DENTSPLY International Inc.

2002 Amended and Restated Equity Incentive Plan

 

SECTION 1

PURPOSE

The purpose of the DENTSPLY International Inc. 2002 Amended and Restated Equity
Incentive Plan (originally named the "DENTSPLY International Inc. 2002 Stock
Option Plan") (the "Plan") is to benefit DENTSPLY International Inc.
("DENTSPLY") and its "Subsidiaries," as defined below (hereinafter referred to,
either individually or collectively, as the "Company") by recognizing the
contributions made to the Company by officers and other key employees,
consultants and advisers, to provide such persons with an additional incentive
to devote themselves to the future success of the Company, and to improve the
ability of the Company to attract, retain and motivate such persons. The Plan is
also intended as an additional incentive to members of the Board of Directors of
DENTSPLY (the "Board") who are not employees of the Company ("Outside
Directors") to serve on the Board and to devote themselves to the future success
of the Company. "Subsidiaries," as used in the Plan, has the definition set
forth in Section 424 (f) of the Internal Revenue Code of 1986, as amended (the
"Code"). The original effective date of the Plan was March 22, 2002 ("Effective
Date"). An amendment and restatement of the Plan was approved by the Board as of
March 22, 2005, to change the name of the Plan to the "2002 Amended and Restated
Equity Incentive Plan", to provide for the grant of restricted stock, restricted
stock units and stock appreciation rights to eligible participants and to make
conforming changes in other provisions.

 

Stock options which constitute "incentive stock options" within the meaning of
Section 422 of the Code ("ISOs"), stock options which do not constitute ISOs
("NSOs"), stock which is subject to certain forfeiture risks and restrictions
("Restricted Stock"), stock delivered upon vesting of units ("Restricted Stock
Units") and stock appreciation rights ("Stock Appreciation Rights") may be
awarded under the Plan. ISOs and NSOs are collectively referred to as "Options."
Options, Restricted Stock, Restricted Stock Units and Stock Appreciation Rights
are collectively referred to as "Awards." The persons to whom Options are
granted under the Plan are hereinafter referred to as "Optionees." The persons
to whom Restricted Stock, Restricted Stock Units and/or Stock Appreciation
Rights are granted under the Plan are hereinafter referred as to "Grantees."

 

SECTION 2

ELIGIBILITY

Outside Directors shall participate in the Plan only in accordance with the
provisions of Section 5. The Committee (as defined in Section 3) shall
initially, and from time to time thereafter, select those officers and other key
employees of the Company, including members of the Board who are also employees
("Employee Directors"), and consultants and advisers to the Company, to
participate in the Plan on the basis of the importance of their services in the
management, development and operations of the Company. Officers, other key
employees and Employee Directors are collectively referred to as "Key
Employees."

 

 

 

 

SECTION 3

ADMINISTRATION

 

3.1

The Committee

 

The Plan shall be administered by the Human Resources Committee of the Board or
a subcommittee thereof (“Committee”). The Committee shall be comprised of two
(2) or more members of the Board. All members of the Committee shall qualify as
"Non-Employee Directors" as defined in Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "1934 Act"), or any successor rule or regulation,
"independent directors" as defined in Section 4200(15) of the Marketplace Rules
of The Nasdaq Stock Market and "outside directors" as defined in Section 162(m)
or any successor provision of the Code and applicable Treasury regulations
thereunder, if such qualification is deemed necessary in order for the grant or
the exercise of Options under the Plan to qualify for any tax or other material
benefit to Optionees or the Company under applicable law.

 

3.2

Authority of the Committee

Subject to the express provisions of the Plan, the Committee shall have sole
discretion concerning all matters relating to the Plan and Awards granted
hereunder. The Committee, in its sole discretion, shall determine the Key
Employees, consultants and advisors to whom, and the time or times at which,
Awards will be granted, the number of shares to be subject to each Award, the
expiration date of each Award, the time or times within which the Option may be
exercised or forfeiture restrictions lapse, the cancellation or termination of
the Award and the other terms and conditions of the grant of the Award. The
terms and conditions of Awards need not be the same with respect to each
Optionee and/or Grantee or with respect to each Award.

 

The Committee may, subject to the provisions of the Plan, establish such rules
and regulations as it deems necessary or advisable for the proper administration
of the Plan, and may make determinations and may take such other actions in
connection with or in relation to the Plan as it deems necessary or advisable.
Each determination or other action made or taken pursuant to the Plan, including
interpretation of the Plan and the specific terms and conditions of the Award
granted hereunder by the Committee, shall be final, binding and conclusive for
all purposes and upon all persons.

 

3.3

Award Agreement

Each Award shall be evidenced by a written agreement or grant certificate
specifying the type of Award granted, the number of shares of Common Stock, par
value $.01 per share ("Common Stock") to be subject to such Award and, as
applicable, the vesting schedule, the exercise or grant price, the terms for
payment of the exercise price, the expiration date of the Option, the
restrictions imposed upon the Restricted Stock and/or Restricted Stock Units and
such other terms and conditions established by the Committee, in its sole
discretion, which are not inconsistent with the Plan.

 

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SECTION 4

SHARES OF COMMON STOCK SUBJECT TO THE PLAN

4.1            Subject to adjustment as provided in Sections 4.1 and 4.2,
Options, Restricted Stock, Restricted Stock Units and Stock Appreciation Rights
with respect to an aggregate of seven million (7,000,000) shares of common
stock, par value $.01 per share of DENTSPLY (the "Common Stock") (plus any
shares of Common Stock covered by any unexercised portion of canceled or
terminated stock options granted under the DENTSPLY International Inc. 1993
Stock Option Plan or 1998 Stock Option Plan), may be granted under the Plan (the
"Maximum Number"). The Maximum Number shall be increased on January 1 of each
calendar year during the term of the Plan (as set forth in Section 16) to equal
seven percent (7%) of the outstanding shares of Common Stock on such date, in
the event that seven million (7,000,000) shares is less than seven percent (7%)
of the outstanding shares of Common Stock on such date, prior to such increase.
Notwithstanding the foregoing, and subject to adjustment as provided in Section
4.2, (i) Options with respect to no more than one million (1,000,000) shares of
Common Stock may be granted as ISOs under the Plan, (ii) no more than two
million (2,000,000) shares may be awarded as Restricted Stock or Restricted
Stock Units under the Plan, and (iii) in any calendar year no Key Employee shall
be granted Options or Stock Appreciation Rights with respect to more than five
hundred thousand (500,000) shares of Common Stock or Restricted Stock and
Restricted Stock Units in excess of 150,000 shares of Common Stock. Any shares
of Common Stock reserved for issuance upon exercise of Options or Stock
Appreciation Rights which expire, terminate or are cancelled, and any shares of
Common Stock subject to any grant of Restricted Stock or Restricted Stock Units
which are forfeited, may again be subject to new Awards under the Plan. For the
avoidance of doubt, the amendment and restatement of the Plan does not increase
the Maximum Number and notwithstanding any adjustment in the Maximum Number, as
provided above, all Awards granted under the Plan on or following the Effective
Date, subject to forfeitures or cancellation, shall be counted towards the
Maximum Number.

4.2            The number of shares of Common Stock subject to the Plan and to
Awards granted under the Plan shall be adjusted as follows: (a) in the event
that the number of outstanding shares of Common Stock is changed by any stock
dividend, stock split or combination of shares, the number of shares subject to
the Plan and to Awards previously granted thereunder shall be proportionately
adjusted, (b) in the event of any merger, consolidation or reorganization of the
Company with any other corporation or corporations, there shall be substituted
on an equitable basis as determined by the Board of Directors, in its sole
discretion, for each share of Common Stock then subject to the Plan and for each
share of Common Stock then subject to an Award granted under the Plan, the
number and kind of shares of stock, other securities, cash or other property to
which the holders of Common Stock of the Company are entitled pursuant to the
transaction, and (c) in the event of any other changes in the capitalization of
the Company, the Committee, in its sole discretion, shall provide for an
equitable adjustment in the number of shares of Common Stock then subject to the
Plan and to each share of Common Stock then subject to Award granted under the
Plan. In the event of any such adjustment, the exercise price per share of any
Options or Stock Appreciation Rights shall be proportionately adjusted.

 

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SECTION 5

GRANT OF OPTIONS TO OUTSIDE DIRECTORS

 

5.1

Grants

 

All grants of Options to Outside Directors shall be automatic and
non-discretionary. Each individual who becomes an Outside Director (other than
an Outside Director who was previously an Employee Director) shall be granted a
NSO to purchase nine thousand (9,000) shares of Common Stock on the date he or
she becomes an Outside Director. Each individual who is an Employee Director and
who thereafter becomes an Outside Director shall be granted automatically a NSO
to purchase nine thousand (9,000) shares of Common Stock on the third
anniversary of the date such Employee Director was last granted an Option.
Thereafter, each Outside Director who holds NSOs granted under this Section 5
and is re-elected to the Board shall be granted an additional NSO to purchase
nine thousand (9,000) shares of Common Stock on the third anniversary of the
date such Outside Director was last granted an Option.

 

5.2

Expiration

 

Except to the extent otherwise provided in or pursuant to Section 11, each
Option shall expire, and all rights to purchase shares of Common Stock shall
expire, on the tenth anniversary of the date on which the Option was granted.

 

5.3

Exercise Price

 

The exercise price of each NSO granted to an Outside Director shall be the "Fair
Market Value," on the date on which the Option is granted, of the Common Stock
subject to the Option. For purposes of the Plan, "Fair Market Value" shall mean
the closing sales price of the Common Stock on The Nasdaq National Market, or
other national securities exchange which is the principal securities market on
which the Common Stock is traded (as reported in The Wall Street Journal,
Eastern Edition).

 

5.4

Vesting

 

Each such NSO shall become exercisable ("vest") with respect to one-third of the
total number of shares of Common Stock subject to the Option on the first
anniversary following the date of its grant, and with respect to an additional
one-third of the total number of shares of Common Stock subject to the Option,
on each anniversary thereafter during the succeeding two years.

 

5.5

Restricted Stock, Restricted Stock Units and Stock Appreciation Rights

 

Notwithstanding the foregoing, the Board of Directors may determine that, in
lieu of being granted NSOs as described in this Section 5, an Outside Director
shall be granted an Award of shares of Restricted Stock, Restricted Stock Units
and/or Stock Appreciation Rights as described in Section 8 or 10 hereof which,
at the time of grant, for the same value as 9,000 Options as determined by the
method the Company uses to value Awards. In any such event, the restrictions as
to such Award of Restricted Stock and/or Restricted Stock Units shall lapse, and
any such Award of Stock Appreciation Rights shall vest, in accordance with the
vesting schedule set forth in Section 5.4.

 

 

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SECTION 6

GRANTS OF OPTIONS TO EMPLOYEES, CONSULTANTS AND ADVISERS

 

6.1

Grants

 

Subject to the terms of the Plan, the Committee may from time to time grant
Options which are ISOs to Key Employees and Options which are NSOs to Key
Employees, consultants and advisers of the Company. Each such grant shall
specify whether the Options so granted are ISOs or NSOs, provided, however, that
if, notwithstanding its designation as an ISO, all or any portion of an Option
does not qualify under the Code as an ISO, the portion which does not so qualify
shall be treated for all purposes as a NSO.

 

6.2

Expiration

Except to the extent otherwise provided in or pursuant to Section 11, each
Option shall expire, and all rights to purchase shares of Common Stock shall
expire, on the tenth anniversary of the date on which the Option was granted.

 

6.3

Vesting

Except to the extent otherwise provided in or pursuant to Section 11, or in the
proviso to this sentence, Options shall vest pursuant to the following schedule:
with respect to one-third of the total number of shares of Common Stock subject
to Option on the first anniversary following the date of its grant, and with
respect to an additional one-third of the total number of shares of Common Stock
subject to the Option, on each anniversary thereafter during the succeeding two
years; provided, however, that the Committee, in its sole discretion, shall have
the authority to shorten or lengthen the vesting schedule with respect to any or
all Options, or any part thereof, granted under the Plan.

 

6.4

Required Terms and Conditions of ISOs

ISOs may be granted to Key Employees. Each ISO granted to a Key Employee shall
be in such form and subject to such restrictions and other terms and conditions
as the Committee may determine, in its sole discretion, at the time of grant,
subject to the general provisions of the Plan, the applicable Option agreement
or grant certificate, and the following specific rules:

 

(a)        Except as provided in Section 6.4(c), the exercise price per share of
each ISO shall be the Fair Market Value of a share of Common Stock on the date
such ISO is granted.

(b)        The aggregate Fair Market Value (determined with respect to each ISO
at the time such Option is granted) of the shares of Common Stock with respect
to which ISOs are exercisable for the first time by an Optionee during any
calendar year (under all incentive stock option plans of the Company) shall not
exceed $200,000.

(c)        Notwithstanding anything herein to the contrary, if an ISO is granted
to an individual who owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company, (i) the
exercise price of each ISO shall be not less than one hundred ten percent (110%)
of the Fair Market Value of a share of Common Stock on the date the ISO is
granted, and (ii) the ISO shall expire and all rights to purchase shares
thereunder shall cease no later than the fifth anniversary of the date the ISO
was granted.

 

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6.5

Required Terms and Conditions of NSOs

Each NSO granted to Key Employees and consultants and advisers shall be in such
form and subject to such restrictions and other terms and conditions as the
Committee may determine, in its sole discretion, at the time of grant, subject
to the general provisions of the Plan, the applicable Option agreement or grant
certificate, and the following specific rule: except as otherwise determined by
the Committee in its sole discretion with respect to a specific grant, the
exercise price per share of each NSO shall be not less than the Fair Market
Value of a share of Common Stock on the date the NSO is granted.

 

SECTION 7

EXERCISE OF OPTIONS

 

7.1

Notices

 

A person entitled to exercise an Option may do so by delivery of a written
notice to that effect, in a form specified by the Committee, specifying the
number of shares of Common Stock with respect to which the Option is being
exercised and any other information or documents the Committee may prescribe.
The notice shall be accompanied by payment as described in Section 7.2. All
notices, documents or requests provided for herein shall be delivered to the
Secretary of the Company.

 

7.2

Exercise Price

Except as otherwise provided in the Plan or in any Option agreement or grant
certificate, the Optionee shall pay the exercise price of the number of shares
of Common Stock with respect to which the Option is being exercised upon the
date of exercise of such Option (a) in cash, (b) pursuant to a cashless exercise
arrangement with a broker on such terms as the Committee may determine, (c) by
delivering shares of Common Stock held by the Optionee for at least six (6)
months and having an aggregate Fair Market Value on the date of exercise equal
to the Option exercise price, (d) in the case of a Key Employee, by such other
medium of payment as the Committee, in its sole discretion, shall authorize, or
(e) by any combination of (a), (b), (c), and (d). The Company shall issue, in
the name of the Optionee, stock certificates representing the total number of
shares of Common Stock issuable pursuant to the exercise of any Option as soon
as reasonably practicable after such exercise, provided that any shares of
Common Stock purchased by an Optionee through a broker pursuant to clause (b)
above shall be delivered to such broker in accordance with applicable law.

 

SECTION 8

STOCK APPRECIATION RIGHTS

The Committee may award shares of Common Stock to Outside Directors, Key
Employees and consultants and advisors under a Stock Appreciation Right Award,
upon such terms as the Committee deems applicable, including the provisions set
forth below:

 

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8.1

General Requirements.

Stock Appreciation Rights may be granted in tandem with another Award, in
addition to another Award, or freestanding and unrelated to another Award. Stock
Appreciation Rights granted in tandem with or in addition to an Award may be
granted either at the same time as the Award or, except in the case of Incentive
Stock Options, at a later time. The Committee shall determine the number of
shares of Common Stock to be issued pursuant to a Stock Appreciation Right
Award, the grant price thereof and the conditions and limitations applicable to
the exercise thereof.

 

8.2

Payment.

A Stock Appreciation Right shall entitle the Grantee to receive, upon exercise
of the Stock Appreciation Right or any portion thereof, an amount equal to the
product of (a) the excess of the Fair Market Value of a share of Common Stock on
the date of exercise over the grant price thereof and (b) the number of shares
of Common Stock as to which such Stock Appreciation Right Award is being
exercised. Payment of the amount determined under this Section 8.2 shall be made
solely in shares of Common Stock, provided that, the Stock Appreciation Rights
which are settled shall be counted in full against the number of shares
available for award under the Plan, regardless of the number of shares of Common
Stock issued upon settlement of the Stock Appreciation Right.

 

8.3

Exercise.

(a)        Except to the extent otherwise provided in Section 11 or 12, or in
the proviso to this sentence, Stock Appreciation Rights shall vest pursuant to
the following schedule: with respect to one-third of the total number of shares
of Common Stock subject to the Stock Appreciation Right on the first anniversary
following the date of its grant, and with respect to an additional one-third of
the total number of shares of Common Stock subject to the Stock Appreciation
Right, on each anniversary thereafter during the succeeding two years; provided,
however, that the Committee, in its sole discretion, shall have the authority to
shorten or lengthen the vesting schedule with respect to any or all Stock
Appreciation Rights, or any part thereof, granted under the Plan.
Notwithstanding the foregoing, a tandem stock appreciation right shall be
exercisable at such time or times and only to the extent that the related Award
is exercisable.

(b)        A person entitled to exercise a Stock Appreciation Right Award may do
so by delivery of a written notice to that effect, in a form specified by the
Committee, specifying the number of shares of Common Stock with respect to which
the Stock Appreciation Right Award is being exercised and any other information
or documents the Committee may prescribe. Upon exercise of a tandem Stock
Appreciation Right Award, the number of shares of Common Stock covered by the
related Award shall be reduced by the number of shares with respect to which the
Stock Appreciation Right has been exercised.

 

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SECTION 9

TRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS

Unless otherwise determined by the Committee, no Option or Stock Appreciation
Right granted pursuant to the Plan shall be transferable otherwise than by will
or by the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code.

 

SECTION 10

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

The Committee may award shares of Common Stock to Outside Directors, Key
Employees and consultants and advisors under an Award of Restricted Stock and/or
Restricted Stock Units, upon such terms as the Committee deems applicable,
including the provisions set forth below.

 

10.1

General Requirements.

Shares of Common Stock issued or transferred pursuant to an Award of Restricted
Stock and/or Restricted Stock Units may be issued or transferred for
consideration or for no consideration, and subject to restrictions or no
restrictions, as determined by the Committee. The Committee may establish
conditions under which restrictions on shares of Restricted Stock and/or
Restricted Stock Units shall lapse over a period of time or according to such
other criteria (including performance-based criteria) as the Committee deems
appropriate. The period of time during which shares of Restricted Stock and/or
Restricted Stock Units remain subject to restrictions will be designated in the
written agreement or grant certificate as the "Restricted Period."

 

10.2

Number of Shares.

The Committee shall determine the number of shares of Common Stock to be issued
pursuant to an Award of Restricted Stock and/or Restricted Stock Units and the
restrictions applicable to the shares subject to such Award.

 

10.3

Restrictions on Transfer and Legend on Stock Certificate.

During the Restricted Period, subject to such exceptions as the Committee may
deem appropriate, a Grantee may not sell, assign, transfer, donate, pledge or
otherwise dispose of the shares of Restricted Stock or Restricted Stock Units.
Each certificate for a share of Restricted Stock shall contain a legend giving
appropriate notice of the applicable restrictions. The Grantee shall be entitled
to have the legend removed from the stock certificate covering the shares of
Restricted Stock subject to restrictions when all restrictions on such shares
lapse. The Board may determine that the Company will not issue certificates for
shares of Restricted Stock until all restrictions on such shares lapse, or that
the Company will retain possession of certificates for shares of Restricted
Stock until all restrictions on such shares lapse.

 

 

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10.4

Right to Vote and to Receive Dividends.

During the Restricted Period, except as otherwise set forth in the applicable
written agreement or grant certificate, the Grantee shall have the right to vote
shares of Restricted Stock and to receive any dividends or other distributions
paid on such shares of Restricted Stock, subject to any restrictions deemed
appropriate by the Committee. The Committee may determine in its discretion with
respect to any Award of Restricted Stock Units that, in the event that dividends
are paid on shares of Common Stock, an amount equal to the dividend paid on each
such share shall be credited to the shares subject to Award of Restricted Stock
Units ("Dividend Credits"). Any Dividend Credits shall be paid to the Grantee if
and when the restrictions with respect to such Restricted Stock Units lapse as
set forth in Section 10.5.

 

10.5

Lapse of Restrictions.

(a)        All restrictions imposed on Restricted Stock and/or Restricted Stock
Units shall lapse upon the expiration of the applicable Restricted Period and
the satisfaction of all conditions imposed by the Committee (the date on which
restrictions lapse as to any shares of Restricted Stock or Restricted Stock
Units, the "Vesting Date"). The Committee may determine, as to any grant of
Restricted Stock and/or Restricted Stock Units, that the restrictions shall
lapse without regard to any Restricted Period.

(b)        Upon the lapse of restrictions with respect to any Restricted Stock
Units, the value of such Restricted Stock Units shall be paid to the Grantee in
shares of Common Stock. For purposes of the preceding sentence, each Restricted
Stock Unit as to which restrictions have lapsed shall have a value equal to the
Fair Market Value as of the Units Vesting Date. "Units Vesting Date" means, with
respect to any Restricted Stock Units, the date on which restrictions with
respect to such Restricted Stock Units lapse.

SECTION 11

EFFECT OF TERMINATION OF EMPLOYMENT

 

11.1

Termination Generally

 

(a)        Except as provided in Section 11.2, 11.3 or 12, or as determined by
the Committee, in its sole discretion, all rights to exercise the vested portion
of any Option held by an Optionee or of any Stock Appreciation Right Award held
by a Grantee whose employment or relationship (if a non-employee) with the
Company or service on the Board is terminated for any reason other than "Cause,"
as defined below, shall terminate ninety (90) days following the date of
termination of employment or the relationship or service on the Board, as the
case may be. All rights to exercise the vested portion of any Option held by an
Optionee or of any Stock Appreciation Right Award held by a Grantee whose
employment or relationship (if a non-employee) with the Company is terminated
for "Cause" shall terminate on the date of termination of employment or the
relationship. For the purposes of this Plan, "Cause" shall mean a finding by the
Committee that the Optionee has engaged in conduct that is fraudulent, disloyal,
criminal or injurious to the Company, including, without limitation, acts of
dishonesty, embezzlement, theft, felonious conduct or unauthorized disclosure of
trade secrets or confidential information of the Company. Unless otherwise
provided in the Plan or determined by the Committee, vesting of Options and
Stock Appreciation Right Awards ceases immediately upon termination of
employment, or the date of termination of the relationship with the Company, and
any portion of an Option and/or Stock Appreciation Right Award that has not
vested on or before the date of such termination is forfeited on such date.

 

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(b)        If a Grantee who has received an Award of Restricted Stock and/or
Restricted Stock Units ceases to be employed by the Company during the
Restricted Period, or if other specified conditions are not met, the Award of
Restricted Stock and/or Restricted Stock Units shall terminate as to all shares
covered by the Award as to which the restrictions have not lapsed, and, in the
case of Restricted Stock, those shares of Common Stock shall be canceled in
exchange for the purchase price, if any, paid by the Grantee for such shares.
The Committee may provide, however, for complete or partial exceptions to this
requirement as it deems appropriate.

(c)        The transfer of employment from the Company to a Subsidiary, or from
a Subsidiary to the Company, or from a Subsidiary to another Subsidiary, shall
not constitute a termination of employment for purposes of the Plan. Awards
granted under the Plan shall not be affected by any change of duties in
connection with the employment of the Key Employee or by a leave of absence
authorized by the Company.

11.2

Death and Disability

In the event of the death or Disability (as defined below) of an Optionee or
Grantee during employment or such Optionee's or Grantee relationship with the
Company or service on the Board, (a) all Options held by the Optionee and all
Stock Appreciation Right Awards held by the Grantee shall become fully
exercisable on such date of death or Disability and (b) all restrictions and
conditions on all Restricted Stock and/or Restricted Stock Units held by the
Grantee shall lapse on such date of death or Disability. Each of the Options
held by such an Optionee and each of the Stock Appreciation Right Awards held by
such a Grantee shall expire on the earlier of (i) the first anniversary of the
date of death or Disability and (ii) the date that such Option or Stock
Appreciation Right Award expires in accordance with its terms, provided that, in
any event, NSOs granted under this Plan shall not expire earlier than one year
from the date of death or disability. For purposes of this Section 11.2,
"Disability" shall mean the inability of an individual to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which is expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than twelve (12)
months. The Committee, in its sole discretion, shall determine the existence and
date of any Disability.

 

11.3

Retirement

(a)        Key Employees. In the event the employment of a Key Employee with the
Company shall be terminated by reason of "Normal Retirement" or "Early
Retirement," as defined below, all Options and Stock Appreciation Right Awards
held by such Key Employee shall become fully exercisable on the date of such
Employee retirement. Each of the Options and Stock Appreciation Right Awards
held by such a Key Employee shall expire on the earlier of (i) the fifth
anniversary of the date of the Employee retirement, or (ii) the date that such
Option expires in accordance with its terms. For the purposes hereof, "Normal
Retirement" shall mean retirement of a Key Employee at or after age 65 and
"Early Retirement" shall mean retirement of a Key Employee at or after age 60
with a minimum of 15 years of service with the Company. In the event the
employment of a Key Employee with the Company shall be terminated by reason of a
retirement that is not an Normal Retirement or Early Retirement, the Committee
may, in its sole discretion, determine the vesting, exercisability and exercise
periods applicable to Options and Stock Appreciation Right Awards held by such
Key Employee. In the event the employment of a Key Employee with the Company
shall be terminated by reason of "Normal Retirement" or "Early Retirement", all
restrictions and conditions on all Restricted Stock and/or Restricted Stock
Units held by such

 

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Key Employee shall lapse on the date of such Normal Retirement or Early
Retirement. In the event the employment of a Key Employee with the Company shall
be terminated by reason of a retirement that is not a Normal Retirement or Early
Retirement, the Committee may, in its sole discretion, determine the
restrictions and conditions, if any, on Restricted Stock and/or Restricted Stock
Units held by such Key Employee that will lapse.

(b)        Outside Directors. In the event the service on the Board of an
Outside Director shall be terminated by reason of the retirement of such Outside
Director in accordance with the Company’s retirement policy for members of the
Board ("Outside Director Retirement"), all Options and Stock Appreciation Right
Awards held by such Outside Director shall become fully exercisable on the date
of such Outside Director Retirement. Each of the Options and Stock Appreciation
Right Awards held by such an Outside Director shall expire on the earlier of (i)
the date that such Option or Stock Appreciation Right Award expires in
accordance with its terms or (ii) the five year anniversary date of such Outside
Director Retirement. In the event the service on the Board of an Outside
Director shall be terminated by reason of an "Outside Director Retirement", all
restrictions and conditions on all Restricted Stock and/or Restricted Stock
Units held by such Outside Director shall lapse on the date of such Outside
Director Retirement.

(c) Key Employees Who Are Employee Directors. Section 11.3(a) shall be
applicable to Options, Stock Appreciation Rights, Restricted Stock and/or
Restricted Stock Units held by any Key Employee who is an Employee Director at
the time that such Key Employee's employment with the Company terminates by
reason of Employee Retirement. If such Key Employee continues to serve on the
Board as of the date of such Key Employee’s Employee Retirement, then Section
11.3(b) shall be applicable to Options, Stock Appreciation Rights Restricted
Stock and/or Restricted Stock Units granted after such date.

 

SECTION 12

CHANGE IN CONTROL

 

 

12.1

Effect of Change in Control

Notwithstanding any of the provisions of the Plan or any written agreement or
grant certificate evidencing Awards granted hereunder, immediately upon a
"Change in Control" (as defined in Section 12.2), all outstanding Options and
Stock Appreciation Rights granted to Key Employees or Outside Directors, whether
or not otherwise exercisable as of the date of such Change in Control, shall
accelerate and become fully exercisable and all restrictions thereon shall
terminate in order that Optionees and Grantees may fully realize the benefits
thereunder, and all restrictions and conditions on all Restricted Stock and
Restricted Stock Units granted to Key Employees or Outside Directors shall lapse
upon the effective date of the Change of Control. The Committee may determine in
its discretion (but shall not be obligated to do so) that any or all holders of
outstanding Options and Stock Appreciation Right Awards which are exercisable
immediately prior to a Change of Control (including those that become
exercisable under this Section 12.1) will be required to surrender them in
exchange for a payment, in cash or Common Stock as determined by the Committee,
equal to the value of such Options and Stock Appreciation Right Awards (as
determined by the Committee in its discretion), with such payment to take place
as of the date of the Change in Control or such other date as the Committee may
prescribe.

 

12.2

Definition of Change in Control

The term "Change in Control" shall mean the occurrence, at any time during the
term of an Award granted under the Plan, of any of the following events:

 

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(a)        The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a "Person") (other than the Company or any benefit plan sponsored
by the Company) of beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act) of 30% or more of either (i) the then outstanding shares of
the Common Stock (the "Outstanding Common Stock") or (ii) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Voting Securities"); or

(b)        Individuals who, as of the Effective Date, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least one-third (1/3)
of the Board (rounded down to the nearest whole number), provided that any
individual whose election or nomination for election was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company; or

(c)        Consummation by the Company of a reorganization, merger or
consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Common Stock and Voting Securities
immediately prior to such Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the
Outstanding Common Stock and Voting Securities, as the case may be; or

(d)        Consummation of a complete liquidation or dissolution of the Company,
or sale or other disposition of all or substantially all of the assets of the
Company other than to a corporation with respect to which, following such sale
or disposition, more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors is then owned
beneficially, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Common Stock and Voting Securities immediately prior to such sale or
disposition in substantially the same proportions as their ownership of the
Outstanding Common Stock and Voting Securities, as the case may be, immediately
prior to such sale or disposition.

(e)        In addition to the foregoing, with respect to any Key Employee
covered under this provision, consummation by the Company of a Business
Combination, in each case, with respect to which all or substantially all of the
individuals and entities who were the respective beneficial owners of the
Outstanding Common Stock and Voting Securities immediately prior to such
Business Combination do not, following such Business Combination, beneficially
own, directly or indirectly, more than 55% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination in substantially the same proportion as their ownership immediately
prior to such Business Combination of the Outstanding Common Stock and Voting
Securities, as the case may be, and any Key Employees who were employed

 

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by the Company and were Optionees or Grantees under the Plan at the time of such
Business Combination is terminated other than for Cause or voluntarily leaves
the employ of the Company within two (2) years from the date of any such
Business Combination as the result of a voluntary termination of employment by
such Key Employee within sixty (60) days after any one or more of the following
events have occurred:

(i)

failure by the Company to maintain the duties, status, and responsibilities of
the Key Employee substantially consistent with those prior to the Business
Combination, or

(ii)

a reduction by the Company in the Key Employee’s base salary as in effect as of
the date prior to the Business Combination, or

(iii)

the failure of the Company to maintain and to continue the Key Employee’s
participation in the Company’s benefit plans as in effect from time to time on a
basis substantially equivalent to the participation and benefits of Company
employees similarly situated to the Employee.

SECTION 13

RIGHTS AS STOCKHOLDER

Except as provided in Section 10.4 with respect to an Award of Restricted Stock
or Restricted Stock Units, an Optionee or Grantee (or a transferee of any such
person pursuant to Section 9) shall have no rights as a stockholder with respect
to any Common Stock covered by an Award or receivable upon the exercise of Award
until the Optionee, Grantee or transferee shall have become the holder of record
of such Common Stock, and no adjustments shall be made for dividends in cash or
other property or other distributions or rights in respect to such Common Stock
for which the applicable record date is prior to the date on which the Optionee
or Grantee shall have become the holder of record of the shares of Common Stock
purchased pursuant to exercise of the Award.

 

SECTION 14

POSTPONEMENT OF EXERCISE

The Committee may postpone any exercise of an Option or Stock Appreciation Right
Awards for such time as the Committee in its sole discretion may deem necessary
in order to permit the Company to comply with any applicable laws or rules,
regulations or other requirements of the Securities and Exchange Commission or
any securities exchange or quotation system upon which the Common Stock is then
listed or quoted. Any such postponement shall not extend the term of an Option
or Stock Appreciation Right Award, unless such postponement extends beyond the
expiration date of the Award in which case the expiration date shall be extended
thirty (30) days, and neither the Company nor its directors, officers, employees
or agents shall have any obligation or liability to an Optionee or Grantee, or
to his or her successor or to any other person.

 

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SECTION 15

TAXES

 

 

15.1

Taxes Generally

The Company shall have the right to withhold from any Award, from any payment
due or transfer made under any Award or under the Plan or from any compensation
or other amount owing to a participant the amount (in cash, shares or other
property) of any applicable withholding or other taxes in respect of an Award,
its exercise, or any payment or transfer under an Award or under the Plan and to
take such other action as may be necessary in the opinion of the Committee to
satisfy all obligations for the payment of such taxes.

 

15.2

Payment of Taxes

A participant, with the approval of the Committee, may satisfy the obligation
set forth in Section 15.1, in whole or in part, by (a) directing the Company to
withhold such number of shares of Common Stock otherwise issuable upon exercise
or vesting of an Award (as the case may be) having an aggregate Fair Market
Value on the date of exercise equal to the amount of tax required to be
withheld, or (b) delivering shares of Common Stock of the Company having an
aggregate Fair Market Value equal to the amount required to be withheld on any
date. The Committee may, in its sole discretion, require payment by the
participant in cash of any such withholding obligation and may disapprove any
election or delivery or may suspend or terminate the right to make elections or
deliveries under this Section 15.2.

 

SECTION 16

TERMINATION, AMENDMENT AND TERM OF PLAN

16.1         The Board or the Committee may terminate, suspend, or amend the
Plan, in whole or in part, from time to time, without the approval of the
stockholders of the Company provided, however, that no Plan amendment shall be
effective until approved by the stockholders of the Company if the effect of the
amendment is to lower the exercise price of previously granted Options or Stock
Appreciation Rights or if such stockholder approval is required in order for the
Plan to continue to satisfy the requirements of Rule 16b-3 under the 1934 Act or
applicable tax or other laws.

16.2         The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Award granted hereunder in the
manner and to the extent it shall deem desirable, in its sole discretion, to
effectuate the Plan. No amendment or termination of the Plan shall adversely
affect any Award theretofore granted without the consent of the receipient,
except that the Committee may amend the Plan in a manner that does affect Awards
theretofore granted upon a finding by the Committee that such amendment is in
the best interests of holders of outstanding Options affected thereby.

16.3         The Plan became effective as of March 22, 2002. An amendment and
restatement of the Plan has been adopted and authorized by the Board of
Directors for submission to the stockholders of the Company for their approval.
If the Plan, as amended and restated, is approved by the stockholders of the
Company, the amendment and restatement shall be deemed to have become effective
as of May 11, 2005. Unless earlier terminated in accordance herewith, the Plan
shall terminate on March 22, 2012. Termination of the Plan shall not affect
Awards previously granted under the Plan.

 

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SECTION 17

GOVERNING LAW

The Plan shall be governed and interpreted in accordance with the laws of the
State of Delaware, without regard to any conflict of law provisions which would
result in the application of the laws of any other jurisdiction.

 

SECTION 18

NO RIGHT TO AWARD; NO RIGHT TO EMPLOYMENT

No person shall have any claim of right to be granted an Award under the Plan.
Neither the Plan nor any action taken hereunder shall be construed as giving any
employee of the Company any right to be retained in the employ of the Company or
as giving any member of the Board any right to continue to serve in such
capacity.

 

SECTION 19

AWARDS NOT INCLUDABLE FOR BENEFIT PURPOSES

Income recognized by a participant pursuant to the provisions of the Plan shall
not be included in the determination of benefits under any employee pension
benefit plan (as such term is defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974) or group insurance or other benefit plans
applicable to the participant which are maintained by the Company, except as may
be provided under the terms of such plans or determined by resolution of the
Committee.

 

SECTION 20

NO STRICT CONSTRUCTION

No rule of strict construction shall be implied against the Company, the
Committee, or any other person in the interpretation of any of the terms of the
Plan, any Award granted under the Plan or any rule or procedure established by
the Board.

 

SECTION 21

CAPTIONS

All Section headings used in the Plan are for convenience only, do not
constitute a part of the Plan, and shall not be deemed to limit, characterize or
affect in any way any provisions of the Plan, and all provisions of the Plan
shall be construed as if no captions have been used in the Plan.

 

SECTION 22

SEVERABILITY

Whenever possible, each provision in the Plan and every Award at any time
granted under the Plan shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of the Plan or any Award at
any time granted under the Plan shall be held to be prohibited by or invalid
under applicable law, then such provision shall be deemed amended to accomplish
the objectives of the provision as originally written to the fullest extent
permitted by law, and all other provisions of the Plan and every other Award at
any time granted under the Plan shall remain in full force and effect.

 

SECTION 23

MODIFICATION FOR GRANTS OUTSIDE THE U.S.

The Board may, without amending the Plan, determine the terms and conditions
applicable to grants of Awards to participants who are foreign nationals or
employed outside the United States in a manner otherwise inconsistent with the
Plan if the Board deems such terms and conditions necessary in order to
recognize differences in local law or regulations, tax policies or customs.

 

 

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