in its sole discretion, accelerate the vesting of any
Restricted Stock or Restricted Stock Unit or the lapsing of any applicable
Restricted Period at any time and for any reason.

 

(ii)                                  Unless otherwise provided by the
Committee, whether in an Award Agreement or otherwise, in the event of a
Participant’s Termination for any reason prior to the time that such
Participant’s Restricted Stock or Restricted Stock Units, as applicable, have
vested, (A) all vesting with respect to such Participant’s Restricted Stock or
Restricted Stock Units, as applicable, shall cease; and (B) unvested shares of
Restricted Stock and unvested Restricted Stock Units, as applicable, shall be
forfeited to the Company by the Participant for no consideration as of the date
of such Termination.

 

(d)                                       Issuance of Restricted Stock and
Settlement of Restricted Stock Units.

 

(i)                                     Upon the expiration of the Restricted
Period with respect to any shares of Restricted Stock, the restrictions set
forth in the applicable Award Agreement shall be of no further force or effect
with respect to such shares, except as set forth in the applicable

 

15

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Award Agreement.  If an escrow arrangement is used, upon such expiration, the
Company shall issue to the Participant, or the Participant’s beneficiary,
without charge, the stock certificate (or, if applicable, a notice evidencing a
book-entry notation) evidencing the shares of Restricted Stock which have not
then been forfeited and with respect to which the Restricted Period has expired
(rounded down to the nearest full share).  Dividends, if any, that may have been
withheld by the Committee and attributable to any particular share of Restricted
Stock shall be distributed to the Participant in cash or, in the sole discretion
of the Committee, in shares of Common Stock having a Fair Market Value (on the
date of distribution) equal to the amount of such dividends, upon the release of
restrictions on such share and, if such share is forfeited, the Participant
shall have no right to such dividends.

 

(ii)                                  Unless otherwise provided by the Committee
in an Award Agreement or otherwise, upon the expiration of the Restricted Period
with respect to any outstanding Restricted Stock Units, the Company shall issue
to the Participant or the Participant’s beneficiary, without charge, one
(1) share of Common Stock (or other securities or other property, as applicable)
for each such outstanding Restricted Stock Unit; provided, however, that the
Committee may, in its sole discretion, elect to (A) pay cash or part cash and
part shares of Common Stock in lieu of issuing only shares of Common Stock in
respect of such Restricted Stock Units; or (B) defer the issuance of shares of
Common Stock (or cash or part cash and part shares of Common Stock, as the case
may be) beyond the expiration of the Restricted Period if such extension would
not cause adverse tax consequences under Section 409A of the Code.  If a cash
payment is made in lieu of issuing shares of Common Stock in respect of such
Restricted Stock Units, the amount of such payment shall be equal to the Fair
Market Value per share of the Common Stock as of the date on which the
Restricted Period lapsed with respect to such Restricted Stock Units.  To the
extent provided in an Award Agreement, the holder of outstanding Restricted
Stock Units shall be entitled to be credited with dividend equivalent payments
(upon the payment by the Company of dividends on shares of Common Stock) either
in cash or, in the sole discretion of the Committee, in shares of Common Stock
having a Fair Market Value equal to the amount of such dividends (and interest
may, in the sole discretion of the Committee, be credited on the amount of cash
dividend equivalents at a rate and subject to such terms as determined by the
Committee), which accumulated dividend equivalents (and interest thereon, if
applicable) shall be payable at the same time as the underlying Restricted Stock
Units are settled following the date on which the Restricted Period lapses with
respect to such Restricted Stock Units, and, if such Restricted Stock Units are
forfeited, the Participant shall have no right to such dividend equivalent
payments (or interest thereon, if applicable).

 

(e)                                        Legends on Restricted Stock.  Each
certificate, if any, or book entry representing Restricted Stock awarded under
the Plan, if any, shall bear a legend or book entry notation substantially in
the form of the following, in addition to any other information the Company
deems appropriate, until the lapse of all restrictions with respect to such
shares of Common Stock:

 

TRANSFER OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY IS RESTRICTED
PURSUANT TO THE TERMS OF THE

 

16

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AMERICAN RENAL ASSOCIATES HOLDINGS, INC. 2016 OMNIBUS INCENTIVE PLAN AND A
RESTRICTED STOCK AWARD AGREEMENT BETWEEN AMERICAN RENAL ASSOCIATES
HOLDINGS, INC. AND PARTICIPANT.  A COPY OF SUCH PLAN AND AWARD AGREEMENT IS ON
FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF AMERICAN RENAL ASSOCIATES
HOLDINGS, INC.

 

10.                               Other Equity-Based Awards and Other Cash-Based
Awards.  The Committee may grant Other Equity-Based Awards and Other Cash-Based
Awards under the Plan to Eligible Persons, alone or in tandem with other Awards,
in such amounts and dependent on such conditions as the Committee shall from
time to time in its sole discretion determine.  Each Other Equity-Based Award
granted under the Plan shall be evidenced by an Award Agreement and  each Other
Cash-Based Award granted under the Plan shall be evidenced in such form as the
Committee may determine from time to time.  Each Other Equity-Based Award or
Other Cash-Based Award, as applicable, so granted shall be subject to such
conditions not inconsistent with the Plan as may be reflected in the applicable
Award Agreement or other form evidencing such Award, including, without
limitation, those set forth in Section 14(a) of the Plan.

 

11.                               Performance Compensation Awards.

 

(a)                                       General.  The Committee shall have the
authority, at or before the time of grant of any Award, to designate such Award
as a Performance Compensation Award intended to qualify as “performance-based
compensation” under Section 162(m) of the Code.    Notwithstanding anything in
the Plan to the contrary, if the Company determines that a Participant who has
been granted an Award designated as a Performance Compensation Award is not (or
is no longer) a “covered employee” (within the meaning of Section 162(m) of the
Code), the terms and conditions of such Award may be modified without regard to
any restrictions or limitations set forth in this Section 11 (but subject
otherwise to the provisions of Section 13 of the Plan).

 

(b)                                       Discretion of Committee with Respect
to Performance Compensation Awards.  With regard to a particular Performance
Period, the Committee shall have sole discretion to select the length of such
Performance Period, the type(s) of Performance Compensation Awards to be issued,
the Performance Criteria that will be used to establish the Performance Goal(s),
the kind(s) and/or level(s) of the Performance Goal(s) that is (are) to apply
and the Performance Formula(e).  Within the first ninety (90) days of a
Performance Period (or, within any other maximum period allowed under
Section 162(m) of the Code), the Committee shall, with regard to the Performance
Compensation Awards to be issued for such Performance Period, exercise its
discretion with respect to each of the matters enumerated in the immediately
preceding sentence and record the same in writing.

 

(c)                                        Performance Criteria.  The
Performance Criteria that will be used to establish the Performance Goal(s) may
be based on the attainment of specific levels of performance of the Company
(and/or one or more members of the Company Group, divisions or operational
and/or business units, product lines, brands, business segments, administrative
departments, or any combination of the foregoing) and shall be limited to the
following, which may be determined in accordance with GAAP or on a non-GAAP
basis: (i) net earnings, net income (before or after

 

17

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taxes) or consolidated net income; (ii) basic or diluted earnings per share
(before or after taxes); (iii) net revenue or net revenue growth; (iv) gross
revenue or gross revenue growth, gross profit or gross profit growth; (v) net
operating profit (before or after taxes); (vi) return measures (including, but
not limited to, return on investment, assets, capital, employed capital,
invested capital, equity, or sales); (vii) cash flow measures (including, but
not limited to, operating cash flow, free cash flow, or cash flow return on
capital), which may but are not required to be measured on a per share basis;
(viii) actual or adjusted earnings before or after interest, taxes, depreciation
and/or amortization (including EBIT and EBITDA); (ix) gross or net operating
margins; (x) productivity ratios; (xi) share price (including, but not limited
to, growth measures and total stockholder return); (xii) expense targets or cost
reduction goals, general and administrative expense savings; (xiii) operating
efficiency; (xiv) objective measures of customer/client satisfaction;
(xv) working capital targets; (xvi) measures of economic value added or other
‘value creation’ metrics; (xvii) enterprise value; (xviii) sales;
(xix) stockholder return; (xx) customer/client retention; (xxi) competitive
market metrics; (xxii) employee retention; (xxiii) objective measures of
personal targets, goals or completion of projects (including but not limited to
succession and hiring projects, completion of specific acquisitions,
dispositions, reorganizations or other corporate transactions or capital-raising
transactions, expansions of specific business operations and meeting divisional
or project budgets); (xxiv) comparisons of continuing operations to other
operations; (xxv) market share; (xxvi) cost of capital, debt leverage year-end
cash position or book value; (xxvii) strategic objectives; or (xxviii) any
combination of the foregoing.  Any one or more of the Performance Criteria may
be stated as a percentage of another Performance Criteria, or used on an
absolute or relative basis to measure the performance of one or more members of
the Company Group as a whole or any divisions or operational and/or business
units, product lines, brands, business segments or administrative departments of
the Company and/or one or more members of the Company Group or any combination
thereof, as the Committee may deem appropriate, or any of the above Performance
Criteria may be compared to the performance of a selected group of comparison
companies, or a published or special index that the Committee, in its sole
discretion, deems appropriate, or as compared to various stock market indices. 
The Committee also has the authority to provide for accelerated vesting of any
Award based on the achievement of Performance Goals pursuant to the Performance
Criteria specified in this paragraph.  To the extent required under
Section 162(m) of the Code, the Committee shall, within the first ninety (90)
days of a Performance Period (or, within any other maximum period allowed under
Section 162(m) of the Code), define in an objective fashion the manner of
calculating the Performance Criteria it selects to use for such Performance
Period.

 

(d)                                       Modification of Performance Goal(s). 
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing Performance Criteria without
obtaining stockholder approval of such alterations, the Committee shall have
sole discretion to make such alterations without obtaining stockholder
approval.  Unless otherwise determined by the Committee at the time a
Performance Compensation Award is granted, the Committee shall, during the first
ninety (90) days of a Performance Period (or, within any other maximum period
allowed under Section 162(m) of the Code), or at any time thereafter to the
extent the exercise of such authority at such time would not cause the
Performance Compensation Awards granted to any Participant for such Performance
Period to fail to qualify as “performance-based compensation” under
Section 162(m) of the Code, specify adjustments or modifications to be made to
the calculation of a Performance Goal for such

 

18

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Performance Period, based on and in order to appropriately reflect the following
events: (i) asset write-downs; (ii) litigation or claim judgments or
settlements; (iii) the effect of changes in tax laws, accounting principles, or
other laws or regulatory rules affecting reported results; (iv) any
reorganization and restructuring programs; (v) acquisitions or divestitures;
(vi) any other specific, unusual or nonrecurring events, or objectively
determinable category thereof; (vii) foreign exchange gains and losses;
(viii) discontinued operations and nonrecurring charges; and (ix) a change in
the Company’s fiscal year.

 

(e)                                        Payment of Performance Compensation
Awards.

 

(i)                                     Condition to Receipt of Payment.  Unless
otherwise provided in the applicable Award Agreement, a Participant must be
employed by the Company on the last day of a Performance Period to be eligible
for payment in respect of a Performance Compensation Award for such Performance
Period.

 

(ii)                                  Limitation.  Unless otherwise provided in
the applicable Award Agreement, a Participant shall be eligible to receive
payment in respect of a Performance Compensation Award only to the extent that
(A) the Performance Goals for such period are achieved, and (B) all or some
portion of such Participant’s Performance Compensation Award has been earned for
the Performance Period based on the application of the Performance Formula to
such achieved Performance Goals.

 

(iii)                               Certification.  Following the completion of
a Performance Period, the Committee shall review and certify in writing whether,
and to what extent, the Performance Goals for the Performance Period have been
achieved and, if so, calculate and certify in writing that amount of the
Performance Compensation Awards earned for the period based upon the Performance
Formula.  The Committee shall then determine the amount of each Participant’s
Performance Compensation Award actually payable for the Performance Period and,
in so doing, may apply Negative Discretion.

 

(iv)                              Use of Negative Discretion.  In determining
the actual amount of an individual Participant’s Performance Compensation Award
for a Performance Period, if such Performance Compensation Award is an Other
Cash-Based Award, the Committee may reduce or eliminate the amount of such
Performance Compensation Award earned under the Performance Formula in the
Performance Period through the use of Negative Discretion.  Unless otherwise
provided in the applicable Award Agreement, the Committee shall not have the
discretion to (A) grant or provide payment in respect of Performance
Compensation Awards for a Performance Period if the Performance Goals for such
Performance Period have not been attained or (B) increase a Performance
Compensation Award above the applicable limitations set forth in Section 5 of
the Plan.

 

(f)                                         Timing of Award Payments.  Unless
otherwise provided in the applicable Award Agreement, Performance Compensation
Awards granted for a Performance Period shall be paid to Participants as soon as
administratively practicable following completion of the certifications required
by this Section 11.  Any Performance Compensation Award that has been deferred
shall not (between the date as of which the Award is deferred and the payment
date) increase (i) with respect to a Performance Compensation Award that is
payable in cash, by a measuring

 

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factor for each fiscal year greater than a reasonable rate of interest set by
the Committee; or (ii) with respect to a Performance Compensation Award that is
payable in shares of Common Stock, by an amount greater than the appreciation of
a share of Common Stock from the date such Award is deferred to the payment
date.  Any Performance Compensation Award that is deferred and is otherwise
payable in shares of Common Stock shall be credited (during the period between
the date as of which the Award is deferred and the payment date) with dividend
equivalents (in a manner consistent with the methodology set forth in the last
sentence of Section 9(d)(ii) of the Plan).

 

12.                               Changes in Capital Structure and Similar
Events.  Notwithstanding any other provision in this Plan to the contrary, the
following provisions shall apply to all Awards granted hereunder (other than
Other Cash-Based Awards):

 

(a)                                       General.  In the event of (i) any
dividend (other than regular cash dividends) or other distribution (whether in
the form of cash, shares of Common Stock, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, split-off, spin-off, combination, repurchase or
exchange of shares of Common Stock or other securities of the Company, issuance
of warrants or other rights to acquire shares of Common Stock or other
securities of the Company, or other similar corporate transaction or event that
affects the shares of Common Stock (including a Change in Control); or
(ii) unusual or nonrecurring events affecting the Company, including changes in
applicable rules, rulings, regulations or other requirements, that the Committee
determines, in its sole discretion, could result in substantial dilution or
enlargement of the rights intended to be granted to, or available for,
Participants (any event in (i) or (ii), an “Adjustment Event”), the Committee
shall, in respect of any such Adjustment Event, make such proportionate
substitution or adjustment, if any, as it deems equitable, to any or all of
(A) the Absolute Share Limit, or any other limit applicable under the Plan with
respect to the number of Awards which may be granted hereunder; (B) the number
of shares of Common Stock or other securities of the Company (or number and kind
of other securities or other property) which may be issued in respect of Awards
or with respect to which Awards may be granted under the Plan or any Sub-Plan;
and (C) the terms of any outstanding Award, including, without limitation,
(I) the number of shares of Common Stock or other securities of the Company (or
number and kind of other securities or other property) subject to outstanding
Awards or to which outstanding Awards relate; (II) the Exercise Price or Strike
Price with respect to any Award; or (III) any applicable performance measures
(including, without limitation, Performance Criteria and Performance Goals);
provided, that in the case of any “equity restructuring” (within the meaning of
the Financial Accounting Standards Board Accounting Standards Codification Topic
718 (or any successor pronouncement thereto)), the Committee shall make an
equitable or proportionate adjustment to outstanding Awards to reflect such
equity restructuring.  Any adjustment under this Section 12 shall be conclusive
and binding for all purposes.

 

(b)                                       Adjustment Events.  Without limiting
the foregoing, except as may otherwise be provided in an Award Agreement, in
connection with any Adjustment Event, the Committee may, in its sole discretion,
provide for any one or more of the following:

 

(i)                                     a substitution or assumption of Awards
(or awards of an acquiring company), acceleration of the exercisability of,
lapse of restrictions on, or termination of,

 

20

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Awards, or a period of time (which shall not be required to be more than ten
(10) days) for Participants to exercise outstanding Awards prior to the
occurrence of such event (and any such Award not so exercised shall terminate
upon the occurrence of such event); and

 

(ii)                                  subject to any limitations or reductions
as may be necessary to comply with Section 409A of the Code, cancellation of any
one or more outstanding Awards and payment to the holders of such Awards that
are vested as of such cancellation (including, without limitation, any Awards
that would vest as a result of the occurrence of such event but for such
cancellation or for which vesting is accelerated by the Committee in connection
with such event), the value of such Awards, if any, as determined by the
Committee (which value, if applicable, may be based upon the price per share of
Common Stock received or to be received by other stockholders of the Company in
such event), including, without limitation, in the case of an outstanding Option
or SAR, a cash payment in an amount equal to the excess, if any, of the Fair
Market Value (as of a date specified by the Committee) of the shares of Common
Stock subject to such Option or SAR over the aggregate Exercise Price or Strike
Price of such Option or SAR (it being understood that, in such event, any Option
or SAR having a per share Exercise Price or Strike Price equal to, or in excess
of, the Fair Market Value of a share of Common Stock subject thereto may be
canceled and terminated without any payment or consideration therefor), or, in
the case of Restricted Stock, Restricted Stock Units or Other Equity-Based
Awards that are not vested as of such cancellation, a cash payment or equity
subject to deferred vesting and delivery consistent with the vesting
restrictions applicable to such Restricted Stock, Restricted Stock Units or
Other Equity-Based Awards prior to cancellation, or the underlying shares in
respect thereof.

 

Payments to holders pursuant to clause (ii) above shall be made in cash or, in
the sole discretion of the Committee, in the form of such other consideration
necessary for a Participant to receive property, cash, or securities (or
combination thereof) as such Participant would have been entitled to receive
upon the occurrence of the transaction if the Participant had been, immediately
prior to such transaction, the holder of the number of shares of Common Stock
covered by the Award at such time (less any applicable Exercise Price or Strike
Price).

 

(c)                                        Other Requirements.  Prior to any
payment or adjustment contemplated under this Section 12, the Committee may
require a Participant to (i) represent and warrant as to the unencumbered title
to the Participant’s Awards; (ii) bear such Participant’s pro rata share of any
post-closing indemnity obligations, and be subject to the same post-closing
purchase price adjustments, escrow terms, offset rights, holdback terms, and
similar conditions as the other holders of Common Stock, subject to any
limitations or reductions as may be necessary to comply with Section 409A of the
Code; and (iii) deliver customary transfer documentation as reasonably
determined by the Committee.

 

(d)                                       Fractional Shares.  Any adjustment
provided under this Section 12 may provide for the elimination of any fractional
share that might otherwise become subject to an Award.

 

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13.                               Amendments and Termination.

 

(a)                                       Amendment and Termination of the
Plan.  The Board may amend, alter, suspend, discontinue, or terminate the Plan
or any portion thereof at any time; provided, that no such amendment,
alteration, suspension, discontinuance or termination shall be made without
stockholder approval if (i) such approval is necessary to comply with any
regulatory requirement applicable to the Plan (including, without limitation, as
necessary to comply with any rules or regulations of any securities exchange or
inter-dealer quotation system on which the securities of the Company may be
listed or quoted) or for changes in GAAP to new accounting standards; (ii) it
would materially increase the number of securities which may be issued under the
Plan (except for increases pursuant to Section 5 or 12 of the Plan); or (iii) it
would materially modify the requirements for participation in the Plan;
provided, further, that any such amendment, alteration, suspension,
discontinuance or termination that would materially and adversely affect the
rights of any Participant or any holder or beneficiary of any Award theretofore
granted shall not to that extent be effective without the consent of the
affected Participant, holder or beneficiary.  Notwithstanding the foregoing, no
amendment shall be made to the last proviso of Section 13(b) of the Plan without
stockholder approval.

 

(b)                                       Amendment of Award Agreements.  The
Committee may, to the extent consistent with the terms of any applicable Award
Agreement, waive any conditions or rights under, amend any terms of, or alter,
suspend, discontinue, cancel or terminate, any Award theretofore granted or the
associated Award Agreement, prospectively or retroactively (including after a
Participant’s Termination); provided, that, other than pursuant to Section 12,
any such waiver, amendment, alteration, suspension, discontinuance, cancellation
or termination that would materially and adversely affect the rights of any
Participant with respect to any Award theretofore granted shall not to that
extent be effective without the consent of the affected Participant; provided,
further, that without stockholder approval, except as otherwise permitted under
Section 12 of the Plan, (i) no amendment or modification may reduce the Exercise
Price of any Option or the Strike Price of any SAR; (ii) the Committee may not
cancel any outstanding Option or SAR and replace it with a new Option or SAR
(with a lower Exercise Price or Strike Price, as the case may be) or other Award
or cash payment that is greater than the intrinsic value (if any) of the
cancelled Option or SAR; and (iii) the Committee may not take any other action
which is considered a “repricing” for purposes of the stockholder approval
rules of any securities exchange or inter-dealer quotation system on which the
securities of the Company are listed or quoted.

 

14.                               General.

 

(a)                                       Award Agreements.  Each Award (other
than an Other Cash-Based Award) under the Plan shall be evidenced by an Award
Agreement, which shall be delivered to the Participant to whom such Award was
granted and shall specify the terms and conditions of the Award and any
rules applicable thereto, including, without limitation, the effect on such
Award of the death, Disability or Termination of a Participant, or of such other
events as may be determined by the Committee.  For purposes of the Plan, an
Award Agreement may be in any such form (written or electronic) as determined by
the Committee (including, without limitation, a Board or Committee resolution,
an employment agreement, a notice, a certificate or a letter) evidencing the
Award.  The Committee need not require an Award Agreement to be signed by the
Participant or a duly authorized representative of the Company.

 

22

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(b)                                       Nontransferability.

 

(i)                                     Each Award shall be exercisable only by
such Participant to whom such Award was granted during the Participant’s
lifetime, or, if permissible under applicable law, by the Participant’s legal
guardian or representative.  No Award may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Participant (unless
such transfer is specifically required pursuant to a domestic relations order or
by applicable law) other than by will or by the laws of descent and distribution
and any such purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance shall be void and unenforceable against any member of
the Company Group; provided, that the designation of a beneficiary shall not
constitute an assignment, alienation, pledge, attachment, sale, transfer or
encumbrance.

 

(ii)                                  Notwithstanding the foregoing, the
Committee may, in its sole discretion, permit Awards (other than Incentive Stock
Options) to be transferred by a Participant, without consideration, subject to
such rules as the Committee may adopt consistent with any applicable Award
Agreement to preserve the purposes of the Plan, to (A) any person who is a
“family member” of the Participant, as such term is used in the instructions to
Form S-8 under the Securities Act or any successor form of registration
statement promulgated by the Securities and Exchange Commission (collectively,
the “Immediate Family Members”); (B) a trust solely for the benefit of the
Participant and the Participant’s Immediate Family Members; (C) a partnership or
limited liability company whose only partners or stockholders are the
Participant and the Participant’s Immediate Family Members; or (D) a beneficiary
to whom donations are eligible to be treated as “charitable contributions” for
federal income tax purposes (each transferee described in clauses (A), (B),
(C) and (D) above is hereinafter referred to as a “Permitted Transferee”);
provided, that the Participant gives the Committee advance written notice
describing the terms and conditions of the proposed transfer and the Committee
notifies the Participant in writing that such a transfer would comply with the
requirements of the Plan.

 

(iii)                               The terms of any Award transferred in
accordance with clause (ii) above shall apply to the Permitted Transferee and
any reference in the Plan, or in any applicable Award Agreement, to a
Participant shall be deemed to refer to the Permitted Transferee, except that
(A) Permitted Transferees shall not be entitled to transfer any Award, other
than by will or the laws of descent and distribution; (B) Permitted Transferees
shall not be entitled to exercise any transferred Option unless there shall be
in effect a registration statement on an appropriate form covering the shares of
Common Stock to be acquired pursuant to the exercise of such Option if the
Committee determines, consistent with any applicable Award Agreement, that such
a registration statement is necessary or appropriate; (C) neither the Committee
nor the Company shall be required to provide any notice to a Permitted
Transferee, whether or not such notice is or would otherwise have been required
to be given to the Participant under the Plan or otherwise; and (D) the
consequences of a Participant’s Termination under the terms of the Plan and the
applicable Award Agreement shall continue to be applied with respect to the
Participant, including, without limitation, that an Option shall be exercisable
by the Permitted

 

23

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Transferee only to the extent, and for the periods, specified in the Plan and
the applicable Award Agreement.

 

(c)                                        Dividends and Dividend Equivalents. 
The Committee may, in its sole discretion, provide a Participant as part of an
Award with dividends, dividend equivalents, or similar payments in respect of
Awards, payable in cash, shares of Common Stock, other securities, other Awards
or other property, on a current or deferred basis, on such terms and conditions
as may be determined by the Committee in its sole discretion, including, without
limitation, payment directly to the Participant, withholding of such amounts by
the Company subject to vesting of the Award or reinvestment in additional shares
of Common Stock, Restricted Stock or other Awards; provided, that no dividends,
dividend equivalents or other similar payments shall be payable in respect of
outstanding (i) Options or SARs; or (ii) unearned Performance Compensation
Awards or other unearned Awards subject to performance conditions (other than,
or in addition to, the passage of time) (although dividends, dividend
equivalents or other similar payments may be accumulated in respect of unearned
Awards and paid within fifteen (15) days after such Awards are earned and become
payable or distributable).

 

(d)                                       Tax Withholding.

 

(i)                                     As a condition to the grant of any
Award, the Committee may require that a Participant satisfy, through a cash
payment by the Participant, or in the discretion of the Committee, through
deduction or withholding from any payment of any kind otherwise due to the
Participant, or through such other arrangements as are satisfactory to the
Committee, the amount of all federal, state, and local income and other
applicable taxes of any kind required or permitted to be withheld in connection
with such Award.

 

(ii)                                  Without limiting the generality of clause
(i) above, the Committee may (but is not obligated to), in its sole discretion,
permit a Participant to satisfy, in whole or in part, the foregoing withholding
liability by (A) the delivery of shares of Common Stock (which are not subject
to any pledge or other security interest) that have been held by the Participant
for at least six (6) months (or such other period as established from time to
time by the Committee in order to avoid adverse accounting treatment applying
GAAP) having a Fair Market Value equal to such withholding liability; or
(B) having the Company withhold from the number of shares of Common Stock
otherwise issuable or deliverable pursuant to the exercise or settlement of the
Award a number of shares with a Fair Market Value equal to such withholding
liability, provided that with respect to shares withheld pursuant to clause (B),
the number of such shares may not have a Fair Market Value greater than the
minimum required statutory withholding liability unless determined by the
Committee not to result in adverse accounting consequences.

 

(e)                                        Data Protection.  By participating in
the Plan or accepting any rights granted under it, each Participant consents to
the collection and processing of personal data relating to the Participant so
that the Company and its Affiliates can fulfill their obligations and exercise
their rights under the Plan and generally administer and manage the Plan.  This
data will include, but may not be limited to, data about participation in the
Plan and shares offered or received, purchased, or sold under the Plan from time
to time and other appropriate financial

 

24

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and other data (such as the date on which the Awards were granted) about the
Participant and the Participant’s participation in the Plan.

 

(f)                                         No Claim to Awards; No Rights to
Continued Employment; Waiver.  No employee of any member of the Company Group,
or other Person, shall have any claim or right to be granted an Award under the
Plan or, having been selected for the grant of an Award, to be selected for a
grant of any other Award.  There is no obligation for uniformity of treatment of
Participants or holders or beneficiaries of Awards.  The terms and conditions of
Awards and the Committee’s determinations and interpretations with respect
thereto need not be the same with respect to each Participant and may be made
selectively among Participants, whether or not such Participants are similarly
situated.  Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ or service of the
Service Recipient or any other member of the Company Group, nor shall it be
construed as giving any Participant any rights to continued service on the
Board.  The Service Recipient or any other member of the Company Group may at
any time dismiss a Participant from employment or discontinue any consulting
relationship, free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or any Award Agreement.  By accepting
an Award under the Plan, a Participant shall thereby be deemed to have waived
any claim to continued exercise or vesting of an Award or to damages or
severance entitlement related to non-continuation of the Award beyond the period
provided under the Plan or any Award Agreement, except to the extent of any
provision to the contrary in any written employment contract or other agreement
between the Service Recipient and/or any member of the Company Group and the
Participant, whether any such agreement is executed before, on or after the Date
of Grant.

 

(g)                                        International Participants.  With
respect to Participants who reside or work outside of the United States of
America and who are not (and who are not expected to be) “covered employees”
within the meaning of Section 162(m) of the Code, the Committee may, in its sole
discretion, amend the terms of the Plan and create or amend Sub-Plans or amend
outstanding Awards with respect to such Participants in order to conform such
terms with the requirements of local law or to obtain more favorable tax or
other treatment for a Participant or any member of the Company Group.

 

(h)                                       Designation and Change of
Beneficiary.  Each Participant may file with the Committee a written designation
of one or more Persons as the beneficiary(ies) who shall be entitled to receive
the amounts payable with respect to an Award, if any, due under the Plan upon
the Participant’s death.  A Participant may, from time to time, revoke or change
the Participant’s beneficiary designation without the consent of any prior
beneficiary by filing a new designation with the Committee.  The last such
designation received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant’s death, and in no event
shall it be effective as of a date prior to such receipt.  If no beneficiary
designation is filed by a Participant, the beneficiary shall be deemed to be the
Participant’s spouse or, if the Participant is unmarried at the time of death,
the Participant’s estate.

 

(i)                                           Termination.  Except as otherwise
provided in an Award Agreement, unless determined otherwise by the Committee at
any point following such event: (i) neither a

 

25

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temporary absence from employment or service due to illness, vacation or leave
of absence (including, without limitation, a call to active duty for military
service through a Reserve or National Guard unit) nor a transfer from employment
or service with one Service Recipient to employment or service with another
Service Recipient (or vice-versa) shall be considered a Termination; and (ii) if
a Participant undergoes a Termination, but such Participant continues to provide
services to the Company Group in a non-employee capacity, such change in status
shall not be considered a Termination for purposes of the Plan.  Further, unless
otherwise determined by the Committee, in the event that any Service Recipient
ceases to be a member of the Company Group (by reason of sale, divestiture,
spin-off or other similar transaction), unless a Participant’s employment or
service is transferred to another entity that would constitute a Service
Recipient immediately following such transaction, such Participant shall be
deemed to have suffered a Termination hereunder as of the date of the
consummation of such transaction.

 

(j)                                          No Rights as a Stockholder.  Except
as otherwise specifically provided in the Plan or any Award Agreement, no Person
shall be entitled to the privileges of ownership in respect of shares of Common
Stock which are subject to Awards hereunder until such shares have been issued
or delivered to such Person.

 

(k)                                       Government and Other Regulations.

 

(i)                                     The obligation of the Company to settle
Awards in shares of Common Stock or other consideration shall be subject to all
applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be required.  Notwithstanding any terms or conditions of any
Award to the contrary, the Company shall be under no obligation to offer to sell
or to sell, and shall be prohibited from offering to sell or selling, any shares
of Common Stock pursuant to an Award unless such shares have been properly
registered for sale pursuant to the Securities Act with the Securities and
Exchange Commission or unless the Company has received an opinion of counsel (if
the Company has requested such an opinion), satisfactory to the Company, that
such shares may be offered or sold without such registration pursuant to an
available exemption therefrom and the terms and conditions of such exemption
have been fully complied with.  The Company shall be under no obligation to
register for sale under the Securities Act any of the shares of Common Stock to
be offered or sold under the Plan.  The Committee shall have the authority to
provide that all shares of Common Stock or other securities of any member of the
Company Group issued under the Plan shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the
Plan, the applicable Award Agreement, the Federal securities laws, or the rules,
regulations and other requirements of the Securities and Exchange Commission,
any securities exchange or inter-dealer quotation system on which the securities
of the Company are listed or quoted and any other applicable Federal, state,
local or non-U.S. laws, rules, regulations and other requirements, and, without
limiting the generality of Section 9 of the Plan, the Committee may cause a
legend or legends to be put on certificates representing shares of Common Stock
or other securities of any member of the Company Group issued under the Plan to
make appropriate reference to such restrictions or may cause such Common Stock
or other securities of any member of the Company Group issued under the Plan in
book-entry form to be held subject to the Company’s instructions or subject to
appropriate stop-transfer orders.  Notwithstanding

 

26

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any provision in the Plan to the contrary, the Committee reserves the right to
add any additional terms or provisions to any Award granted under the Plan that
the Committee, in its sole discretion, deems necessary or advisable in order
that such Award complies with the legal requirements of any governmental entity
to whose jurisdiction the Award is subject.

 

(ii)                                  The Committee may cancel an Award or any
portion thereof if it determines, in its sole discretion, that legal or
contractual restrictions and/or blockage and/or other market considerations
would make the Company’s acquisition of shares of Common Stock from the public
markets, the Company’s issuance of Common Stock to the Participant, the
Participant’s acquisition of Common Stock from the Company and/or the
Participant’s sale of Common Stock to the public markets, illegal, impracticable
or inadvisable.  If the Committee determines to cancel all or any portion of an
Award in accordance with the foregoing, the Company shall, subject to any
limitations or reductions as may be necessary to comply with Section 409A of the
Code, (A) pay to the Participant an amount equal to the excess of (I) the
aggregate Fair Market Value of the shares of Common Stock subject to such Award
or portion thereof canceled (determined as of the applicable exercise date, or
the date that the shares would have been vested or issued, as applicable); over
(II) the aggregate Exercise Price or Strike Price (in the case of an Option or
SAR, respectively) or any amount payable as a condition of issuance of shares of
Common Stock (in the case of any other Award).  Such amount shall be delivered
to the Participant as soon as practicable following the cancellation of such
Award or portion thereof, or (B) in the case of Restricted Stock, Restricted
Stock Units or Other Equity-Based Awards, provide the Participant with a cash
payment or equity subject to deferred vesting and delivery consistent with the
vesting restrictions applicable to such Restricted Stock, Restricted Stock Units
or Other Equity-Based Awards, or the underlying shares in respect thereof.

 

(l)                                           No Section 83(b) Elections Without
Consent of Company.  No election under Section 83(b) of the Code or under a
similar provision of law may be made unless expressly permitted by the terms of
the applicable Award Agreement or by action of the Committee in writing prior to
the making of such election (with such consent by action of the Committee not to
be unreasonably withheld).  If a Participant, in connection with the acquisition
of shares of Common Stock under the Plan or otherwise, is expressly permitted to
make such election and the Participant makes the election, the Participant shall
notify the Company of such election within ten (10) days of filing notice of the
election with the Internal Revenue Service or other governmental authority, in
addition to any filing and notification required pursuant to Section 83(b) of
the Code or other applicable provision.

 

(m)                                   Payments to Persons Other Than
Participants.  If the Committee shall find that any Person to whom any amount is
payable under the Plan is unable to care for the Participant’s affairs because
of illness or accident, or is a minor, or has died, then any payment due to such
Person or the Participant’s estate (unless a prior claim therefor has been made
by a duly appointed legal representative) may, if the Committee so directs the
Company, be paid to the Participant’s spouse, child, relative, an institution
maintaining or having custody of such Person, or any other Person deemed by the
Committee to be a proper recipient on behalf of such Person

 

27

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otherwise entitled to payment.  Any such payment shall be a complete discharge
of the liability of the Committee and the Company therefor.

 

(n)                                       Nonexclusivity of the Plan.  Neither
the adoption of the Plan by the Board nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board to adopt such other incentive arrangements
as it may deem desirable, including, without limitation, the granting of
equity-based awards otherwise than under the Plan, and such arrangements may be
either applicable generally or only in specific cases.

 

(o)                                       No Trust or Fund Created.  Neither the
Plan nor any Award shall create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between any member of the Company
Group, on the one hand, and a Participant or other Person, on the other hand. 
No provision of the Plan or any Award shall require the Company, for the purpose
of satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made or otherwise
to segregate any assets, nor shall the Company be obligated to maintain separate
bank accounts, books, records or other evidence of the existence of a segregated
or separately maintained or administered fund for such purposes.  Participants
shall have no rights under the Plan other than as unsecured general creditors of
the Company, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have the same
rights as other service providers under general law.

 

(p)                                       Reliance on Reports.  Each member of
the Committee and each member of the Board shall be fully justified in acting or
failing to act, as the case may be, and shall not be liable for having so acted
or failed to act in good faith, in reliance upon any report made by the
independent public accountant of any member of the Company Group and/or any
other information furnished in connection with the Plan by any agent of the
Company or the Committee or the Board, other than himself or herself.

 

(q)                                       Relationship to Other Benefits.  No
payment under the Plan shall be taken into account in determining any benefits
under any pension, retirement, profit sharing, group insurance or other benefit
plan of the Company except as otherwise specifically provided in such other plan
or as required by applicable law.

 

(r)                                          Governing Law.  The Plan shall be
governed by and construed in accordance with the internal laws of the State of
Delaware applicable to contracts made and performed wholly within the State of
Delaware, without giving effect to the conflict of laws provisions thereof. 
EACH PARTICIPANT WHO ACCEPTS AN AWARD IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY SUIT, ACTION, OR OTHER PROCEEDING INSTITUTED BY OR AGAINST SUCH
PARTICIPANT IN RESPECT OF THE PARTICIPANT’S RIGHTS OR OBLIGATIONS HEREUNDER

 

(s)                                         Severability.  If any provision of
the Plan or any Award or Award Agreement is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person or
Award, or would disqualify the Plan or any Award under any law deemed applicable
by the Committee, such provision shall be construed or deemed amended to conform
to the

 

28

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applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be construed or deemed stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.

 

(t)                                          Obligations Binding on Successors. 
The obligations of the Company under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation
or other reorganization of the Company, or upon any successor corporation or
organization succeeding to substantially all of the assets and business of the
Company.

 

(u)                                       Section 409A of the Code.

 

(i)                                     Notwithstanding any provision of the
Plan to the contrary, it is intended that the provisions of the Plan comply with
Section 409A of the Code, and all provisions of the Plan shall be construed and
interpreted in a manner consistent with the requirements for avoiding taxes or
penalties under Section 409A of the Code.  Each Participant is solely
responsible and liable for the satisfaction of all taxes and penalties that may
be imposed on or in respect of such Participant in connection with the Plan
(including any taxes and penalties under Section 409A of the Code), and neither
the Service Recipient nor any other member of the Company Group shall have any
obligation to indemnify or otherwise hold such Participant (or any beneficiary)
harmless from any or all of such taxes or penalties.  With respect to any Award
that is considered “deferred compensation” subject to Section 409A of the Code,
references in the Plan to “termination of employment” (and substantially similar
phrases) shall mean “separation from service” within the meaning of Section 409A
of the Code.  For purposes of Section 409A of the Code, each of the payments
that may be made in respect of any Award granted under the Plan is designated as
separate payments.

 

(ii)                                  Notwithstanding anything in the Plan to
the contrary, if a Participant is a “specified employee” within the meaning of
Section 409A(a)(2)(B)(i) of the Code, no payments in respect of any Awards that
are “deferred compensation” subject to Section 409A of the Code and which would
otherwise be payable upon the Participant’s “separation from service” (as
defined in Section 409A of the Code) shall be made to such Participant prior to
the date that is six (6) months after the date of such Participant’s “separation
from service” or, if earlier, the date of the Participant’s death.  Following
any applicable six (6) month delay, all such delayed payments will be paid in a
single lump sum on the earliest date permitted under Section 409A of the Code
that is also a business day.

 

(iii)                               Unless otherwise provided by the Committee
in an Award Agreement or otherwise, in the event that the timing of payments in
respect of any Award (that would otherwise be considered “deferred compensation”
subject to Section 409A of the Code) would be accelerated upon the occurrence of
(A) a Change in Control, no such acceleration shall be permitted unless the
event giving rise to the Change in Control satisfies the definition of a change
in the ownership or effective control of a corporation, or a change in the
ownership of a substantial portion of the assets of a corporation pursuant to
Section 409A of the Code; or (B) a Disability, no such acceleration shall be

 

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permitted unless the Disability also satisfies the definition of “Disability”
pursuant to Section 409A of the Code.

 

(v)                                       Clawback/Repayment.  All Awards shall
be subject to reduction, cancellation, forfeiture or recoupment to the extent
necessary to comply with (i) any clawback, forfeiture or other similar policy
adopted by the Board or the Committee and as in effect from time to time; and
(ii) applicable law.  Further, to the extent that the Participant receives any
amount in excess of the amount that the Participant should otherwise have
received under the terms of the Award for any reason (including, without
limitation, by reason of a financial restatement, mistake in calculations or
other administrative error), the Participant shall be required to repay any such
excess amount to the Company.

 

(w)                                     Detrimental Activity.  Notwithstanding
anything to the contrary contained herein, if a Participant has engaged in any
Detrimental Activity, as determined by the Committee, the Committee may, in its
sole discretion, provide for one or more of the following:

 

(i)                                     cancellation of any or all of such
Participant’s outstanding Awards; or

 

(ii)                                  forfeiture by the Participant of any gain
realized on the vesting or exercise of Awards, and to repay any such gain to
promptly to the Company.

 

(x)                                       Right of Offset.  The Company will
have the right to offset against its obligation to deliver shares of Common
Stock (or other property or cash) under the Plan or any Award Agreement any
outstanding amounts (including, without limitation, travel and entertainment or
advance account balances, loans, repayment obligations under any Awards, or
amounts repayable to the Company pursuant to tax equalization, housing,
automobile or other employee programs) that the Participant then owes to any
member of the Company Group and any amounts the Committee otherwise deems
appropriate pursuant to any tax equalization policy or agreement. 
Notwithstanding the foregoing, if an Award is “deferred compensation” subject to
Section 409A of the Code, the Committee will have no right to offset against its
obligation to deliver shares of Common Stock (or other property or cash) under
the Plan or any Award Agreement if such offset could subject the Participant to
the additional tax imposed under Section 409A of the Code in respect of an
outstanding Award.

 

(y)                                       Expenses; Titles and Headings.  The
expenses of administering the Plan shall be borne by the Company Group.  The
titles and headings of the sections in the Plan are for convenience of reference
only, and in the event of any conflict, the text of the Plan, rather than such
titles or headings, shall control.

 

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