Exhibit 10.1

 

REGIS CORPORATION

 

AMENDED AND RESTATED 2004 LONG TERM INCENTIVE PLAN

 

(As proposed to be amended and restated upon shareholder approval at the
October 22, 2013 annual meeting)

 

TABLE OF CONTENTS

 

 

Page

 

 

ARTICLE I ESTABLISHMENT AND PURPOSE

1

1.1

Establishment

1

1.2

Purpose

1

1.3

Compliance with 409A

1

 

 

 

ARTICLE II DEFINITIONS

1

2.1

Affiliate

1

2.2

Agreement

1

2.3

Award

1

2.4

Beneficiary

1

2.5

Board of Directors or Board

1

2.6

Cause

1

2.7

Change in Control

2

2.8

Code

3

2.9

Commission

3

2.10

Committee

3

2.11

Common Stock

3

2.12

Company

3

2.13

Covered Employee

3

2.14

Disability

3

2.15

Exchange Act

3

2.16

Exercise Price

4

2.17

Fair Market Value

4

2.18

Grant Date

4

2.19

Incentive Stock Option

4

2.20

Non-Qualified Stock Option

4

2.21

Option Period

4

2.22

Participant

4

2.23

Performance Unit

4

2.24

Plan

4

2.25

Representative

4

2.26

Restatement Effective Date

5

2.27

Restricted Stock

5

2.28

Restricted Stock Unit

5

2.29

Rule 16b-3

5

2.30

Stock Appreciation Right

5

2.31

Stock Option or Option

5

2.32

Termination of Employment

5

 

 

 

ARTICLE III ADMINISTRATION

5

3.1

Committee Structure and Actions

5

3.2

Committee Authority

5

 

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3.3

Delegation of Authority

7

3.4

Indemnification

7

 

 

 

ARTICLE IV SHARES SUBJECT TO PLAN

7

4.1

Number of Shares

7

4.2

Release of Shares

7

4.3

Substitute Awards

7

4.4

Restrictions on Awards

8

4.5

Shareholder Rights

8

4.6

Effect of Certain Changes

8

 

 

 

ARTICLE V ELIGIBILITY

9

5.1

Eligibility

9

 

 

 

ARTICLE VI STOCK OPTIONS

9

6.1

General

9

6.2

Grant

9

6.3

Terms and Conditions

9

6.4

Termination by Reason of Death

10

6.5

Termination by Reason of Disability

10

6.6

Termination for Cause

10

6.7

Other Termination

10

 

 

 

ARTICLE VII STOCK APPRECIATION RIGHTS

11

7.1

General

11

7.2

Grant

11

7.3

Terms and Conditions

11

 

 

 

ARTICLE VIII RESTRICTED STOCK AND RESTRICTED STOCK UNITS

12

8.1

General

12

8.2

Grant, Awards and Certificates

12

8.3

Terms and Conditions

12

 

 

 

ARTICLE IX PERFORMANCE UNITS

13

9.1

General

13

9.2

Earning Performance Unit Awards

13

9.3

Termination of Employment Due to Death or Disability

13

9.4

Nontransferability

13

9.5

Election to Defer

14

9.6

Payment

14

 

 

 

ARTICLE X CHANGE IN CONTROL PROVISIONS

14

10.1

Impact of Event

14

10.2

Additional Discretion

14

10.3

Fundamental Change

14

 

 

 

ARTICLE XI PROVISIONS APPLICABLE TO SHARES ACQUIRED UNDER THIS PLAN

15

11.1

No Company Obligation

15

 

 

 

ARTICLE XII MISCELLANEOUS

15

12.1

Amendments and Termination; No Repricing

15

12.2

Unfunded Status of Plan

16

12.3

Provisions Relating to Internal Revenue Code Section 162(m)

16

12.4

No Additional Obligation

17

12.5

Withholding

17

 

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12.6

Controlling Law

17

12.7

Offset

17

12.8

Nontransferability; Beneficiaries

18

12.9

Gross-Up for Excise Tax

18

12.10

No Rights with Respect to Continuance of Employment

18

12.11

Awards in Substitution for Awards Granted by Other Corporations

18

12.12

Foreign Alternatives

19

12.13

Delivery of Stock Certificates

19

12.14

Headings

19

12.15

Severability

19

12.16

Successors and Assigns

19

12.17

Entire Agreement

19

 

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REGIS CORPORATION

AMENDED AND RESTATED 2004 LONG TERM INCENTIVE PLAN

 

ARTICLE I

 

ESTABLISHMENT AND PURPOSE

 

1.1 Establishment. The Regis Corporation 2004 Long Term Incentive Plan (“Plan”)
was established by Regis Corporation (“Company”), effective as of May 26, 2004
(the “Effective Date”), restated effective as of December 31, 2008 to
incorporate and supersede all prior amendments hereto and to make certain
changes to comply with Section 409A of the Internal Revenue Code of 1986,
further amended and restated as of October 28, 2010 to, among other changes,
increase the shares available under the Plan, and shall be further amended as
set forth herein as of the Restatement Effective Date.

 

1.2 Purpose. The purpose of the Plan is to foster and promote the long-term
financial success of the Company and materially increase shareholder value by
motivating performance through incentive compensation. The Plan also is intended
to encourage Participant ownership in the Company, attract and retain talent,
and enable Participants to participate in the long-term growth and financial
success of the Company. The Plan and the grant of Awards thereunder are
expressly conditioned upon the Plan’s approval by the shareholders of the
Company.

 

1.3 Compliance with 409A. The Plan is intended to meet the requirements of
paragraph (2), (3) and (4) of Code Section 409A(a) to the extent applicable, and
the terms and provisions of the Plan should be interpreted and applied in a
manner consistent with such requirements, including the regulations and other
guidance issued under Code Section 409A.

 

ARTICLE II

 

DEFINITIONS

 

For purposes of the Plan, the following terms are defined as set forth below:

 

2.1 “Affiliate” means any entity that is a subsidiary or a parent corporation,
as defined in Section 424(e) of the Code, of the Company or any other entity
designated by the Committee as covered by the Plan in which the Company has,
directly or indirectly, at least a 20% voting interest.

 

2.2 “Agreement” means any agreement entered into pursuant to the Plan by which
an Award is granted to a Participant, and any amendments thereto.

 

2.3 “Award” means any Stock Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit or Performance Unit granted to a Participant under the
Plan. Awards shall be subject to the terms and conditions of the Plan and shall
be evidenced by an Agreement containing such additional terms and conditions,
not inconsistent with the provisions of the Plan, as the Committee shall deem
desirable.

 

2.4 “Beneficiary” means any person or other entity, which has been designated by
a Participant in his or her most recent written beneficiary designation filed
with the Committee to receive the compensation, specified under the Plan to the
extent permitted. If there is no designated beneficiary, then the term means any
person or other entity entitled by will or the laws of descent and distribution
to receive such compensation.

 

2.5 “Board of Directors” or “Board” means the Board of Directors of the Company.

 

2.6 “Cause” means, for purposes of determining whether and when a Participant
has incurred a Termination of Employment for Cause, any act or omission which
permits the Company to terminate the written employment

 

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agreement or arrangement between the Participant and the Company or an Affiliate
for “cause” as defined in such agreement or arrangement. In the event there is
no such agreement or arrangement or the agreement or arrangement does not define
the term “Cause,” then “Cause” means (1) with respect to Awards granted before
October 28, 2010, the Participant’s intentional participation in illegal conduct
which (i) is materially and directly detrimental to the financial interests of
the Company or an Affiliate and (ii) results in the Participant’s conviction of
a felony and (2) with respect to Awards granted on or after October 28, 2010,
(i) (a) a felony conviction under any Federal or state statute which is
materially detrimental to the financial interests of the Company, or (b) willful
non-performance by the Participant of his or her material employment duties
other than by reason of his or her physical or mental incapacity after
reasonable written notice to the Participant and reasonable opportunity (not
less than thirty (30) days) to cease such non-performance; or (ii) the
Participant willfully engaging in fraud or gross misconduct which is materially
detrimental to the financial interests of the Company.

 

2.7 “Change in Control” means:

 

(1) with respect to Awards granted before January 1, 2009, the first to occur of
any of the following events:

 

(a) the acquisition by any “person,” as that term is used in Sections 13(d) and
14(d) of the Exchange Act of “beneficial ownership,” as defined in Rule 13d-3
under the Exchange Act, directly or indirectly, of 20% or more of the shares of
the Company’s capital stock;

 

(b) the first day on which less than two-thirds of the total membership of the
Board of Directors shall be Continuing Directors (as that term is defined in
Article VII of the Company’s Articles of Incorporation);

 

(c) the approval by the shareholders of the Company of a merger, share exchange,
or consolidation of the Company (a “Transaction”), other than a Transaction
which would result in the Voting Stock of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than 50% of
the Voting Stock of the Company or such surviving entity immediately after such
Transaction; or

 

(d) the approval by the shareholders of the Company of a complete liquidation of
the Company or a sale or disposition of all or substantially all the assets of
the Company; and

 

(2) with respect to Awards granted on or after January 1, 2009, the first to
occur of any of the following events:

 

(a) any “person” within the meaning of Section 2(a)(2) of the Securities Act of
1933 and Section 14(d) of the Exchange Act is or has become the “beneficial
owner,” as defined in Rule 13d-3 under the Exchange Act, of twenty percent (20%)
or more of either (i) the then outstanding shares of Common Stock of the Company
(the “Outstanding Common Stock”) or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Voting Securities”), except for an
acquisition by an entity resulting from a Business Combination (as defined
below) in which clauses (x) and (y) of subparagraph (b) applies;

 

(b) consummation of (i) a merger or consolidation of the Company with or into
another entity, (ii) a statutory share exchange or (iii) the acquisition by any
person (as defined above) of all or substantially all of the assets of the
Company (each, a “Business Combination”), unless immediately following such
Business Combination, (x) all or substantially all of the beneficial owners of
the Outstanding Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than fifty percent (50%) of the
voting power of the then outstanding shares of voting stock (or comparable
voting equity interests) of the surviving or acquiring entity resulting from
such Business Combination (including such beneficial ownership

 

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of an entity that, as a result of such transaction, owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries), in substantially the same proportions (as compared to the other
beneficial owners of the Company’s voting stock immediately prior to such
Business Combination) as their beneficial ownership of the Company’s voting
stock immediately prior to such Business Combination and (y) no person (as
defined above) beneficially owns, directly or indirectly, twenty percent (20%)
or more of the voting power of the outstanding voting stock (or comparable
equity interests) of the surviving or acquiring entity (other than a direct or
indirect parent entity of the surviving or acquiring entity, that, after giving
effect to the Business Combination, beneficially owns, directly or indirectly,
100% of the outstanding voting stock (or comparable equity interests) of the
surviving or acquiring entity), or

 

(c) individuals who constitute the Company’s Board of Directors on the Effective
Date (the “Incumbent Board”) have ceased for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
Effective Date whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least three-quarters (75%) of the
directors comprising the Incumbent Board shall be, for purposes of this Plan,
considered as though such person were a member of the Incumbent Board;

 

provided, however, that for any payment with respect to any Award under the Plan
that is subject to Section 409A of the Code, the Change in Control must also be
a change in control event under Treas. Reg. Section 1.409A-3(i)(5).

 

2.8 “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and any successor, along with related rules, regulations and
interpretations.

 

2.9 “Commission” means the Securities and Exchange Commission or any successor
thereto.

 

2.10 “Committee” means the committee of the Board responsible for granting
Awards under the Plan, which shall be the Compensation Committee of the Board,
until such time as the Board may designate a different committee. The Committee
shall consist solely of two or more directors, each of whom is a “Non-Employee
Director” within the meaning of Rule 16b-3 and each of whom is also an “outside
director” under Section 162(m) of the Code. In addition, each member of the
Committee must be an “independent director” as determined under the corporate
governance rules of the New York Stock Exchange, as amended from time to time.

 

2.11 “Common Stock” means the shares of the Company’s common stock, $0.05 par
value, whether presently or hereafter issued, and any other stock or security
resulting from adjustment thereof as described hereinafter, or the common stock
of any successor to the Company which is designated for the purpose of the Plan.

 

2.12 “Company” means Regis Corporation, a Minnesota corporation, and includes
any successor or assignee corporation or corporations into which the Company may
be merged, changed or consolidated; any corporation for whose securities the
securities of the Company shall be exchanged; and any assignee of or successor
to substantially all of the assets of the Company.

 

2.13 “Covered Employee” means a Participant who, in the sole judgment of the
Committee, may be treated as a “covered employee” within the meaning of
Section 162(m) of the Code at the time income is recognized by the Participant
in connection with an Award that is intended to qualify for the
Performance-Based Exception (as defined below).

 

2.14 “Disability” means that the Participant is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months.

 

2.15 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

 

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2.16 “Exercise Price” means the price at which the Common Stock may be purchased
under an Option or may be obtained under a Stock Appreciation Right.

 

2.17 “Fair Market Value” means the value of one share of Common Stock,
determined pursuant to the applicable method described below, without regard to
whether the Common Stock is restricted or represents a minority interest:

 

(1) if the Common Stock is listed on a securities exchange or quoted on an
automated quotation system, the closing price of a share of Common Stock on the
relevant date (or, if such date is not a business day or a day on which
quotations are reported, then on the immediately preceding date on which
quotations were reported) or if a closing price was not reported on the grant
date, then the arithmetic mean of the high and low prices on that date or on the
first preceding trading date, as reported by the principal national exchange on
which such shares are traded (in the case of an exchange) or by the automated
quotation system, as the case may be;

 

(2) if the Common Stock is not listed on a national securities exchange or
quoted on the automated quotation system, but is actively traded in the over-the
counter market, the average of the closing bid and asked prices for a share of
the Common Stock on the relevant date (or, if such date is not a business day or
a day on which quotations are reported, then on the immediately preceding date
on which quotations were reported), or the most recent preceding date for which
such quotations are reported; and

 

(3) if, on the relevant date, the Common Stock is not publicly traded or
reported as described in (1) or (2) above, the value determined by the
reasonable application of a reasonable valuation method which is consistent with
Treas. Reg. § 1.409A-1(b)(5)(iv), selected in good faith by the Board.

 

2.18 “Grant Date” means the date as of which an Award is granted pursuant to the
Plan or such later effective date for the Award as specified at the time of
grant.

 

2.19 “Incentive Stock Option” means any Stock Option intended to be and
designated as an “incentive stock option” within the meaning of Section 422 of
the Code.

 

2.20 “Non-Qualified Stock Option” means an Option to purchase Common Stock in
the Company granted under the Plan, the taxation of which is pursuant to
Section 83 of the Code.

 

2.21 “Option Period” means the period during which the Option remains
outstanding in accordance with an Agreement and Article VI.

 

2.22 “Participant” means a person who satisfies the eligibility conditions of
Article V and to whom an Award has been granted by the Committee under the Plan.
In the event that a Representative is appointed for a Participant, then the term
“Participant” shall mean such appointed Representative. Notwithstanding the
appointment of a Representative, the term “Termination of Employment” shall mean
the Termination of Employment of the Participant.

 

2.23 “Performance Unit” shall have the meaning set forth in Section 9.1 hereof.

 

2.24 “Plan” means the Regis Corporation 2004 Long Term Incentive Plan, as herein
set forth and as may be amended from time to time.

 

2.25 “Representative” means (a) the person or entity acting as the executor or
administrator of a Participant’s estate pursuant to the last will and testament
of a Participant or pursuant to the laws of the jurisdiction in which the
Participant had the Participant’s primary residence at the date of the
Participant’s death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
beneficiary of the Participant upon or following the Participant’s death; or
(d) the person to whom an Award has been permissibly

 

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transferred; provided that only one of the foregoing shall be the Representative
at any point in time as determined under applicable law and recognized by the
Committee.

 

2.26 “Restatement Effective Date” means the date on which this Plan, as amended
and restated, is approved by the Company’s shareholders at the Company’s 2013
annual meeting of shareholders.

 

2.27 “Restricted Stock” means Common Stock granted to a Participant under
Section 8.1 hereof and which is subject to certain restrictions and to a risk of
forfeiture or repurchase by the Company.

 

2.28 “Restricted Stock Unit” means an Award to a Participant under Section 8.1
hereof under which no Common Stock actually is awarded to the Participant on the
date of grant. Each Award of a Restricted Stock Unit entitles a Participant to
receive a share of Common Stock, or cash in the amount of the Fair Market Value
of a share of Common Stock, as of a future date, subject to certain restrictions
and to a risk of forfeiture.

 

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

 

2.30 “Stock Appreciation Right” means a right granted under Article VII.

 

2.31 “Stock Option” or “Option” means a right, granted to a Participant under
Section 6.1 hereof, to purchase Common Stock at a specified price during
specified time periods.

 

2.32 “Termination of Employment” means the occurrence of any act or event
whether pursuant to an employment agreement or otherwise that actually or
effectively causes or results in the person’s ceasing, for whatever reason, to
be any and all of an officer or employee of the Company or of any Affiliate,
including, without limitation, death, Disability, dismissal, severance at the
election of the Participant, retirement, or severance as a result of the
discontinuance, liquidation, sale or transfer by the Company or its Affiliates
of a business owned or operated by the Company or its Affiliates.

 

With respect to any person who is not an employee with respect to the Company or
an Affiliate (such as a non-employee member of the Board), the Agreement shall
establish what act or event shall constitute a Termination of Employment for
purposes of the Plan. A Termination of Employment shall occur with respect to an
employee who is employed by an Affiliate if the Affiliate shall cease to be an
Affiliate and the Participant shall not immediately thereafter become an
employee of the Company or an Affiliate. To the extent that an Award granted
under the Plan is subject to Internal Revenue Code Section 409A, a Termination
of Employment shall mean a “separation from service” under Code Section 409A and
the regulations and guidance issued with respect thereto (all references herein
to Code Section 409A shall include such regulations and guidance).
Notwithstanding the foregoing, no Termination of Employment shall be deemed to
have occurred in the case of (1) an approved leave of absence; and (2) any
change in status so long as the individual remains in the service of the Company
or any Affiliate in a capacity that satisfies the eligibility conditions of
Article V.

 

In addition, certain other terms used herein have definitions given to them in
the first place in which they are used.

 

ARTICLE III

 

ADMINISTRATION

 

3.1 Committee Structure and Actions. The Plan shall be administered by the
Committee in accordance with the rules and responsibilities of the Committee.

 

3.2 Committee Authority. Subject to the terms of the Plan, the Committee shall
have the authority:

 

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(1) to select those persons to whom Awards may be granted from time to time;

 

(2) to determine whether and to what extent Awards are to be granted hereunder;

 

(3) to determine the number of shares of Common Stock to be covered by each
Award granted hereunder;

 

(4) to determine the terms and conditions of any Award granted hereunder,
provided that the Exercise Price of any Option or Stock Appreciation Right shall
not be less than the Fair Market Value per share as of the Grant Date;

 

(5) to adjust the terms and conditions, at any time or from time to time, of any
Award, subject to the limitations of Section 12.1;

 

(6) to determine to what extent and under what circumstances shares of Common
Stock and other amounts payable with respect to an Award shall be deferred;

 

(7) to provide for the forms of Agreement to be utilized in connection with this
Plan;

 

(8) to determine what legal requirements are applicable to the Plan, Awards, and
the issuance of Common Stock, and to require of a Participant that appropriate
action be taken with respect to such requirements;

 

(9) to cancel, with the consent of the Participant or as otherwise provided in
the Plan or an Agreement, outstanding Awards;

 

(10) to require as a condition of the exercise of an Award or the issuance or
transfer of a certificate (or other representation of title) of Common Stock,
the withholding from a Participant of the amount of any taxes as may be
necessary in order for the Company or any other employer to obtain a deduction
or as may be otherwise required by law;

 

(11) to determine whether and with what effect an individual has incurred a
Termination of Employment (or, as applicable, a “separation from service”
pursuant to Code Section 409A);

 

(12) to determine the restrictions or limitations on the transfer of Common
Stock;

 

(13) to determine whether an Award is to be adjusted, modified or purchased, or
is to become fully exercisable, under the Plan or the terms of an Agreement;

 

(14) to determine the permissible methods of Award exercise and payment within
the terms and conditions of the Plan and the particular Agreement;

 

(15) to adopt, amend and rescind such rules and regulations as, in its opinion,
may be advisable in the administration of this Plan; and

 

(16) to appoint and compensate agents, counsel, auditors or other specialists to
aid it in the discharge of its duties.

 

The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any Agreement) and to otherwise
supervise the administration of the Plan. The Committee’s policies and
procedures may differ with respect to Awards granted at different times and may
differ with respect to a Participant from time to time, or with respect to
different Participants at the same or different times.

 

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Any determination made by the Committee pursuant to the provisions of the Plan
shall be made in its sole discretion, and in the case of any determination
relating to an Award may be made at the time of the grant of the Award or,
unless in contravention of any express term of the Plan or an Agreement, at any
time thereafter. All decisions made by the Committee pursuant to the provisions
of the Plan shall be final and binding on all persons, including the Company and
Participants. Any determination shall not be subject to de novo review if
challenged in court.

 

3.3 Delegation of Authority. To the extent not inconsistent with applicable law
or stock exchange rules, the Committee may delegate all or any portion of its
authority under the Plan to determine and administer Awards to Participants who
are not subject to Section 16 of the Exchange Act to one or more persons who are
either members of the Board of Directors or executive officers of the Company.

 

3.4 Indemnification. Each person who is or has been a member of the Committee or
of the Board, and any other person to whom the Committee delegates authority
under the Plan, shall be indemnified and held harmless by the Company, to the
extent permitted by law, against and from (1) any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by such person in
connection with or resulting from any claim, action, suit or proceeding to which
such person may be a party or in which such person may be involved by reason of
any action taken or failure to act, made in good faith, under the Plan and
(2) any and all amounts paid by such person in settlement thereof, with the
Company’s approval, or paid by such person in satisfaction of any judgment in
any such action, suit or proceeding against such person, provided such person
shall give the Company an opportunity, at the Company’s expense, to handle and
defend the same before such person undertakes to handle and defend it on such
person’s own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such person or persons
may be entitled under the Company’s articles of incorporation or bylaws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.

 

ARTICLE IV

 

SHARES SUBJECT TO PLAN

 

4.1 Number of Shares. As originally adopted in 2004, the Plan provided for the
reservation and authorization of 2,500,000 shares of Common Stock. Subject to
the adjustment under Section 4.6, as of October 28, 2010, an additional
4,250,000 shares of Common Stock were reserved and became available for
distribution pursuant to Awards under the Plan.  Such shares may consist, in
whole or in part, of authorized and unissued shares or shares acquired from a
third party.  Notwithstanding the foregoing, no more than 3,465,701 shares of
Common Stock may be the subject of Awards other than Options and Stock
Appreciation Rights that are granted on or after the Restatement Effective Date.

 

4.2 Release of Shares. The Committee shall have full authority to determine the
number of shares of Common Stock available for Awards, which shall include
(without limitation) as available for distribution any shares of Common Stock
that have ceased to be subject to an Award; any shares of Common Stock subject
to any Award that have been previously forfeited; any shares under an Award that
otherwise terminates without issuance of Common Stock being made to a
Participant. Notwithstanding the foregoing, the following shares of Common Stock
shall not again become available for Awards or increase the number of shares
available for grant under the Plan:  (i) shares tendered by the Participant or
withheld by the Company in payment of the purchase price of an Option issued
under the Plan, (ii) shares tendered by the Participant or withheld by the
Company to satisfy any tax withholding obligation with respect to an Award,
(iii) shares repurchased by the Company with proceeds received from the exercise
of an Option issued under the Plan, and (iv) shares subject to a Stock
Appreciation Right issued under this Plan that are not issued in connection with
the stock settlement of that Stock Appreciation Right upon its exercise.  Any
shares that are available immediately prior to the termination of the Plan, or
any shares of Common Stock returned to the Company for any reason subsequent to
the termination of the Plan, may be transferred to a successor plan.

 

4.3 Substitute Awards. Substitute awards granted pursuant to Section 12.11 of
the Plan shall not be charged against the maximum number of shares set forth
above. Additionally, in the event that a company acquired by the Company

 

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or an Affiliate or which the Company or any Affiliate combines has shares
available under a pre-existing plan approved by shareholders and not adopted in
contemplation of such acquisition or combination, the shares available for grant
pursuant to the terms of such pre-existing plan (as adjusted, to the extent
appropriate, using the exchange ratio or other adjustment or valuation ratio or
formula used in such acquisition or combination to determine the consideration
payable to the holders of common stock of the entities party to such acquisition
or combination) may be used for Awards under the Plan and shall not be charged
against the foregoing maximum share limitations; provided that Awards using such
available shares shall not be made after the date awards or grants could have
been made under the terms of the pre-existing plan, absent the acquisition or
combination, and shall only be made to individuals who were not employees of the
Company or an Affiliate prior to such acquisition or combination.

 

4.4 Restrictions on Awards. Common Stock issued upon exercise of an Award shall
be subject to the terms and conditions specified herein and to such other terms,
conditions and restrictions as the Committee in its discretion may determine or
provide in the Award Agreement. The Company shall not be required to issue or
deliver any certificates for Common Stock, cash or other property prior to
(i) the completion of any registration or qualification of such shares under
federal, state or other law, or any ruling or regulation of any government body
which the Committee determines to be necessary or advisable; (ii) the
satisfaction of any applicable withholding obligation in order for the Company
or an Affiliate to obtain a deduction or discharge its legal obligation with
respect to the exercise of an Award; or (iii) where required by Code
Section 409A for payments or transfers made upon a Participant’s “separation
from service” as defined in Code Section 409A to a Participant who is a
“specified employee” under Code Section 409A, the first business day after the
expiration of the six month period following such separation from service or if
earlier, the date of Participant’s death. The Company may cause any certificate
(or other representation of title) for any shares of Common Stock to be
delivered to be properly marked with a legend or other notation reflecting the
limitations on transfer of such Common Stock as provided in this Plan or as the
Committee may otherwise require. The Committee may require any person exercising
an Award to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of the Common
Stock in compliance with applicable law or otherwise. Fractional shares shall
not be delivered, but shall be rounded to the next lower whole number of shares.

 

4.5 Shareholder Rights. No person shall have any rights of a shareholder as to
Common Stock subject to an Award until, after proper exercise of the Award or
other action required, such shares shall have been recorded on the Company’s
official shareholder records as having been issued and transferred. Upon
exercise of the Award or any portion thereof, the Company will have a reasonable
period in which to issue and transfer the shares, and the Participant will not
be treated as a shareholder for any purpose whatsoever prior to such issuance
and transfer. No adjustment shall be made for cash dividends or other rights for
which the record date is prior to the date such shares are recorded as issued
and transferred in the Company’s official shareholder records, except as
provided herein or in an Agreement.

 

4.6 Effect of Certain Changes. In the event of any equity restructuring (within
the meaning of Financial Accounting Standards Board Accounting Standards
Codification Topic 718, referred to as “ASC Topic 718”) that causes the per
share value of shares of Common Stock to change, such as a stock dividend or
stock split, the Committee shall cause there to be made an equitable adjustment
to the number and kind of shares of Common Stock or other securities issued or
reserved for issuance pursuant to the Plan, to limits on numbers of certain
types of Awards and per-Participant limitations, and to outstanding Awards
(including but not limited to the number and kind of shares of Common Stock to
which such Awards are subject, and the exercise or strike price of such Awards)
to the extent such other Awards would not otherwise automatically adjust in the
equity restructuring; provided, in each case, that with respect to Incentive
Stock Options, no such adjustment shall be authorized to the extent that such
adjustment would cause such Incentive Stock Option to violate Section 422(b) of
the Code or any successor provision; provided, further, that no such adjustment
shall be authorized under this Section to the extent that such adjustment would
cause an Award to be subject to adverse tax consequences under Section 409A of
the Code. In the event of any other change in corporate capitalization, which
may include a merger, consolidation, any reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of the
Code), or any partial or complete liquidation of the Company to the extent such
events do not constitute equity restructurings or business combinations within
the meaning of ASC Topic 718, such equitable adjustments described in the
foregoing sentence may be made as determined to be appropriate and equitable by
the Committee to prevent dilution or enlargement of rights. In either case, any
such adjustment shall be conclusive and binding for all purposes of the

 

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Plan. Unless otherwise determined by the Committee, the number of shares of
Common Stock subject to an Award shall always be a whole number.

 

ARTICLE V

 

ELIGIBILITY

 

5.1 Eligibility. Except as herein provided, the persons who shall be eligible to
participate in the Plan and be granted Awards shall be those persons who are
common law employees of the Company or any Affiliate, non-employee members of
the Board, or other individuals selected by the Committee. Of those persons
described in the preceding sentence, the Committee may, from time to time,
select persons to be granted Awards and shall determine the terms and conditions
with respect thereto. In making any such selection and in determining the form
of the Award, the Committee shall give consideration to such factors deemed
appropriate by the Committee.

 

ARTICLE VI

 

STOCK OPTIONS

 

6.1 General. The Committee shall have authority to grant Options under the Plan
at any time or from time to time. An Option shall entitle the Participant to
receive Common Stock upon exercise of such Option, subject to the Participant’s
satisfaction in full of any conditions, restrictions or limitations imposed in
accordance with the Plan or an Agreement (the terms and provisions of which may
differ from other Agreements) including, without limitation, payment of the
Exercise Price.

 

6.2 Grant. The grant of an Option shall occur as of the Grant Date determined by
the Committee. Stock Options may be granted alone or in connection with other
Awards. An Award of Options shall be evidenced by, and subject to the terms of,
an Agreement. Only a person who is a common-law employee of the Company, any
parent corporation of the Company, or a subsidiary (as such terms are defined in
Section 424 of the Code) on the date of grant shall be eligible to be granted an
Incentive Stock Option. To the extent that any Option is not designated as an
Incentive Stock Option or even if so designated does not qualify as an Incentive
Stock Option, it shall constitute a Non-Qualified Stock Option.

 

6.3 Terms and Conditions. Options shall be subject to such terms and conditions
as shall be determined by the Committee, including the following:

 

(1) Exercise Price. Except in the case of substitute awards granted pursuant to
Section 12.11 of the Plan, the Exercise Price per share shall not be less than
the Fair Market Value per share as of the Grant Date. If an Option intended to
qualify as an Incentive Stock Option is granted to an individual who owns or who
is deemed to own shares possessing more than ten percent (10%) of the combined
voting power of all classes of stock of the Company, a corporation which is a
parent corporation of the Company, or any subsidiary of the Company (each as
defined in Section 424 of the Code) (a “10% Owner”), the Exercise Price per
share shall not be less than one hundred ten percent (110%) of such Fair Market
Value per share.

 

(2) Option Period. The Option Period of each Option shall be fixed by the
Committee, provided that no Option shall be exercisable more than ten (10) years
after the date the Option is granted. In the case of an Incentive Stock Option
granted to a 10% Owner, the Option Period shall not exceed five (5) years. No
Option which is intended to be an Incentive Stock Option shall be granted more
than ten (10) years from the date the Plan is adopted by the Company or the date
the Plan is approved by the shareholders of the Company, whichever is earlier.

 

(3) Exercisability. Unless otherwise provided in an Award Agreement, Options
shall become exercisable at the rate of twenty percent (20%) of the total number
of shares as of each anniversary of the Grant Date. In

 

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addition, the Committee may at any time accelerate the exercisability of all or
part of any Option. If the Committee intends that an Option be able to qualify
as an Incentive Stock Option, the Committee may, in its discretion, provide that
the aggregate Fair Market Value (determined at the date of grant of the Option)
of the Common Stock as to which such Incentive Stock Option held by a
Participant which is exercisable for the first time during any calendar year
(including all other incentive stock options held by the Participant issued
under all plans of the Company and its Affiliates), shall not exceed $100,000.

 

(4) Method of Exercise. Subject to the provisions of this Article VI and the
Agreement, a Participant may exercise Options, in whole or in part after they
become exercisable, during the Option Period by giving written notice of
exercise on a form provided by the Committee to the Company specifying the
number of shares of Common Stock subject to the Option to be purchased or in
such other manner as is prescribed by the Committee or its delegates. Such
notice shall be accompanied by payment in full of the purchase price by cash or
certified check or such other form of payment as the Company may accept. If
permitted by the Committee, payment in full or in part may also be made by
(i) withholding Common Stock otherwise issuable to the Participant upon exercise
of the Option or by delivering Common Stock already owned by the Participant, in
each case having a total Fair Market Value on the date of exercise equal to the
Option Price; (ii) the delivery of cash by a broker-dealer as a “cashless”
exercise, provided such method of payment may not be used by a director or
executive officer of the Company to the extent it would violate the
Sarbanes-Oxley Act of 2002; or (iii) any combination of the foregoing.

 

(5) Non-transferability of Options. Except as provided under the Plan or an
Agreement, or as otherwise approved by the Committee, no Option shall be sold,
assigned, margined, transferred, encumbered, conveyed, gifted, alienated,
hypothecated, pledged, or otherwise disposed of, other than by will or by the
laws of descent and distribution, and all Options shall be exercisable during
the Participant’s lifetime only by the Participant or the Participant’s
Representative.

 

6.4 Termination by Reason of Death. Unless otherwise provided in an Agreement or
determined by the Committee, if a Participant incurs a Termination of Employment
due to death or dies within three (3) months after a termination described in
Section 6.6, any unexpired and unexercised Option held by such Participant shall
thereafter be fully exercisable for a period of one (1) year immediately
following the date of such death or until the expiration of the Option Period,
whichever period is the shorter.

 

6.5 Termination by Reason of Disability. Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to a Disability, any unexpired and unexercised Option held by
such Participant shall thereafter be fully exercisable by the Participant for a
period of one (1) year immediately following the date of such Disability or
until the expiration of the Option Period, whichever period is the shorter, and
the Participant’s death at any time following such Termination of Employment due
to Disability shall not affect the foregoing.

 

6.6 Termination for Cause. If the Participant incurs a Termination of Employment
for Cause, the Option shall terminate immediately.

 

6.7 Other Termination. Unless otherwise provided in an Agreement or determined
by the Committee, if a Participant incurs a Termination of Employment that is
involuntary on the part of the Participant (but is not due to death, Disability
or termination for Cause) or is voluntary on the part of the Participant, any
Option held by such Participant shall thereupon terminate, except that such
Option, to the extent then exercisable, may be exercised for the lesser of the
ninety (90) consecutive day period commencing with the date of such Termination
of Employment or until the expiration of the Option Period whichever period is
the shorter. Unless otherwise provided in an Agreement, the death or Disability
of a Participant after a Termination of Employment otherwise provided herein
shall not extend the time permitted to exercise an Option.

 

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ARTICLE VII

 

STOCK APPRECIATION RIGHTS

 

7.1 General. The Committee shall have authority to grant Stock Appreciation
Rights under the Plan at any time or from time to time. Stock Appreciation
Rights may be awarded either alone or in addition to other Awards granted under
the Plan. Subject to the Participant’s satisfaction in full of any conditions,
restrictions or limitations imposed in accordance with the Plan or an Agreement,
a Stock Appreciation Right shall entitle the Participant to surrender to the
Company the Stock Appreciation Right and to be paid therefore in Common Stock
the amount described in Section 7.3(2).

 

7.2 Grant. The grant of a Stock Appreciation Right shall occur as of the Grant
Date determined by the Committee. Except in the case of substitute awards
granted pursuant to Section 12.11 of the Plan, in no event shall the Exercise
Price per share be less than the Fair Market Value per share as of the Grant
Date. A Stock Appreciation Right entitles a Participant to receive Common Stock
as determined by the Committee and set forth in the Award Agreement in
accordance with Section 7.3(2). An Award of Stock Appreciation Rights shall be
evidenced by, and subject to the terms of an Agreement, which shall become
effective upon execution by the Participant.

 

7.3 Terms and Conditions. Stock Appreciation Rights shall be subject to such
terms and conditions as shall be determined by the Committee, including the
following:

 

(1) Period and Exercise. The term of a Stock Appreciation Right shall be
established by the Committee. A Stock Appreciation Right shall be for such
period and shall be exercisable at such times and to the extent provided in the
Agreement. Subject to Section 10.1 and the terms set by the Committee, Stock
Appreciation Rights shall be exercisable at the rate of twenty percent (20%) of
the shares subject to the Award as of each anniversary of the Grant Date. In
addition, the Committee may at any time accelerate the exercisability of all or
part of any Stock Appreciation Right. Stock Appreciation Rights shall be
exercised by the Participant’s giving written notice of exercise on a form
provided by the Committee (if available) to the Company specifying the portion
of the Stock Appreciation Right to be exercised or in such other manner as is
prescribed by the Committee or its delegates.

 

(2) Amount. Upon the exercise of a Stock Appreciation Right, a Participant shall
be entitled to receive an amount in cash or Common Stock equal in value to the
excess of the Fair Market Value per share of Common Stock as of the date of
exercise over the Exercise Price per share of Common Stock specified in the
related Agreement, multiplied by the number of shares in respect of which the
Stock Appreciation Right is exercised. For purposes of determining the number of
shares of Common Stock to be delivered upon exercise of a Stock Appreciation
Right to be paid in stock, the amount the Participant is entitled to receive in
accordance with the foregoing sentence shall be divided by the Fair Market Value
per share of Common Stock as of the date of exercise of such Stock Appreciation
Right.

 

(3) Non-transferability of Stock Appreciation Rights. Except as provided in the
Plan or in an Agreement, no Stock Appreciation Rights shall be sold, assigned,
margined, transferred, encumbered, conveyed, gifted, alienated, hypothecated,
pledged or otherwise disposed of, other than by will or the laws of descent and
distribution, and all Stock Appreciation Rights shall be exercisable during the
Participant’s lifetime only by the Participant or the Participant’s
Representative.

 

(4) Termination. A Stock Appreciation Right shall be forfeited or terminated at
such time as an Option would be forfeited or terminated under the Plan, unless
otherwise provided in an Agreement.

 

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ARTICLE VIII

 

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

 

8.1 General. The Committee shall have authority to grant Restricted Stock and/or
Restricted Stock Units under the Plan at any time or from time to time. The
Committee shall determine the number of shares of Restricted Stock and/or the
number of Restricted Stock Units to be awarded to any Participant, the time or
times within which such Awards may be subject to forfeiture, and any other terms
and conditions of the Awards. Each Award shall be confirmed by, and be subject
to the terms of, an Agreement which shall become effective upon execution by the
Participant.

 

8.2 Grant, Awards and Certificates. An Award of Restricted Stock or of
Restricted Stock Units shall occur as of the Grant Date determined by the
Committee and as provided in an Agreement. Restricted Stock and Restricted Stock
Units may be awarded either alone or in addition to other Awards granted under
the Plan. Notwithstanding the limitations on issuance of Common Stock otherwise
provided in the Plan, each Participant receiving an Award of Restricted Stock
shall be issued a certificate (or other representation of title) in respect of
such Restricted Stock. Such certificate shall be registered in the name of such
Participant and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award as determined by the
Committee. The Committee may require that the certificates evidencing such
shares be held in custody by the Company until the restrictions thereon shall
have lapsed and that, as a condition of any Award of Restricted Stock, the
Participant shall have delivered a share power, endorsed in blank, relating to
the Common Stock covered by such Award.

 

8.3 Terms and Conditions. Restricted Stock and Restricted Stock Units shall be
subject to such terms and conditions as shall be determined by the Committee,
including the following:

 

(1) Limitations on Transferability. The issue prices for Restricted Stock and
Restricted Stock Units shall be set by the Committee and may be zero. Subject to
the provisions of the Plan and the Agreement, during a period set by the
Committee (and, in the case of Restricted Stock Units, until the date of
delivery of Common Stock), commencing with the date of such Award (the
“Restriction Period”), the Participant shall not be permitted to sell, assign,
margin, transfer, encumber, convey, gift, alienate, hypothecate, pledge or
otherwise dispose of Restricted Stock or Restricted Stock Units.

 

(2) Rights. Except as provided in Section 8.3(1), the Participant shall have,
with respect to the Restricted Stock, all of the rights of a shareholder of the
Company holding the class of Common Stock that is the subject of the Restricted
Stock, including, if applicable, the right to vote the shares and the right to
receive any cash dividends, except as limited by this Section 8.3(2). A
Participant shall have no voting rights with respect to any Restricted Stock
Units granted hereunder but shall, to the extent provided in an Agreement, have
the right to receive (with respect to such Restricted Stock Units) cash payments
or dividend equivalent amounts (as provided in the Participant’s Restricted
Stock Unit Agreement) equal in value to, and payable at the same time as, the
cash dividends payable on a like number shares of Common Stock. Unless otherwise
determined by the Committee, cash dividends on a Restricted Stock Award shall
not be distributed prior to vesting of the Restricted Stock Award, but shall
instead be accumulated and distributed as additional shares of Common Stock
after vesting of the Restricted Stock Award, provided that payment shall be made
no more than two and a half months after the end of the calendar year in which
the Restricted Stock Award vests.

 

(3) Criteria. Based on service, performance by the Participant or by the Company
or the Affiliate, including any division or department for which the Participant
is employed, or such other factors or criteria as the Committee may determine,
the Committee may provide for the lapse of restrictions in installments and may
accelerate the vesting of all or any part of any Award of Restricted Stock and
waive the restrictions for all or any part of such Award of Restricted Stock.

 

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(4) Forfeiture. Unless otherwise provided in an Agreement or determined by the
Committee, if the Participant incurs a Termination of Employment due to death or
Disability during the Restriction Period, the restrictions shall lapse and the
Participant shall be fully vested in the Restricted Stock or Restricted Stock
Units. Except to the extent otherwise provided in the applicable Agreement and
the Plan, upon a Participant’s Termination of Employment for any reason during
the Restriction Period other than a Termination of Employment due to death or
Disability, all shares of Restricted Stock and Restricted Stock Units still
subject to restriction shall be forfeited by the Participant, except the
Committee shall have the discretion to waive in whole or in part any or all
remaining restrictions with respect to any or all of such Participant’s
Restricted Stock and Restricted Stock Units.

 

(5) Delivery. If a share certificate is issued in respect of Restricted Stock,
the certificate shall be registered in the name of the Participant but shall be
held by the Company for the account of the Participant until the end of the
Restricted Period. If and when the Restriction Period expires without a prior
forfeiture of Restricted Stock or Restricted Stock Units subject to such
Restriction Period, unlegended certificates (or other representation of title)
for Common Stock shall be delivered to the Participant at the time and subject
to the conditions provided in the Agreement governing such Award.

 

(6) Election. If so provided in the applicable Award Agreement, a Participant
may elect to further defer receipt of the Restricted Stock or payment of Common
Stock with respect to Restricted Stock Units for a specified period or until a
specified event, subject to the Committee’s approval and to such terms as are
determined by the Committee. Subject to any exceptions adopted by the Committee,
such election must be made in compliance with the terms and conditions of
Section 409A of the Code.

 

ARTICLE IX

 

PERFORMANCE UNITS

 

9.1 General. The Committee shall have authority to grant Performance Units under
the Plan at any time or from time to time. A Performance Unit (“Performance
Unit”) consists of the right to receive cash or Common Stock upon achievement of
certain goals relating to performance (“Performance Goals”) and may be awarded
either alone or in addition to other Awards granted under the Plan. The
Committee shall have complete discretion to determine the number of Performance
Units granted to each Participant. Each Performance Unit Award shall be
evidenced by, and be subject to the terms of, an Agreement which will become
effective upon execution by the Participant. The time period during which a
Performance Unit Award shall be earned shall be the “Performance Period,” and
shall be at least one (1) fiscal year in length. Performance Units may be
subject to Performance Goals which shall be established by the Committee.

 

9.2 Earning Performance Unit Awards. After the applicable Performance Period
shall have ended, the Committee shall determine the extent to which the
established Performance Goals have been achieved.

 

9.3 Termination of Employment Due to Death or Disability. In the event of a
Termination of Employment due to death or Disability during a Performance
Period, the Participant shall receive a pro rata share (based on the portion of
the Performance Period during which the Participant was providing services to
the Company or an Affiliate) of the Award (as determined following the
completion of the Performance Period) earned with respect to the Participant’s
Performance Units relating to such Performance Period. Unless otherwise
determined by the Committee, in the event that a Participant’s employment
terminates for any other reason, all Performance Units shall be forfeited by the
Participant to the Company. Distribution of earned Performance Units on account
of Termination of Employment due to death or Disability shall be made at the
same time payments are made to Participants who did not incur a Termination of
Employment during the applicable Performance Period

 

9.4 Nontransferability. Unless otherwise provided in an Agreement, Performance
Units may not be sold, assigned, margined, transferred, encumbered, conveyed,
gifted, alienated, hypothecated, pledged, or otherwise disposed of, other than
by will or by the laws of descent and distribution.

 

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9.5 Election to Defer. If so provided in an Award Agreement, a Participant may
elect to defer receipt of the cash Award with respect to Performance Units for a
specified period or until a specified event, subject to the Committee’s
approval, on such terms as are determined by the Committee, and subject to
compliance with Section 409A of the Code.

 

9.6 Payment. Payment with respect to Performance Units shall be made in
accordance with the related Agreement. In no event, however, shall any payment
with respect to a Performance Unit be made after the fifteenth day of the third
month after the last day of the applicable Performance Period.

 

ARTICLE X

 

CHANGE IN CONTROL PROVISIONS

 

10.1 Impact of Event. Notwithstanding any other provision of the Plan to the
contrary and unless otherwise provided in an Agreement, in the event of a Change
in Control:

 

(1) Any Stock Options and Stock Appreciation Rights outstanding as of the date
of such Change in Control and not then exercisable shall become fully
exercisable to the full extent of the original grant;

 

(2) The restrictions applicable to any Restricted Stock and Restricted Stock
Unit Awards shall lapse. Such Restricted Stock shall become free of all
restrictions and become fully vested and transferable to the full extent of the
original grant, and such Restricted Stock Units shall become free of all
restrictions, fully vested, and payable in shares of Common Stock; and

 

(3) Any Performance Goal or other condition with respect to any Performance
Units shall be deemed to have been satisfied in full, and such Award shall be
fully distributable.

 

10.2 Additional Discretion. In the event of a Change in Control, the Committee
shall make a proportional adjustment of the terms of Awards granted hereunder in
whatever manner as the Committee deems appropriate to equitably reflect the
change (if any) in the value of the Common Stock due to the Change in Control.
Notwithstanding anything herein or in an Agreement to the contrary, upon a
Change in Control, the Committee shall have full discretion with respect to an
outstanding Award to provide that the securities of another entity be
substituted hereunder for the Common Stock and to make equitable adjustment with
respect thereto.

 

10.3 Fundamental Change. In the event of a proposed (i) dissolution or
liquidation of the Company, (ii) a sale of substantially all of the assets of
the Company, (iii) a merger or consolidation of the Company with or into any
other corporation, regardless of whether the Company is the surviving
corporation, or (iv) a statutory share exchange involving the capital stock of
the Company (each, a “Fundamental Change”), the Committee may, but shall not be
obligated to:

 

(1) with respect to a Fundamental Change that involves a merger, consolidation
or statutory share exchange, make appropriate provision for the protection of
each outstanding Stock Options and Stock Appreciation Rights by the substitution
of options, stock appreciation rights and appropriate voting common stock of the
corporation surviving any such merger or consolidation or, if appropriate, the
“parent corporation” (as defined in Section 424(e) of the Code from time to
time, and any regulations promulgated thereunder, or any successor provision) of
the Company or such surviving corporation, in lieu of the Stock Options, Stock
Appreciation Rights and shares of Regis Stock, or

 

(2) with respect to any Fundamental Change, including, without limitation, a
merger, consolidation or statutory share exchange, declare, prior to the
occurrence of the Fundamental Change, and provide written notice to each holder
of a Stock Option or Stock Appreciation Right of the declaration, that the Stock
Option or Stock Appreciation Right, whether or not then exercisable, shall be
canceled at the time of, or immediately prior to the occurrence of, the
Fundamental Change in exchange for payment to the holder of

 

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the Stock Option or Stock Appreciation Right, within 20 days after the
Fundamental Change, of cash equal to (i) for each share of Regis Stock covered
by the canceled Stock Option, the amount, if any, by which the Fair Market Value
(as defined in this Section) per share exceeds the Exercise Price per share
covered by such Stock Option and (ii) for each Stock Appreciation Right, the
price determined pursuant to Section 7.3(2), except that Fair Market Value of
the share of Regis Stock as of the date of exercise of the Stock Appreciation
Right as used therein shall be deemed to mean the Fair Market Value of each
share of Regis Stock with respect to which the Stock Appreciation Right is
determined in the manner hereinafter referred to in this Section 10.3(2). At the
time of the declaration provided for in the immediately preceding sentence, the
Stock Option or Stock Appreciation Right shall immediately become exercisable in
full and the holder of the Stock Option or Stock Appreciation Right shall have
the right, during the period preceding the time of cancellation of the Stock
Option or Stock Appreciation Right, to exercise the Stock Option or Stock
Appreciation Right as to all or any part of the shares of Regis Stock covered
thereby or the Stock Appreciation Right in whole or in part, as the case may be.
In the event of a declaration pursuant to this Section 10.3(2), each Stock
Option and Stock Appreciation Right, to the extent that it shall not have been
exercised prior to the Fundamental Change, shall be canceled at the time of, or
immediately prior to, the Fundamental Change, as provided in the declaration.
Notwithstanding the foregoing, each holder of a Stock Option or Stock
Appreciation Right shall not be entitled to the payment provided for in this
Section 10.3(2) if such Stock Option or Stock Appreciation Right shall have
expired or been forfeited. For purposes of this Section 10.3(2) only, “Fair
Market Value” per share of Regis Stock means cash plus the fair market value, as
determined in good faith by the Committee, of the non-cash consideration to be
received per share of Regis Stock by the shareholders of the Company upon the
occurrence of the Fundamental Change, notwithstanding anything to the contrary
provided in this Agreement.

 

ARTICLE XI

 

PROVISIONS APPLICABLE TO SHARES ACQUIRED UNDER THIS PLAN

 

11.1 No Company Obligation. Except to the extent required by applicable
securities laws, none of the Company, an Affiliate or the Committee shall have
any duty or obligation to affirmatively disclose material information to a
record or beneficial holder of Common Stock or an Award, and such holder shall
have no right to be advised of any material information regarding the Company or
any Affiliate at any time prior to, upon, or in connection with receipt,
exercise or distribution of an Award. The Company makes no representation or
warranty as to the future value of the Common Stock issued or acquired in
accordance with the provisions of the Plan.

 

ARTICLE XII

 

MISCELLANEOUS

 

12.1 Amendments and Termination; No Repricing. Upon shareholder approval of the
amendment to extend the term of the Plan at the 2013 annual meeting of
shareholders, the Plan shall terminate on May 26, 2024, and the Board may amend,
alter, or discontinue the Plan at any time, but no termination, amendment,
alteration or discontinuation shall be made which would materially impair the
rights of a Participant under an Award theretofore granted without the
Participant’s consent, except such an amendment (a) made to cause the Plan to
comply with applicable law, including without limitation an amendment to bring
the Award into compliance with, or obtain an exemption from, the requirements of
Code Section 409A; or (b) made to permit the Company or an Affiliate a tax
deduction under applicable law. The Committee may amend, alter or discontinue
the terms of any Award theretofore granted, prospectively or retroactively, on
the same conditions and limitations (and exceptions to limitations) as apply to
the Board, and further subject to any approval or limitations the Board may
impose. Notwithstanding the foregoing, any material amendments (as determined
under the rules of the New York Stock Exchange, as amended from time to time or
otherwise required by law) to the Plan shall require shareholder approval. In no
event may the Exercise Price per share of Common Stock covered by an Option, or
the Exercise Price of a Stock Appreciation Right, be reduced, or may an Option
or Stock Appreciation Right otherwise be subject to any action that would be
treated under the accounting rules or otherwise as a “repricing,” unless such
action is approved by the Company’s shareholders.

 

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12.2 Unfunded Status of Plan. It is intended that the Plan be an “unfunded” plan
for incentive compensation. The Committee may authorize the creation of trusts
or other arrangements to meet the obligations created under the Plan to deliver
Common Stock or make payments; provided, however, that, unless the Committee
otherwise determines, the existence of such trusts or other arrangements is
consistent with the “unfunded” status of the Plan.

 

12.3 Provisions Relating to Internal Revenue Code Section 162(m). It is the
intent of the Company that certain Awards granted to persons who are Covered
Employees within the meaning of Section 162(m) of the Code shall constitute
“qualified performance-based compensation” satisfying the requirements of Code
Section 162(m) (the “Performance-Based Exception”). Accordingly, the Plan shall
be administered and the provisions of the Plan shall be interpreted in a manner
consistent with Code Section 162(m) with respect to such Awards. If any
provision of the Plan or any Agreement relating to such an Award does not comply
or is inconsistent with the requirements of Code Section 162(m), such provision
shall be construed or deemed amended to the extent necessary to conform to such
requirements. In addition, the following provisions shall apply with respect to
any Award intended to qualify for the Performance-Based Exception:

 

(1) Not later than the date required or permitted for “qualified
performance-based compensation” under Code Section 162(m), the Committee shall
determine the Participants who are Covered Employees who will receive Awards
that are intended as qualified performance-based compensation and the amount or
method for determining the amount of such compensation.

 

(2) During any three-consecutive calendar year period, the maximum number of
shares of Common Stock for which Options and Stock Appreciation Rights, in the
aggregate, may be granted to any Participant shall not exceed 800,000 shares.
For Restricted Stock and Restricted Stock Units that are intended to qualify for
the Performance-Based Exception, no more than 800,000 shares may be subject to
such Awards granted to any Participant during any three-consecutive calendar
year period. For Performance Unit Awards that are intended to qualify for the
Performance-Based Exception, no more than $2,000,000 may be subject to such
Awards granted to any Participant during any three-consecutive calendar year
period. If, after amounts have been earned with respect to Performance Unit
Awards, the payment of such amounts is deferred, any additional amounts
attributable to earnings during the deferral period shall be disregarded for
purposes of this limit.

 

(3) Performance Goals. Awards may be subject to Performance Goals (as defined in
Section 9.1) which shall be measured in a specific Performance Period (as
defined in Section 9.1) established by the Committee which shall be based on any
of the following performance criteria, either alone or in any combination, and
on either a consolidated or business unit level, and on an absolute or relative
basis compared to other companies or indexes, as the Committee may determine:
earnings per share (“EPS”), sales; cash flow; cash flow from operations;
operating profit or income; net income; operating margin; net income margin;
return on net assets; economic value added; return on total assets; return on
common equity; return on total capital; total shareholder return; revenue;
revenue growth; earnings before interest, taxes, depreciation and amortization
(“EBITDA”); EBITDA growth; funds from operations per share and per share growth;
cash available for distribution; cash available for distribution per share and
per share growth; share price performance or improvements in the Company’s
attainment of expense levels; and implementing or completion of critical
projects. In addition, Awards not intended to qualify for the Performance-Based
Exception may be based on such other performance criteria as the Committee may
determine. The foregoing criteria shall have any reasonable definitions that the
Committee may specify, which may include or exclude any or all of the following
items as the Committee may specify: extraordinary, unusual or non-recurring
items, as defined by GAAP; effects of accounting changes; effects of financing
activities (e.g., effect on earnings per share of issuance of convertible debt
securities); expenses for restructuring or productivity initiatives; other
non-operating items; spending for acquisitions; effects of divestitures; and
effects of litigation activities and settlements. Any such performance criterion
or combination of such criteria may apply to the Participant’s Award opportunity
in its entirety or to any designated portion or portions of the Award
opportunity, as the Committee may specify. Unless the Committee determines
otherwise for any Performance Period, extraordinary items, such as capital gains
and losses, which affect any performance criterion applicable to the Award
(including but not limited to the criterion of net income) shall be excluded or
included in determining on the extent to which the

 

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corresponding performance goal has been achieved, whichever will produce the
higher Award. In the event applicable tax or other laws change to permit the
Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval. The
Committee has the right to adjust downward, but not upward, any amount
determined to be otherwise payable in connection with such an Award.

 

(4) Earning Performance Awards. After the applicable Performance Period shall
have ended, the Committee shall certify the extent to which the established
Performance Goals have been achieved. Payment with respect to Awards for Covered
Employees that are intended to qualify for the Performance-Based Exception shall
be a direct function of the extent to which the Company’s Performance Goals have
been achieved. An Award intended to qualify for the Performance-Based Exception
shall (unless the Committee determines otherwise) provide that in the event of
the Participant’s Termination of Employment prior to the end of the Performance
Period for any reason other than death or Disability, such Award will be payable
only (a) if the applicable Performance Goals are achieved and (b) to the extent,
if any, as the Committee shall determine.

 

(5) Other Section 162(m) Provisions. In the manner required by Section 162(m) of
the Code, the Committee shall, promptly after the date on which the necessary
financial and other information for a particular Performance Period becomes
available, certify the extent to which Performance Goals have been achieved with
respect to any Award intended to qualify for the Performance-Based Exception.
The Committee may not increase the amount of any Performance Unit Award payable
to any Participant above the amount established in accordance with the relevant
Performance Goals with respect to any Award intended to qualify for the
Performance-Based Exception.

 

12.4 No Additional Obligation. Nothing contained in the Plan shall prevent the
Company or an Affiliate from adopting other or additional compensation or
benefit arrangements for its employees.

 

12.5 Withholding. No later than the date as of which an amount first becomes
includible in the gross income of the Participant for federal income tax
purposes with respect to any Award, the Participant shall pay to the Company (or
other entity identified by the Committee), or make arrangements satisfactory to
the Company or other entity identified by the Committee regarding the payment
of, any federal, state, or local taxes of any kind required by law to be
withheld with respect to such income. Unless otherwise determined by the
Committee, withholding obligations may be settled with Common Stock, including
shares of Common Stock that are part of the Award that give rise to the
withholding requirement. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and its Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the Participant. Subject to approval by the
Committee, a Participant may elect to have such tax withholding obligation
satisfied, in whole or in part, by (i) authorizing the Company to withhold from
shares of Common Stock to be issued pursuant to any Award a number of shares
with an aggregate Fair Market Value (as of the date the withholding is effected)
that would satisfy the required statutory minimum (but no more than such
required minimum) with respect to the Company’s withholding obligation, or
(ii) transferring to the Company shares of Common Stock owned by the Participant
with an aggregate Fair Market Value (as of the date the withholding is effected)
that would satisfy the required statutory minimum (but no more than such
required minimum) with respect to the Company’s withholding obligation.

 

12.6 Controlling Law. The Plan and all Awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of Minnesota
(other than its law respecting choice of law). The Plan shall be construed to
comply with all applicable law and to avoid liability to the Company, an
Affiliate or a Participant. The Board and the Committee shall administer the
Plan, and shall exercise all authority and discretion under the Plan to satisfy
the requirements of Code Section 409A.

 

12.7 Offset. Any amounts owed to the Company or an Affiliate by the Participant
of whatever nature may be offset by the Company from the value of any Award to
be transferred to the Participant.

 

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12.8 Nontransferability; Beneficiaries. No Award shall be assignable or
transferable by the Participant, otherwise than by will or the laws of descent
and distribution or pursuant to a beneficiary designation, and Awards shall be
exercisable during the Participant’s lifetime only by the Participant (or by the
Participant’s legal representatives in the event of the Participant’s
incapacity). Each Participant may designate a Beneficiary to exercise any Option
or Stock Appreciation Right or receive any Award held by the Participant at the
time of the Participant’s death or to be assigned any other Award outstanding at
the time of the Participant’s death. If a deceased Participant has named no
Beneficiary, any Award held by the Participant at the time of death shall be
transferred as provided in his or her will or by the laws of descent and
distribution. Except in the case of the holder’s incapacity, only the holder may
exercise an Option or Stock Appreciation Right. Notwithstanding the foregoing,
the Board or the Committee may, in its discretion and subject to such
limitations and conditions as the Board or the Committee deems appropriate,
permit the transfer of an Award by a Participant without consideration to a
Participant’s children, stepchildren, grandchildren, parents, stepparents,
grandparents, spouse (including an ex-spouse incident to divorce), siblings,
in-laws, or persons related by reason of legal adoption (collectively, the
“Family Members”), or to a trust for the exclusive benefit of the Grantee’s
Family Members or a partnership, corporation or limited liability the equity
interests of which are owned by the Grantee and/or the Grantee’s Family Members.

 

12.9 Gross-Up for Excise Tax. If all or any portion of the payments and benefits
(including any acceleration of vesting) provided under this Plan, either alone
or together with other payments and benefits which a Participant receives or is
then entitled to receive from the Company or an Affiliate, would constitute a
“parachute payment” within the meaning of Section 280G of the Code, the Company
shall pay to the Participant, within ten (10) business days of the determination
that the payment would constitute a parachute payment, a tax “gross-up” payment
to the extent necessary so that the net after-tax benefit to the Participant
shall be equal to the net after-tax benefit if the excise tax associated with
the “parachute payment” were not imposed. The “net after-tax benefit” for these
purposes shall mean the sum of (i) the total amount payable to the Participant
under the Plan that would constitute a “parachute payment”, plus (ii) all other
payments and benefits which the Participant receives or is then entitled to
receive from the Company or any Affiliate that would constitute a “parachute
payment” within the meaning of Section 280G of the Code, less (iii) the amount
of federal income taxes payable with respect to the foregoing calculated at the
maximum marginal income tax rate for each year in which the foregoing shall be
paid to the Participant (based upon the rate in effect for such year as set
forth in the Code at the time of the payment), less (iv) the amount of excise
taxes imposed with respect to the payments and benefits described in (i) and
(ii) above by Section 4999 of the Code. The determination on whether or not all
or any portion of the payments and benefits provided to the Participant would
constitute parachute payments shall be made by a national certified public
accounting firm selected by the Company, and such determination shall be
conclusive and binding on the Participant.  The provisions of this Section 12.9
shall not be effective as to any Participants who first receive Awards under the
Plan on or after the Restatement Effective Date.

 

12.10 No Rights with Respect to Continuance of Employment. Nothing contained
herein shall be deemed to alter the relationship between the Company or an
Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship. Nothing contained herein shall be construed to
constitute a contract of employment between the Company or an Affiliate and a
Participant. The Company or an Affiliate and each of the Participants continue
to have the right to terminate the employment or service relationship at any
time for any reason, except as provided in a written contract. The Company or an
Affiliate shall have no obligation to retain the Participant in its employ or
service as a result of this Plan. There shall be no inference as to the length
of employment or service hereby, and the Company or an Affiliate reserves the
same rights to terminate the Participant’s employment or service as existed
prior to the individual becoming a Participant in this Plan.

 

12.11 Awards in Substitution for Awards Granted by Other Corporations. Awards
may be granted under the Plan from time to time in substitution for awards held
by employees, directors or service providers of other corporations who are about
to become officers, directors or employees of the Company or an Affiliate as the
result of a merger or consolidation of the employing corporation with the
Company or an Affiliate, or the acquisition by the Company or an Affiliate of
the assets of the employing corporation, or the acquisition by the Company or
Affiliate of the share of the employing corporation, as the result of which it
becomes a designated employer under the Plan. The terms and conditions of the
Awards so granted may vary from the terms and conditions set forth in this Plan
at the time of such

 

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grant as the majority of the members of the Committee may deem appropriate to
conform, in whole or in part, to the provisions of the awards in substitution
for which they are granted.

 

12.12 Foreign Alternatives. Notwithstanding the other provisions of the Plan, in
the case of any Award to any Participant who is an employee of a foreign
subsidiary or foreign branch of the Company or held by a Participant who is in
any other category specified by the Committee, the Committee may specify that
such Award shall not be represented by Common Stock or other securities but
shall be represented by rights approximately equivalent (as determined by the
Committee) to the rights that such Participant would have received if shares of
Common Stock or other securities had been issued in the name of such Participant
otherwise in accordance with the Plan (such rights being hereinafter called
“Share Equivalents”). The Share Equivalents representing any such Award may
subsequently, at the option of the Committee, be converted into cash or an
equivalent number of shares of Common Stock or other securities under such
circumstances and in such manner as the Committee may determine.

 

12.13 Delivery of Stock Certificates. To the extent the Company uses
certificates to represent shares of Common Stock, certificates to be delivered
to Participants under this Plan shall be deemed delivered for all purposes when
the Company or a stock transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the Participant, at the
Participant’s last known address on file with the Company. Any reference in this
Section 12.13 or elsewhere in the Plan or an Agreement to actual stock
certificates and/or the delivery of actual stock certificates shall be deemed
satisfied by the electronic record-keeping and electronic delivery of shares of
Common Stock or other mechanism then utilized by the Company and its agents for
reflecting ownership of such shares.

 

12.14 Headings. The headings contained in this Plan are for reference purposes
only and shall not affect the meaning or interpretation of this Plan.

 

12.15 Severability. If any provision of this Plan shall for any reason be held
to be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision hereby, and this Plan shall be construed as if such
invalid or unenforceable provision were omitted.

 

12.16 Successors and Assigns. This Plan shall inure to the benefit of and be
binding upon each successor and assign of the Company. All obligations imposed
upon a Participant, and all rights granted to the Company hereunder, shall be
binding upon the Participant’s heirs, legal representatives and successors.

 

12.17 Entire Agreement. This Plan and each Agreement constitute the entire
agreement with respect to the subject matter hereof and thereof, provided that
in the event of any inconsistency between the Plan and each Agreement, the terms
and conditions of this Plan shall control.

 

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