EXHIBIT 10.1

 

HAYNES INTERNATIONAL, INC.

2016 INCENTIVE COMPENSATION PLAN

 

ARTICLE I

 

ESTABLISHMENT AND PURPOSE

 

The Board of Directors of Haynes International, Inc. (the “Company”) hereby
establishes the Haynes International, Inc. 2016 Incentive Compensation Plan (the
“Plan”), effective on the date this plan is approved by the stockholders of the
Company (the “Effective Date”), for the purpose of making cash and non-cash
awards to eligible employees and non-employee directors. The Plan is intended to
promote the interests of the Company and the stockholders of the Company by
providing directors, executive officers and other management employees of the
Company with appropriate incentives and rewards to encourage them to enter into
and continue in the employ of the Company, to acquire a proprietary interest in
the long-term success of the Company and to reward the performance of
individuals in fulfilling their personal responsibilities for long range and
annual achievements.

 

ARTICLE II

 

DEFINITIONS

 

Whenever used in the Plan or any Award hereunder, the following terms shall have
the meanings set forth below:

 

(a)                                 “Affiliate” means any entity in which the
Company has a substantial direct or indirect equity interest (other than a
Subsidiary), but only if expressly so designated by the Committee from time to
time.

 

(b)                                 “Award” means, individually or collectively,
a grant or award under this Plan of Stock Options, Restricted Stock, Stock
Appreciation Rights, Restricted Stock Units, Performance Units or Performance
Shares.

 

(c)                                  “Award Agreement” means an agreement
entered into by each Participant and the Company, setting forth the terms and
provisions applicable to Awards granted to Participants under this Plan.

 

(d)                                 “Beneficial Owner” shall have the meaning
set forth in Rule 13d-3 under the Exchange Act.

 

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

 

(f)                                   “Cause” shall have the meaning set forth
in any employment, consulting or other agreement between the Company and the
Participant. If there is no such agreement, or if any such agreement does not
define “Cause”, then “Cause” means (i) in the case of an Employee, willful and
gross misconduct on the part of an Employee that is materially and demonstrably
detrimental to the Company or any Subsidiary or Affiliate as determined by the
Board of Directors in its sole discretion or (ii) in the case of a Director, the
removal of a Director from office pursuant to the relevant provisions of the
Second Amended and Restated By-laws of the Company, as amended from time to
time.

 

(g)                                  “Change in Control” shall mean the
occurrence of any one of the following events:

 

--------------------------------------------------------------------------------

 

(i)                                     any Person other than an Existing
Substantial Shareholder becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing a majority of the combined voting power
of the Company’s then outstanding securities (assuming conversion of all
outstanding non-voting securities into voting securities and the exercise of all
outstanding options or other convertible securities),

 

(ii)                                  in any two (2) year period during the term
of the Plan, individuals who, on the first day of such period, constitute a
majority of the number of Directors serving on the Board of Directors and any
new Director (other than a Director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to, a consent solicitation, relating to the election of Directors of the
Company) whose appointment or election by the Board or nomination for election
by the Company’s stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the Directors then still in office who either were Directors
on the first day of such period or whose appointment, election or nomination for
election was previously so approved or recommended, cease to constitute a
majority of the number of Directors serving on the Board of Directors at the end
of such two (2) year period;

 

(iii)                               the consummation of a merger or
consolidation of the Company or any Subsidiary of the Company with any other
corporation (other than with an Existing Substantial Shareholder or any of its
Affiliates), other than (x) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent, either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof, a majority of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (y) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly or indirectly, of securities
of the Company representing a majority of the combined voting power of the
Company’s then outstanding securities; or

 

(iv)                              the stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or substantially all
of the Company’s assets, other than a sale or disposition by the Company of all
or substantially all of the Company’s assets to an entity controlled by an
Existing Substantial Shareholder or any of its affiliates, or to an entity, a
majority of the combined voting power of the voting securities of which is owned
by substantially all of the stockholders of the Company immediately prior to
such sale in substantially the same proportions as their ownership of the
Company immediately prior to such sale.

 

(h)                                 “Code” means the Internal Revenue Code of
1986, as amended from time to time.

 

(i)                                     “Committee” means the Compensation
Committee of the Board of Directors.

 

(j)                                    “Director” means any individual who is a
member of the Board of Directors.

 

(k)                                 “Disability” means a Total and Permanent
Disability as defined in the Haynes International, Inc. Pension Plan.

 

--------------------------------------------------------------------------------

 

(l)                                     “Employee” means executive officers,
other members of management and other full-time employees employed by the
Company or any Subsidiary. The payment of a Director’s fee by the Company shall
not be sufficient to constitute employment by the Company.

 

(m)                             “Exchange Act” means the Securities Exchange Act
of 1934, as amended from time to time, or any successor act thereto.

 

(n)                                 “Exercise Price” means the price at which a
Share may be purchased by a Participant pursuant to an Option, as determined by
the Committee.

 

(p)                                 “Existing Substantial Shareholder” means any
Person that alone or together with its affiliates shall be the Beneficial Owner
of more than 15% of the Shares outstanding as of the Effective Date.

 

(q)                                 “Fair Market Value” per Share as of a
particular date means the last reported sale price (on the last trading day
immediately preceding such date) of the Shares quoted on the NASDAQ Global
Select Market, the NASDAQ Global Market or the NASDAQ Capital Market, as the
case may be (or any other exchange or national market system upon which price
quotations for the Shares are regularly available); provided, however, if price
quotations for the Shares are not regularly available on any exchange or
national market system, Fair Market Value per Share shall mean, as of any date,
the fair market value of such Shares on such date as determined in good faith by
the Board of Directors or the Committee by formula or other method consistent
with the determination of fair market value under Code Section 409A and its
interpretive regulations.

 

(r)                                    “Non-Employee Director” means a Director
who is a “non-employee director” within the meaning of Rule 16b-3 of the
Exchange Act and who is also an “outside director” within the meaning of
Section 162(m) of the Code.

 

(s)                                   “Option” means an option to purchase
Shares from the Company.

 

(t)                                    “Participant” means an Employee or
Non-Employee Director who has entered into an Award Agreement with the Company
pursuant to this Plan.

 

(u)                                 “Performance Criteria” means performance
criteria determined by reference to goals pre-established by the Committee in
its sole discretion, based on one or more of the following (if applicable, such
criteria shall be determined in accordance with United States generally accepted
accounting principles (“GAAP”) or based upon the Company’s GAAP financial
statements): (1) return on total stockholder equity; (2) earnings per Share;
(3) income before taxes; (4) earnings before any or all of interest, taxes,
minority interest, depreciation and amortization; (5) economic profit; (6) sales
or revenues; (7) return on assets, capital or investment; (8) market share;
(9) cost reduction goals; (10) implementation or completion of critical projects
or processes; (11) operating cash flow; (12) free cash flow; (13) net income;
(14) accounts receivable; (15) costs; (16) debt to equity ratio; (17) diversity;
(18) economic value added; (19) index comparisons; (20) inventory;
(21) operating margin; (22) peer company comparisons; (23) production levels;
(24) productivity; (25) profit margin; (26) return on sales; (27) safety;
(28) sales growth; (29) stock price; (30) succession planning and talent
development; (31) sustainability; (32) total segment profit; (33) total
stockholder return (actual or relative); (34) working capital and (35) any
combination of, or a specified increase or decrease in, any of the foregoing. To
the extent permitted under Section 162(m) of the Code (including, without
limitation, compliance with any requirements for stockholder approval), the
Committee in its sole discretion may designate additional Performance Criteria
on which the Performance Goals may be based or adjust, modify or amend the
Performance Criteria.

 

--------------------------------------------------------------------------------

 

(v)                                 “Performance Goals” means the required level
of achievement of the Performance Criteria established by the Committee in order
for an eligible Employee to receive an Award hereunder.

 

(w)                               “Performance Period” means such period,
whether a fiscal year of the Company or such other period as may from time to
time be established by the Committee, over which attainment of a Performance
Goal shall be measured by the Committee , however, in no event shall an Award
have a Performance Period of less than one (1) year.

 

(x)                                 “Performance Unit” and “Performance Share”
each mean an Award granted to an Employee pursuant to Article VIII herein.

 

(y)                                 “Person” means any individual or entity.

 

(z)                                  “Restricted Stock” means shares of the
Company’s stock granted to a Participant subject to restrictions in accordance
with Article VII.

 

(aa)                          “Restricted Stock Unit” means an Award of
Restricted Stock Units pursuant to Section 7.8.

 

(bb)                          “Retirement” or to “Retire” means a resignation
(a) after reaching age sixty-five (65) or (b) after reaching age sixty-two
(62) and completing at least ten (10) years of service with the Company.

 

(cc)                            “Shares” or “Stock” means the shares of common
stock, 0.001 par value, of the Company, as may be adjusted in accordance with
Section 4.7 below.

 

(dd)                          “Subsidiary” means any corporation, partnership,
venture or other entity in which the Company holds, directly or indirectly, an
fifty percent (50%) or greater ownership interest.

 

(ee)                            “Termination of Employment” means, in the case
of an Employee, a complete termination of the employment relationship between an
Employee and the Company and all Subsidiaries, or, in the case of a Non-Employee
Director, such Non-Employee Director ceasing to serve on the Board of Directors.
For purposes of this definition, a Participant who is employed by an entity that
ceases to be a Subsidiary or a business unit within a Subsidiary shall be deemed
to have Terminated Employment as of the date such entity ceased to be a
Subsidiary or a business unit within a Subsidiary, unless the Participant is
also employed by the Company or an entity that continues to be a Subsidiary or a
business unit within a Subsidiary. Notwithstanding the preceding provisions, to
the extent required to be exempt from or to comply with Code Section 409A and
its interpretive regulations and other guidance, a Termination of Employment
must also constitute a “separation from service” within the meaning of Code
Section 409A(a)(2)(A)(i) and the guidance thereunder.

 

ARTICLE III

 

ADMINISTRATION OF THE PLAN

 

The Plan shall be administered by the Committee. The Committee may establish and
adopt resolutions, rules and regulations, including revisions thereto, not
inconsistent with the provisions of the Plan, and construe and interpret
provisions of the Plan, as it deems appropriate to make the Plan and Awards
effective and to provide for the administration of the Plan, and it may take
such other action with regard to the Plan and Awards as it deems appropriate,
including, but not limited to, adopting and authorizing the Company to enter
into Award Agreements. All such actions shall be final, conclusive and

 

--------------------------------------------------------------------------------

 

binding on all persons, and no member of the Committee or the Board of Directors
shall be liable for any action or determination made in good faith with respect
to the Plan or any Award granted hereunder.

 

In furtherance, and not in limitation, of the above, the Committee shall have
the authority in its sole discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Awards; to determine the persons to whom and
the time or times at which Awards shall be granted; to determine the type and
number of Awards to be granted, the number of Shares to which an Award may
relate and the terms, conditions, restrictions and performance criteria relating
to any Award; to determine Performance Goals no later than such time as required
to ensure that an underlying Award which is intended to comply with the
requirements of Section 162(m) of the Code so complies; to determine whether, to
what extent, and under what circumstances an Award may be settled, cancelled,
forfeited, exchanged, or surrendered; and to make adjustments in the terms and
conditions of, and the Performance Goals (if any) included in, Awards.

 

No Award may be made under the Plan after March 1, 2026.

 

ARTICLE IV

 

AWARDS SUBJECT TO THE PLAN

 

4.1  Types of Awards.  Awards under this Plan may be made in any of the
following forms at the Committee’s discretion: Performance Shares; Performance
Units; Restricted Stock; Restricted Stock Units; Stock Appreciation Rights;
Incentive Stock Options; or Non-qualified Stock Options.

 

4.2.  Annual Limitation on Awards to Employees.  In any calendar year, no Awards
to any one Employee may exceed any combination of (i) $1,500,000 in cash awards,
including Performance Units, (ii) 40,000 shares of performance-based Restricted
Stock, performance-based Restricted Stock Units, shares of time-based Restricted
Stock, time-based Restricted Stock Units or Performance Shares or (iii) 100,000
Stock Options (including Incentive Stock Options and Non-Qualified Stock
Options) or Stock Appreciation Rights.

 

4.3  Annual Limitation on Awards to Non-Employee Directors.  In any calendar
year, no Awards to any one Non-Employee Director may exceed any combination of
(i) 6,000 shares of time-based Restricted Stock, performance-based Restricted
Stock, time-based Restricted Stock Units, performance-based Restricted Stock
Units or Performance Shares, or (ii) 15,000 Stock Options (but not Incentive
Stock Options) or Stock Appreciation Rights.

 

4.4  Performance Goals.  The Committee shall determine the Performance Criteria
and Performance Goals, if any, and amounts payable pursuant to any Award in
writing no later than ninety (90) days after the commencement of any Performance
Period and no later than after twenty-five percent (25%) of such Performance
Period has elapsed. The Committee shall determine attainment of Performance
Goals and any other applicable terms and conditions and the amount of any
payments/Awards earned. At the Committee’s discretion, measurement of
achievement of Performance Goals may be calculated excluding the impact of
extraordinary or non-recurring items during any applicable Performance Period to
the extent set forth in the applicable Award Agreement. Performance Goals shall
include payout tables, formulas or other standards to be used in determining the
extent to which the Performance Goals are met, and, if met, the amount of the
Award to be distributed pursuant to this Plan. When the Committee desires an
Award of Performance Shares, Performance Units, Restricted Stock or Restricted
Stock Units to qualify for the “performance-based exception” under
Section 162(m) of the Code, the Committee shall establish or modify the
Performance Goals for the respective Award prior to or within 90 days after the
beginning of the Performance Period relating to such Performance Goal, and not
later than the date twenty-five percent (25%) of such Performance Period has
elapsed. For all such Awards not intended to so qualify, the Committee shall
establish the Performance Goals before the end of the respective Performance
Period. The Performance Goals may be based upon the performance of the Company
or of any Subsidiary or Affiliate

 

--------------------------------------------------------------------------------

 

of the Company (or any division or business unit of such entity) and may also be
based upon the performance of the Company alone (excluding Subsidiaries and
Affiliates), a particular group within the Company or an individual Employee’s
performance. The Performance Goals may differ from Participant to Participant
and from Award to Award. The Performance Goals may also be based upon the
attainment of specified levels of performance under one or more of the
Performance Criteria relative to the performance of other comparable entities.
Performance Goals may include a threshold level of performance below which no
Award will be earned, a level of performance at which the target amount of an
Award will be earned and a level of performance at which the maximum amount of
the Award will be earned. The Committee shall have the discretion to decrease or
cancel a performance-based Award despite the fact that the relevant Performance
Goals have been met, but the Committee shall not have the discretion to vest or
increase an Award if the relevant Performance Goals have not been met.

 

4.5  Number of Shares.  Subject to adjustment as provided in Section 4.7 herein,
the following limitations shall apply in the aggregate as specified in the
categories set forth below:

 

(a)                                 For Restricted Stock, Restricted Stock Units
and Performance Shares, no more than 275,000 Shares (or Share equivalents) may
be granted in the aggregate hereunder;

 

(b)                                 For Stock Options and Stock Appreciation
Rights, no more than 425,000 Shares (or Share equivalents) may be granted in the
aggregate hereunder.

 

The Shares granted under this Plan may be either authorized but unissued or
reacquired Shares.

 

4.6  Share Accounting.  The following rules will apply for purposes of the
determination of the number of Shares available for grant under the Plan or
compliance with the foregoing limits:

 

(a)                                 If an outstanding Award for any reason
expires or is terminated or canceled without having been exercised or settled in
full, or if Shares acquired pursuant to an Award subject to forfeiture are
forfeited under the terms of the Plan or the relevant Award, the Shares
allocable to the terminated portion of such Award or such forfeited Shares shall
again be available for issuance under the Plan;

 

(b)                                 Shares shall not be deemed to have been
issued pursuant to the Plan with respect to any portion of an Award that is
settled in cash;

 

(c)                                  The following Shares may not again be made
available for issuance as awards under the Plan: (i) Shares not issued or
delivered as a result of the net settlement of an outstanding Option or SAR,
(ii) Shares used to pay the exercise price or withholding taxes related to an
outstanding Option or SAR, (iii) Shares repurchased on the open market with the
proceeds of the Option Exercise Price and (iv) Shares delivered to the Company
pursuant to Section 14.2 shall not be available for future grants under the
Plan.

 

4.7  Adjustments in Authorized Plan Shares and Outstanding Awards.  In the event
of any merger, reorganization, consolidation, recapitalization, separation,
split-up, liquidation, Share combination, Stock split, Stock dividend, or other
change in the corporate structure of the Company affecting the Shares, an
adjustment shall be made in the number and class of Shares available for Awards
under the Plan (including but not limited to individual limits), and in the
number and class of and/or price of Shares subject to outstanding Awards granted
under the Plan, and/or the number of outstanding Options, Shares of Restricted
Stock, and Performance Shares (and other Awards whose value is based on a number
of Shares) constituting outstanding Awards and any applicable Performance Goals,
as may be determined to be appropriate and equitable by the Committee, in its
sole discretion, to prevent dilution or enlargement of rights. In a
stock-for-stock acquisition of the Company, the Committee may, in its
discretion, substitute securities of another issuer for any Shares subject to
outstanding Awards.

 

--------------------------------------------------------------------------------

 

ARTICLE V

 

ELIGIBILITY AND PARTICIPATION

 

5.1  Eligibility.  All full-time Employees and Non-Employee Directors are
eligible to receive Awards under this Plan.

 

5.2  Actual Participation.  Subject to the provisions of the Plan, the Committee
may, from time to time, select from all eligible Employees and Non-Employee
Directors those to whom Awards shall be granted and shall determine the nature
and amount of each Award. No Employee or Non-Employee Director is entitled to
receive an Award unless selected by the Committee.

 

ARTICLE VI

 

STOCK OPTIONS

 

6.1  Grant of Options.  Subject to the terms and provisions of the Plan, Options
may be granted to Non-Employee Directors and Employees at any time and from time
to time, and under such terms and conditions, as shall be determined by the
Committee. Subject to Sections 4.2 and 4.3, the Committee shall have discretion
in determining the number of Shares subject to Options granted to each
Participant. The Committee may grant Incentive Stock Options, as described in
Section 422 of the Code, under this Plan.

 

6.2  Form of Issuance.  Each Option grant shall be issued in the form of an
Award Agreement containing terms and conditions to be established by the
Committee. Such terms and conditions shall include the Exercise Price, the
duration of the Option, the number of Shares to which an Option pertains and
such other provisions as the Committee shall determine.

 

6.3  Exercise Price.  Except as otherwise specifically set forth herein, unless
a greater Exercise Price is determined by the Committee, the Exercise Price for
each Option awarded under this Plan shall be equal to one hundred percent (100%)
of the Fair Market Value of a Share on the date the Option is granted. Subject
to adjustment as provided in Section 4.7 herein or as otherwise provided herein,
the terms of an Option may not be amended to reduce the exercise price nor may
Options be cancelled or exchanged for cash, other awards or Options with an
exercise price that is less than the exercise price of the original Options
without stockholder approval; provided, however, the foregoing shall not
prohibit the cancellation of Options in exchange for cash or other consideration
that does not exceed the excess of the Fair Market Value of the Shares
underlying such Options over the exercise price thereof on the date of such
cancellation.

 

6.4  Duration of Options.  Each Option shall expire at such time as the
Committee shall determine at the time of grant (which duration may be extended
by the Committee); provided, however, that no Option shall be exercisable later
than the tenth (10th) anniversary date of its grant. In the event the Committee
does not specify the expiration date of an Option, then such Option will expire
on the tenth (10th) anniversary date of its grant, except as otherwise provided
herein.

 

6.5  Vesting of Options.  A grant of Options shall vest at such times and under
such terms and conditions as determined by the Committee; provided, however,
unless another vesting schedule is provided by the Committee in the Award
Agreement, one-third of the Options will vest on each of the first three
anniversaries of the grant date.

 

6.6  Exercise of Options.

 

(a)                                 Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant. Exercises of Options may be effected only on
days and during the hours that the NASDAQ Stock Market is open for

 

--------------------------------------------------------------------------------

 

regular trading. The Committee may change or limit the times or days Options may
be exercised. If an Option expires on a day or at a time when exercises are not
permitted, then the Options may be exercised no later than the immediately
preceding date and time that the Options were exercisable.

 

(b)                                 An Option shall be exercised by providing
notice to the designated agent selected by the Committee (if no such agent has
been designated, then to the Committee), in the manner and form determined by
the Committee, which notice shall be irrevocable, setting forth the exact number
of Shares with respect to which the Option is being exercised and including with
such notice payment of the Exercise Price, as applicable. When an Option has
been transferred, the Committee or its designated agent may require appropriate
documentation that the person or persons exercising the Option, if other than
the Participant, has the right to exercise the Option. No Option may be
exercised with respect to a fraction of a Share.

 

(c)                                  The Committee also may allow
broker-assisted exercise as permitted under Federal Reserve Board’s
Regulation T, subject to applicable securities law restrictions, or by any other
means that the Committee determines to be consistent with the Plan’s purpose and
applicable law.

 

6.7  Payment.  The Exercise Price shall be paid in full, at the time of exercise
of the Option, (i) by personal or bank cashier’s check, (ii) if the Participant
may do so without violating Section 16(b) or (c) of the Exchange Act, and
subject to approval by the Committee, by tendering to the Company whole Shares
owned by such Participant having a Fair Market Value at the time of exercise
equal to the Exercise Price of the Shares which the Option is being exercised,
(iii) if the Participant may do so without violating Section 16(b) or (c) of the
Exchange Act, and subject to approval by the Committee, by surrendering a number
of vested options having a value (based on the difference between the Exercise
Price per share and the Fair Market Value per share of the Shares at the time of
exercise) equal to the Exercise Price of the Shares for which the Option is
being exercised, or (iv) any combination of (i), (ii) or (iii).

 

6.8  Termination of Employment.  Unless otherwise provided by the Committee, the
following limitations on exercise of Options shall apply upon Termination of
Employment:

 

(a)                                 Termination Other than for Cause, Death,
Disability or Retirement.  Unless specifically provided otherwise in the Award
Agreement, if the employment of a Participant is terminated for any reason other
than Cause, death, Disability or Retirement, all unvested Options held by the
Participant on the date of termination shall terminate immediately and any
vested Options shall remain exercisable for (i) in the case of the Chief
Executive Officer, six (6) months following the date of termination (or, in the
case of an Incentive Stock Option, ninety (90) days following the date of
termination), but in no event later than the expiration of such Options as
specified in the applicable Option Agreement or (ii) in the case of any other
Participant, ninety (90) days following the date of termination, but in no event
later than the expiration of such Options as specified in the applicable Option
Agreement. If the Option is not exercised during this period, it shall be void
and deemed to have been forfeited and be of no further force or effect.

 

(b)                                 Termination by Death, Disability or
Retirement.  Upon the death, Disability or Retirement of a Participant, all
unvested Options shall vest immediately and all Options held by such Participant
shall remain exercisable for five (5) years following the date of such event,
but in no event later than the expiration date of such Option as specified in
the applicable Award Agreement. Notwithstanding the foregoing, in the case of
Incentive Stock Options, such Options shall remain exercisable for a period of
one (1) year in the case of Disability and for a period of ninety (90) days in
the case of death or Retirement. If the Option is not exercised during this
period, it shall be void and deemed to have been forfeited and be of no further
force or effect.

 

--------------------------------------------------------------------------------

 

(c)                                  Forfeiture by Reason of Termination for
Cause.  Notwithstanding the exercise period described in Section 6.4, if the
employment or service of Participant is Terminated for Cause by the Company, all
rights or interests in any Option, regardless of the extent to which it might
otherwise have been vested and exercisable on the date of such Termination for
Cause, shall be forfeited and such Option shall no longer be exercisable to any
extent whatsoever.

 

6.9  Restrictions on Exercise and Transfer of Options.  Unless otherwise
provided by the Committee:

 

(a)                                 During the Participant’s lifetime, the
Participant’s Options shall be exercisable only by the Participant or by the
Participant’s guardian or legal representative. After the death of the
Participant, an Option shall only be exercised by the holder thereof (including,
but not limited to, an executor or administrator of a decedent’s estate) or his
or her guardian or legal representative.

 

(b)                                 No Option shall be transferable except:
(i) in the case of the Participant, only upon the Participant’s death; and
(ii) in the case of any holder after the Participant’s death, only by will or by
the laws of descent and distribution.

 

--------------------------------------------------------------------------------

 

6.10  Incentive Stock Options

 

In addition to the other terms and conditions applicable to all Options:

 

(a)                                 the aggregate Fair Market Value (determined
as of the date the Option is granted) of the Shares with respect to which
Incentive Stock Options held by an individual first become exercisable in any
calendar year (under this Plan and all other incentive stock options plans of
the Company and its Affiliates) shall not exceed $100,000 (or such other limit
as may be required by the Code), if such limitation is necessary to qualify the
Option as an Incentive Stock Option, and to the extent an Option or Options
granted to a Participant exceed such limit such Option or Options shall be
treated as Non-Qualified Stock Options;

 

(b)                                 an Incentive Stock Option shall not be
exercisable and the Term of the Award shall not be more than ten (10) years
after the date of grant (or such other limit as may be required by the Code) if
such limitation is necessary to qualify the Option as an Incentive Stock Option;

 

(c)                                  the Agreement covering an Incentive Stock
Option shall contain such other terms and provisions which the Committee
determines necessary to qualify such Option as an Incentive Stock Option; and

 

(d)                                 notwithstanding any other provision of this
Plan if, at the time an Incentive Stock Option is granted, the Participant owns
(after application of the rules contained in Section 424(d) of the Code, or its
successor provision) Shares possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or its
subsidiaries, (A) the option price for such Incentive Stock Option shall be at
least 110% of the Fair Market Value of the Shares subject to such Incentive
Stock Option on the date of grant and (B) such Option shall not be exercisable
after the date five years from the date such Incentive Stock Option is granted.

 

ARTICLE VII

 

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

 

7.1  Grant of Restricted Stock.  Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Non-Employee Directors and eligible Employees in such
amounts and upon such terms and conditions as the Committee shall determine. In
addition to any other terms and conditions imposed by the Committee, vesting of
Restricted Stock for Employees may be conditioned upon the achievement of
Performance Goals.

 

7.2  Restricted Stock Award Agreement.  The terms and conditions of each
Restricted Stock Award shall be set forth in a Restricted Stock Award Agreement
between the Company and the Participant.

 

7.3  Restrictions.  Each Restricted Stock Award Agreement made under the Plan
shall contain the following terms, conditions and restrictions and such
additional terms, conditions and restrictions as may be determined by the
Committee:

 

(a)                                 Restrictions.  Until the restrictions set
forth in this Subsection (a) lapse pursuant to Subsection (b), (c), (d) or (e),
Shares awarded to a Participant in accordance with a Restricted Stock Award and
which are still subject to such restrictions shall not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of.

 

(b)                                 Lapse of Restrictions for Grants to
Employees.  Except as set forth in Subsections (d) and (e), the restrictions set
forth in Subsection (a) shall begin to lapse on or after (but not before) the
first anniversary of the date of any Restricted Stock Award made to an

 

--------------------------------------------------------------------------------

 

Employee at such times and to such extent as the Committee may designate in the
Award Agreement (including, without limitation, the attainment of Performance
Goals).

 

(c)                                  Lapse of Restrictions for Grants to
Non-Employee Directors.  Except as set forth in Subsections (d) and (e), the
restrictions set forth in Subsection (a) shall lapse for any Restricted Stock
Award made to a Non-Employee Director upon the earlier of (i) such time as may
be determined by the Committee at the time of the Award and set forth in the
Award Agreement or (ii) the failure of such Non-Employee Director to be
re-elected at an annual meeting of the stockholders of the Company or the
removal of a Non-Employee Director from office by any other means by action of
the stockholders of the Company.

 

(d)                                 Termination of Employment by Reason of Death
or Disability.  Notwithstanding any provision of Subsection (a) to the contrary,
if an Employee or a Non-Employee Director either dies or Terminates Employment
because of Disability while in such employment or directorship, then the
restrictions set forth in Subsection (a) shall lapse on the day of such event as
to all Shares subject to a Restricted Stock Award.

 

(e)                                  Forfeiture of Award.  Any Shares as to
which the restrictions of Section 7.4(a) have not lapsed in accordance with this
Section 7.4 as of the date of a Participant’s Termination of Employment shall be
forfeited and returned to the Company as of such date without the payment of
consideration by the Company.

 

7.5  Voting Rights, Dividends and Other Distributions.  Except as otherwise
provided in an Award Agreement, Participants holding Shares of Restricted Stock
granted hereunder may exercise full voting rights and shall receive all
dividends and distributions paid with respect to such Shares. If any such
dividends or distributions are paid in Shares, the Shares so paid shall
automatically be subject to the same restrictions and conditions as the Shares
of Restricted Stock with respect to which they were paid.

 

7.6  Rights With Respect to Shares.  A Participant to whom a Restricted Stock
Award has been made shall have absolute beneficial ownership of the Shares
awarded to him, including the right to vote the shares and to receive dividends
thereon; subject, however, to the terms, conditions and restrictions described
in the Plan and/or the Award Agreement. The certificate(s) for such shares, with
restrictive legends thereon, shall be held by the Company for the Participant’s
benefit until the restrictions lapse, whereupon certificates without restrictive
legends shall be issued and delivered to him.

 

7.7  Restrictive Legends.  Certificates for Shares issued pursuant to Restricted
Stock Awards shall bear an appropriate legend referring to the terms, conditions
and restrictions described in the Plan and the Award Agreement. Any attempt to
dispose of any Shares in contravention of the terms, conditions and restrictions
described in the Plan or the Award Agreement shall be ineffective.

 

7.8  Restricted Stock Units.  In lieu of or in addition to Restricted Stock, the
Committee may grant Restricted Stock Units under such terms and conditions as
shall be determined by the Committee. Restricted Stock Units shall be subject to
the same terms and conditions under this Plan as Restricted Stock except as
otherwise provided in this Plan or as otherwise provided by the Committee.
Except as otherwise provided by the Committee, a Restricted Stock Unit Award
shall be settled and pay out promptly upon vesting (to the extent permitted by
Section 409A of the Code), and the Participant holding such Restricted Stock
Units shall receive, as determined by the Committee, Shares equal to the number
of such Restricted Stock Units as to which restrictions lapse, or cash equal to
the Fair Market Value of the number of Shares underlying such Restricted Stock
Units as of the settlement date. Restricted Stock Units shall not be
transferable, shall have no voting rights and shall not receive dividends but
shall, unless otherwise provided by the Committee, receive dividend equivalents
at the time and at the same rate as dividends are paid on Shares with the same
record and pay dates.

 

--------------------------------------------------------------------------------

 

ARTICLE VIII

 

PERFORMANCE UNITS AND PERFORMANCE SHARES

 

8.1  Grants of Performance Units and Performance Shares.  Subject to the terms
of the Plan, Performance Shares and Performance Units may be granted to eligible
Employees or Non-Employee Directors at any time and from time to time, as
determined by the Committee. Subject to Sections 4.2, 4.3 and 8.2, the Committee
shall have complete discretion in determining the number of Performance Units
and/or Performance Shares Awarded to each Participant and the terms and
conditions of each such Award.

 

8.2  Value of Performance Shares and Units.

 

(a)                                 A Performance Share is equivalent in value
to a Share.

 

(b)                                 A Performance Unit shall be equal in value
to a fixed dollar amount determined by the Committee. The number of Shares
equivalent to the potential payout of a Performance Unit shall be determined by
dividing the maximum cash payout of the Award by the Fair Market Value per Share
on the effective date of the grant. The Committee may denominate a Performance
Unit Award in dollars instead of Performance Units.

 

8.3  Performance Goals.  For each Award of Performance Shares or Performance
Units, the Committee shall establish (and may establish for other Awards)
Performance Goals for the Company, its Subsidiaries, and/or divisions of any of
foregoing, using the Performance Criteria. Unless previously canceled or
reduced, Performance Shares and Performance Units which may not be converted
because of failure in whole or in part to satisfy the relevant Performance Goals
or for any other reason shall be canceled without further action by the
Committee at the time they would otherwise be distributable.

 

8.4  Dividend Equivalents on Performance Shares.  If determined by the
Committee, a cash payment (“Dividend Equivalent”) in an amount equal to the
dividend payable on one Share may be made to a Participant for each Performance
Share held by such Participant on the record date for the dividend. Such
Dividend Equivalent, if any, shall only be paid on the number of Performance
Shares actually distributed and such payment shall be made when the related
Performance Shares are distributed.

 

8.5  Form and Timing of Payment of Performance Units and Performance Shares.  As
soon as practicable after the applicable Performance Period has ended and all
other conditions (other than Committee actions) to conversion and distribution
of a Performance Share and/or Performance Unit Award have been satisfied (or, if
applicable, at such other time determined by the Committee at or before the
establishment of the Performance Goal), the Committee shall determine whether
and the extent to which the Performance Goals were met for the applicable
Performance Units and Performance Shares and shall certify such results in a
manner consistent with the provisions of the performance-based compensation
exception provisions of Code Section 162(m) and the regulation thereunder. If
Performance Goals have been met, then the number of Performance Units and
Performance Shares to be converted into Stock and/or cash and distributed to the
Participants shall be determined in accordance with the Performance Goals for
such Awards, subject to any limits imposed by the Committee. Payment of
Performance Units and Performance Shares shall be made in a single lump sum, as
soon as reasonably administratively possible following the determination of the
number of Shares or amount of cash to which the Participant is entitled but not
later than the 15th the day of the third month following the end of the
applicable Performance Period. Performance Units will be distributed to
Participants in the form of cash. Performance Shares will be distributed to
Participants in the form of cash or Stock, or a combination of cash and Stock,
as determined by the Committee. In the event the Participant is no longer an
Employee at the time of the distribution, then the distribution shall be one
hundred (100%) in cash, provided the Participant may elect to take fifty percent
(50%) or one hundred percent (100%) in Stock. At any time prior to the
distribution of the Performance Shares and/or Performance Units, unless
otherwise provided by the Committee or prohibited by this Plan (such as in the
case of a Change in Control), the Committee shall have the authority to reduce
or eliminate the number of Performance Units or Performance Shares to be
converted and distributed, or to cancel any part or all of a grant or award of
Performance Units or Performance Shares, or

 

--------------------------------------------------------------------------------

 

to mandate the form in which the Award shall be paid (i.e., in cash, in Stock or
both, in any proportions determined by the Committee).

 

For the purpose of converting Performance Shares into cash and distributing the
same to the holders thereof (or for determining the amount of cash to be
deferred), the value of a Performance Share shall be the Fair Market Value of a
Share on the date the Committee authorizes the payout of Awards. Performance
Shares to be distributed in the form of Stock will be converted at the rate of
one (1) Share per Performance Share.

 

8.6  Termination of Employment Due to Death or Disability.  In the event of the
Participant’s Termination of Employment by reason of death or Disability during
a Performance Period, the Participant shall receive a lump sum payout of the
related outstanding Performance Units and Performance Shares calculated as if
all unfinished Performance Periods had ended with one hundred percent (100%) of
the Performance Goals achieved at target level, valued as of the first business
day of the calendar year following the date of Termination of Employment and
payable as soon thereafter as reasonably possible but not later than the
15th day of the third month after the end of the calendar year in which such
death or Disability occurred. Where the amount or part of Dividend Equivalents
is determined by the number of Performance Shares that are paid out or is
otherwise determined by a performance measure, and the related Performance
Period for the Dividend Equivalents was not completed at death or Disability,
then the Dividend Equivalents will be calculated as though one hundred percent
(100%) of the goals were achieved at target level and paid as soon as reasonably
possible.

 

8.7  Termination of Employment for Other than Death or Disability.  Unless the
Committee determines otherwise at any time, in the event of the Participant’s
Termination of Employment during the Performance Period for a reason other than
due to death or Disability (and other than for Cause), then upon such
Termination, the amount of the Participant’s Performance Units and number of
Performance Shares shall be adjusted. The revised Awards shall be determined by
multiplying the amount of the Performance Units and the number of Performance
Shares, as applicable, by the number of months the Participant worked at least
one day during the respective Performance Period divided by the number of months
in the Performance Period, to be paid, if at all, at the same time and under the
same terms that such outstanding Performance Units or Performance Shares would
otherwise be paid; provided, however, if the Participant is not Retirement
eligible and Terminates Employment voluntarily during the Performance Period for
a grant of Performance Units or Performance Shares, then such Award shall be
cancelled upon such Termination. A Termination shall be deemed to be voluntary
if it is recorded as such on the records of the Company, as determined by the
Company in its sole discretion.

 

8.8  Termination of Employment for Cause.  In the event of the Termination of
Employment of a Participant by the Company for Cause, all Performance Units and
Performance Shares shall be forfeited by the Participant to the Company.

 

8.9  Non-transferability.  Performance Units and Performance Shares may not be
sold, transferred, pledged, assigned or otherwise alienated or hypothecated.

 

ARTICLE IX

 

STOCK APPRECIATION RIGHTS

 

9.1  Grant.  An Award of a Stock Appreciation Right shall entitle the
Participant, subject to terms and conditions determined by the Committee, to
receive upon exercise of the Stock Appreciation Right all or a portion of the
excess of (i) the Fair Market Value of a specified number of Shares as of the
date of exercise of the Stock Appreciation Right over (ii) a specified purchase
price which shall not be less than 100% of the Fair Market Value of such Shares
as of the date of grant of the Stock Appreciation Right. Each Stock Appreciation
Right shall be subject to such terms as provided in the applicable Award
Agreement. Except as otherwise provided in the applicable Award Agreement, upon
exercise of a Stock Appreciation Right, payment to the Participant (or to his or
her Successor) shall be made in the form of cash, Shares or a combination of
cash and Shares (as determined by the Committee if not otherwise specified in
the Award) as promptly as practicable after such exercise. The Agreement may
provide for a limitation upon the

 

--------------------------------------------------------------------------------

 

amount or percentage of the total appreciation on which payment (whether in cash
and/or Stock) may be made in the event of the exercise of a Stock Appreciation
Right. Participants holding Stock Appreciation Rights shall have no dividend
rights with respect to Shares subject to such Stock Appreciation Rights.

 

9.2  Exercisability.  Each Stock Appreciation Right shall vest and be
exercisable in whole or in part on the terms provided in the Award Agreement.
Unless otherwise provided in the Award Agreement, a Stock Appreciation Right
shall not vest more rapidly than ratably over a period of three years from the
grant date beginning on the first anniversary of the Stock Appreciation Right
grant date. Notwithstanding the foregoing, the vesting of a Stock Appreciation
Right may be accelerated upon the occurrence of certain events as provided in
the Agreement. In no event shall any Stock Appreciation Right be exercisable at
any time after its Term. When a Stock Appreciation Right is no longer
exercisable, it shall be deemed to have lapsed or terminated. No Stock
Appreciation Right may be exercised for a fraction of a Share. The provisions of
Section 6.8 and 6.9 shall be applicable to SARs as if they were Options (but not
Incentive Stock Options).

 

ARTICLE X

 

BENEFICIARY DESIGNATION

 

10.1  In the event of the death of a Participant, distributions or Awards under
this Plan, other than Restricted Stock, shall pass in accordance with the
Company’s rules for employee beneficiary designations, as the same may be
amended from time to time. A Participant’s most recent beneficiary designation
will also apply to distributions or awards under this Plan unless and until the
Participant provides to the contrary in accordance with the procedures set forth
in such rules.

 

ARTICLE XI

 

EMPLOYEE MATTERS

 

11.1  No Contract of Employment.  Unless otherwise expressed in a separate
writing signed by an authorized officer of the Company, all Employees are
employed for an unspecified period of time and are considered to be “at-will
employees.” Nothing in this Plan shall confer upon any Participant the right to
continue in the employ of the Company or any Subsidiary, nor shall it limit or
restrict in any way the right of the Company or any Subsidiary to discharge the
Participant at any time for any reason whatsoever, with or without cause.

 

11.2  No Rights As A Stockholder.  Except as specifically set forth herein or in
an applicable Award Agreement, a Participant shall have no rights as a
stockholder with respect to any Award unless and until the Participant duly
performs all obligations set forth herein that would result in the Participant
becoming the owner of any Shares subject to such Award and certificates
evidencing ownership of Shares are issued to the Participant. Thereafter, cash
dividends, stock dividends, stock splits and other securities and rights to
subscribe shall be paid or distributed with respect to Shares acquired pursuant
to the Plan in the same manner as such items are paid or distributed to other
stockholders of the Company. Adjustments to the number and kind of Shares in the
event of certain transactions shall be made as described in Section 4.7.

 

11.3  Participation.  No Employee shall have the right to be selected to receive
an Award under this Plan, or, having been so selected, to be selected to receive
a future Award.

 

11.4  Clawback Policy.  All Awards granted hereunder are subject to the
Committee’s policy relating to potential return or forfeiture of Awards granted
hereunder in the event of a restatement of the Company’s financial statements
due to material noncompliance by the Company with financial reporting
requirements under the securities laws.

 

--------------------------------------------------------------------------------

 

ARTICLE XII

 

CHANGE IN CONTROL

 

Unless the Committee provides otherwise prior to the grant of an Award, upon the
occurrence of a Change in Control, the following shall apply to such Award:

 

(a)                                 Any and all Options and Stock Appreciation
Rights granted hereunder to a Participant immediately shall become vested and
exercisable upon the occurrence of a Change in Control, and shall remain
exercisable for one (1) year following the date of such event, but in no event
later than the expiration date of such Option as specified in the applicable
Award Agreement;

 

(b)                                 Any restriction periods and all restrictions
imposed on Restricted Stock and Restricted Stock Units shall lapse and they
shall immediately become fully vested upon the occurrence of a Change in
Control; provided, Restricted Stock Units shall be settled in accordance with
the terms of the grant without regard to the Change in Control unless the Change
in Control constitutes a “change in contract event” within the meaning of
Section 409A of the Code and such Termination of Employment occurs within two
years following such Change in Control, in which case the Restricted Stock Units
shall be settled and paid out with such Termination of Employment.

 

(c)                                  Outstanding Performance Shares or
Performance Units will vest automatically, with payment made or Shares issued
based upon actual performance of the Company in the period prior to the Change
in Control, but in no event less than the amount that would have been paid or
issued if the target level of performance established by the Committee prior to
the occurrence of the Change in Control had been achieved.

 

(d)                                 In the event of a Change in Control, an
Award shall be treated, to the extent determined by the Committee to be
appropriate and permitted under Section 409A of the Code, in accordance with one
of the following methods as determined by the Committee in its sole discretion:
(i) upon at least ten (10) days’ advance notice to the affected persons, cancel
any outstanding Awards and pay to the holders thereof, in cash or stock, or any
combination thereof, the value of such Awards based upon the price per Share
received or to be received by other stockholders of the Company in the event; or
(ii) provide for the assumption of or the issuance of substitute awards that
will substantially preserve the otherwise applicable terms of any affected
Awards previously granted under the Plan, as determined by the Committee in its
sole discretion.

 

ARTICLE XIII

 

AMENDMENT, MODIFICATION AND TERMINATION

 

13.1  Amendment, Modification, and Termination.  The Board may at any time and
from time to time, alter or amend the Plan or any Award in whole or in part or
suspend or terminate the Plan in whole or in part.

 

13.2  Awards Previously Granted.  No termination, amendment or modification of
the Plan or any Award (other than Performance Shares or Performance Units) shall
adversely affect in any material way any Award previously granted under the
Plan, without the written consent of the Participant holding such Award;
provided, however, that any such modification made for the purpose of complying
with Section 409A of the Code may be made by the Company without the consent of
any Participant.

 

--------------------------------------------------------------------------------

 

13.3  Delay in Payment.  To the extent required in order to avoid the imposition
of any interest and/or additional tax under Section 409A(a)(1)(B) of the Code,
any amount that is considered deferred compensation under the Plan or Agreement
and that is required to be postponed pursuant to Section 409A of the Code,
following the a Participant’s Termination of Employment shall be delayed for six
months if a Participant is deemed to be a “specified employee” as defined in
Section 409A(a)(2)(i)(B) of the Code; provided that, if the Participant dies
during the postponement period prior to the payment of the postponed amount, the
amounts withheld on account of Section 409A shall be paid to the executor or
administrator of the decedent’s estate within 60 days following the date of his
death. A “Specified Employee” means any Participant who is a “key employee” (as
defined in Code Section 416(i) without regard to paragraph (5) thereof), as
determined by the Company in accordance with its uniform policy with respect to
all arrangements subject to Code Section 409A, based upon the twelve (12) month
period ending on each December 31st (such twelve (12) month period is referred
to below as the “identification period”). All Participants who are determined to
be key employees under Code Section 416(i) (without regard to
paragraph (5) thereof) during the identification period shall be treated as
Specified Employees for purposes of the Plan during the twelve (12) month period
that begins on the first day of the 4th month following the close of such
identification period.

 

ARTICLE XIV

 

TAXES

 

14.1  General Tax Withholding.  Unless otherwise provided by the Committee or
this Plan, the Company shall deduct or withhold an amount sufficient to satisfy
Federal, state, and local taxes (including but not limited to the Participant’s
employment tax obligations) required by law to be withheld with respect to any
taxable event arising or as a result of cash paid under this Plan (“Withholding
Taxes”).

 

14.2  Restricted Stock Withholding Taxes.

 

(a)                                 Employees.  The Company and its Subsidiaries
shall, to the extent permitted by law, deduct from any payments of any kind
otherwise due or to become due to an Employee granted a Restricted Stock Award
any federal, state or local taxes of any kind required by law to be paid or
withheld with respect to the vesting of a Restricted Stock Award, provided,
that, if such arrangement is not possible or practicable, the Employee shall
make direct payment of the applicable taxes to the Company. Notwithstanding the
foregoing, an Employee may, by written notice to the Committee (which notice may
be delivered to such members of management of the Company which the Committee
may from time to time designate) and subject to such rules as the Committee may
adopt, elect to satisfy, in whole or in part, any withholding tax obligation
that may arise in connection with the Shares subject to the Restricted Stock
Award by having the Company accept from the Employee delivery of Shares having a
Fair Market Value equal to the amount of the withholding tax to be satisfied by
such delivery.

 

(b)                                 Non-Employee Directors.  Unless a written
election notice is delivered in accordance with the immediately following
sentence, a Non-Employee Director shall make direct payment of all applicable
taxes arising from the vesting of a Restricted Stock Award to the relevant
taxing authorities. A Non-Employee Director may, by written notice to the
Committee (which notice may be delivered to such members of management of the
Company which the Committee may from time to time designate) and subject to such
rules as the Committee may adopt, elect to satisfy, in whole or in part, any tax
obligation that may arise in connection with the Shares subject to the
Restricted Stock Award by having the Company buy from the Non-Employee Director
Shares having a Fair Market Value equal to the amount of the tax to be satisfied
by such delivery.

 

--------------------------------------------------------------------------------

 

14.3  Option Withholding Taxes.

 

(a)                                 Generally.  The Company or any Subsidiary
may take such steps as it may deem necessary or appropriate for the withholding
of any taxes which the Company or any Subsidiary is required by law or
regulation of any governmental authority, whether federal, state or local,
domestic or foreign, to withhold in connection with any Option including, but
not limited to, requiring the Participant to pay such tax at the time of
exercise or the withholding of issuance of Shares to be issued upon the exercise
of any Option until the Participant reimburses the Company for the amount the
Company is required to withhold with respect to such taxes, or, at the Company’s
sole discretion, canceling any portion of such issuance of Shares in any amount
sufficient to reimburse itself for the amount it is required to so withhold.

 

--------------------------------------------------------------------------------

 

(b)                                 Satisfying Taxes by Withholding Optioned
Shares.  Option Agreements under the Plan may, at the discretion of the Board or
the Committee, contain a provision to the effect that all federal and state
taxes required to be withheld or collected from a Participant upon exercise of
an Option may be satisfied by the withholding of a sufficient number of
exercised Shares that are subject to the Option which, valued at Fair Market
Value on the date of exercise, would be equal to the total withholding
obligation of the Participant for the exercise of such Option; provided,
however, that if the Company is a public reporting corporation, no person who is
an “officer” of the Company, as such term is defined in Rule 3b-2 under the
Exchange Act, may elect to satisfy the withholding of federal and state taxes
upon the exercise of an Option by the withholding of exercised Shares that are
subject to the Option, unless such election is made either (i) at least six
(6) months prior to the date that the exercise of the Option becomes a taxable
event or (ii) during any of the periods beginning on the third business day
following the date on which the Company issues a news release containing the
operating results of a fiscal quarter or fiscal year and ending on the twelfth
business day following such date. Such election shall be deemed made upon
receipt of notice thereof by an officer of the Company, by mail, personal
delivery, or by facsimile message, and shall (unless notice to the contrary is
provided to the Company) be operative for all Option exercises which occur
during the twelve-month period following the election.

 

ARTICLE XV

 

SUCCESSORS

 

All obligations of the Company under the Plan, with respect to Awards granted
hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or other acquisition of all or substantially all of the
business and/or assets of the Company.

 

ARTICLE XVI

 

LEGAL CONSTRUCTION

 

16.1  Gender and Number.  Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

 

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

 

16.3  Requirements of Law.  The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies, stockholders or national
securities exchanges as may be required.

 

16.4  Errors.  At any time, the Company may correct any error made under the
Plan without prejudice to the Company. Such corrections may include, without
limitation, changing or revoking an issuance of an Award made in error.

 

16.5  Elections and Notices.  Notwithstanding anything to the contrary contained
in this Plan, all elections and notices of every kind shall be made on forms
prepared by the Company or the General Counsel, Secretary or Assistant
Secretary, or their respective delegates, or shall be made in such other manner
as permitted or required by the Company or the General Counsel, Secretary or
Assistant Secretary, or their respective delegates, including but not limited to
elections or notices through electronic means, over the Internet or otherwise.
An election shall be deemed made when received by the Company (or its

 

--------------------------------------------------------------------------------

 

designated agent, but only in cases where the designated agent has been
appointed for the purpose of receiving such election), which may waive any
defects in form. The Company may limit the time an election may be made in
advance of any deadline.

 

Where any notice or filing is required or permitted to be given to the Company
under the Plan, it shall be delivered to the principal office of the Company,
directed to the attention of the Vice President—General Counsel of the Company
or his or her successor. Such notice shall be deemed given on the date of
delivery.

 

Notice to the Participant shall be deemed given when mailed (or sent by telecopy
or electronic mail) to the Participant’s work or home address as shown on the
records of the Company or, at the option of the Company, to the Participant’s
e-mail address as shown on the records of the Company.

 

It is the Participant’s responsibility to ensure that the Participant’s
addresses are kept up to date on the records of the Company. In the case of
notices affecting multiple Participants, the notices may be given by general
distribution at the Participants’ work locations.

 

16.6  Governing Law.  To the extent not preempted by Federal law, the Plan, and
all Awards and agreements hereunder, and any and all disputes in connection
therewith, shall be governed by and construed in accordance with the substantive
laws of the State of Indiana, without regard to conflict or choice of law
principles which might otherwise refer the construction, interpretation or
enforceability of this Plan to the substantive law of another jurisdiction.

 

16.7  409A Compliance.  Awards under the Plan may be structured to be exempt
from or be subject to Section 409A of the Code. To the extent that Awards
granted under the Plan are subject to Section 409A of the Code, the Plan will be
construed and administered in a manner that enables the Plan and such Awards to
comply with the provisions of Section 409A of the Code.

 

16.8  Issuance of Shares and Compliance With Securities Laws.  No Shares shall
be issued upon the exercise of any Award unless the issuance of such Shares is
the subject of an effective registration statement under the federal Securities
Act of 1933, as amended (the “Securities Act”), and applicable state securities
laws, or unless, in the opinion of counsel to the Company, the issuance would be
exempt from the registration requirements of the Securities Act and such state
laws. A Participant has no right at any time to require the Company to register
the Shares under federal or state securities laws. Any person purchasing Shares
upon exercise of an Option issued pursuant to the Plan may be required to make
such representations and furnish such information as may, in the opinion of
counsel for the Company, be appropriate to permit the Company, in light of the
existence or nonexistence with respect to such Shares of an effective
registration under the Securities Act, or any similar state statute, to issue
the Shares in compliance with the provisions of those or any comparable acts.

 

16.9  Securities Restrictions.  All certificates for Shares delivered under the
Plan shall be subject to such stop-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Shares are then listed, and any applicable federal or state securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions. If the
Committee determines that the issuance of Shares hereunder is not in compliance
with, or subject to an exemption from, any applicable federal or state
securities laws, such shares shall not be issued until such time as the
Committee determines that the issuance is permissible. Shares delivered under
the Plan may be delivered electronically pursuant to such arrangements as the
Committee shall determine.

 

16.10  Other Plans.  Notwithstanding the adoption of this Plan by the Board and
approval of this Plan by the Company’s stockholders as provided in Article I
hereof, any other incentive compensation plans adopted by the Company, as
amended from time to time (the “Other Plans”) shall remain in effect, but grants
of stock options and other awards pursuant to the Other Plans shall not be made
after the effective date of this Plan. All grants and awards heretofore made
under the Other Plans shall be governed by the terms of the applicable Other
Plans.

 

--------------------------------------------------------------------------------