Exhibit 10.5

 

MEDLEY MANAGEMENT INC.
2014 Omnibus Incentive Plan

 

1.            Purpose. The purpose of the Medley Management Inc. 2014 Omnibus
Incentive Plan is to provide a means through which the Company and its
Affiliates may attract and retain key personnel and to provide a means whereby
directors, officers, employees, consultants and advisors (and prospective
directors, officers, employees, consultants and advisors) of the Company and its
Affiliates 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 or LLC Interests, thereby strengthening
their commitment to the welfare of the Company and its Affiliates 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)          “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.

 

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

 

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

 

(e)          “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,
or could reasonably be expected to result in, material harm to the business or
reputation of the Company or any Affiliate; (C) conviction of, or plea of guilty
or no contest to, (I) any felony; or (II) any other crime that results, or could
reasonably be expected to result in, material harm to the business or reputation
of the Company or any Affiliate; (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 Affiliate; or (F) act of personal dishonesty that involves
personal profit in connection with the Participant’s employment or service to
the Service Recipient.

 

 

 

  

(f)        “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, treating, for the avoidance of doubt, all then-outstanding LLC
Units as shares of Common Stock assuming the full exchange of then-outstanding
LLC Units for shares of Common Stock in accordance with the Exchange Agreement
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 24 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 to any Person that is not an Affiliate of the
Company.

 

(g)        “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.

 

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(h)          “Committee” means the Compensation Committee of the Board or
subcommittee thereof if required with respect to actions taken to comply with
Section 162(m) of the Code in respect of Awards or, if no such Compensation
Committee or subcommittee thereof exists, the Board.

 

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

 

(j)          “Company” means Medley Management Inc., a Delaware corporation, and
any successor thereto.

 

(k)          “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.

 

(l)          “Designated Foreign Subsidiaries” means all Affiliates 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.

 

(m)          “Detrimental Activity” means any of the following: (i) unauthorized
disclosure of any confidential or proprietary information of the Company or its
Affiliates; (ii) any activity that would be grounds to terminate the
Participant’s employment or service with the Service Recipient for Cause; (iii)
the breach of any noncompetition, nonsolicitation or other agreement containing
restrictive covenants, with the Company or its Affiliates; or (iv) fraud or
conduct contributing to any financial restatements or irregularities, as
determined by the Committee in its sole discretion.

 

(n)          “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 Company or an
Affiliate, or, in the absence of such a plan, the complete and permanent
inability by reason of illness or accident to perform the duties of the
occupation at which a Participant was employed or served when such disability
commenced. Any determination of whether Disability exists shall be made by the
Company in its sole and absolute discretion.

 

(o)          “Effective Date” means September 23, 2014.

 

(p)          “Eligible Director” means a person who is (i) a “non-employee
director” within the meaning of Rule 16b-3 under the Exchange Act; (ii) an
“outside director” within the meaning of Section 162(m) of the Code; and (iii)
an “independent director” under the rules of the NYSE or any other securities
exchange or inter-dealer quotation system on which the Common Stock is listed or
quoted, or a person meeting any similar requirement under any successor rule or
regulation.

 

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(q)          “Eligible Person” means any (i) individual employed by the Company
or an Affiliate; 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 the Company or an Affiliate; (iii) consultant or advisor to the
Company or an Affiliate who may be offered securities registrable pursuant to a
registration statement on Form S-8 under the Securities Act; or (iv) any
prospective employees, directors, officers, consultants or advisors who have
accepted offers of employment or consultancy from the Company or one of its
Affiliates (and would satisfy the provisions of clauses (i) through (iii) above
once he or she begins employment with or providing services to the Company or
one of its Affiliates), who, in the case of each of clauses (i) through (iv)
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. Solely for purposes of this Section 2(q), “Affiliate”
shall be limited to: (1) a Subsidiary; (2) any parent corporation of the Company
within the meaning of Section 424(e) of the Code (“Parent”); (3) any
corporation, trade or business of which 50% or more of the combined voting power
of such entity’s outstanding securities is directly or indirectly controlled by
the Company or any Subsidiary or Parent; or (4) any corporation, trade or
business which, directly or indirectly, controls 50% or more of the combined
voting power of the outstanding securities of the Company.

 

(r)          “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.

 

(s)          “Exchange Agreement” means the Exchange Agreement, dated as of or
about the date of the closing of the initial public offering of the Company
among the Company, Medley LLC and holders of LLC Units from time to time party
thereto, as amended from time to time.

 

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

 

(u)          “Fair Market Value” means, on a given date, if (i) 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) 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) 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 the Common Stock is offered
to the public in connection with such initial public offering.

 

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

 

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(w)          “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.

 

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

 

(y)          “LLC Agreement” means the Amended and Restated Limited Liability
Company Agreement of Medley LLC, as the same may be amended from time to time.

 

(z)          “LLC Interests” means any interest in Medley LLC that is designated
by the Committee that is available to be issued or granted under the Plan as an
LLC Interest.

 

(aa)         “LLC Units” has the meaning given such term in the Exchange
Agreement.

 

(bb)         “Negative Discretion” means the discretion authorized by the Plan
to be applied by the Committee to eliminate or reduce the size of a Performance
Compensation Award consistent with Section 162(m) of the Code.

 

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

 

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

 

(ee)         “NYSE” means the New York Stock Exchange.

 

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

 

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

 

(hh)         “Other Stock-Based Award” means an Award granted under Section 10
of the Plan.

 

(ii)         “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.

 

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

 

(kk)         “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.

 

(ll)         “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.

 

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(mm)         “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.

 

(nn)         “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.

 

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

 

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

 

(qq)         “Plan” means this Medley Management Inc. 2014 Omnibus Incentive
Plan, as it may be amended from time to time.

 

(rr)         “Restricted Period” means the period of time determined by the
Committee during which an Award is subject to restrictions or, as applicable,
the period of time within which performance is measured for purposes of
determining whether an Award has been earned.

 

(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, either the Company or an Affiliate of the Company 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.

 

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(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.

 

(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 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.

 

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 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 he or she takes any action with respect to an Award under the Plan that
is subject to Rule 16b-3 or Section 162(m) of the Code, as applicable, be an
Eligible Director. However, the fact that a Committee member shall fail to
qualify as an Eligible 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
or LLC Interests, as applicable, 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 or
exercised in 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) make any other determination and take any other action that the Committee
deems necessary or desirable for the administration of the Plan; and (x) adopt
Sub-Plans.

 

(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 the Company or any Subsidiary 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
persons (i) who are Non-Employee Directors or otherwise are subject to Section
16 of the Exchange Act or (ii) who are, or who are reasonably expected to be,
“covered employees” for purposes of Section 162(m) of the Code.

 

(d)          Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any Award or any documents evidencing Awards granted pursuant to the
Plan 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 or entities,
including, without limitation, the Company, any of its Affiliates, any
Participant, any holder or beneficiary of any Award, and any stockholder of the
Company.

 

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(e)          Awards may, in the discretion of the Committee, be made under the
Plan in assumption of, or in substitution for, outstanding awards previously
granted by the Company, any of its Affiliates or any entity acquired by the
Company or with which the Company combines.

 

(f)          No member of the Board, the Committee or any employee or agent of
the Company or any Subsidiary (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 under the Plan or any Award
agreement 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 or
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 Company’s Certificate of Incorporation or Bylaws.
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 Company’s or any Subsidiary’s organizational
documents, as a matter of law, individual indemnification agreement or contract
or otherwise, or any other power that the Company may have to indemnify such
Indemnifiable Persons or hold them harmless.

 

(g)          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 NYSE or any other
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.

 

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 5.           Grant of Awards; Shares and LLC Interests 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, the total number of Awards
available under the Plan shall be no more than 4,500,000 (the “Absolute Share
Limit”), of which all or any portion may be issued as shares of Common Stock or
LLC Interests; (ii) subject to Section 12 of the Plan, grants of Options or SARs
under the Plan in respect of no more than 4,500,000 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
2,250,000 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 $1,000,000 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 $7,500,000. Unless the Committee shall otherwise determine, the Common
Stock delivered by the Company or its Affiliates upon exchange of the LLC
Interests that have been issued under the Plan shall be issued under the Plan.

 

(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 Strike 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.

 

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(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 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, in written or electronic form, 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 the Company and its
Affiliates, 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.

 

11

 

  

(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 the Company or any Affiliate, the
Exercise Price per share shall be no less than 110% of the Fair Market Value per
share on the Date of Grant.

 

(c)        Vesting and Expiration; Termination.

 

(i)          Options shall vest and become exercisable in such manner and on
such date or dates or upon such 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 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 the Company or any Affiliate.

 

(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 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).

 

12

 

 

(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; 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 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 all applicable required
withholding and any other applicable taxes. 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 he or she 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 (A) two years after the Date of Grant of the Incentive Stock Option or (B)
one 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.

 

13

 

  

(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 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 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.

 

14

 

 

(f)        Substitution of SARs for Nonqualified Stock Options. The Committee
shall have the authority in its sole discretion to substitute, without the
consent of the affected Participant or any holder or beneficiary of SARs, SARs
settled in shares of Common Stock (or settled in shares or cash in the sole
discretion of the Committee) for outstanding Nonqualified Stock Options;
provided that (i) the substitution shall not otherwise result in a modification
of the terms of any such Nonqualified Stock Option; (ii) the number of shares of
Common Stock underlying the substituted SARs shall be the same as the number of
shares of Common Stock underlying such Nonqualified Stock Options; and (iii) the
Strike Price of the substituted SARs shall be equal to the Exercise Price of
such Nonqualified Stock Options.

 

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 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, the
Participant generally shall have the rights and privileges of a stockholder as
to such 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.

 

(c)        Restricted Period; Termination.

 

(i)          The Restricted Period with respect to Restricted Stock and
Restricted Stock Units shall lapse in such manner and on such date or dates or
upon such events determined by the Committee; provided, however, that
notwithstanding any such dates or events, the Committee may in its sole
discretion accelerate the lapse of the Restricted Period at any time and for any
reason.

 

15

 

  

(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 (x) all vesting with respect to such
Participant’s Restricted Stock or Restricted Stock Units shall cease and (y)
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 Award agreement. If an escrow arrangement
is used, upon such expiration, the Company shall issue to the Participant, or
his or her 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, at 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 his or her 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 (i) 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 (ii) defer the issuance of shares of Common Stock (or cash or
part shares of Common Stock and part cash, 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, the amount of such payment shall be
equal to the Fair Market Value 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, at 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, at 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 release of restrictions on such Restricted Stock
Units, and, if such Restricted Stock Units are forfeited, the Participant shall
have no right to such dividend equivalent payments.

 

16

 

  

(e)        Legends on Restricted Stock. Each certificate, if any, representing
Restricted Stock awarded under the Plan, if any, shall bear a legend
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 MEDLEY MANAGEMENT INC. 2014 Omnibus INCENTIVE PLAN
AND A RESTRICTED STOCK AWARD AGREEMENT BETWEEN MEDLEY MANAGEMENT INC. AND
PARTICIPANT. A COPY OF SUCH PLAN AND AWARD AGREEMENT IS ON FILE AT THE PRINCIPAL
EXECUTIVE OFFICES OF MEDLEY MANAGEMENT INC.

 

10.         Other Stock- or LLC Interest-Based Awards. The Committee may issue
unrestricted Common Stock, rights to receive grants of Awards at a future date,
other Awards denominated in Common Stock (including, without limitation,
performance shares or performance units) or LLC Interests, under the Plan to
Eligible Persons, alone or in tandem with other Awards, in such amounts as the
Committee shall from time to time in its sole discretion determine. Each Other
Stock-Based Award granted under the Plan shall be evidenced by an Award
agreement. Each Other Stock-Based Award so granted shall be subject to such
conditions not inconsistent with the Plan as may be reflected in the applicable
Award agreement.

 

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. The Committee shall also have the authority to make
an award of a cash bonus to any Participant and 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).

 

17

 

 

(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 Affiliates, 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 generally
accepted accounting principles (“GAAP”) or on a non-GAAP basis: (i) net
earnings, net income (before or after 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) 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 the Company and/or one or more Affiliates as a whole or any
divisions or operational and/or business units, product lines, brands, business
segments, administrative departments of the Company and/or one or more
Affiliates 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.

 

18

 

  

(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 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)
extraordinary nonrecurring items as described in Accounting Standards
Codification Topic 225-20 (or any successor pronouncement thereto) and/or in
management’s discussion and analysis of financial condition and results of
operations appearing in the Company’s annual report to stockholders for the
applicable year; (vi) acquisitions or divestitures; (vii) any other specific,
unusual or nonrecurring events, or objectively determinable category thereof;
(viii) foreign exchange gains and losses; (ix) discontinued operations and
nonrecurring charges; and (x) 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 of the 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.

 

19

 

 

(iv)         Use of Negative Discretion. In determining the actual amount of an
individual Participant’s Performance Compensation Award for a Performance
Period, the Committee may reduce or eliminate the amount of the 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 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. In the event of (a)
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,
including LLC Interests), 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 or LLC Interests, issuance of warrants or other rights
to acquire shares of Common Stock or other securities of the Company or LLC
Interests, or other similar corporate transaction or event (including, without
limitation, a Change in Control) that affects the shares of Common Stock or LLC
Interests, as applicable or (b) unusual or nonrecurring events (including,
without limitation, a Change in Control) affecting the Company, any Affiliate,
or the financial statements of the Company or any Affiliate, or changes in
applicable rules, rulings, regulations or other requirements of any governmental
body or securities exchange or inter-dealer quotation system, accounting
principles or law, such that in either case an adjustment is determined by the
Committee in its sole discretion to be necessary or appropriate, then the
Committee shall make any such adjustments in such manner as it may deem
equitable, including, without limitation, any or all of the following:

 

(i)          adjusting 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, including LLC Interests) which may be issued in respect of Awards or
with respect to which Awards may be granted under the Plan (including, without
limitation, adjusting any or all of the limitations under Section 5 of the
Plan); and (C) the terms of any outstanding Award, including, without
limitation, (1) the number of shares of Common Stock or other securities of the
Company (or number and kind of other securities or other property, including LLC
Interests) subject to outstanding Awards or to which outstanding Awards relate;
(2) the Exercise Price or Strike Price with respect to any Award; or (3) any
applicable performance measures (including, without limitation, Performance
Criteria and Performance Goals);

 

20

 

  

(ii)         providing for a substitution or assumption of Awards (or awards of
an acquiring company), accelerating the exercisability of, lapse of restrictions
on, or termination of, Awards or providing for 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

 

(iii)        cancelling any one or more outstanding Awards and causing to be
paid to the holders holding vested Awards (including any Awards that would vest
as a result of the occurrence of such event but for such cancellation) the value
of such Awards, if any, as determined by the Committee (which if applicable may
be based upon the price per share of Common Stock received or to be received by
other stockholders of the Company or holders of LLC Interests, as applicable, 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, respectively (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);

 

provided, however, 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 in Incentive Stock Options
under this Section 12 (other than any cancellation of Incentive Stock Options)
shall be made only to the extent not constituting a “modification” within the
meaning of Section 424(h)(3) of the Code, and any adjustments under this Section
12 shall be made in a manner which does not adversely affect the exemption
provided pursuant to Rule 16b-3 under the Exchange Act. Any such adjustment
shall be conclusive and binding for all purposes. Payments to holders pursuant
to clause (iii) 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 or LLC Interests, as
applicable, covered by the Award at such time (less any applicable Exercise
Price or Strike Price). In addition, prior to any payment or adjustment
contemplated under this Section 12, the Committee may require a Participant to
(A) represent and warrant as to the unencumbered title to his Awards; (B) 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 or LLC Interests, as applicable and (C) deliver customary transfer
documentation as reasonably determined by the Committee.

 

21

 

  

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, discontinuation 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 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 under the Plan shall be evidenced by an
Award agreement, which shall be delivered to the Participant 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

 

  

(b)        Nontransferability.

 

(i)          Each Award shall be exercisable only by a Participant 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 (including, without limitation, except as may be prohibited by
applicable law, pursuant to a domestic relations order) 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 the Company or an Affiliate; 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 his or her
Immediate Family Members; (C) a partnership or limited liability company whose
only partners or stockholders are the Participant and his or her 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 the
immediately preceding sentence 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) the Committee or the
Company shall not 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 the
Termination of the Participant 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 Transferee only to the extent, and for the periods, specified in the
Plan and the applicable Award agreement.

 

23

 

  

(c)        Dividends and Dividend Equivalents. The Committee in its sole
discretion may 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)          A Participant shall be required to pay to the Company or any
Affiliate, and the Company or any Affiliate shall have the right and is hereby
authorized to withhold, from any cash, shares of Common Stock, other securities
or other property issuable or deliverable under any Award or from any
compensation or other amounts owing to a Participant, the amount (in cash,
shares of Common Stock, other securities or other property) of any required
withholding or any other applicable 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 or the Company
to satisfy all obligations for the payment of such withholding or any other
applicable taxes.

 

(ii)         Without limiting the generality of clause (i) above, the Committee
may, 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)
owned by the Participant 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.

 

24

 

  

(e)        No Claim to Awards; No Rights to Continued Employment; Waiver. No
employee of the Company or any Affiliate, 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 Company or any Affiliate,
nor shall it be construed as giving any Participant any rights to continued
service on the Board. The Company or any of its Affiliates 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
Company and its Affiliates and the Participant, whether any such agreement is
executed before, on or after the Date of Grant.

 

(f)         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 or
Sub-Plans or 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, the Company or its
Affiliates.

 

(g)        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 his or her death. A
Participant may, from time to time, revoke or change his or her 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 his or her spouse
or, if the Participant is unmarried at the time of death, his or her estate.

 

(h)        Termination. Except as otherwise provided in an Award agreement,
unless determined otherwise by the Committee at any point following such event:
(i) neither a 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 of employment,
but such Participant continues to provide services to the Company and its
Affiliates 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 an Affiliate of the Company (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.

 

25

 

  

(i)         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.

 

(j)         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 the Company or any Affiliate 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 the Company or any
Affiliate issued under the Plan to make appropriate reference to such
restrictions or may cause such Common Stock or other securities of the Company
or any Affiliate 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 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 it 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.

 

26

 

  

(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 pay to the Participant an amount equal to the
excess of (A) 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 (B) 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.

 

(k)        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. 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.

 

(l)         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 his or her affairs because of illness or accident, or is a minor, or
has died, then any payment due to such person or his or her 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 his or her 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 otherwise entitled to payment. Any such payment shall be a complete
discharge of the liability of the Committee and the Company therefor.

 

(m)       Nonexclusivity of the Plan. Neither the adoption of this Plan by the
Board nor the submission of this 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 stock options otherwise than
under this Plan, and such arrangements may be either applicable generally or
only in specific cases.

 

27

 

 

(n)        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 the Company or any Affiliate, on the one hand, and a
Participant or other person or entity, 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 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 employees
under general law.

 

(o)        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 the
Company and its Affiliates 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.

 

(p)        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.

 

(q)        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.

 

(r)         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 entity 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 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 entity or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.

 

(s)        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.

 

(t)         409A of the Code.

 

(i)          Notwithstanding any provision of the Plan to the contrary, it is
intended that the provisions of this Plan comply with Section 409A of the Code,
and all provisions of this 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 this Plan (including any taxes and penalties
under Section 409A of the Code), and neither the Company nor any Affiliate 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.

 

28

 

 

(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 months after the date of such Participant’s “separation
from service” or, if earlier, the Participant’s date of death. Following any
applicable six 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 and any Treasury Regulations promulgated thereunder or (B) a
Disability, no such acceleration shall be permitted unless the Disability also
satisfies the definition of “Disability” pursuant to Section 409A of the Code
and any Treasury Regulations promulgated thereunder.

 

(u)        Clawback/Forfeiture. Notwithstanding anything to the contrary
contained herein, an Award agreement may provide that the Committee may in its
sole discretion cancel such Award if the Participant has engaged in or engages
in any Detrimental Activity. The Committee may also provide in an Award
agreement that if the Participant otherwise has engaged in or engages in any
Detrimental Activity, the Participant will forfeit any gain realized on the
vesting or exercise of such Award, and must repay the gain to the Company. The
Committee may also provide in an Award agreement that if the Participant
receives any amount in excess of what the Participant should 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), then the Participant shall be required to repay any such excess amount
to the Company. Without limiting the foregoing, all Awards shall be subject to
reduction, cancellation, forfeiture or recoupment to the extent necessary to
comply with applicable law.

 

29

 

 

(v)          Expenses; Gender; Titles and Headings. The expenses of
administering the Plan shall be borne by the Company and its Affiliates.
Masculine pronouns and other words of masculine gender shall refer to both men
and women. 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.

 

30