Exhibit 10.1
ASSISTED LIVING CONCEPTS, INC.
2006 OMNIBUS INCENTIVE COMPENSATION PLAN
Effective October 31, 2006
Amended and restated April 30, 2009 to reflect March 16, 2009 one-for-five
reverse stock split
     SECTION 1. Purpose. The purpose of this Assisted Living Concepts, Inc. 2006
Omnibus Incentive Compensation Plan is to promote the interests of Assisted
Living Concepts, Inc., a Nevada corporation (the “Company”), and its
stockholders by (a) attracting and retaining exceptional directors, officers,
employees and consultants (including prospective directors, officers, employees
and consultants) of the Company and its Affiliates (as defined below) and
(b) enabling such individuals to participate in the long-term growth and
financial success of the Company.
     SECTION 2. Definitions. As used herein, the following terms shall have the
meanings set forth below:
     “Affiliate” means (a) any entity that, directly or indirectly, is
controlled by, controls or is under common control with, the Company and (b) any
entity in which the Company has a significant equity interest, in either case
following the Initial Distribution and as otherwise determined by the Committee.
     “Award” means any award that is permitted under Section 6 and granted under
the Plan.
     “Award Agreement” means any written agreement, contract or other instrument
or document evidencing any Award, which may, but need not, require execution or
acknowledgment by a Participant.
     “Board” means the Board of Directors of the Company.
     “Cash Incentive Award” shall have the meaning specified in Section 6(f).
     “Change of Control” shall (a) have the meaning set forth in an Award
Agreement or (b) if there is no definition set forth in an Award Agreement, mean
the occurrence of any of the following events, not including any events
occurring prior to or in connection with the Initial Distribution (including the
occurrence of such Initial Distribution):
     (i) the consummation of (A) a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving (x) the Company or
(y) any of its subsidiaries, but in the case of this clause (y) only if Company
Voting Securities (as defined below) are issued or issuable in connection with
such transaction (each of the transactions referred to in this clause (A), a
“Reorganization”) or (B) a sale or other disposition of all or substantially all
the assets of the Company to a person that is not an Affiliate of the Company (a
“Sale”), in each case, if such Reorganization or Sale requires the approval of
the Company’s stockholders under the law of the Company’s jurisdiction of
organization (whether such approval is required for such Reorganization or Sale
or for the issuance of securities in such Reorganization or Sale), unless,
immediately following such Reorganization or Sale, (1) all or substantially all
the persons who were the “beneficial owners” (as such term is defined in
Rule 13d-3 under the Exchange Act) of the securities eligible to vote for the
election of the Board (“Company Voting Securities”) outstanding immediately
prior to the consummation of such Reorganization or Sale beneficially own,
directly or indirectly, more than 50% of the combined voting power of the then
outstanding voting securities of the corporation or other entity resulting from
such Reorganization or Sale (including a corporation or other entity that as a
result of such transaction directly or indirectly owns the Company or all or
substantially all the Company’s assets) (the “Continuing Company”)

 

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

 

in substantially the same proportions as their ownership, immediately prior to
the consummation of such Reorganization or Sale, of the outstanding Company
Voting Securities (excluding any outstanding voting securities of the Continuing
Company that such beneficial owners hold immediately following the consummation
of such Reorganization or Sale as a result of their ownership prior to such
consummation of voting securities of any corporation or other entity (other than
the Company) involved in or forming part of such Reorganization or Sale), (2) no
Person (excluding (x) any employee benefit plan (or related trust or fiduciary)
sponsored or maintained by the Company or its Affiliates, (y) Scotia and (z) the
Company and its Affiliates) beneficially owns, directly or indirectly, 20% or
more of the combined voting power of the outstanding voting securities of the
Continuing Company immediately following the consummation of such Reorganization
or Sale and (3) immediately following the consummation of such Reorganization or
Sale, at least a majority of the members of the board of directors (or
equivalent body) of the Continuing Company are Incumbent Directors;
     (ii) the stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company, unless such liquidation or dissolution is part of
a transaction or series of transactions described in paragraph (i) above that
does not otherwise constitute a Change of Control; or
     (iii) any Person or “group” (as used in Section 14(d)(2) of the Exchange
Act) (excluding (x) any employee benefit plan (or related trust or fiduciary)
sponsored or maintained by the Company or its Affiliates, (y) Scotia and (z) the
Company and its Affiliates) becomes the beneficial owner, directly or
indirectly, of Company Voting Securities representing 20% or more of the
combined voting power of the then outstanding Company Voting Securities;
provided, however, that, for purposes of this subparagraph (iv), no acquisition
of Company Voting Securities (x) directly from the Company or (y) by any
employee benefit plan (or related trust or fiduciary) sponsored or maintained by
the Company or its Affiliates shall constitute a Change of Control.
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.
     “Committee” means the Compensation/ Nominating/ Governance committee of the
Board, or such other committee of the Board as may be designated by the Board
from time to time to administer the Plan.
     “EBITDA” means earnings before interest, taxes, depreciation and
amortization.
     “Effective Date” has the meaning assigned thereto in the Arrangement
Agreement, dated as of September 12, 2006, among Extendicare Real Estate
Investment Trust, the Company and the other parties thereto.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended, or
any successor statute thereto.
     “Exercise Price” means (a) in the case of Options, the price specified in
the applicable Award Agreement as the price-per-Share at which Shares may be
purchased pursuant to such Option or (b) in the case of SARs, the price
specified in the applicable Award Agreement as the reference price-per-Share
used to calculate the amount payable to the Participant.

-2-

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

 

     “Fair Market Value” means (a) with respect to any property other than
Shares, the fair market value of such property determined by such methods or
procedures as shall be established from time to time by the Committee and
(b) with respect to the Shares, as of any date, (i) the mean between the high
and low sales prices of the Shares (A) as reported by the NYSE for such date or
(B) if the Shares are listed on any other national stock exchange, as reported
on the stock exchange composite tape for securities traded on such stock
exchange for such date or, with respect to each of clauses (A) and (B), if there
were no sales on such date, on the closest preceding date on which there were
sales of Shares or (ii) in the event there shall be no public market for the
Shares on such date, the fair market value of the Shares as determined in good
faith by the Committee.
     “Incentive Stock Option” means an option to purchase Shares from the
Company that (a) is granted under Section 6 and (b) is intended to qualify for
special Federal income tax treatment pursuant to Sections 421 and 422 of the
Code, as now constituted or subsequently amended, or pursuant to a successor
provision of the Code, and which is so designated in the applicable Award
Agreement.
     “Independent Director” means a member of the Board who is neither (a) an
employee of the Company nor (b) an employee of any Affiliate, and who, at the
time of acting, is a “Non-Employee Director” under Rule 16b-3.
     “Initial Distribution” means the issuance of shares of Class A common stock
and Class B common stock of the Company to the holders of Extendicare Inc.
Subordinate Voting Shares and Multiple Voting Shares, respectively, on the
Effective Date pursuant to the Plan of Arrangement to be filed by Extendicare
Inc. with Canadian authorities in connection with, among other things, the
Company’s separation from Extendicare Inc.
     “IRS” means the Internal Revenue Service or any successor thereto and
includes the staff thereof.
     “Nonqualified Stock Option” means an option to purchase Shares from the
Company that (a) is granted under Section 6 and (b) is not an Incentive Stock
Option.
     “NYSE” means the New York Stock Exchange or any successor thereto.
     “Option” means an Incentive Stock Option or a Nonqualified Stock Option or
both, as the context requires.
     “Participant” means any director, officer, employee or consultant
(including any prospective director, officer, employee or consultant) of the
Company or its Affiliates who is eligible for an Award under Section 5 and who
is selected by the Committee to receive an Award under the Plan or who receives
a Substitute Award pursuant to Section 4(c).
     “Performance Compensation Award” means any Award designated by the
Committee as a Performance Compensation Award pursuant to Section 6(i).
     “Performance Criteria” means the criterion or criteria that the Committee
shall select for purposes of establishing a Performance Goal for a Performance
Period with respect to any Performance Compensation Award, Performance Unit or
Cash Incentive Award under the Plan.
     “Performance Formula” means, for a Performance Period, the one or more
objective formulas applied against the relevant Performance Goal to determine,
with regard to the Performance Compensation Award, Performance Unit or Cash
Incentive Award of a particular Participant, whether all, a portion or none of
the Award has been earned for the Performance Period.

-3-

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

 

     “Performance Goal” means, for a Performance Period, the one or more goals
established by the Committee for the Performance Period based upon the
Performance Criteria.
     “Performance Period” means the one or more periods of time as the Committee
may select over which the attainment of one or more Performance Goals will be
measured for the purpose of determining a Participant’s right to and the payment
of a Performance Compensation Award, Performance Unit or Cash Incentive Award.
     “Performance Unit” means an Award under Section 6(e) that has a value set
by the Committee (or that is determined by reference to a valuation formula
specified by the Committee or the Fair Market Value of Shares), which value may
be paid to the Participant by delivery of such property as the Committee shall
determine, including without limitation, cash or Shares, or any combination
thereof, upon achievement of such Performance Goals during the relevant
Performance Period as the Committee shall establish at the time of such Award or
thereafter.
     “Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or a government agency
or political subdivision thereof or any other entity.
     “Plan” means this Assisted Living Concepts, Inc. 2006 Omnibus Incentive
Compensation Plan, as in effect from time to time.
     “Restricted Share” means a Share delivered under the Plan that is subject
to certain transfer restrictions, forfeiture provisions and/or other terms and
conditions specified herein and in the applicable Award Agreement.
     “RSU” means a restricted stock unit Award that is designated as such in the
applicable Award Agreement and that represents an unfunded and unsecured promise
to deliver Shares, cash, other securities, other Awards or other property in
accordance with the terms of the applicable Award Agreement.
     “Rule 16b-3” means Rule 16b-3 as promulgated and interpreted by the SEC
under the Exchange Act or any successor rule or regulation thereto as in effect
from time to time.
     “SAR” means a stock appreciation right Award that represents an unfunded
and unsecured promise to deliver Shares, cash, other securities, other Awards or
other property equal in value to the excess, if any, of the Fair Market Value
per Share over the Exercise Price per Share of the SAR, subject to the terms of
the applicable Award Agreement.
     “Scotia” means, collectively, Scotia Investments Limited, Minas Basin
Creditco Limited, Parrsboro Lumber Company, Minas Basin Investments and BH
Investments Limited, and any Person who would be deemed the same “person” as any
such entity for purposes of Sections 13(d) and 14(d) of the Exchange Act,
whether or not applicable or who is directly or indirectly controlled by members
of the family of the late R.A. Jodrey.
     “SEC” means the Securities and Exchange Commission or any successor thereto
and shall include the staff thereof.
     “Shares” means shares of Class A common stock of the Company, $0.01 par
value, or such other securities of the Company (a) into which such shares shall
be changed by reason of a recapitalization,

-4-

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

 

merger, consolidation, split-up, combination, exchange of shares or other
similar transaction or (b) as may be determined by the Committee pursuant to
Section 4(b).
     “Subsidiary” means any entity in which the Company, directly or indirectly,
possesses 50% or more of the total combined voting power of all classes of its
stock.
     “Substitute Awards” shall have the meaning specified in Section 4(c).
     SECTION 3. Administration.
     (a) Composition of Committee. The Plan shall be administered by the
Committee, which shall be composed of one or more directors, as determined by
the Board; provided that after the date of the consummation of the Initial
Distribution, to the extent necessary to comply with the rules of the NYSE and
Rule 16b-3 and to satisfy any applicable requirements of Section 162(m) of the
Code and any other applicable laws or rules, the Committee shall be composed of
two or more directors, all of whom shall be Independent Directors and all of
whom shall (i) qualify as “outside directors” under Section 162(m) of the Code
and (ii) meet the independence requirements of the NYSE.
     (b) 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 sole and plenary authority to
administer the Plan, including, but not limited to, the authority to
(i) designate Participants, (ii) determine the type or types of Awards to be
granted to a Participant, (iii) 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, (iv) determine the terms and conditions of any
Awards, (v) determine the vesting schedules of Awards and, if certain
performance criteria must be attained in order for an Award to vest or be
settled or paid, establish such performance criteria and certify whether, and to
what extent, such performance criteria have been attained, (vi) determine
whether, to what extent and under what circumstances Awards may be settled or
exercised in cash, Shares, other securities, other Awards or other property, or
canceled, forfeited or suspended and the method or methods by which Awards may
be settled, exercised, canceled, forfeited or suspended, (vii) determine
whether, to what extent and under what circumstances cash, Shares, other
securities, other Awards, other property and other amounts payable with respect
to an Award shall be deferred either automatically or at the election of the
holder thereof or of the Committee, (viii) interpret, administer, reconcile any
inconsistency in, correct any default in and supply any omission in, the Plan
and any instrument or agreement relating to, or Award made under, the Plan,
(ix) establish, amend, suspend or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan, (x) accelerate the vesting or exercisability of, payment for or lapse of
restrictions on, Awards, (xi) amend an outstanding Award or grant a replacement
Award for an Award previously granted under the Plan if, in its sole discretion,
the Committee determines that (A) the tax consequences of such Award to the
Company or the Participant differ from those consequences that were expected to
occur on the date the Award was granted or (B) clarifications or interpretations
of, or changes to, tax law or regulations permit Awards to be granted that have
more favorable tax consequences than initially anticipated and (xii) make any
other determination and take any other action that the Committee deems necessary
or desirable for the administration of the Plan.
     (c) Committee Decisions. Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations and other decisions under or
with respect to the Plan or any Award shall be within the sole and plenary
discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon all persons, including the Company, any Affiliate,
any Participant, any holder or beneficiary of any Award and any stockholder.

-5-

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

 

     (d) Indemnification. No member of the Board, the Committee or any employee
of the Company (each such person, a “Covered Person”) shall be liable for any
action taken or omitted to be taken or any determination made in good faith with
respect to the Plan or any Award hereunder. Each Covered Person shall be
indemnified and held harmless by the Company against and from (i) any loss,
cost, liability or expense (including attorneys’ fees) that may be imposed upon
or incurred by such Covered Person in connection with or resulting from any
action, suit or proceeding to which such Covered Person may be a party or in
which such Covered Person may be involved by reason of any action taken or
omitted to be taken under the Plan or any Award Agreement and (ii) any and all
amounts paid by such Covered Person, with the Company’s approval, in settlement
thereof, or paid by such Covered Person in satisfaction of any judgment in any
such action, suit or proceeding against such Covered Person; provided that the
Company shall have the right, at its own expense, to assume and defend any such
action, suit or proceeding, and, once the Company gives notice of its intent to
assume the defense, the Company shall have sole control over such defense with
counsel of the Company’s choice. The foregoing right of indemnification shall
not be available to a Covered Person to the extent that a court of competent
jurisdiction in a final judgment or other final adjudication, in either case not
subject to further appeal, determines that the acts or omissions of such Covered
Person giving rise to the indemnification claim resulted from such Covered
Person’s bad faith, fraud or willful criminal act or omission or that such right
of indemnification is otherwise prohibited by law or by the Company’s Amended
and Restated Articles of Incorporation or Bylaws. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which Covered Persons may be entitled under the Company’s Amended and Restated
Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any
other power that the Company may have to indemnify such persons or hold them
harmless.
     (e) Delegation of Authority to Senior Officers. The Committee may delegate,
on such terms and conditions as it determines in its sole and plenary
discretion, to one or more senior officers of the Company the authority to make
grants of Awards to officers (other than executive officers), employees and
consultants of the Company and its Affiliates (including any prospective
officer, employee or consultant) and all necessary and appropriate decisions and
determinations with respect thereto.
     (f) Awards to Independent Directors. Notwithstanding anything to the
contrary contained herein, the Board may, in its sole and plenary discretion, at
any time and from time to time, grant Awards to Independent Directors or
administer the Plan with respect to such Awards. In any such case, the Board
shall have all the authority and responsibility granted to the Committee herein.
     SECTION 4. Shares Available for Awards; Other Limits.
     (a) Shares Available. Subject to adjustment as provided in Section 4(b),
the aggregate number of Shares that may be delivered pursuant to Awards granted
under the Plan shall be 800,000, of which the maximum number of Shares that may
be delivered pursuant to Incentive Stock Options granted under the Plan shall be
800,000, provided that each such number of Shares shall automatically be
adjusted to take into account any stock distribution or stock split that occurs
in connection with the Initial Distribution. If, after the effective date of the
Plan, any Award granted under the Plan is forfeited, or otherwise expires,
terminates or is canceled without the delivery of Shares, then the Shares
covered by such forfeited, expired, terminated or canceled Award shall again
become available to be delivered pursuant to Awards under the Plan. If Shares
issued upon exercise, vesting or settlement of an Award, or Shares owned by a
Participant (which are not subject to any pledge or other security interest),
are surrendered or tendered to the Company in payment of the Exercise Price of
an Award or any taxes required to be withheld in respect of an Award, in each
case, in accordance with the terms and conditions of the Plan and any applicable
Award Agreement, such surrendered or tendered Shares shall again become
available to be delivered pursuant to Awards under the Plan; provided, however,
that in no event shall such Shares increase the number of Shares that may be
delivered pursuant to Incentive Stock

-6-

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

 

Options granted under the Plan. Subject to adjustment as provided in
Section 4(b), (i) the maximum number of Shares with respect to which Awards may
be granted to any Participant in any fiscal year of the Company shall be 40,000,
provided that such number of Shares shall automatically be adjusted to take into
account any stock distribution or stock split that occurs in connection with the
Initial Distribution, and (ii) the maximum aggregate amount of cash and other
property (valued at its Fair Market Value) other than Shares that may be paid or
delivered pursuant to Awards to any Participant in any fiscal year of the
Company shall be $2,000,000.
     (b) Adjustments for Changes in Capitalization and Similar Events. In the
event that the Committee determines that any dividend or other distribution
(whether in the form of cash, Shares, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Shares
or other securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company, or other similar corporate
transaction or event affects the Shares such that an adjustment is determined by
the Committee in its discretion to be appropriate or desirable, then the
Committee may (i) in such manner as it may deem equitable or desirable, adjust
any or all of (A) the number of Shares or other securities of the Company (or
number and kind of other securities or property) with respect to which Awards
may be granted, including (1) the aggregate number of Shares that may be
delivered pursuant to Awards granted under the Plan, as provided in Section 4(a)
and (2) the maximum number of Shares or other securities of the Company (or
number and kind of other securities or property) with respect to which Awards
may be granted to any Participant in any fiscal year of the Company and (B) the
terms of any outstanding Award, including (1) the number of Shares or other
securities of the Company (or number and kind of other securities or property)
subject to outstanding Awards or to which outstanding Awards relate and (2) the
Exercise Price with respect to any Award, (ii) if deemed appropriate or
desirable by the Committee, make provision for a cash payment to the holder of
an outstanding Award in consideration for the cancellation of such Award,
including, in the case of an outstanding Option or SAR, a cash payment to the
holder of such Option or SAR in consideration for the cancellation of such
Option or SAR in an amount equal to the excess, if any, of the Fair Market Value
(as of a date specified by the Committee) of the Shares subject to such Option
or SAR over the aggregate Exercise Price of such Option or SAR and (iii) if
deemed appropriate or desirable by the Committee, cancel and terminate any
Option or SAR having a per Share Exercise Price equal to, or in excess of, the
Fair Market Value of a Share subject to such Option or SAR without any payment
or consideration therefor.
     (c) Substitute Awards. Awards may, in the discretion of the Committee, be
granted under the Plan in assumption of, or in substitution for, outstanding
awards previously granted by the Company or any of its Affiliates or a company
acquired by the Company or any of its Affiliates or with which the Company or
any of its Affiliates combines (“Substitute Awards”). The number of Shares
underlying any Substitute Awards shall be counted against the aggregate number
of Shares available for Awards under the Plan; provided, however, that
Substitute Awards issued in connection with the assumption of, or in
substitution for, outstanding awards previously granted by an entity that is
acquired by the Company or any of its Affiliates or with which the Company or
any of its Affiliates combines shall not be counted against the aggregate number
of Shares available for Awards under the Plan; provided further, however, that
Substitute Awards issued in connection with the assumption of, or in
substitution for, outstanding stock options intended to qualify for special tax
treatment under Sections 421 and 422 of the Code that were previously granted by
an entity that is acquired by the Company or any of its Affiliates or with which
the Company or any of its Affiliates combines shall be counted against the
aggregate number of Shares available for Incentive Stock Options under the Plan.
     (d) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.

-7-

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

 

     SECTION 5. Eligibility. Any director, officer, employee or consultant
(including any prospective director, officer, employee or consultant) of the
Company or any of its Affiliates shall be eligible to be designated a
Participant.
     SECTION 6. Awards.
     (a) Types of Awards. Awards may be made under the Plan in the form of
(i) Options, (ii) SARs, (iii) Restricted Shares, (iv) RSUs, (v) Performance
Units, (vi)  Cash Incentive Awards and (viii) other equity-based or
equity-related Awards that the Committee determines are consistent with the
purpose of the Plan and the interests of the Company. Awards may be granted in
tandem with other Awards. No Incentive Stock Option (other than an Incentive
Stock Option that may be assumed or issued by the Company in connection with a
transaction to which Section 424(a) of the Code applies) may be granted to a
person who is ineligible to receive an Incentive Stock Option under the Code.
     (b) Options.
     (i) Grant. Subject to the provisions of the Plan, the Committee shall have
sole and plenary authority to determine the Participants to whom Options shall
be granted, the number of Shares to be covered by each Option, whether the
Option will be an Incentive Stock Option or a Nonqualified Stock Option and the
conditions and limitations applicable to the vesting and exercise of the Option.
In the case of Incentive Stock Options, the terms and conditions of such grants
shall be subject to and comply with such rules as may be prescribed by
Section 422 of the Code and any regulations related thereto, as may be amended
from time to time. All Options granted under the Plan shall be Nonqualified
Stock Options unless the applicable Award Agreement expressly states that the
Option is intended to be an Incentive Stock Option. If an Option is intended to
be an Incentive Stock Option, and if for any reason such Option (or any portion
thereof) shall not qualify as an Incentive Stock Option, then, to the extent of
such nonqualification, such Option (or portion thereof) shall be regarded as a
Nonqualified Stock Option appropriately granted under the Plan; provided that
such Option (or portion thereof) otherwise complies with the Plan’s requirements
relating to Nonqualified Stock Options.
     (ii) Exercise Price. Except as otherwise established by the Committee at
the time an Option is granted and set forth in the applicable Award Agreement,
the Exercise Price of each Share covered by an Option shall be not less than
100% of the Fair Market Value of such Share (determined as of the date the
Option is granted); provided, however, that in the case of an Incentive Stock
Option granted to an employee who, at the time of the grant of such Option, owns
stock representing more than 10% of the voting power of all classes of stock of
the Company or any Affiliate, the per Share Exercise Price shall be no less than
110% of the Fair Market Value per Share on the date of the grant. Options are
intended to qualify as “qualified performance-based compensation” under Section
162(m) of the Code.
     (iii) Vesting and Exercise. Each Option shall be vested and exercisable at
such times, in such manner and subject to such terms and conditions as the
Committee may, in its sole and plenary discretion, specify in the applicable
Award Agreement or thereafter. Except as otherwise specified by the Committee in
the applicable Award Agreement, an Option may only be exercised to the extent
that it has already vested at the time of exercise. Except as otherwise
specified by the Committee in the Award Agreement, Options shall become vested
and exercisable with respect to one-fourth of the Shares subject to such Options
on each of the first four anniversaries of the date of grant. An Option shall be
deemed to be exercised when written or electronic notice of such exercise has
been given to the Company in accordance with the terms of the Award by the
person entitled to exercise the Award and full payment pursuant to
Section 6(b)(iv) for the Shares

-8-

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

 

with respect to which the Award is exercised has been received by the Company.
Exercise of an Option in any manner shall result in a decrease in the number of
Shares that thereafter may be available for sale under the Option and, except as
expressly set forth in Section 4(c), in the number of Shares that may be
available for purposes of the Plan, by the number of Shares as to which the
Option is exercised. The Committee may impose such conditions with respect to
the exercise of Options, including, without limitation, any relating to the
application of Federal or state securities laws, as it may deem necessary or
advisable.
     (iv) Payment.
(A) No Shares shall be delivered pursuant to any exercise of an Option until
payment in full of the aggregate Exercise Price therefor is received by the
Company, and the Participant has paid to the Company an amount equal to any
Federal, state, local and foreign income and employment taxes required to be
withheld. Such payments may be made in cash (or its equivalent) or, in the
Committee’s sole and plenary discretion, (1) by exchanging Shares owned by the
Participant (which are not the subject of any pledge or other security interest)
or (2) if there shall be a public market for the Shares at such time, subject to
such rules as may be established by the Committee, through delivery of
irrevocable instructions to a broker to sell the Shares otherwise deliverable
upon the exercise of the Option and to deliver promptly to the Company an amount
equal to the aggregate Exercise Price, or by a combination of the foregoing;
provided that the combined value of all cash and cash equivalents and the Fair
Market Value of any such Shares so tendered to the Company as of the date of
such tender is at least equal to such aggregate Exercise Price and the amount of
any Federal, state, local or foreign income or employment taxes required to be
withheld.
(B) Wherever in the Plan or any Award Agreement a Participant is permitted to
pay the Exercise Price of an Option or taxes relating to the exercise of an
Option by delivering Shares, the Participant may, subject to procedures
satisfactory to the Committee, satisfy such delivery requirement by presenting
proof of beneficial ownership of such Shares, in which case the Company shall
treat the Option as exercised without further payment and shall withhold such
number of Shares from the Shares acquired by the exercise of the Option.
     (v) Expiration. Except as otherwise set forth in the applicable Award
Agreement, each Option shall expire immediately, without any payment, upon the
earlier of (A) the tenth anniversary of the date the Option is granted and
(B) 90 days after the date the Participant who is holding the Option ceases to
be a director, officer, employee or consultant of the Company or one of its
Affiliates. In no event may an Option be exercisable after the tenth anniversary
of the date the Option is granted.
     (c) SARs.
     (i) Grant. Subject to the provisions of the Plan, the Committee shall have
sole and plenary authority to determine the Participants to whom SARs shall be
granted, the number of Shares to be covered by each SAR, the Exercise Price
thereof and the conditions and limitations applicable to the exercise thereof.
SARs may be granted in tandem with another Award, in addition to another Award
or freestanding and unrelated to another Award. SARs granted in tandem with, or
in addition to, an Award may be granted either at the same time as the Award or
at a later time.

-9-

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

 

     (ii) Exercise Price. Except as otherwise established by the Committee at
the time a SAR is granted and set forth in the applicable Award Agreement, the
Exercise Price of each Share covered by a SAR shall be not less than 100% of the
Fair Market Value of such Share (determined as of the date the SAR is granted).
SARs are intended to qualify as “qualified performance-based compensation” under
Section 162(m) of the Code.
     (iii) Exercise. A SAR shall entitle the Participant to receive an amount
equal to the excess, if any, of the Fair Market Value of a Share on the date of
exercise of the SAR over the Exercise Price thereof. The Committee shall
determine, in its sole and plenary discretion, whether a SAR shall be settled in
cash, Shares, other securities, other Awards, other property or a combination of
any of the foregoing.
     (iv) Other Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine, at or after the grant
of a SAR, the vesting criteria, term, methods of exercise, methods and form of
settlement and any other terms and conditions of any SAR. Any such determination
by the Committee may be changed by the Committee from time to time and may
govern the exercise of SARs granted or exercised thereafter. The Committee may
impose such conditions or restrictions on the exercise of any SAR as it shall
deem appropriate or desirable.
     (d) Restricted Shares and RSUs.
     (i) Grant. Subject to the provisions of the Plan, the Committee shall have
sole and plenary authority to determine the Participants to whom Restricted
Shares and RSUs shall be granted, the number of Restricted Shares and RSUs to be
granted to each Participant, the duration of the period during which, and the
conditions, if any, under which, the Restricted Shares and RSUs may vest or may
be forfeited to the Company and the other terms and conditions of such Awards.
     (ii) Transfer Restrictions. Restricted Shares and RSUs may not be sold,
assigned, transferred, pledged or otherwise encumbered except as provided in the
Plan or as may be provided in the applicable Award Agreement; provided, however,
that the Committee may in its discretion determine that Restricted Shares and
RSUs may be transferred by the Participant. Certificates issued in respect of
Restricted Shares shall be registered in the name of the Participant and
deposited by such Participant, together with a stock power endorsed in blank,
with the Company or such other custodian as may be designated by the Committee
or the Company, and shall be held by the Company or other custodian, as
applicable, until such time as the restrictions applicable to such Restricted
Shares lapse. Upon the lapse of the restrictions applicable to such Restricted
Shares, the Company or other custodian, as applicable, shall deliver such
certificates to the Participant or the Participant’s legal representative.
     (iii) Payment/Lapse of Restrictions. Each RSU shall be granted with respect
to one Share or shall have a value equal to the Fair Market Value of one Share.
RSUs shall be paid in cash, Shares, other securities, other Awards or other
property, as determined in the sole and plenary discretion of the Committee,
upon the lapse of restrictions applicable thereto, or otherwise in accordance
with the applicable Award Agreement. If a Restricted Share or an RSU is intended
to qualify as “qualified performance-based compensation” under Section 162(m) of
the Code, all requirements set forth in Section 6(i) must be satisfied in order
for the restrictions applicable thereto to lapse.

-10-

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

 

     (e) Performance Units.
     (i) Grant. Subject to the provisions of the Plan, the Committee shall have
sole and plenary authority to determine the Participants to whom Performance
Units shall be granted and the terms and conditions thereof.
     (ii) Value of Performance Units. Each Performance Unit shall have an
initial value that is established by the Committee at the time of grant. The
Committee shall set Performance Goals in its discretion which, depending on the
extent to which they are met during a Performance Period, will determine the
number and value of Performance Units that will be paid out to the Participant.
     (iii) Earning of Performance Units. Subject to the provisions of the Plan,
after the applicable Performance Period has ended, the holder of Performance
Units shall be entitled to receive a payout of the number and value of
Performance Units earned by the Participant over the Performance Period, to be
determined by the Committee, in its sole and plenary discretion, as a function
of the extent to which the corresponding Performance Goals have been achieved.
     (iv) Form and Timing of Payment of Performance Units. Subject to the
provisions of the Plan, the Committee, in its sole and plenary discretion, may
pay earned Performance Units in the form of cash or in Shares (or in a
combination thereof) that has an aggregate Fair Market Value equal to the value
of the earned Performance Units at the close of the applicable Performance
Period. Such Shares may be granted subject to any restrictions in the applicable
Award Agreement deemed appropriate by the Committee. The determination of the
Committee with respect to the form and timing of payout of such Awards shall be
set forth in the applicable Award Agreement. If a Performance Unit is intended
to qualify as “qualified performance-based compensation” under Section 162(m) of
the Code, all requirements set forth in Section 6(i) must be satisfied in order
for a Participant to be entitled to payment.
     (f) Cash Incentive Awards. Subject to the provisions of the Plan, the
Committee, in its sole and plenary discretion, shall have the authority to grant
Cash Incentive Awards. The Committee shall establish Cash Incentive Award levels
to determine the amount of a Cash Incentive Award payable upon the attainment of
Performance Goals. If a Cash Incentive Award is intended to qualify as
“qualified performance-based compensation” under Section 162(m) of the Code, all
requirements set forth in Section 6(i) must be satisfied in order for a
Participant to be entitled to payment.
     (g) Other Stock-Based Awards. Subject to the provisions of the Plan, the
Committee shall have the sole and plenary authority to grant to Participants
other equity-based or equity-related Awards (including, but not limited to,
fully-vested Shares) in such amounts and subject to such terms and conditions as
the Committee shall determine. If such an Award is intended to qualify as
“qualified performance-based compensation” under Section 162(m) of the Code, all
requirements set forth in Section 6(i) must be satisfied in order for a
Participant to be entitled to payment.
     (h) Dividend Equivalents. In the sole and plenary discretion of the
Committee, an Award, other than an Option, SAR or Cash Incentive Award, may
provide the Participant with dividends or dividend equivalents, payable in cash,
Shares, other securities, other Awards or other property, on a current or
deferred basis, on such terms and conditions as may be determined by the
Committee in its sole and plenary discretion, including, without limitation,
payment directly to the Participant, withholding of such amounts by the Company
subject to vesting of the Award or reinvestment in additional Shares, Restricted
Shares or other Awards.

-11-

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

 

     (i) Performance Compensation Awards.
     (i) General. The Committee shall have the authority, at the time of grant
of any Award, to designate such Award (other than Options and SARs) as a
Performance Compensation Award in order to qualify such Award as “qualified
performance-based compensation” under Section 162(m) of the Code. Options and
SARs granted under the Plan shall not be included among Awards that are
designated as Performance Compensation Awards under this Section 6(i).
     (ii) Eligibility. The Committee shall, in its sole discretion, designate
within the first 90 days of a Performance Period (or, if shorter, within the
maximum period allowed under Section 162(m) of the Code) which Participants will
be eligible to receive Performance Compensation Awards in respect of such
Performance Period. However, designation of a Participant eligible to receive an
Award hereunder for a Performance Period shall not in any manner entitle the
Participant to receive payment in respect of any Performance Compensation Award
for such Performance Period. The determination as to whether or not such
Participant becomes entitled to payment in respect of any Performance
Compensation Award shall be decided solely in accordance with the provisions of
this Section 6(i). Moreover, designation of a Participant eligible to receive an
Award hereunder for a particular Performance Period shall not require
designation of such Participant eligible to receive an Award hereunder in any
subsequent Performance Period and designation of one person as a Participant
eligible to receive an Award hereunder shall not require designation of any
other person as a Participant eligible to receive an Award hereunder in such
period or in any other period.
     (iii) Discretion of Committee with Respect to Performance Compensation
Awards. With regard to a particular Performance Period, the Committee shall have
full discretion to select the length of such Performance Period, the types of
Performance Compensation Awards to be issued, the Performance Criteria that will
be used to establish the Performance Goals, the kinds and levels of the
Performance Goals that are to apply to the Company or any of its Subsidiaries,
Affiliates, divisions or operational units, or any combination of the foregoing,
and the Performance Formula. Within the first 90 days of a Performance Period
(or, if shorter, within the maximum period allowed under Section 162(m) of the
Code), the Committee shall, with regard to the Performance Compensation Awards
to be issued for such Performance Period, exercise its discretion with respect
to each of the matters enumerated in the immediately preceding sentence and
record the same in writing.
     (iv) Performance Criteria. Notwithstanding the foregoing, the Performance
Criteria that will be used to establish the Performance Goals shall be based on
the attainment of specific levels of performance of the Company or any of its
Subsidiaries, Affiliates, divisions or operational units, or any combination of
the foregoing, and shall be limited to the following: (A) net income before or
after taxes, (B) earnings before or after taxes (including EBITDA),
(C) operating income, (D) earnings per share, (E) return on stockholders’
equity, (F) return on investment or capital, (G) return on assets, (H) level or
amount of acquisitions, (I) share price, (J) profitability and profit margins
(including EBITDA margins), (K) market share, (L) revenues or sales (based on
units or dollars), (M) costs, (N) cash flow, (O) working capital and (P) project
completion time and budget goals. Such performance criteria may be applied on an
absolute basis and/or be relative to one or more peer companies of the Company
or indices or any combination thereof. To the extent required under Section
162(m) of the Code, the Committee shall, within the first 90 days of the
applicable Performance Period (or, if shorter, within the maximum period allowed
under Section 162(m) of the Code), define in an objective manner the method of
calculating the Performance Criteria it selects to use for such Performance
Period.

-12-

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

 

     (v) Modification of Performance Goals. The Committee is authorized at any
time during the first 90 days of a Performance Period (or, if shorter, within
the maximum period allowed under Section 162(m) of the Code), or any time
thereafter (but only to the extent the exercise of such authority after such
90-day period (or such shorter period, if applicable) would not cause the
Performance Compensation Awards granted to any Participant for the Performance
Period to fail to qualify as “qualified performance-based compensation” under
Section 162(m) of the Code), in its sole and plenary discretion, to adjust or
modify the calculation of a Performance Goal for such Performance Period to the
extent permitted under Section 162(m) of the Code (A) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction, event
or development affecting the Company or any of its Affiliates, Subsidiaries,
divisions or operating units (to the extent applicable to such Performance Goal)
or (B) in recognition of, or in anticipation of, any other unusual or
nonrecurring events affecting the Company or any of its Affiliates,
Subsidiaries, divisions or operating units (to the extent applicable to such
Performance Goal), or the financial statements of the Company or any of its
Affiliates, Subsidiaries, divisions or operating units (to the extent applicable
to such Performance Goal), or of changes in applicable rules, rulings,
regulations or other requirements of any governmental body or securities
exchange, accounting principles, law or business conditions.
     (vi) Payment of Performance Compensation Awards.
          (A) Condition to Receipt of Payment. A Participant must be employed by
the Company on the last day of a Performance Period to be eligible for payment
in respect of a Performance Compensation Award for such Performance Period.
Notwithstanding the foregoing, in the discretion of the Committee, Performance
Compensation Awards may be paid to Participants who have retired or whose
employment has terminated prior to the last day of a Performance Period for
which a Performance Compensation Award is made or to the designee or estate of a
Participant who has died prior to the last day of a Performance Period.
          (B) Limitation. A Participant shall be eligible to receive payments in
respect of a Performance Compensation Award only to the extent that (1) the
Performance Goals for such period are achieved and certified by the Committee in
accordance with Section 6(i)(vi)(C) and (2) the Performance Formula as applied
against such Performance Goals determines that all or some portion of such
Participant’s Performance Compensation Award has been earned for the Performance
Period.
          (C) Certification. Following the completion of a Performance Period,
the Committee shall meet to review and certify in writing whether, and to what
extent, the Performance Goals for the Performance Period have been achieved and,
if so, to calculate and certify in writing that amount of the Performance
Compensation Awards earned for the period based upon the Performance Formula.
The Committee shall then determine the actual size of each Participant’s
Performance Compensation Award for the Performance Period and, in so doing, may
apply negative discretion as authorized by Section 6(i)(vi)(D).
          (D) Negative Discretion. In determining the actual size of an
individual Performance Compensation Award for a Performance Period, the
Committee may, in its sole and plenary discretion, reduce or eliminate the
amount of the Award earned in the Performance Period, even if applicable
Performance Goals have been attained.

-13-

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

 

          (E) Timing of Award Payments. The Performance Compensation Awards
granted for a Performance Period shall be paid to Participants as soon as
administratively possible following completion of the certifications required by
Section 6(i)(vi)(C), unless the Committee shall determine that any Performance
Compensation Award shall be deferred.
          (F) Discretion. In no event shall any discretionary authority granted
to the Committee by the Plan be used to (1) grant or provide payment in respect
of Performance Compensation Awards for a Performance Period if the Performance
Goals for such Performance Period have not been attained, (2) increase a
Performance Compensation Award for any Participant at any time after the first
90 days of the Performance Period (or, if shorter, the maximum period allowed
under Section 162(m)) or (3) increase a Performance Compensation Award above the
maximum amount payable under Section 4(a) of the Plan.
     SECTION 7. Amendment and Termination.
     (a) Amendments to the Plan. Subject to any applicable law or government
regulation, to any requirement that must be satisfied if the Plan is intended to
be a stockholder approved plan for purposes of Section 162(m) of the Code and to
the rules of the NYSE or any successor exchange or quotation system on which the
Shares may be listed or quoted, the Plan may be amended, modified or terminated
by the Board without the approval of the stockholders of the Company except that
stockholder approval shall be required for any amendment that would (i) increase
the maximum number of Shares for which Awards may be granted under the Plan or
increase the maximum number of Shares that may be delivered pursuant to
Incentive Stock Options granted under the Plan; provided, however, that any
adjustment under Section 4(b) shall not constitute an increase for purposes of
this Section 7(a) or (ii) change the class of employees or other individuals
eligible to participate in the Plan. No modification, amendment or termination
of the Plan may, without the consent of the Participant to whom any Award shall
theretofor have been granted, materially and adversely affect the rights of such
Participant (or his or her transferee) under such Award, unless otherwise
provided by the Committee in the applicable Award Agreement.
     (b) Amendments to Awards. The Committee may waive any conditions or rights
under, amend any terms of, or alter, suspend, discontinue, cancel or terminate
any Award theretofor granted, prospectively or retroactively; provided, however,
that, except as set forth in the Plan, unless otherwise provided by the
Committee in the applicable Award Agreement, any such waiver, amendment,
alteration, suspension, discontinuance, cancellation or termination that would
materially and adversely impair the rights of any Participant or any holder or
beneficiary of any Award theretofor granted shall not to that extent be
effective without the consent of the impaired Participant, holder or
beneficiary.
     (c) Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 4(b) or the occurrence of a Change of Control) affecting
the Company, any Affiliate, or the financial statements of the Company or any
Affiliate, or of changes in applicable rules, rulings, regulations or other
requirements of any governmental body or securities exchange, accounting
principles or law (i) whenever the Committee, in its sole and plenary
discretion, determines that such adjustments are appropriate or desirable,
including, without limitation, providing for a substitution or assumption of
Awards, accelerating the exercisability of, lapse of restrictions on, or
termination of, Awards or providing for a period of time for exercise prior to
the occurrence of such event, (ii) if deemed appropriate or desirable by the
Committee, in its sole and plenary discretion, by providing for a cash payment
to the holder of an Award in consideration for the cancellation of such Award,
including, in the

-14-

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

 

case of an outstanding Option or SAR, a cash payment to the holder of such
Option or SAR in consideration for the cancellation of such Option or SAR in an
amount equal to the excess, if any, of the Fair Market Value (as of a date
specified by the Committee) of the Shares subject to such Option or SAR over the
aggregate Exercise Price of such Option or SAR and (iii) if deemed appropriate
or desirable by the Committee, in its sole and plenary discretion, by canceling
and terminating any Option or SAR having a per Share Exercise Price equal to, or
in excess of, the Fair Market Value of a Share subject to such Option or SAR
without any payment or consideration therefor.
     SECTION 8. Change of Control. Unless otherwise provided in the applicable
Award Agreement, in the event of a Change of Control after the date of the
adoption of the Plan, unless provision is made in connection with the Change of
Control for (a) assumption of Awards previously granted or (b) substitution for
such Awards of new awards covering stock of a successor corporation or its
“parent corporation” (as defined in Section 424(e) of the Code) or “subsidiary
corporation” (as defined in Section 424(f) of the Code) with appropriate
adjustments as to the number and kinds of shares and the Exercise Prices, if
applicable, (i) any outstanding Options or SARs then held by Participants that
are unexercisable or otherwise unvested shall automatically be deemed
exercisable or otherwise vested, as the case may be, as of immediately prior to
such Change of Control, (ii) all Performance Units and Cash Incentive Awards
shall be paid out as if the date of the Change of Control were the last day of
the applicable Performance Period and “target” performance levels had been
attained and (iii) all other outstanding Awards (i.e., other than Options, SARs,
Performance Units and Cash Incentive Awards) then held by Participants that are
unexercisable, unvested or still subject to restrictions or forfeiture, shall
automatically be deemed exercisable and vested and all restrictions and
forfeiture provisions related thereto shall lapse as of immediately prior to
such Change of Control.
     SECTION 9. General Provisions.
     (a) Nontransferability. Except as otherwise specified in the applicable
Award Agreement, during the Participant’s lifetime each Award (and any rights
and obligations thereunder) shall be exercisable only by the Participant, or, if
permissible under applicable law, by the Participant’s legal guardian or
representative, and no Award (or any rights and obligations thereunder) may be
assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by a Participant otherwise than by will or by the laws of descent and
distribution, and any such purported assignment, alienation, pledge, attachment,
sale, transfer or encumbrance shall be void and unenforceable against the
Company or any Affiliate; provided that (i) the designation of a beneficiary
shall not constitute an assignment, alienation, pledge, attachment, sale,
transfer or encumbrance and (ii) the Board or the Committee may permit further
transferability, on a general or specific basis, and may impose conditions and
limitations on any permitted transferability; provided, however, that Incentive
Stock Options granted under the Plan shall not be transferable in any way that
would violate Section 1.422-2(a)(2) of the Treasury Regulations. All terms and
conditions of the Plan and all Award Agreements shall be binding upon any
permitted successors and assigns.
     (b) No Rights to Awards. No Participant or other Person shall have any
claim to be granted any Award, and there is no obligation for uniformity of
treatment of Participants or holders or beneficiaries of Awards. The terms and
conditions of Awards and the Committee’s determinations and interpretations with
respect thereto need not be the same with respect to each Participant and may be
made selectively among Participants, whether or not such Participants are
similarly situated.
     (c) Share Certificates. All certificates for Shares or other securities of
the Company or any Affiliate delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan, the applicable
Award Agreement or the rules, regulations and other requirements of the SEC, the
NYSE or

-15-

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

 

any other stock exchange or quotation system upon which such Shares or other
securities are then listed or reported and any applicable Federal or state laws,
and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
     (d) Withholding. A Participant may be required to pay to the Company or any
Affiliate, and the Company or any Affiliate shall have the right and is hereby
authorized to withhold from any Award, from any payment due or transfer made
under any Award or under the Plan or from any compensation or other amount owing
to a Participant, the amount (in cash, Shares, other securities, other Awards or
other property) of any applicable withholding taxes in respect of an Award, its
exercise or any payment or transfer under an Award or under the Plan and to take
such other action as may be necessary in the opinion of the Committee or the
Company to satisfy all obligations for the payment of such taxes.
     (e) Award Agreements. Each Award hereunder shall be evidenced by an Award
Agreement, which shall be delivered to the Participant and shall specify the
terms and conditions of the Award and any rules applicable thereto, including,
but not limited to, the effect on such Award of the death, disability or
termination of employment or service of a Participant and the effect, if any, of
such other events as may be determined by the Committee.
     (f) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other compensation arrangements, which may, but need not, provide for the
grant of options, restricted stock, shares and other types of equity-based
awards (subject to stockholder approval if such approval is required), and such
arrangements may be either generally applicable or applicable only in specific
cases.
     (g) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained as a director, officer, employee
or consultant of or to the Company or any Affiliate, nor shall it be construed
as giving a Participant any rights to continued service on the Board. Further,
the Company or an Affiliate may at any time dismiss a Participant from
employment or discontinue any consulting relationship, free from any liability
or any claim under the Plan, unless otherwise expressly provided in the Plan or
in any Award Agreement.
     (h) No Rights as Stockholder. No Participant or holder or beneficiary of
any Award shall have any rights as a stockholder with respect to any Shares to
be distributed under the Plan until he or she has become the holder of such
Shares. In connection with each grant of Restricted Shares, except as provided
in the applicable Award Agreement, the Participant shall not be entitled to the
rights of a stockholder in respect of such Restricted Shares. Except as
otherwise provided in Section 4(b), Section 7(c) or the applicable Award
Agreement, no adjustments shall be made for dividends or distributions on
(whether ordinary or extraordinary, and whether in cash, Shares, other
securities or other property), or other events relating to, Shares subject to an
Award for which the record date is prior to the date such Shares are delivered.
     (i) Governing Law. The validity, construction and effect of the Plan and
any rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Nevada, without giving
effect to the conflict of laws provisions thereof.
     (j) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as
to any Person or Award, or would disqualify the Plan or any Award under any law
deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform to the applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award,

-16-

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

 

such provision shall be construed or deemed stricken as to such jurisdiction,
Person or Award and the remainder of the Plan and any such Award shall remain in
full force and effect.
     (k) Other Laws. The Committee may refuse to issue or transfer any Shares or
other consideration under an Award if, acting in its sole and plenary
discretion, it determines that the issuance or transfer of such Shares or such
other consideration might violate any applicable law or regulation or entitle
the Company to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant, other holder or beneficiary in
connection with the exercise of such Award shall be promptly refunded to the
relevant Participant, holder or beneficiary. Without limiting the generality of
the foregoing, no Award granted hereunder shall be construed as an offer to sell
securities of the Company, and no such offer shall be outstanding, unless and
until the Committee in its sole and plenary discretion has determined that any
such offer, if made, would be in compliance with all applicable requirements of
the U.S. Federal and any other applicable securities laws.
     (l) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate, on one hand, and a
Participant or any other Person, on the other hand. To the extent that any
Person acquires a right to receive payments from the Company or any Affiliate
pursuant to an Award, such right shall be no greater than the right of any
unsecured general creditor of the Company or such Affiliate.
     (m) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities or other property shall be paid or transferred in lieu of
any fractional Shares or whether such fractional Shares or any rights thereto
shall be canceled, terminated or otherwise eliminated.
     (n) Requirement of Consent and Notification of Election Under Section 83(b)
of the Code or Similar Provision. No election under Section 83(b) of the Code
(to include in gross income in the year of transfer the amounts specified in
Section 83(b) of the Code) or under a similar provision of law may be made
unless expressly permitted by the terms of the applicable Award Agreement or by
action of the Committee in writing prior to the making of such election. If an
Award recipient, in connection with the acquisition of Shares under the Plan or
otherwise, is expressly permitted under the terms of the applicable Award
Agreement or by such Committee action to make such an election and the
Participant makes the election, the Participant shall notify the Committee of
such election within ten days of filing notice of the election with the IRS or
other governmental authority, in addition to any filing and notification
required pursuant to regulations issued under Section 83(b) of the Code or other
applicable provision.
     (o) Requirement of Notification Upon Disqualifying Disposition Under
Section 421(b) of the Code. If any Participant shall make any disposition of
Shares delivered pursuant to the exercise of an Incentive Stock Option under the
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions) or any successor provision of the Code, such
Participant shall notify the Company of such disposition within ten days of such
disposition.
     (p) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
     SECTION 10. Term of the Plan.
     (a) Effective Date. The Plan shall be effective as of the date of its
adoption by the Board and approval by the Company’s stockholders; provided,
however, that no Incentive Stock Options may be

-17-

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

 

granted under the Plan unless it is approved by the Company’s stockholders
within twelve (12) months before or after the date the Plan is adopted by the
Board.
     (b) Expiration Date. No Award shall be granted under the Plan after the
tenth anniversary of the date the Plan is approved under Section 10(a). Unless
otherwise expressly provided in the Plan or in an applicable Award Agreement,
any Award granted hereunder may, and the authority of the Board or the Committee
to amend, alter, adjust, suspend, discontinue or terminate any such Award or to
waive any conditions or rights under any such Award shall, nevertheless continue
thereafter.

-18-