Exhibit 10.2
EURONET WORLDWIDE, INC.
2006 STOCK INCENTIVE PLAN
(Amended and Restated)
Approved by the Company’s stockholders on
May 18, 2006

i

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

 

EURONET WORLDWIDE, INC.
2006 STOCK INCENTIVE PLAN
(Amended and Restated)
I. INTRODUCTION

1.01   Establishment. Euronet Worldwide, Inc., a corporation organized and
existing under the laws of the state of Delaware (the “Company”), hereby
establishes the Euronet Worldwide, Inc. 2006 Stock Incentive Plan (the “Plan”)
for certain current or prospective directors, officers, key employees or outside
consultants of the Company and its affiliates.   1.02   Purpose. The purpose of
this Plan is to encourage Participants to acquire a proprietary and vested
interest in the growth and performance of the Company. The Plan is also designed
to assist the Company in attracting and retaining employees, non-employee
directors and other Participants by providing them with the opportunity to
participate in the success and profitability of the Company.   1.03   Duration.
The Plan shall commence on the Effective Date and shall remain in effect,
subject to the right of the Board to amend or terminate the Plan at any time
pursuant to Section 15 hereof, until all Shares subject to it shall have been
issued, purchased or acquired according to the Plan’s provisions. Unless the
Plan shall be reapproved by the stockholders of the Company and the Board renews
the continuation of the Plan, no Awards shall be issued pursuant to the Plan
after the tenth (10th) anniversary of the Plan’s Effective Date.

II. DEFINITIONS

2.01   The following terms shall have the meanings set forth below.

  (a)   “1933 Act” means the Securities Act of 1933, as amended. Reference to a
specific section of the 1933 Act or regulation thereunder shall include such
section or regulation, any valid regulation promulgated under such section, and
any comparable provision of any future legislation or regulation amending,
supplementing, or superseding such section or regulation.     (b)   “1934 Act”
means the Securities Exchange Act of 1934, as amended. Reference to a specific
section of the 1934 Act or regulation thereunder shall include such section or
regulation, any valid regulation promulgated under such section, and any
comparable provision of any future legislation or regulation amending,
supplementing, or superseding such section or regulation.     (c)   “Affiliate”
of the Company means any person, corporation, partnership, association or other
business or professional entity that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by, or is under common Control with
the Company.

 

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

 

  (d)   “Award” means a grant made under this Plan in any form which may include
but is not limited to Stock Options, Restricted Stock, Restricted Stock Units,
Performance Shares, Bonus Shares, Stock Appreciation Rights and Performance
Units.     (e)   “Award Agreement” means a written agreement or instrument
between the Company and a Holder evidencing an Award.     (f)   “Beneficiary”
means the person, persons, trust or trusts which have been designated by a
Holder in his or her most recent written beneficiary designation filed with the
Company to receive the benefits specified under this Plan upon the death of the
Holder, or, if there is no designated Beneficiary or surviving designated
Beneficiary, then the person, persons, trust or trusts entitled by will or the
laws of descent and distribution to receive such benefits.     (g)   “Board”
means the Board of Directors of the Company.     (h)   “Bonus Shares” means the
Shares granted to a Participant in accordance with Section 10.     (i)   “Cause”
means, unless otherwise defined in an Award Agreement,

  (i)   Participant’s conviction of, plea of guilty to, or plea of nolo
contendere to a felony or other crime that involves fraud or dishonesty,    
(ii)   any willful action or omission by a Participant which would constitute
grounds for immediate dismissal under the employment policies of the Company by
which Participant is employed, including but not limited to intoxication with
alcohol or illegal drugs while on the premises of the Company, or violation of
sexual harassment laws or the internal sexual harassment policy of the Company
by which Participant is employed,     (iii)   Participant’s habitual neglect of
duties, including but not limited to repeated absences from work without
reasonable excuse, or     (iv)   Participant’s willful and intentional material
misconduct in the performance of his duties that results in financial detriment
to the Company;

      provided, however, that for purposes of clauses (ii), (iii) and (iv),
Cause shall not include any one or more of the following: bad judgment,
negligence or any act or omission believed by the Participant in good faith to
have been in or not opposed to the interest of the Company (without intent of
the Participant to gain, directly or indirectly, a profit to which the
Participant was not legally entitled). A Participant who agrees to resign from
his affiliation with the Company in lieu of being terminated for Cause may be
deemed to have been terminated for Cause for purposes of this Plan.

2

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

 

  (j)   “Change in Control” means the first to occur of the following events:

  (i)   Any Person is or becomes the Beneficial Owner (within the meaning set
forth in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities
of the Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its Affiliates)
representing 50% or more of the combined voting power of the Company’s then
outstanding securities, excluding any Person who becomes such a Beneficial Owner
in connection with a transaction described in clause (x) of paragraph (iii) of
this Section 2.01(j); or     (ii)   The following individuals cease for any
reason to constitute a majority of the number of directors then serving:
individuals who, on the Effective Date, constitute the Board 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 by a vote of at least two-thirds of
the directors then still in office who either were directors on the date hereof
or whose appointment, election or nomination for election was previously so
approved or recommended; or     (iii)   There is consummated a merger or
consolidation of the Company with any other corporation, 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), in combination with
the ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company at least 50% 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 (not including in the
securities beneficially owned by such Person any securities acquired directly
from the Company or its Affiliates other than in connection with the acquisition
by the Company or its Affiliates of a business) representing 50% or more 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

3

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

 

      or substantially all of the Company’s assets to an entity, at least 50% of
the combined voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.

      Notwithstanding the foregoing, a “Change in Control” shall not be deemed
to have occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
Company’s common stock immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the Company’s assets
immediately following such transaction or series of transactions.     (k)  
“Code” means the Internal Revenue Code of 1986, as it may be amended from time
to time, and the rules and regulations promulgated thereunder.     (l)  
“Committee” means (i) the Board, or (ii) one or more committees of the Board to
whom the Board has delegated all or part of its authority under this Plan.    
(m)   “Company” means Euronet Worldwide, Inc., a Delaware corporation, and any
successor thereto.     (n)   “Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, by
contract or otherwise.     (o)   “Covered Employee” means an Employee that meets
the definition of “covered employee” under section 162(m)(3) of the Code, or any
successor provision thereto.     (p)   “Date of Grant” or “Grant Date” means,
with respect to any Award, the date as of which such Award is granted under the
Plan.     (q)   “Disabled” or “Disability” means an individual (i) is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than twelve
(12) months or (ii) is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months, receiving
income replacement benefits for a period of not less than 3 months under a
Company-sponsored accident and health plan. Notwithstanding the above, with
respect to an Incentive Stock Option and the period after time following a
separation from service a Holder has to exercise such Incentive Stock Option,
“disabled” shall have the same meaning as defined in Code section 22(e)(3).

4

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

 

  (r)   “Effective Date” means May 18, 2006, such date being the date this Plan
was approved by the Company’s stockholders.     (s)   “Eligible Employees” means
key employees (including, without limitations, officers and directors who are
also employees) of the Company or an Affiliate upon whose judgment, initiative
and efforts the Company is, or will be, important to the successful conduct of
its business.     (t)   “Executive Officer” means (i) the president of the
Company, any vice president of the Company in charge of a principal business
unit, division or function (such as sales, administration, or finance), any
other officer who performs a policy making function or any other person who
performs similar policy making functions for the Company and (ii) Executive
Officers (as defined in part (i) of this definition) of subsidiaries of the
Company who perform policy making functions for the Company.     (u)   “Fair
Market Value” means, as of any date, the value of the Stock determined in good
faith, from time to time, by the Committee in its sole discretion and the
Committee may adopt such formulas as in its opinion shall reflect the true fair
market value of such stock from time to time and may rely on such independent
advice with respect to such fair market value as the Committee shall deem
appropriate. In the event that the Shares of the Company are traded on a
national securities exchange, the Committee may determine that the Fair Market
Value of the Stock shall be based upon the last sale before or the first sale
after the Grant Date, the closing price on the trading day before or the trading
day of the grant, or any other reasonable basis using actual transactions in
such Stock as reported in The Wall Street Journal and consistently applied. The
determination of Fair Market Value also may be based upon an average selling
price during a specified period that is within 30 days before or 30 days after
the Grant Date, provided that the commitment to grant the stock right based on
such valuation method must be irrevocable before the beginning of the specified
period, and such valuation method must be used consistently for grants of stock
rights under the same and substantially similar programs.     (v)  
“Freestanding SAR” means any SAR that is granted independently of any Option.  
  (w)   “Good Reason” shall mean any of the following events, which has not been
either consented to in advance by the Participant in writing or cured by the
Company within a reasonable period of time not to exceed 20 days after the
Participant provides written notice thereof: (i) the requirement that the
Participant’s principal service for the Company be performed more than 30 miles
from the Participant’s primary office as of the effective date of a Change in
Control, (ii) other than as part of an across-the-board reduction affecting all
similarly-situated employees, a material reduction in the Participant’s base
compensation in effect immediately before the Change in Control; (iii) other
than as part of an across-the-board reduction affecting all similarly-situated
employees, the failure by the Company to continue to provide the Participant
with the same level of overall compensation

5

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

 

      and benefits provided immediately before the Change in Control, or the
taking of any action by the Company which would directly or indirectly reduce
any of such benefits or deprive the Participant of any material fringe benefit;
(iv) the assignment to the Participant of duties and responsibilities materially
different from those associated with his position immediately before the Change
in Control; or (v) a material diminution or reduction, on or after a Change in
Control, in the Participant’s responsibilities or authority, including reporting
responsibilities in connection with the Participant’s service with the Company.
    (x)   “Holder” means a Participant, Beneficiary or Permitted Transferee who
is in possession of an Award Agreement representing an Award that (i) in the
case of a Participant has been granted to such individual, (ii) in the case of a
Beneficiary has transferred to such person under the laws of descent and
distribution or (iii) in the case of a Permitted Transferee, has been
transferred to such person as permitted by the Committee, and such Award
Agreement has not expired, been canceled or terminated.     (y)   “Incentive
Stock Option” means any Option designated as such and granted in accordance with
the requirements of section 422 of the Code or any successor provisions thereto.
    (z)   “Nonqualified Stock Option” means any Option to purchase Shares that
is not an Incentive Stock Option.     (aa)   “Option” means a right to purchase
Stock at a stated price for a specified period of time. Such definition includes
both Nonqualified Stock Options and Incentive Stock Options.     (bb)   “Option
Agreement” or “Option Award Agreement” means a written agreement or instrument
between the Company and a Holder evidencing an Option.     (cc)   “Option
Exercise Price” means the price at which Shares subject to an Option may be
purchased, determined in accordance with Section 6.02(b).     (dd)   “Option
Holder” shall have the meaning as set forth in Section 6.02. For the avoidance
of any doubt, in situations where the Option has been transferred to a Permitted
Transferee or passed to a Beneficiary in accordance with the laws of descent and
distribution, the Option Holder will not be the same person as the Holder of the
Option.     (ee)   “Participant” means a Service Provider of the Company
designated by the Committee from time to time during the term of the Plan to
receive one or more Awards under the Plan.     (ff)   “Performance Period” means
the period of time as specified by the Committee over which Performance Units
are to be earned.

6

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

 

  (gg)   “Performance Shares” means an Award made pursuant to Section 9 which
entitles a Holder to receive Shares, their cash equivalent, or a combination
thereof based on the achievement of performance targets during a Performance
Period.     (hh)   “Performance Units” means an Award made pursuant to Section 9
which entitles a Holder to receive cash, Stock or a combination thereof based on
the achievement of performance targets during a Performance Period.     (ii)  
“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
1934 Act and used in Sections 13(d) and 14(d) thereof, including “group” as
defined in Section 13(d) thereof.     (jj)   “Plan” means the Euronet Worldwide,
Inc. 2006 Stock Incentive Plan, as set forth in this instrument and as hereafter
amended from time to time.     (kk)   “Plan Year” means each 12-month period
beginning January 1 and ending the following December 31, except that for the
first year of the Plan it shall begin on the Effective Date and extend to
December 31 of that year.     (ll)   “Restricted Stock” means Stock granted
under Section 8 that is subject those restrictions set forth therein and the
Award Agreement.     (mm)   “Restricted Stock Unit” means an Award granted under
Section 8 evidencing the Holder’s right to receive a Share (or cash payment
equal to the Fair Market Value of a Share) at some future date.     (nn)  
“Rule 16b-3” means Rule 16b-3 promulgated under the 1934 Act, and any future
regulation amending, supplementing, or superseding such regulation.     (oo)  
“SAR” or “Stock Appreciation Right” means an Award, granted either alone or in
connection with an Option, that is designated as a SAR pursuant to Section 7.  
  (pp)   “SAR Holder” shall have the meaning as set forth in Section 7.02.    
(qq)   “Section 16 Person” means a Person who is subject to obligations under
section 16 of the 1934 Act with respect to transactions involving equity
securities of the Company.     (rr)   “Service Provider” means an Eligible
Employee, non-employee director, officer, or outside consultant of the Company
or any Subsidiary, as well as to any prospective director, officer, employee, or
outside consultant of the Company or any Subsidiary.     (ss)   “Share” means a
share of Stock.     (tt)   “Stock” means authorized and issued or unissued
common stock of the Company, at such par value as may be established from time
to time.

7

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

 

  (uu)   “Subsidiary” means (i) in the case of an Incentive Stock Option a
“subsidiary corporation,” whether now or hereafter existing, as defined in
section 424(f) of the Code, and (ii) in the case of any other type of Award, in
addition to a subsidiary corporation as defined in (i), a limited liability
company, partnership or other entity in which the Company controls fifty percent
(50%) or more of the voting power or equity interests.     (vv)   “Tandem SAR”
means a SAR which is granted in connection with, or related to, an Option, and
which requires forfeiture of the right to purchase an equal number of Shares
under the related Option upon the exercise of such SAR; or alternatively, which
requires the cancellation of an equal amount of SARs upon the purchase of the
Shares subject to the Option.     (ww)   “Vested Option” means any Option, or
portion thereof, which is fully exercisable by the Holder. Vested Options remain
exercisable only for that period of time as provided for under this Plan and any
applicable Option Award Agreement. Once a Vested Option is no longer exercisable
after otherwise having been exercisable, the Option shall become null and void.

2.02   Gender and Number. Except when otherwise indicated by the context, the
masculine gender shall also include the feminine gender, and the definition of
any term herein in the singular shall also include the plural.

III. PLAN ADMINISTRATION

3.01   Composition of Committee. The Plan shall be administered by the
Committee. To the extent the Board considers it desirable for transactions
relating to Awards to be eligible to qualify for an exemption under Rule 16b-3,
the Committee shall consist of two or more directors of the Company, all of whom
qualify as “non-employee directors” within the meaning of Rule 16b-3. To the
extent the Board considers it desirable for compensation delivered pursuant to
Awards to be eligible to qualify for an exemption from the limit on tax
deductibility of compensation under section 162(m) of the Code, the Committee
shall consist of two or more directors of the Company, all of whom shall qualify
as “outside directors” within the meaning of Code section 162(m).   3.02  
Authority of Committee. Subject to the terms of the Plan and applicable law, and
in addition to other express powers and authorizations conferred on the
Committee by the Plan, the Committee shall have full power and authority to:

  (a)   select the Service Providers to whom Awards may from time to time be
granted hereunder;     (b)   determine the type or types of Awards to be granted
to eligible Service Providers;     (c)   determine the number of Shares to be
covered by, or with respect to which payments, rights, or other matters are to
be calculated in connection with, Awards;

8

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

 

  (d)   determine the terms and conditions of any Award;     (e)   determine
whether, and to what extent, and under what circumstances Awards may be settled
or exercised in cash, Shares, other securities, other Awards or other property;
    (f)   determine whether, and to what extent, and under what circumstance
Awards may be canceled, forfeited, or suspended and the method or methods by
which Awards may be settled, exercised, canceled, forfeited, or suspended;    
(g)   correct any defect, supply an omission, reconcile any inconsistency and
otherwise interpret and administer the Plan and any instrument or Award
Agreement relating to the Plan or any Award hereunder;     (h)   accelerate the
exercisability of any Option, the vesting of any Restricted Shares or otherwise
remove any restriction on any Award such that the Award becomes fully payable;  
  (i)   modify and amend the Plan, establish, amend, suspend, or waive such
rules, regulations and procedures of the Plan, and appoint such agents as it
shall deem appropriate for the proper administration of the Plan; and     (j)  
make any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.

3.03   Committee Delegation. The Committee may delegate to any member of the
Board or committee of Board members such of its powers as it deems appropriate,
including the power to sub-delegate, except that only a member of the Board (or
a committee thereof) may grant Awards from time to time to specified categories
of Service Providers in amounts and on terms to be specified by the Board;
provided that no such grants shall be made other than by the Board or the
Committee to individuals who are then Section 16 Persons or other than by the
Committee to individuals who are then or are deemed likely to become a “covered
employee” within the meaning of Code section 162(m). A majority of the members
of the Committee may determine its actions and fix the time and place of its
meetings.   3.04   Determination Under the Plan. Unless otherwise expressly
provided in the Plan, all designations, determinations, adjustments,
interpretations, and other decisions under or with respect to the Plan, any
Award or Award Agreement shall be within the sole discretion of the Committee,
may be made at any time and shall be final, conclusive, and binding upon all
persons, including the Company, any Participant, any Holder, and any
stockholder. No member of the Committee shall be liable for any action,
determination or interpretation made in good faith, and all members of the
Committee shall, in addition to their rights as directors, be fully protected by
the Company with respect to any such action, determination or interpretation.

9

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

 

IV. STOCK SUBJECT TO THE PLAN

4.01   Number of Shares. Subject to adjustment as provided in Section 4.03 and
subject to the maximum amount of Shares that may be granted to an individual in
a calendar year as set forth in Section 5.05, no more than a total of Four
Million (4,000,000) Shares are authorized for issuance under the Plan in
accordance with the provisions of the Plan and subject to such restrictions or
other provisions as the Committee may from time to time deem necessary. Any
Shares issued hereunder may consist, in whole or in part, of authorized and
unissued shares or treasury shares. The Shares may be divided among the various
Plan components as the Committee shall determine. Shares that are subject to an
underlying Award and Shares that are issued pursuant to the exercise of an Award
shall be applied to reduce the maximum number of Shares remaining available for
use under the Plan. The Company shall at all times during the term of the Plan
and while any Awards are outstanding retain as authorized and unissued Stock, or
as treasury Stock, at least the number of Shares from time to time required
under the provisions of the Plan, or otherwise assure itself of its ability to
perform its obligations hereunder.   4.02   Unused and Forfeited Stock. Any
Shares that are subject to an Award under this Plan that are not used because
the terms and conditions of the Award are not met, including any Shares that are
subject to an Award that expires or is terminated for any reason, any Shares
that are used for full or partial payment of the purchase price of Shares with
respect to which an Option is exercised and any Shares retained by the Company
pursuant to Section 16.02 shall automatically become available for use under the
Plan. Notwithstanding the foregoing, any Shares used for full or partial payment
of the purchase price of the Shares with respect to which an Option is exercised
and any Shares retained by the Company pursuant to Section 16.02 that were
originally Incentive Stock Option Shares must still be considered as having been
granted for purposes of determining whether the Share limitation provided for in
Section 4.01 has been reached for purposes of Incentive Stock Option grants.  
4.03   Adjustment in Authorized Shares. If, without the receipt of consideration
therefore by the Company, the Company shall at any time increase or decrease the
number of its outstanding Shares or change in any way the rights and privileges
of such Shares such as, but not limited to, the payment of a stock dividend or
any other distribution upon such Shares payable in Stock, or through a stock
split, subdivision, consolidation, combination, reclassification or
recapitalization involving the Stock, such that an adjustment is necessary in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then in relation to the Shares
that are affected by one or more of the above events, the numbers, rights and
privileges of (i) the Shares as to which Awards may be granted under the Plan,
(ii) the exercise or purchase price of each outstanding Award, and (iii) the
Shares then included in each outstanding Award granted hereunder, shall be
increased, decreased or changed in like manner, as if the Shares underlying the
Award had been issued and outstanding, fully paid and non assessable at the time
of such occurrence. The manner in which Awards are adjusted pursuant to this
Section 4.03 is to be determined by the Board or the Committee; provided that
all adjustments must be determined by the Board or Committee

10

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

 

    in good faith, and must be effectuated so as to preserve the value that any
Participant has in outstanding Awards as of the time of the event giving rise to
any potential dilution or enlargement of rights.   4.04   General Adjustment
Rules.

  (a)   If any adjustment or substitution provided for in this Section 4 shall
result in the creation of a fractional Share under any Award, such fractional
Share shall be rounded to the nearest whole Share and fractional Shares shall
not be issued.     (b)   In the case of any such substitution or adjustment
affecting an Option or a SAR (including a Nonqualified Stock Option) such
substitution or adjustments shall be made in a manner that is in accordance with
the substitution and assumption rules set forth in Treasury Regulations 1.424-1
and the applicable guidance relating to Code section 409A.

V. PARTICIPATION

5.01   Basis of Grant. Participants in the Plan shall be those Service
Providers, who, in the judgment of the Committee, are performing, or during the
term of their incentive arrangement will perform, important services in the
management, operation and development of the Company, and significantly
contribute, or are expected to significantly contribute, to the achievement of
long-term corporate economic objectives. Participants may also include Service
Providers who, in the Committee’s discretion, are entitled to receive Awards as
an inducement to perform services for the Company or any Subsidiary; provided
that an Award Agreement may contain terms and conditions providing for the
termination of such inducement Award in the event that such Service Provider is
not retained to perform services for the Company with the period specified
therein.   5.02   Types of Grants; Limits. Participants may be granted from time
to time one or more Awards; provided, however, that the grant of each such Award
shall be separately approved by the Committee or its designee, and receipt of
one such Award shall not result in the automatic receipt of any other Award.
Written notice shall be given to such Person, specifying the terms, conditions,
right and duties related to such Award. Under no circumstance shall Incentive
Stock Options be granted to (i) non-employee directors, (ii) Consultants,
(iii) any prospective non-employee director, employee or consultant, or (iv) any
person not permitted to receive Incentive Stock Options under the Code.   5.03  
Award Agreements. Each Participant shall enter into an Award Agreement(s) with
the Company, in such form as the Committee shall determine and which is
consistent with the provisions of the Plan, specifying such terms, conditions,
rights and duties. Unless otherwise explicitly stated in the Award Agreement,
Awards shall be deemed to be granted as of the date specified in the grant
resolution of the Committee, which date shall be the date of any related
agreement(s) with the Participant. Unless explicitly provided for in a
particular Award Agreement that the terms of the Plan are being superseded, in

11

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

 

    the event of any inconsistency between the provisions of the Plan and any
such Award Agreement(s) entered into hereunder, the provisions of the Plan shall
govern.   5.04   Restrictive Covenants. The Committee may, in its sole and
absolute discretion, place certain restrictive covenants in an Award Agreement
requiring the Participant to agree to refrain from certain actions. Such
Restrictive Covenants, if contained in the Award Agreement, will be binding on
the Participant.

  (a)   Maximum Annual Award. The maximum number of Shares with respect to which
an Award or Awards may be granted to any Participant in any one taxable year of
the Company (the “Maximum Annual Participant Award”) shall not exceed Four
Hundred Thousand (400,000) Shares (increased, proportionately, in the event of
any stock split or stock dividend with respect to the Shares). The Maximum
Annual Participant Award shall include any Bonus Shares that are paid to a
Participant in a taxable year pursuant to the achievement of one or more
established and objective performance goals under the Company’s Executive Annual
Incentive Plan or pursuant to any other Company-sponsored compensation plan or
program. If an Option is in tandem with a SAR, such that the exercise of the
Option or SAR with respect to a Share cancels the tandem SAR or Option right,
respectively, with respect to each Share, the tandem Option and SAR rights with
respect to each Share shall be counted as covering but one Share for purposes of
the Maximum Annual Participant Award.

VI. STOCK OPTIONS

6.01   Grant of Options. A Participant may be granted one or more Options. The
Committee in its sole discretion shall designate whether an Option is an
Incentive Stock Option or a Nonqualified Stock Option. The Committee may grant
both an Incentive Stock Option and a Nonqualified Stock Option to the same
Participant at the same time or at different times. Incentive Stock Options and
Nonqualified Stock Options, whether granted at the same or different times,
shall be deemed to have been awarded in separate grants, shall be clearly
identified, and in no event shall the exercise of one Option affect the right to
exercise any other Option or affect the number of Shares for which any other
Option may be exercised.   6.02   Option Agreements. Each Option granted under
the Plan shall be evidenced by a written Option Award Agreement which shall be
entered into by the Company and the Participant to whom the Option is granted
(the “Option Holder”), and which shall contain the following terms and
conditions, as well as such other terms and conditions not inconsistent
therewith, as the Committee may consider appropriate in each case.

  (a)   Number of Shares. Each Option Award Agreement shall state that it covers
a specified number of Shares, as determined by the Committee. To the extent that
the aggregate Fair Market Value of Shares with respect to which Options
designated as Incentive Stock Options are exercisable for the first time by any
Option Holder during any calendar year exceeds $100,000 or, if different, the
maximum limitation in effect at the time of grant under section 422(d) of the

12

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

 

      Code, or any successor provision, such Options in excess of such limit
shall be treated as Nonqualified Stock Options. The foregoing shall be applied
by taking Options into account in the order in which they were granted. For the
purposes of the foregoing, the Fair Market Value of any Share shall be
determined as of the time the Option with respect to such Share is granted. In
the event the foregoing results in a portion of an Option designated as an
Incentive Stock Option exceeding the $100,000 limitation, only such excess shall
be treated as a Nonqualified Stock Option.     (b)   Price. Each Option Award
Agreement shall state the Option Exercise Price at which each Share covered by
an Option may be purchased. Such Option Exercise Price shall be determined in
each case by the Committee; provided, however, that the Option Exercise Price
for each Share covered by an Incentive Stock Option shall not be less than the
Fair Market Value of the Stock on the Option’s Grant Date and provided further
that the Incentive Stock Option granted to an Eligible Employee who then owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or any parent or Subsidiary corporation of the Company
must be at least 110% of the Fair Market Value of the Stock subject to the
Incentive Stock Option on the Option’s Grant Date.     (c)   Duration of
Options. Each Option Award Agreement shall state the period of time, determined
by the Committee, within which the Option may be exercised by the Option Holder
(the “Option Period”). The Option Period must expire, in all cases, not more
than ten years from the Option’s Grant Date; provided, however, that the Option
Period of an Incentive Stock Option granted to an Eligible Employee who then
owns Stock possessing more than 10% of the total combined voting power of all
classes of Stock of the Company must expire not more than five years from the
Option’s Grant Date. Each Option Award Agreement shall also state the periods of
time, if any, as determined by the Committee, when incremental portions of each
Option shall become exercisable. If any Option or portion thereof is not
exercised during its Option Period, such unexercised portion shall be deemed to
have been forfeited and have no further force or effect. Due to Code section
409A’s treatment of an extension or renewal of an Option as the granting of a
new Option, the Committee shall not extend or renew the term of an Option
without the consent of the Holder.     (d)   Termination of Service, Death,
Disability, etc. Each Option Agreement shall state the period of time, if any,
determined by the Committee, within which the Vested Option may be exercised
after an Option Holder ceases to be a Service Provider on account of the
Participant’s death, Disability, voluntary resignation, removal from the Board
or the Company having terminated such Option Holder’s employment with or without
Cause.     (e)   Transferability. Except as otherwise determined by the
Committee, Options shall not be transferable by the Option Holder except by will
or pursuant to the laws of descent and distribution. Each Vested Option shall be
exercisable during the

13

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

 

      Option Holder’s lifetime only by him or her, or in the event of Disability
or incapacity, by his or her guardian or legal representative. Shares issuable
pursuant to any Option shall be delivered only to or for the account of the
Option Holder, or in the event of Disability or incapacity, to his or her
guardian or legal representative.     (f)   Exercise, Payments, etc.

  (i)   Unless otherwise provided in the Option Award Agreement, each Vested
Option may be exercised by delivery to the Corporate Secretary of the Company a
written notice specifying the number of Shares with respect to which such Option
is exercised and payment of the Option Exercise Price. Such notice shall be in a
form satisfactory to the Committee or its designee and shall specify the
particular Vested Option that is being exercised and the number of Shares with
respect to which the Vested Option is being exercised. The exercise of the
Vested Option shall be deemed effective upon receipt of such notice by the
Corporate Secretary and payment to the Company. The purchase of such Stock shall
take place at the principal offices of the Company upon delivery of such notice,
at which time the purchase price of the Stock shall be paid in full by any of
the methods or any combination of the methods set forth in (ii) below.     (ii)
  The Option Exercise Price shall be paid by any of the following methods:

  1.   Cash or Certified bank check;     2.   By delivery to the Company of
certificates representing the number of Shares then owned by the Holder, the
Fair Market Value of which equals the purchase price of the Stock purchased
pursuant to the Vested Option, properly endorsed for transfer to the Company;
provided, however, that Shares used for this purpose must have been held by the
Holder for such minimum period of time as may be established from time to time
by the Committee; and provided further that the Fair Market Value of any Shares
delivered in payment of the purchase price upon exercise of the Options shall be
the Fair Market Value as of the exercise date, which shall be the date of
delivery of the certificates for the Stock used as payment of the Option
Exercise Price.         In lieu of actually surrendering to the Company the
stock certificates representing the number of Shares then owned by the Holder,
the Committee may, in its discretion permit the Holder to submit to the Company
a statement affirming ownership by the Holder of such number of Shares and
request that such Shares, although not actually surrendered, be deemed to have
been surrendered by the Holder as payment of the exercise price.

14

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

 

  3.   For any Holder other than an Executive Officer or except as otherwise
prohibited by the Committee, by payment through a broker in accordance with
procedures permitted by Regulation T of the Federal Reserve Board.     4.   Any
combination of the consideration provided in the foregoing subsections (1),
(2) and (3).

  (iii)   The Company shall not guarantee a third-party loan obtained by a
Holder to pay part or the entire Option Exercise Price of the Shares.

  (g)   Date of Grant. Unless otherwise specifically specified in the Option
Award Agreement, an option shall be considered as having been granted on the
date specified in the grant resolution of the Committee.     (h)   Withholding.

  (i)   Nonqualified Stock Options. Upon any exercise of a Nonqualified Stock
Options, the Option Holder shall make appropriate arrangements with the Company
to provide for the minimum amount of additional withholding required by
applicable federal and state income tax and payroll laws, including payment of
such taxes through delivery of Stock or by withholding Stock to be issued under
the Option, as provided in Section 16.     (ii)   Incentive Stock Options. In
the event that an Option Holder makes a disposition (as defined in section
424(c) of the Code) of any Stock acquired pursuant to the exercise of an
Incentive Stock Option prior to the later of (a) the expiration of two years
from the date on which the Incentive Stock Option was granted or (b) the
expiration of one year from the date on which the Option was exercised, the
Participant shall send written notice to the Company at its principal office
(Attention: Corporate Secretary) of the date of such disposition, the number of
shares disposed of, the amount of proceeds received from such disposition, and
any other information relating to such disposition as the Company may reasonably
request. The Option Holder shall, in the event of such a disposition, make
appropriate arrangements with the Company to provide for the amount of
additional withholding, if any, required by applicable Federal and state income
tax laws.

  (i)   Adjustment of Options. Subject to the limitations set forth below and
those contained in Sections 6 and 15, the Committee may make any adjustment in
the Option Exercise Price, the number of Shares subject to, or the terms of, an
outstanding Option and a subsequent granting of an Option by amendment or by
substitution of an outstanding Option. Such amendment, substitution, or re-grant
may result in terms and conditions (including Option Exercise Price, number of
Shares covered, vesting schedule or exercise period) that differ from the terms

15

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

 

      and conditions of the original Option. The Committee may not, however,
adversely affect the rights of any Option Holder to previously granted Options
without the consent of such Option Holder. If such action is affected by the
amendment, the effective date of such amendment shall be the date of the
original grant. Any adjustment, modification, extension or renewal of an Option
shall be effected such that the Option is either exempt from, or is compliant
with, Code section 409A.

6.03   Stockholder Privileges. No Holder shall have any rights as a stockholder
with respect to any Shares covered by an Option until the Holder becomes the
holder of record of such Stock, and no adjustments shall be made for dividends
or other distributions or other rights as to which there is a record date
preceding the date such Holder becomes the holder of record of such Stock,
except as provided in Section 4.

VII. STOCK APPRECIATION RIGHTS

7.01   Grant of SARs. Subject to the terms and conditions of this Plan, a SAR
may be granted to a Participant at any time and from time to time as shall be
determined by the Committee in its sole discretion. The Committee may grant
Freestanding SARs or Tandem SARs, or any combination thereof.

  (a)   Number of Shares. The Committee shall have complete discretion to
determine the number of SARs granted to any Participant, subject to the
limitations imposed in this Plan and by applicable law.     (b)   Exercise Price
and Other Terms. The Committee, subject to the provisions of this Plan, shall
have complete discretion to determine the terms and conditions of SARs granted
under this Plan. The exercise price per Share of Tandem SARs shall equal the
exercise price per Share of the related Option. In no event shall a SAR granted
to a Section 16 Person become exercisable until at least six (6) months after
the Date of Grant or such shorter period as may be permissible while maintaining
compliance with Rule 16b-3.

7.02   SAR Award Agreement. Each SAR granted under the Plan shall be evidenced
by a written SAR Award Agreement which shall be entered into by the Company and
the Participant to whom the SAR is granted (the “SAR Holder”), and which shall
specify the exercise price per share, the terms of the SAR, the conditions of
exercise, and such other terms and conditions as the Committee in its sole
discretion shall determine.   7.03   Exercise of Tandem SARs. Tandem SARs may be
exercised for all or part of the Shares subject to the related Option upon the
surrender of the right to exercise the equivalent portion of the related Option.
A Tandem SAR may be exercised only with respect to the Shares for which its
related Option is then exercisable. With respect to a Tandem SAR granted in
connection with an Incentive Stock Option: (a) the Tandem SAR shall expire no
later than the expiration of the underlying Incentive Stock Option; (b) the
value of the payout with respect to the Tandem SAR shall be for no more than one
hundred percent (100%) of the difference between the Exercise Price per Share of
the underlying

16

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

 

    Incentive Stock Option and the Fair Market Value per Share of the Shares
subject to the underlying Incentive Stock Option at the time the Tandem SAR is
exercised; and (c) the Tandem SAR shall be exercisable only when the Fair Market
Value per Share of the Shares subject to the Incentive Stock Option exceeds the
per share Option Price per Share of the Incentive Stock Option.   7.04  
Exercise of Freestanding SARs. Freestanding SARs shall be exercisable on such
terms and conditions as the Committee in its sole discretion shall determine;
provided, however, that no Freestanding SAR granted to a Section 16 Person shall
be exercisable until at least six (6) months after the Date of Grant or such
shorter period as may be permissible while maintaining compliance with
Rule 16b-3.   7.05   Expiration of SARs. A SAR granted under this Plan shall
expire on the date set forth in the SAR Award Agreement, which date shall be
determined by the Committee in its sole discretion. Unless otherwise
specifically provided for in the SAR Award Agreement, a Freestanding SAR granted
under this Plan shall terminate according to the same rules under which a
Nonqualified Stock Option would terminate in the event of a SAR Holder’s
termination of employment, death or Disability as provided for in the SAR Award
Agreement. Unless otherwise specifically provided for in the SAR Award
agreement, a Tandem SAR granted under this Plan shall be exercisable at such
time or times and only to the extent that the related Option is exercisable. The
Tandem SAR shall terminate and no longer be exercisable upon the termination or
exercise of the related Options, except that Tandem SARs granted with respect to
less than the full number of shares covered by a related Option shall not be
reduced until the exercise or termination of the related Option exceeds the
number of Shares not covered by the SARs.   7.06   Payment of SAR Amount. Upon
exercise of a SAR, a Holder shall be entitled to receive payment from the
Company in an amount determined by multiplying (i) the positive difference
between the Fair Market Value of a Share on the date of exercise over the
exercise price per Share by (ii) the number of Shares with respect to which the
SAR is exercised. The payment upon a SAR exercise may be in whole Shares of
equivalent value, cash, or a combination of whole Shares and cash. Fractional
Shares shall be rounded down to the nearest whole Share.

VIII. AWARDS OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS

8.01   Restricted Stock Awards Granted by Committee. Coincident with or
following designation for participation in the Plan and subject to the terms and
provisions of the Plan, the Committee, at any time and from time to time, may
grant Restricted Stock to any Service Provider in such amounts as the Committee
shall determine.   8.02   Restricted Stock Unit Awards Granted by Committee.
Coincident with or following designation for participation in the Plan and
subject to the terms and provisions of the Plan, The Committee may grant a
Service Provider Restricted Stock Units, in connection with or separate from a
grant of Restricted Stock. Upon the vesting of Restricted Stock Units, the
Holder shall be entitled to receive the full value of the Restricted Stock Units
payable in either Shares or cash.

17

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

 

8.03   Restrictions. A Holder’s right to retain Shares of Restricted Stock or be
paid with respect to Restricted Stock Units shall be subject to such
restrictions, including but not limited to, him or her continuing to perform as
a Service Provider for a restriction period specified by the Committee, or the
attainment of specified performance goals and objectives, as may be established
by the Committee with respect to such Award. The Committee may in its sole
discretion require different periods of service or different performance goals
and objectives with respect to (i) different Holders, (ii) different Restricted
Stock or Restricted Stock Unit Awards, or (iii) separate, designated portions of
the Shares constituting a Restricted Stock Award. Any grant of Restricted Stock
or Restricted Stock Units shall contain terms such that the Award is either
exempt from Code section 409A or complies with such section.   8.04   Privileges
of a Stockholder, Transferability. Unless otherwise provided in the Award
Agreement, a Participant shall have all voting, dividend, liquidation and other
rights with respect to Shares of Restricted Stock, provided however that any
dividends paid on Shares of Restricted Stock prior to such Shares becoming
vested shall be held in escrow by the Company and subject to the same
restrictions on transferability and forfeitability as the underlying Shares of
Restricted Stock. Any voting, dividend, liquidation or other rights shall accrue
to the benefit of a Holder only with respect to Shares of Restricted Stock held
by, or for the benefit of, the Holder on the record date of any such dividend or
voting date. A Participant’s right to sell, encumber or otherwise transfer such
Restricted Stock shall, in addition to the restrictions otherwise provided for
in the Award Agreement, be subject to the limitations of Section 12.02 hereof.
The Committee may determine that a Holder of Restricted Stock Units is entitled
to receive dividend equivalent payments on such units. If the Committee
determines that Restricted Stock Units shall receive dividend equivalent
payments, such feature will be specified in the applicable Award Agreement.
Restricted Stock Units shall not have any voting rights.   8.05   Enforcement of
Restrictions. The Committee may in its sole discretion require one or more of
the following methods of enforcing the restrictions referred to in Sections 8.02
and 8.03:

  (a)   placing a legend on the stock certificates, or the Restricted Stock Unit
Award Agreement, as applicable, referring to restrictions;     (b)   requiring
the Holder to keep the stock certificates, duly endorsed, in the custody of the
Company while the restrictions remain in effect;     (c)   requiring that the
stock certificates, duly endorsed, be held in the custody of a third party
nominee selected by the Company who will hold such Shares of Restricted Stock on
behalf of the Holder while the restrictions remain in effect; or     (d)  
inserting a provision into the Restricted Stock Award Agreement prohibiting
assignment of such Award Agreement until the terms and conditions or
restrictions contained therein have been satisfied or released, as applicable.

18

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

 

8.06   Termination of Service, Death, Disability, etc. In the event of the death
or Disability of a Participant, all service period and other restrictions
applicable to Restricted Stock Awards then held by him or her shall lapse, and
such Awards shall become fully nonforfeitable. Subject to Section 11, in the
event a Participant ceases to be a Service Provider for any other reason, any
Restricted Stock Awards as to which the service period or other vesting
conditions for have not been satisfied shall be forfeited.

IX. PERFORMANCE SHARES AND PERFORMANCE UNITS

9.01   Awards Granted by Committee. Coincident with or following designation for
participation in the Plan, a Participant may be granted Performance Shares or
Performance Units.   9.02   Amount of Award. The Committee shall establish a
maximum amount of a Holder’s Award, which amount shall be denominated in Shares
in the case of Performance Shares or in dollars in the case of Performance
Units.   9.03   Communication of Award. Written notice of the maximum amount of
a Holder’s Award and the Performance Period determined by Committee shall be
given to a Participant as soon as practicable after approval of the Award by the
Committee.   9.04   Amount of Award Payable. The Committee shall establish
maximum and minimum performance targets to be achieved during the applicable
Performance Period. Performance targets established by the Committee shall
relate to corporate, group, unit or individual performance and may be
established in terms of (i) specified levels of earnings per share from
continuing operations, (ii) operating income, (iii) revenues, (iv) gross margin,
(v) return on operating assets (whether all assets or designated assets),
(vi) return on equity, (vii) economic value added, (viii) stock price
appreciation, (ix) total stockholder return (measured in terms of stock price
appreciation and dividend growth), (x) net income, (xi) debt reduction,
(xii) cost control, or (xiii) such other measures or standards determined by the
Committee. Multiple performance targets may be used and the components of
multiple performance targets may be given the same or different weighting in
determining the amount of an Award earned, and may relate to absolute
performance or relative performance measured against other groups, units,
individual or entities. Achievement of the maximum performance target shall
entitle the Holder to payment (subject to Section 9.06) at the full or maximum
amount specified with respect to the Award: provided, however, that
notwithstanding any other provisions of this Plan, in the case of an Award of
Performance Shares the Committee in its discretion may establish an upper limit
on the amount payable (whether in cash or Stock) as a result of the achievement
of the maximum performance target. The Committee may also establish that a
portion of a full or maximum amount of a Holder’s Award will be paid (subject to
Section 9.06) for performance which exceeds the minimum performance target but
falls below the maximum performance target applicable to such Award.   9.05  
Adjustments. At any time prior to payment of a Performance Share or Performance
Unit Award, the Committee may adjust previously established performance targets
or other

19

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

 

    terms and conditions to reflect events such as changes in law, regulations,
or accounting practice, or mergers acquisitions or divestitures.   9.06  
Payment of Awards. Following the conclusion of each Performance Period, the
Committee shall determine the extent to which performance targets have been
attained, and the satisfaction of any other terms and conditions with respect to
an Award relating to such Performance Period. The Committee shall determine
what, if any, payment is due with respect to an Award and whether such payment
shall be made in cash, Stock or some combination. Payment shall be made in a
lump sum, as determined by the Committee, commencing as promptly as practicable
following the end of the applicable Performance Period, subject to such terms
and conditions and in such forms as may be prescribed by the Committee. All
Awards shall be paid no later than March 15th of the Plan Year following the
Plan Year in which the Committee determines that a Participant is entitled to
receive the performance award.   9.07   Termination of Employment. If a
Participant ceases to be a Service Provider for any reason other than having
been terminated for Cause after the end of a Performance Period yet before
receiving payment as provided for in Section 9.06, the Holder (or the Holder’s
Beneficiaries) shall be entitled to receive the full amount payable as soon as
practicable after such amount has been determined by the Committee. If a Holder
ceases to be a Service Provider before the end of a Performance Period by reason
of his or her death or Disability, the Performance Period for such Holder for
the purpose of determining the amount of the Award payable shall end at the end
of the calendar quarter immediately preceding the date on which such Holder
ceased to be a Service Provider. The amount of an Award payable to a Holder to
whom the preceding sentence is applicable shall be paid at the end of the
Performance Period and shall be that fraction of the Award computed pursuant to
the preceding sentence the numerator of which is the number of calendar quarters
during the Performance Period during all of which said Holder was a Service
Provider and the denominator of which is the number of full calendar quarters in
the Performance Period. In the event a Holder is terminated as a Service
Provider for Cause, either before the end of the Performance Period or after the
end of the Performance Period but prior to the amount of the Award having been
paid, the Holder’s participation in the Plan shall cease, all outstanding Awards
of Performance Shares or Performance Units to such Participant and any right to
receive the payment for any Awards (whether or not any Performance Period has
been completed) shall be canceled.

X. BONUS SHARES
Subject to the terms of the Plan, the Committee may grant Bonus Shares to any
Participant in such amount and upon such terms and at any time and from time to
time as shall be determined by the Committee. The Committee may grant such Bonus
Shares in connection with or pursuant to another Company-sponsored compensation
plan or program.
XI. REORGANIZATION, CHANGE IN CONTROL OR LIQUIDATION

11.01   Except as otherwise provided in an Award Agreement or other agreement
approved by the Committee to which any Participant is a party, in the event that
within the period

20

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

 

    commencing on a Change in Control and ending on the first anniversary of the
Change in Control, a Participant resigns for Good Reason or the Company
terminates the Participant’s employment other than for cause, each Option, share
of Restricted Stock and/or other Award shall without regard to any vesting
schedule, restriction or performance target, automatically become fully
exercisable, fully vested or fully payable, as the case may be, as of the date
of such termination of employment; provided, however, to the extent required by
Code section 409A, if the Participant was a “specified employee” as defined
under Code section 409A as of the time of such Participant’s separation from
service, no share of Restricted Stock or other Award shall become payable until
six months and one day from the effective date of such Participant’s separation
from service.   11.02   In addition to the foregoing, in the event the Company
undergoes a Change in Control or in the event of a corporate merger,
consolidation, major acquisition of property (or stock), separation,
reorganization or liquidation in which the Company is a party and in which a
Change in Control does not occur, the Committee, or the board of directors of
any corporation assuming the obligations of the Company, shall have the full
power and discretion to take any one or more of the following actions:

  (a)   Without reducing the economic value of outstanding Awards, prescribe and
amend the terms and conditions for the exercise of, or settlement of,
outstanding Awards granted hereunder;     (b)   Remove restrictions on
Restricted Stock and Restricted Stock Units;     (c)   Provide that Options or
SARs granted hereunder must be exercised in connection with the closing of such
transactions, and that if not so exercised such Options or SARs will expire; or
    (d)   Cause any Award then outstanding to be assumed, or new rights of
equivalent economic value substituted therefore, by the acquiring or surviving
corporation.

    Any such determinations by the Committee may be made generally with respect
to all Participants, or may be made on a case-by-case basis with respect to
particular Participants. Notwithstanding the foregoing, any transaction
undertaken for the purpose of reincorporating the Company under the laws of
another jurisdiction, if such transaction does not materially affect the
beneficial ownership of the Company’s Shares, such transaction shall not
constitute a merger, consolidation, major acquisition of property for stock,
separation, reorganization, liquidation, or Change in Control.

XII. RIGHTS OF EMPLOYEES; PARTICIPANTS

12.01   Employment. Nothing contained in the Plan or in any Award granted under
the Plan shall confer upon any Participant any right with respect to the
continuation of his or her services as a Service Provider or interfere in any
way with the right of the Company, subject to the terms of any separate
employment or consulting agreement to the contrary, at any time to terminate
such services or to increase or decrease the compensation of the

21

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

 

    Participant from the rate in existence at the time of the grant of an Award.
Whether an authorized leave of absence, or absence in military or government
service, shall constitute a termination of Participant’s services as a Service
Provider shall be determined by the Committee at the time.   12.02  
Nontransferability. Except as provided in Section 12.03, no right or interest of
any Holder in an Award granted pursuant to the Plan shall be assignable or
transferable during the lifetime of the Participant, either voluntarily or
involuntarily, or be subjected to any lien, directly or indirectly, by operation
of law, or otherwise, including execution, levy, garnishment, attachment, pledge
or bankruptcy. In the event of a Participant’s death, a Holder’s rights and
interests in all Awards shall, to the extent not otherwise prohibited hereunder,
be transferable by testamentary will or the laws of descent and distribution,
and payment of any amounts due under the Plan shall be made to, and exercise of
any Options or SARs may be made by, the Holder’s legal representatives, heirs or
legatees. If, in the opinion of the Committee, a person entitled to payments or
to exercise rights with respect to the Plan is disabled from caring for his or
her affairs because of a mental condition, physical condition or age, payment
due such person may be made to, and such rights shall be exercised by, such
person’s guardian, conservator, or other legal personal representative upon
furnishing the Committee with evidence satisfactory to the Committee of such
status. “Transfers” shall not be deemed to include transfers to the Company or
“cashless exercise” procedures with third parties who provide financing for the
purpose of (or who otherwise facilitate) the exercise of Awards consistent with
applicable laws and the authorization of the Committee.   12.03   Permitted
Transfers. Pursuant to conditions and procedures established by the Committee
from time to time, the Committee may permit Awards to be transferred to,
exercised by and paid to certain persons or entities related to a Participant,
including but not limited to members of the Participant’s immediate family,
charitable institutions, or trusts or other entities whose beneficiaries or
beneficial owners are members of the Participant’s immediate family and/or
charitable institutions (a “Permitted Transferee”). In the case of initial
Awards, at the request of the Participant, the Committee may permit the naming
of the related person or entity as the Award recipient. Any permitted transfer
shall be subject to the condition that the Committee receive evidence
satisfactory to it that the transfer is being made for estate and/or tax
planning purposes on a gratuitous or donative basis and without consideration
(other than nominal consideration). Notwithstanding the foregoing, Incentive
Stock Options shall only be transferable to the extent permitted in section 422
of the Code, or such successor provision thereto, and the treasury regulations
thereunder.

XIII. GENERAL RESTRICTIONS

13.01   Investment Representations. The Company may require any person to whom
an Option or other Award is granted, as a condition of exercising such Option or
receiving Stock under the Award, to give written assurances in substance and
form satisfactory to the Company and its counsel to the effect that such person
is acquiring the Stock subject to the Option or the Award for his own account
for investment and not with any present

22

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

 

    intention of selling or otherwise distributing the same, and to such other
effects as the Company deems necessary or appropriate in order to comply with
federal and applicable state securities laws. Legends evidencing such
restrictions may be placed on the certificates evidencing the Stock.   13.02  
Compliance with Securities Laws.

  (a)   Each Award shall be subject to the requirement that, if at any time
counsel to the Company shall determine that the listing, registration or
qualification of the Shares subject to such Award upon any securities exchange
or under any state or federal law, or the consent or approval of any
governmental or regulatory body, is necessary as a condition of, or in
connection with, the issuance or purchase of Shares thereunder, such Award may
not be accepted or exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained on conditions acceptable to the Committee. Nothing herein shall be
deemed to require the Company to apply for or to obtain such listing,
registration or qualification.     (b)   Each Holder who is a director or an
Executive Officer is restricted from taking any action with respect to any Award
if such action would result in a (i) violation of Section 306 of the
Sarbanes-Oxley Act of 2002, and the regulations promulgated thereunder, whether
or not such law and regulations are applicable to the Company, or (ii) any
policies adopted by the Company restricting transactions in the Stock.

13.03   Stock Restriction Agreement. The Committee may provide that Shares
issuable upon the exercise of an Option shall, under certain conditions, be
subject to restrictions whereby the Company has (i) a right of first refusal
with respect to such shares, (ii) specific rights or limitations with respect to
the Participant’s ability to vote such shares, or (iii) a right or obligation to
repurchase all or a portion of such shares, which restrictions may survive a
Participant’s cessation or termination as a Service Provider.

XIV. OTHER EMPLOYEE BENEFITS
The amount of any compensation deemed to be received by a Participant as a
result of the exercise of an Option or the grant, payment or vesting of any
other Award shall not constitute “earnings” with respect to which any other
benefits of such Participant are determined, including without limitation
benefits under (a) any pension, profit sharing, life insurance or salary
continuation plan or other employee benefit plan of the Company or (b) any
agreement between the Company and the Participant, except as such plan or
agreement shall otherwise expressly provide.
XV. PLAN AMENDMENT, MODIFICATION AND TERMINATION

15.01   Amendment, Modification, and Termination. The Board may at any time
terminate, and from time to time may amend or modify, the Plan; provided,
however, that no amendment or modification may become effective without approval
of the amendment or

23

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

 

    modification by the stockholders if stockholder approval is required to
enable the Plan to satisfy any applicable statutory or regulatory requirements,
to comply with the requirements for listing on any exchange where the Shares are
listed, or if the Company, on the advice of counsel, determines that stockholder
approval is otherwise necessary or desirable.   15.02   Adjustment Upon Certain
Unusual or Nonrecurring Events. The Board may make adjustments in the terms and
conditions of Awards in recognition of unusual or nonrecurring events (including
the events described in Section 4.03) affecting the Company or the financial
statements of the Company or of changes in applicable laws, regulations, or
accounting principles, whenever the Board determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.   15.03  
Awards Previously Granted. Notwithstanding any other provision of the Plan to
the contrary (but subject to Section 2.01(i) and Section 15.02), no termination,
amendment or modification of the Plan shall adversely affect in any material way
any Award previously granted under the Plan, without the written consent of the
Holder of such Award.

XVI. WITHHOLDING

16.01   Withholding Requirement. The Company’s obligations to deliver Shares
upon the exercise of an Option, or upon the vesting of any other Award, shall be
subject to the Holder’s satisfaction of all applicable federal, state and local
income and other tax withholding requirements.   16.02   Withholding with Stock.
For Eligible Employees, the Company may permit the Holder to pay all minimum
required amounts of tax withholding, or any part thereof, by electing to
transfer to the Company, or to have the Company withhold from Shares otherwise
issuable to the Holder, Shares having a value equal to the minimum amount
required to be withheld under federal, state or local law or such lesser amount
as may be elected by the Holder. For non-employees, including non-employee
directors, the Company may also permit the Holder to transfer to the Company or
have the Company withhold from Shares otherwise issuable to the Holder, an
amount of Shares determined by the Holder necessary to cover applicable federal,
state or local income or self-employment taxes relating to the exercise, vesting
or payment of the Award. All elections shall be subject to the approval or
disapproval of the Committee or its delegate. The value of Shares to be withheld
shall be based on the Fair Market Value of the Stock on the date that the amount
of tax to be withheld is to be determined (the “Tax Date”), as determined by the
Committee. Any such elections by Holder to have Shares withheld for this purpose
will be subject to the following restrictions:

  (a)   All elections must be made prior to the Tax Date;     (b)   All
elections shall be irrevocable; and

24

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

 

  (c)   If the Holder is an officer or director of the Company within the
meaning of Section 16 of the 1934 Act (“Section 16”), the Holder must satisfy
the requirements of such Section 16 and any applicable rules thereunder with
respect to the use of Stock to satisfy such tax withholding obligation.

XVII. SECTION 162(m) PROVISIONS

17.01   Limitations. Notwithstanding any other provision of this Plan, if the
Committee determines at the time any Award is granted to a Participant that such
Participant is, or is likely to be at the time he or she recognizes income for
federal income tax purposes in connection with such Award, a Covered Employee,
then the Committee may provide that this Section 17 is applicable to such Award.
  17.02   Performance Goals. If an Award is subject to this Section 17, then the
lapsing of restrictions thereon and the distribution of cash, Shares or other
property pursuant thereto, as applicable, shall be subject to the achievement of
one or more objective performance goals established by the Committee, which
shall be based on the attainment of one or any combination of the following:

  (a)   Earnings (either in the aggregate or on a per-Share basis);     (b)  
Growth or rate of growth in earnings (either in the aggregate or on a per-Share
basis);     (c)   Net income or loss (either in the aggregate or on a per-Share
basis);     (d)   Cash flow provided by operations, either in the aggregate or
on a per-Share basis;     (e)   Growth or rate of growth in cash flow (either in
the aggregate or on a per-Share basis);     (f)   Free cash flow (either in the
aggregate on a per-Share basis);     (g)   Reductions in expense levels,
determined either on a Corporation-wide basis or in respect of any one or more
business units;     (h)   Operating and maintenance cost management and employee
productivity;     (i)   Stockholder returns (including return on assets,
investments, equity, or gross sales);     (j)   Return measures (including
return on assets, equity, or sales);     (k)   Growth or rate of growth in
return measures (including return on assets, equity, or sales);

25

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

 

  (l)   Share price (including attainment of a specified per-Share price during
the Incentive Period; growth measures and total stockholder return or attainment
by the Shares of a specified price for a specified period of time);     (m)  
Strategic business criteria, consisting of one or more objectives based on
meeting specified revenue, market share, market penetration, geographic business
expansion goals, objectively identified project milestones, production volume
levels, cost targets, and goals relating to acquisitions or divestitures; and/or
    (n)   Achievement of business or operational goals such as market share
and/or business development;

    provided that applicable incentive goals may be applied on a pre- or
post-tax basis; and provided further that the Committee may, when the applicable
incentive goals are established, provide that the formula for such goals may
include or exclude items to measure specific objectives, such as losses from
discontinued operations, extraordinary gains or losses, the cumulative effect of
accounting changes, acquisitions or divestitures, foreign exchange impacts and
any unusual, nonrecurring gain or loss. In addition to the foregoing performance
goals, the performance goals shall also include any performance goals which are
set forth in the Company’s Executive Annual Incentive Plan, if any, which has
been approved by the Company’s stockholders, which are incorporated herein by
reference. Such performance goals shall be set by the Committee within the time
period prescribed by, and shall otherwise comply with the requirements of,
section 162(m) of the Code and the regulations thereunder.

17.03   Adjustments. Notwithstanding any provision of the Plan other than
Section 4.03 or Section 11, with respect to any Award that is subject to
Section 17, the Committee may not adjust upwards the amount payable pursuant to
such Award, nor may it waive the achievement of the applicable performance goals
except in the case of the death or disability of the Participant.   17.04  
Other Restrictions. The Committee shall have the power to impose such other
restrictions on Awards subject to this Section 17 as it may deem necessary or
appropriate to insure that such Awards satisfy all requirements for
“performance-based compensation” within the meaning of section 162(m)(4)(B) of
the Code or any successor thereto.

XVIII. NONEXCLUSIVITY OF THE PLAN

18.01   Neither the adoption of the Plan by the Board nor the submission of the
Plan to stockholders of the Company for approval shall be construed as creating
any limitations on the power or authority of the Board to continue to maintain
or adopt such other or additional incentive or other compensation arrangements
of whatever nature as the Board may deem necessary or desirable or preclude or
limit the continuation of any other plan, practice or arrangement for the
payment of compensation or fringe benefits to employees, or non-employee
directors generally, or to any class or group of employees, or non-employee
directors, which the Company now has lawfully put into effect, including,

26

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

 

    without limitation, any retirement, pension, savings and stock purchase
plan, insurance, death and disability benefits and executive short-term
incentive plans.

XIX. REQUIREMENTS OF LAW

19.01   Requirements of Law. The issuance of Stock and the payment of cash
pursuant to the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or stock
exchanges as may be required. Notwithstanding any provision of the Plan or any
Award, Holders shall not be entitled to exercise, or receive benefits under any
Award, and the Company shall not be obligated to deliver any Shares or other
benefits to a Holder, if such exercise or delivery would constitute a violation
by the Holder or the Company of any applicable law or regulation.   19.02   Code
Section 409A. This Plan is intended to meet or to be exempt from the
requirements of Code section 409A, and shall be administered, construed and
interpreted in a manner that is in accordance with and in furtherance of such
intent. Any provision of this Plan that would cause an Award to fail to satisfy
Code section 409A or, if applicable, an exemption from the requirements of that
Section, shall be amended (in a manner that as closely as practicable achieves
the original intent of this Plan) to comply with Code section 409A or any such
exemption on a timely basis, which may be made on a retroactive basis, in
accordance with regulations and other guidance issued under Code section 409A.  
19.03   Rule 16b-3. Transactions under the Plan and to the extent even
applicable, within the scope of Rule 16b-3 are intended to comply with all
applicable conditions of Rule 16b-3. To the extent any provision of the Plan or
any action by the Committee under the Plan fails to so comply, such provision or
action shall, without further action by any person, be deemed to be
automatically amended to the extent necessary to effect compliance with
Rule 16b-3; provided, however, that if such provision or action cannot be
amended to effect such compliance, such provision or action shall be deemed null
and void to the extent permitted by law and deemed advisable by the Committee.  
19.04   Governing Law. The Plan and all agreements hereunder shall be construed
in accordance with and governed by the laws of the State of Delaware without
giving effect to the principles of the conflict of laws to the contrary.

27