Exhibit 10.3

RENTRAK CORPORATION

AMENDED AND RESTATED

2005 STOCK INCENTIVE PLAN

Effective August 20, 2009

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TABLE OF CONTENTS

 

              Page   1.   

ESTABLISHMENT AND PURPOSE

     1       1.1  

Establishment

     1       1.2  

Purpose

     1       1.3  

Prior Plans

     1       1.4  

Reservation of Right to Amend to Comply with Section 409A

     1    2.   

DEFINITIONS

     1       2.1  

Defined Terms

     1       2.2  

Gender and Number

     6    3.   

ADMINISTRATION

     6       3.1  

General

     6       3.2  

Composition of the Committee

     6       3.3  

Authority of the Committee

     6       3.4  

Action by the Committee

     7       3.5  

Delegation

     7       3.6  

Liability of Committee Members

     7       3.7  

Costs of Plan

     7    4.   

DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN

     7       4.1  

Duration of the Plan

     7       4.2  

Shares Subject to the Plan

     7    5.   

ELIGIBILITY

     7    6.   

AWARDS

     8       6.1  

Types of Awards

     8       6.2  

General

     8       6.3  

Nonuniform Determinations

     8       6.4  

Award Agreements

     8       6.5  

Provisions Governing All Awards

     8    7.   

OPTIONS

     13       7.1  

Types of Options

     13       7.2  

General

     13       7.3  

Option Price

     13   

 

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TABLE OF CONTENTS

(continued)

 

              Page      7.4  

Option Term

     13       7.5  

Time of Exercise

     13       7.6  

Special Rules for Incentive Stock Options

     14       7.7  

Restricted Shares

     14       7.8  

Limitation on Number of Shares Subject to Options

     14    8.   

STOCK APPRECIATION RIGHTS

     14       8.1  

General

     14       8.2  

Nature of Stock Appreciation Right

     14       8.3  

Exercise

     14       8.4  

Form of Payment

     15       8.5  

Limitation on Number of Stock Appreciation Rights

     15    9.   

RESTRICTED AWARDS

     15       9.1  

Types of Restricted Awards

     15       9.2  

General

     15       9.3  

Restriction Period

     16       9.4  

Forfeiture

     16       9.5  

Settlement of Restricted Awards

     16       9.6  

Rights as a Shareholder

     17       9.7  

Limitation in Number of Restricted Awards

     17    10.   

PERFORMANCE AWARDS

     17       10.1  

General

     17       10.2  

Nature of Performance Awards

     17       10.3  

Performance Cycles

     17       10.4  

Performance Goals

     17       10.5  

Performance Goals for Executive Officers

     18       10.6  

Determination of Awards

     18       10.7  

Timing and Form of Payment

     18       10.8  

Limitation on Number of Performance Awards

     18    11.   

OTHER STOCK-BASED AND COMBINATION AWARDS

     18       11.1  

Other Stock-Based Awards

     18   

 

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TABLE OF CONTENTS

(continued)

 

                Page        11.2     

Combination Awards

     19    12.   

 

DIVIDEND EQUIVALENTS

     19    13.   

 

ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.

     19         13.1     

Plan Does Not Restrict Corporation

     19         13.2     

Adjustments to Shares Subject to the Plan and Outstanding Awards

     19    14.   

 

AMENDMENT AND TERMINATION

     20    15.   

 

MISCELLANEOUS

     20         15.1     

Tax Withholding

     20         15.2     

Unfunded Plan

     20         15.3     

Annulment of Awards

     20         15.4     

Engaging in Competition With Corporation

     20         15.5     

Other Corporation Benefit and Compensation Programs

     21         15.6     

Securities Law Restrictions

     21         15.7     

Governing Law

     21    16.   

 

SHAREHOLDER APPROVAL

     21   

 

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RENTRAK CORPORATION

AMENDED AND RESTATED

2005 STOCK INCENTIVE PLAN

 

1. ESTABLISHMENT AND PURPOSE

1.1 Establishment. Rentrak Corporation, an Oregon corporation (“Corporation”),
established the Rentrak Corporation 2005 Stock Incentive Plan effective as of
August 25, 2005 (the “Effective Date”). The original Plan was approved at
Corporation’s 2005 annual shareholders’ meeting. The Plan is hereby amended and
restated in the form of this Rentrak Corporation Amended and Restated 2005 Stock
Incentive Plan (the “Plan”), effective as of the time of and subject to
shareholder approval as provided in Section 16.

1.2 Purpose. The purpose of the Plan is to promote and advance the interests of
Corporation and its shareholders by enabling Corporation to attract, retain, and
reward key employees, directors, and outside consultants of Corporation and its
subsidiaries. It is also intended to strengthen the mutuality of interests
between such employees, directors, and consultants and Corporation’s
shareholders. The Plan is designed to serve these purposes by offering stock
options and other equity-based incentive awards in order to provide participants
a proprietary interest in pursuing the long-term growth, profitability, and
financial success of Corporation.

1.3 Prior Plans. The Plan is separate from the Rentrak Corporation 1997 Equity
Participation Plan and the Rentrak Corporation 1997 Non-Officer Employee Stock
Option Plan (the “Prior Plans”). The adoption of the Plan neither affects nor is
affected by the continued existence of the Prior Plans except that:

(a) No further Awards will be granted under the Prior Plans; and

(b) The number of Shares which may be made subject to Awards under the Plan will
be adjusted from time to time pursuant to Section 4.2 to reflect cancellation,
termination, or expiration of stock options previously granted under the Prior
Plans.

1.4 Reservation of Right to Amend to Comply with Section 409A. The Board and the
Committee reserve the right to amend the Plan, either retroactively or
prospectively, in whatever respect is required to achieve and maintain
compliance with the requirements of Code Section 409A and the regulations and
other guidance issued by the Department of the Treasury thereunder
(collectively, “Section 409A”).

 

2. DEFINITIONS

2.1 Defined Terms. For purposes of the Plan, the following terms have the
meanings set forth below:

“Award” means an award or grant made to a Participant of Options, Stock
Appreciation Rights, Restricted Awards, Performance Awards, or Other Stock-Based
Awards pursuant to the Plan.

 

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“Award Agreement” means an agreement as described in Section 6.4 of the Plan.

“Board” means the Board of Directors of Corporation.

“Change in Control” has the meaning given by the Committee in each Award
Agreement, or, if the term is not otherwise defined in an Award Agreement, the
first occurrence of any of the following:

(a) Any person (including any individual, corporation, limited liability
company, partnership, trust, group, association, or other “person,” as such term
is used in Section 13(d)(3) or 14(d) of the Exchange Act) other than a trustee
or other fiduciary holding securities under an employee benefit plan of
Corporation, is or becomes a beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
Corporation representing 25 percent or more of the combined voting power of
Corporation’s then outstanding securities;

(b) A majority of the directors elected at any annual or special meeting of
shareholders are not individuals nominated by Corporation’s then incumbent
Board; or

(c) The shareholders of Corporation approve (i) a merger or consolidation of
Corporation with any other corporation, other than a merger or consolidation
which would result in the Voting Securities (defined as all issued and
outstanding securities ordinarily having the right to vote at elections of
Corporation’s directors) of Corporation outstanding immediately prior to such
transaction continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 75 percent of
the combined voting power of the Voting Securities of Corporation or of such
surviving entity outstanding immediately after such merger or consolidation,
(ii) a plan of complete liquidation of Corporation, or (iii) an agreement for
the sale or disposition by Corporation of all or substantially all of its
assets.

“Code” means the Internal Revenue Code of 1986, as amended and in effect from
time to time, or any successor statute, together with rules, regulations, and
interpretations promulgated under the Code. Where the context so requires, any
reference to a particular Code section will be construed to refer to the
successor provision to such Code section.

“Committee” means the committee appointed by the Board to administer the Plan as
provided in Section 3 of the Plan.

“Common Stock” means the $.001 par value Common Stock of Corporation.

“Consultant” means any consultant or adviser to Corporation or a Subsidiary
selected by the Committee who is not an employee of Corporation or a Subsidiary
and who provides services to Corporation or a Subsidiary other than services of
a capital-raising nature.

“Continuing Restriction” means a Restriction contained in Sections 6.5(g),
6.5(i), 15.3, 15.4, and 15.6 of the Plan and any other Restriction expressly
designated by the Committee in an Award Agreement as a Continuing Restriction.

 

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“Corporation” means Rentrak Corporation, an Oregon corporation, or any successor
corporation.

“Disability” means the condition of being permanently “disabled” within the
meaning of Section 22(e)(3) of the Code, namely being 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 which has lasted
or can be expected to last for a continuous period of not less than 12 months.
However, the Committee may change the foregoing definition of “Disability” or
may adopt a different definition for purposes of specific Awards.

“Exchange Act” means the Securities Exchange Act of 1934, as amended and in
effect from time to time, or any successor statute. Where the context so
requires, any reference to a particular section of the Exchange Act, or to any
rule promulgated under the Exchange Act, will be construed to refer to successor
provisions to such section or rule.

“Fair Market Value” means, on any given day, the fair market value per share of
the Common Stock determined as follows:

(a) If the Common Stock is traded on an established securities exchange, the
closing sale price of Common Stock as reported for such day by the principal
exchange on which Common Stock is traded (as determined by the Committee) or, if
Common Stock was not traded on such day, on the next preceding day on which
Common Stock was traded;

(b) If trading activity in Common Stock is reported on The Nasdaq Stock Market,
the closing sale price of Common Stock as reported for such day by Nasdaq or, if
Common Stock trades were not reported on such day, on the next preceding day on
which Common Stock trades were reported by Nasdaq;

(c) If trading activity in Common Stock is reported on the OTC Bulletin Board,
the average of the closing representative bid and asked prices for such day as
reported on the OTC Bulletin Board or, if there are no such quotes for Common
Stock for such day, on the next preceding day for which bid and asked price
quotes for Common Stock were reported on the OTC Bulletin Board; or

(d) If there is no market for Common Stock or if trading activities for Common
Stock are not reported in one of the manners described above, the fair market
value will be as determined by the Committee.

“Incentive Stock Option” or “ISO” means any Option granted pursuant to the Plan
that is intended to be and is specifically designated in its Award Agreement as
an “incentive stock option” within the meaning of Section 422 of the Code.

“Non-Employee Board Director” means a member of the Board who is not an employee
of Corporation or any Subsidiary.

 

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“Non-Employee Subsidiary Director” means a member of the board of directors of a
Subsidiary who is neither an employee of Corporation or a Subsidiary nor a
member of the Board.

“Nonqualified Option” or “NQO” means any Option granted pursuant to the Plan
that is not an Incentive Stock Option.

“Option” means an ISO or an NQO.

“Option Committee” means a committee of one or more members of the Board (who
need not be members of the Committee) to whom the Committee may delegate
authority to grant Awards to Participants who are not Reporting Persons.

“Other Stock-Based Award” means an Award as defined in Section 11.1 of the Plan.

“Participant” means an employee of Corporation or a Subsidiary, a Consultant, a
Non-Employee Board Director, or a Non-Employee Subsidiary Director who is
granted an Award under the Plan.

“Performance Award” means an Award granted pursuant to the provisions of
Section 10 of the Plan, the Vesting of which is contingent on attainment of
Performance Goals.

“Performance Cycle” means a designated performance period pursuant to the
provisions of Section 10.3 of the Plan.

“Performance Goal” means a designated performance objective pursuant to the
provisions of Section 10.4 of the Plan.

“Plan” means this Rentrak Corporation 2005 Amended and Restated Stock Incentive
Plan, as set forth in this document and as it may be amended from time to time.

“Reporting Person” means a Participant who is subject to the reporting
requirements of Section 16(a) of the Exchange Act.

“Restricted Award” means a Restricted Share or a Restricted Stock Unit granted
pursuant to Section 9 of the Plan.

“Restricted Share” means an Award described in Section 9.1(a) of the Plan.

“Restricted Stock Unit” means an Award of units representing Shares described in
Section 9.1(b) of the Plan.

“Restriction” means a provision in the Plan or in an Award Agreement which
limits the exercisability or transferability, or which governs the forfeiture,
of an Award or the Shares, cash, or other property payable pursuant to an Award.

 

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“Restriction Period” means a designated period pursuant to the provisions of
Section 9.3 of the Plan.

“Retirement” has the meaning given by the Committee in each Award Agreement, or,
if the term is not otherwise defined in an Award Agreement, has the following
meaning:

(a) For Participants who are employees, retirement from active employment with
Corporation and its Subsidiaries on or after age 65, or such earlier retirement
date as approved by the Committee for purposes of the Plan;

(b) For Participants who are Non-Employee Board Directors or Non-Employee
Subsidiary Directors, retirement from the applicable board of directors after
attaining the age and service period specified in the Corporate Governance
Guidelines adopted by the Board; or

(c) For Participants who are Consultants, termination of service as a Consultant
after attaining a retirement age specified by the Committee for purposes of an
Award to such Consultant.

“Settlement Period” means, with respect to any Restricted Stock Unit Award or
Performance Award, the period following the expiration of the Restriction Period
or the Performance Cycle, respectively, for such Award specified by the
Committee in the Award Agreement for such Award so that the Restricted Stock
Unit Award or Performance Award will either (a) not be treated as a deferred
compensation arrangement for income tax purposes under Section 409A, or (b) if
treated as a deferred compensation arrangement for such purposes, will meet all
requirements under Section 409A.

“Share” means a share of Common Stock.

“Stock Appreciation Right” or “SAR” means an Award to benefit from the
appreciation of Common Stock granted pursuant to the provisions of Section 8 of
the Plan.

“Subsidiary” means (i) a “subsidiary corporation” of Corporation, within the
meaning of Section 424(f) of the Code, namely any corporation in which
Corporation directly or indirectly controls 50 percent or more of the total
combined voting power of all classes of stock having voting power, and (ii) any
partnership, limited liability company, or other business entity of which
Corporation owns or controls 50 percent or more of the voting interests and
which has been designated by the Committee as a subsidiary; provided, however,
that with respect to ISOs, only employees of subsidiary corporations as
described in clause (i) may receive such Awards.

“Vest,” “Vesting,” or “Vested” means:

(a) In the case of an Award that requires exercise, to be or to become
immediately and fully exercisable and free of all Restrictions (other than
Continuing Restrictions);

 

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(b) In the case of an Award that is subject to forfeiture, to be or to become
nonforfeitable, freely transferable, and free of all Restrictions (other than
Continuing Restrictions);

(c) In the case of an Award that is required to be earned by attaining specified
Performance Goals, to be or to become earned and nonforfeitable, freely
transferable, and free of all Restrictions (other than Continuing Restrictions);
or

(d) In the case of any other Award as to which payment is not dependent solely
upon the exercise of a right, election, or option, to be or to become
immediately payable and free of all Restrictions (except Continuing
Restrictions).

2.2 Gender and Number. Except where otherwise indicated by the context, any
masculine or feminine terminology used in the Plan also includes the opposite
gender; and the definition of any term in Section 2.1 in the singular also
includes the plural, and vice versa.

 

3. ADMINISTRATION

3.1 General. The Plan will be administered by a Committee composed as described
in Section 3.2.

3.2 Composition of the Committee. The Committee will be appointed by the Board
and will consist of not less than a sufficient number of Non-Employee Board
Directors so as to qualify the Committee to administer the Plan as contemplated
by Section 162(m)(4)(C) of the Code, Rule 16b-3 under the Exchange Act and Rule
5605(d) of the Nasdaq Marketplace Rules. The Board may from time to time remove
members from, or add members to, the Committee. Vacancies on the Committee,
however caused, will be filled by the Board. In the event that the Committee
ceases to satisfy the requirements of Section 162(m)(4)(C), Rule 16b-3, or Rule
5605(d), the Board will reconstitute the Committee as necessary to satisfy such
requirements.

3.3 Authority of the Committee. The Committee has full power and authority
(subject to such orders or resolutions as may be issued or adopted from time to
time by the Board) to administer the Plan in its sole discretion, including the
authority to:

(a) Construe and interpret the Plan and any Award Agreement;

(b) Promulgate, amend, and rescind rules and procedures relating to the
implementation of the Plan;

(c) Select the employees, Non-Employee Board Directors, Non-Employee Subsidiary
Directors, and Consultants who will be granted Awards;

(d) Determine the number and types of Awards to be granted to each such
Participant;

(e) Determine the number of Shares, or Share equivalents, to be subject to each
Award;

 

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(f) Determine the option price, purchase price, base price, or similar feature
for any Award; and

(g) Determine all the terms and conditions of all Award Agreements, consistent
with the requirements of the Plan.

Decisions of the Committee, or any delegate as permitted by the Plan, will be
final, conclusive, and binding on all Participants.

3.4 Action by the Committee. A majority of the members of the Committee will
constitute a quorum for the transaction of business. Action approved by a
majority of the members present at any meeting at which a quorum is present, or
action in writing by all of the members of the Committee, will be the valid acts
of the Committee.

3.5 Delegation. Notwithstanding any other provision of this Section 3, the
Committee may delegate to the Option Committee the authority, subject to such
conditions or limitations as the Committee may designate, to determine the
recipients, types, amounts, and terms of Awards granted to Participants who are
not Reporting Persons.

3.6 Liability of Committee Members. No member of the Committee or the Option
Committee will be liable for any action or determination made in good faith with
respect to the Plan, any Award, or any Participant.

3.7 Costs of Plan. The costs and expenses of administering the Plan will be
borne by Corporation.

 

4. DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN

4.1 Duration of the Plan. The Plan became effective on August 25, 2005, and
subject to approval by Corporation’s shareholders as provided in Section 16 is
amended and restated as of the date of such approval. The Plan will remain in
effect until Awards have been granted covering all the available Shares or the
Plan is otherwise terminated by the Board. Termination of the Plan will not
affect outstanding Awards.

4.2 Shares Subject to the Plan. The shares which may be made subject to Awards
under the Plan are Shares of Common Stock, which may be either authorized and
unissued Shares or reacquired Shares. No fractional Shares may be issued under
the Plan. Subject to adjustment pursuant to Section 13, the maximum number of
Shares for which Awards may be granted under the Plan is 2,000,000. If an Award
under the Plan (or any option previously granted under the Prior Plans) is
canceled or expires for any reason prior to having been fully Vested or
exercised by a Participant or is settled in cash in lieu of Shares or is
exchanged for other Awards, all Shares covered by such Awards will be added back
into the number of Shares available for future Awards under the Plan.

 

5. ELIGIBILITY

Officers and other key employees of Corporation and its Subsidiaries (including
employees who may also be directors of Corporation or a Subsidiary),
Consultants, Non-

 

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Employee Board Directors, and Non-Employee Subsidiary Directors who, in the
Committee’s judgment, are or will be contributors to the long-term success of
Corporation are eligible to receive Awards under the Plan.

 

6. AWARDS

6.1 Types of Awards. The types of Awards that may be granted under the Plan are:

(a) Options governed by Section 7 of the Plan;

(b) Stock Appreciation Rights governed by Section 8 of the Plan;

(c) Restricted Awards governed by Section 9 of the Plan;

(d) Performance Awards governed by Section 10 of the Plan; and

(e) Other Stock-Based Awards or combination awards governed by Section 11 of the
Plan.

In the discretion of the Committee, any Award may be granted alone, in addition
to, or in tandem with other Awards under the Plan.

6.2 General. Subject to the limitations of the Plan, the Committee may cause
Corporation to grant Awards to such Participants, at such times, of such types,
in such amounts, for such periods, with such option prices, purchase prices, or
base prices, and subject to such terms, conditions, limitations, and
restrictions as the Committee, in its discretion, deems appropriate. Awards may
be granted as additional compensation to a Participant or in lieu of other
compensation to such Participant. A Participant may receive more than one Award
and more than one type of Award under the Plan.

6.3 Nonuniform Determinations. The Committee’s determinations under the Plan or
under one or more Award Agreements, including, without limitation, (a) the
selection of Participants to receive Awards, (b) the type, form, amount, and
timing of Awards, (c) the terms of specific Award Agreements, and (d) elections
and determinations made by the Committee with respect to exercise or payments of
Awards, need not be uniform and may be made by the Committee selectively among
Participants and Awards, whether or not Participants are similarly situated.

6.4 Award Agreements. Each Award will be evidenced by a written Award Agreement
between Corporation and the Participant. Award Agreements may, subject to the
provisions of the Plan, contain any provision approved by the Committee.

6.5 Provisions Governing All Awards. All Awards are subject to the following
provisions:

(a) Alternative Awards. If any Awards are designated in their Award Agreements
as alternative to each other, the exercise of all or part of one Award will
automatically cause an immediate equal (or pro rata) corresponding termination
of the other alternative Award or Awards.

 

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(b) Rights as Shareholders. No Participant will have any rights of a shareholder
with respect to Shares subject to an Award until such Shares are issued in the
name of the Participant.

(c) Employment Rights. Neither the adoption of the Plan nor the granting of any
Award confers on any person the right to continued employment with Corporation
or any Subsidiary or the right to remain as a director of or a Consultant to
Corporation or any Subsidiary, as the case may be, nor does it interfere in any
way with the right of Corporation or a Subsidiary to terminate such person’s
employment or to remove such person as a Consultant or as a director at any time
for any reason, or for no reason, with or without cause.

(d) Restriction on Transfer. Unless otherwise expressly provided in an
individual Award Agreement, no Award (other than Restricted Shares after they
Vest) will be transferable other than by will or the laws of descent and
distribution and each Award will be exercisable (if exercise is required),
during the lifetime of the Participant, only by the Participant or, in the event
the Participant becomes legally incompetent, by the Participant’s guardian or
legal representative. Notwithstanding the foregoing, the Committee, in its
discretion, may provide in any Award Agreement that the Award:

May be freely transferred;

May be freely transferred to a class of transferees specified in the Award
Agreement; or

May be transferred, but only subject to any terms and conditions specified in
the Award Agreement (including, without limitation, a condition that an Award
may only be transferred without payment of consideration).

Furthermore, notwithstanding the foregoing, any Award may be surrendered to
Corporation pursuant to Section 6.5(h) in connection with the payment of the
purchase or option price of another Award or the payment of the Participant’s
federal, state, or local tax withholding obligation with respect to the exercise
or payment of another Award.

(e) Termination of Employment. The terms and conditions under which an Award may
be exercised, if at all, after a Participant’s termination of employment or
service as a Non-Employee Board Director, Non-Employee Subsidiary Director, or
Consultant will be determined by the Committee and specified in the applicable
Award Agreement.

(f) Change in Control. The Committee, in its discretion, may provide in any
Award Agreement that:

 

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(i) In the event of a Change in Control of Corporation, all or a specified
portion of the Award (to the extent then outstanding) will become immediately
Vested to the full extent not previously Vested. Any such acceleration of Award
Vesting must comply with applicable regulatory requirements and any Participant
will be entitled to decline the accelerated Vesting of all or any portion of his
or her Award, if he or she determines that such acceleration may result in
adverse tax consequences to him or her; and

(ii) In the event the Board approves a proposal for: (i) merger, exchange or
consolidation in which Corporation is not the resulting or surviving corporation
(or in which Corporation is the resulting or surviving corporation but becomes a
subsidiary of another corporation); (ii) transfer of all or substantially all
the assets of Corporation; (iii) sale of 25 percent or more of the combined
voting power of Corporation’s Voting Securities; or (iv) the dissolution or
liquidation of Corporation (each, a “Transaction”), the Committee will notify
Participants in writing of the proposed Transaction (the “Proposed Transaction
Notice”) at least 30 days prior to the effective date of the proposed
Transaction. The Committee may, in its sole discretion, and to the extent
possible under the structure of the Transaction, select one of the following
alternatives for treating outstanding Awards under the Plan:

(a) The Committee may provide that outstanding Awards will be converted into or
replaced by Awards of a similar type relating to the securities of the surviving
or acquiring corporation in the Transaction. The amount and type of securities
subject to and the exercise price (if applicable) of the replacement or
converted Awards will be determined by the Committee based on the exchange
ratio, if any, used in determining shares of the surviving corporation to be
issued to holders of Shares of Corporation. If there is no exchange ratio in the
Transaction, the Committee will, in making its determination, take into account
the relative values of the companies involved in the Transaction and such other
factors as the Committee deems relevant. Such replacement or converted Awards
will continue to Vest over the period (and at the same rate) as the Awards which
the replacement or converted Awards replaced, unless determined otherwise by the
Committee;

(b) The Committee may provide a 30-day period prior to the consummation of the
Transaction during which all outstanding Awards will tentatively become fully
Vested, and upon consummation of such Transaction, all outstanding and
unexercised Awards will immediately terminate. If the Committee elects to
provide such 30-day period for the exercise of Awards, the Proposed Transaction
Notice must so state. Participants, by written notice to Corporation, may
exercise their Awards and, in so exercising the Awards, may condition such
exercise upon, and provide that such exercise will become effective immediately
prior to, the consummation of the Transaction, in which event Participants need
not make payment for any Common Stock to be purchased upon exercise of an Award
until five days after written notice by Corporation to the Participants that the
Transaction has been consummated (the “Transaction Notice”). If the Transaction
is consummated, each Award, to the extent not previously exercised prior to the
consummation of the Transaction, will terminate and cease being exercisable as
of the effective date of such consummation. If the Transaction is abandoned,
(1) all outstanding Awards not exercised will continue to be Vested and
exercisable, to the extent such Awards were Vested and exercisable prior to the
date of

 

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the Proposed Transaction Notice, and (2) to the extent that any Awards not
exercised prior to such abandonment have become Vested and exercisable solely by
operation of this Section 6.5(f)(ii), such Vesting and exercisability will be
deemed annulled, and the Vesting and exercisability provisions otherwise in
effect will be reinstituted, as of the date of such abandonment; or

(c) The Committee may provide that outstanding Awards that are not fully Vested
will become fully Vested subject to Corporation’s right to pay each Participant
a cash amount (determined by the Committee and based on the amount, if any,
being received by Corporation’s shareholders in the Transaction) in exchange for
cancellation of the applicable Award.

Unless the Committee specifically provides otherwise in the change in control
provision for a specific Award Agreement, Awards will become Vested as of a
Change in Control date only if, or to the extent, such acceleration in the
Vesting of the Awards does not result in an “excess parachute payment” within
the meaning of Section 280G(b) of the Code. The Committee, in its discretion,
may include change in control provisions in some Award Agreements and not in
others, may include different change in control provisions in different Award
Agreements, and may include change in control provisions for some Awards or some
Participants and not for others.

(g) Conditioning or Accelerating Benefits. The Committee, in its discretion, may
include in any Award Agreement a provision conditioning or accelerating the
Vesting of an Award or the receipt of benefits pursuant to an Award, either
automatically or in the discretion of the Committee, upon the occurrence of
specified events, including without limitation, a Change in Control of
Corporation (subject to the foregoing paragraph (f)), a sale of all or
substantially all of the property and assets of Corporation, or an event of the
type described in Section 13 of this Plan.

(h) Payment of Purchase Price and Withholding. The Committee, in its discretion,
may include in any Award Agreement a provision permitting the Participant to pay
the purchase or option price, if any, for the Shares or other property issuable
pursuant to the Award, or the Participant’s federal, state, or local tax
withholding obligations with respect to such issuance, in whole or in part by
any one or more of the following methods; provided, however, that the
availability of any one or more methods of payment may be suspended from time to
time if the Committee determines that the use of such payment method would
result in adverse financial accounting treatment for Corporation or adverse tax
treatment for Corporation or the Participant:

(i) By delivering previously owned Shares (including fully vested Restricted
Shares);

(ii) By surrendering other outstanding Vested Awards under the Plan denominated
in Shares or in Share equivalent units;

(iii) By reducing the number of Shares or other property otherwise Vested and
issuable pursuant to the Award;

 

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(iv) Unless specifically prohibited by any applicable statute or rule,
including, without limitation, the provisions of the Sarbanes-Oxley Act of 2002,
by delivering to Corporation a promissory note payable on such terms and over
such period as the Committee may determine;

(v) By delivery (in a form approved by the Committee) of an irrevocable
direction to a securities broker acceptable to the Committee (subject to the
provisions of the Sarbanes-Oxley Act of 2002 and any other applicable statute or
rule):

(a) To sell Shares subject to the Award and to deliver all or a part of the
sales proceeds to Corporation in payment of all or a part of the option or
purchase price and taxes or withholding taxes attributable to the issuance; or

(b) To pledge Shares subject to the Award to the broker as security for a loan
and to deliver all or a part of the loan proceeds to Corporation in payment of
all or a part of the option or purchase price and taxes or withholding taxes
attributable to the issuance; or

(vi) In any combination of the foregoing or in any other form approved by the
Committee.

Shares withheld or surrendered as described above will be valued based on their
Fair Market Value on the date of the transaction. Any Shares withheld or
surrendered with respect to a Reporting Person will be subject to such
additional conditions and limitations as the Committee may impose to comply with
the requirements of the Exchange Act.

(i) Reporting Persons. With respect to all Awards granted to Reporting Persons,
the following limitations will apply only if or to the extent required by Rule
16b-3 under the Exchange Act, unless the Award Agreement provides otherwise:

(i) Awards requiring exercise will not be exercisable until at least six months
after the date the Award was granted, except in the case of the death or
Disability of the Participant; and

(ii) Shares issued pursuant to any other Award may not be sold by the
Participant for at least six months after acquisition, except in the case of the
death or Disability of the Participant.

Award Agreements for Awards to Reporting Persons must also comply with any
future restrictions imposed by such Rule 16b-3.

(j) Service Periods. At the time of granting an Award, the Committee may
specify, by resolution or in the Award Agreement, the period or periods of
service performed or to be performed by the Participant in connection with the
grant of the Award.

(k) Prohibition on Repricing of Options and Stock Appreciation Rights. Except
for adjustments pursuant to Section 13, at no time shall the exercise price of
an Option or the base price of a Stock Appreciation Right granted under the Plan
be subsequently repriced during the period of its exercisability. For purposes
of this Section, repricing means any of the following or any other action that
has the same effect:

 

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(i) Lowering the exercise or base price after the Option or Stock Appreciation
Right is granted;

(ii) Any other action that is treated as a repricing under generally accepted
accounting principles; or

(iii) Canceling an Option or Stock Appreciation Right at a time when its
exercise or base price exceeds the Fair Market Value of the underlying Shares,
in exchange for another Award, unless the cancellation and exchange occurs in
connection with a merger, acquisition, spin-off or other similar corporate
transaction.

 

7. OPTIONS

7.1 Types of Options. Options granted under the Plan may be in the form of
Incentive Stock Options or Nonqualified Options. The grant of each Option and
the Award Agreement governing each Option will identify the Option as an ISO or
an NQO. In the event the Code is amended to provide for tax-favored forms of
stock options other than or in addition to Incentive Stock Options, the
Committee may grant Options under the Plan meeting the requirements of such
forms of options.

7.2 General. All Options will be subject to the terms and conditions set forth
in Section 6 and this Section 7 and Award Agreements governing Options may
contain such additional terms and conditions, not inconsistent with the express
provisions of the Plan, as the Committee deems desirable.

7.3 Option Price. Each Award Agreement for Options will state the option
exercise price per Share of Common Stock purchasable under the Option, which may
not be less than 100 percent of the Fair Market Value of a Share on the date of
grant for all Options.

7.4 Option Term. The Award Agreement for each Option will specify the term of
each Option, which may be unlimited or may have a specified period during which
the Option may be exercised, as determined by the Committee.

7.5 Time of Exercise. The Award Agreement for each Option will specify, as
determined by the Committee:

(a) The time or times when the Option becomes exercisable and whether the Option
becomes exercisable in full or in graduated amounts based on: (i) continuation
of employment over a period specified in the Award Agreement, (ii) satisfaction
of performance goals or criteria specified in the Award Agreement, or (iii) a
combination of continuation of employment and satisfaction of performance goals
or criteria;

(b) Such other terms, conditions, and restrictions as to when the Option may be
exercised as determined by the Committee; and

 

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(c) The extent, if any, to which the Option will remain exercisable after the
Participant ceases to be an employee, Consultant, or director of Corporation or
a Subsidiary.

An Award Agreement for an Option may, in the discretion of the Committee,
provide whether, and to what extent, the time when an Option becomes exercisable
may be accelerated or otherwise modified (i) in the event of the death,
Disability, or Retirement of the Participant, or (ii) upon the occurrence of a
Change in Control. The Committee may, at any time in its discretion, accelerate
the time when all or any portion of an outstanding Option becomes exercisable.

7.6 Special Rules for Incentive Stock Options. In the case of an Option
designated as an Incentive Stock Option, the terms of the Option and the Award
Agreement will conform with the statutory and regulatory requirements specified
pursuant to Section 422 of the Code, as in effect on the date such ISO is
granted. ISOs may be granted only to employees of Corporation or a Subsidiary.
ISOs may not be granted under the Plan after August 20, 2019, unless the
ten-year limitation of Section 422(b)(2) of the Code is removed or extended.

7.7 Restricted Shares. In the discretion of the Committee, the Shares issuable
upon exercise of an Option may be Restricted Shares if so provided in the Award
Agreement for the Option.

7.8 Limitation on Number of Shares Subject to Options. The aggregate number of
Incentive Stock Options that may be granted under the Plan may not exceed
800,000 Shares, and in no event may Options (whether or not ISOs) for more than
300,000 Shares be granted to any individual under the Plan during any fiscal
year.

 

8. STOCK APPRECIATION RIGHTS

8.1 General. Stock Appreciation Rights are subject to the terms and conditions
set forth in Section 6 and this Section 8 and Award Agreements governing Stock
Appreciation Rights may contain such additional terms and conditions, not
inconsistent with the express terms of the Plan, as the Committee deems
desirable.

8.2 Nature of Stock Appreciation Right. A Stock Appreciation Right is an Award
entitling a Participant to receive an amount equal to the excess (or, if the
Committee determines at the time of grant, a portion of the excess) of the Fair
Market Value of a Share of Common Stock on the date of exercise of the SAR over
the base price, as described below, on the date of grant of the SAR, multiplied
by the number of Shares with respect to which the SAR is being exercised. The
base price will be designated by the Committee in the Award Agreement for the
SAR and may be the Fair Market Value of a Share on the grant date of the SAR or
such other higher price as the Committee determines. The base price may not be
less than the Fair Market Value of a Share on the grant date of the SAR.

8.3 Exercise. A Stock Appreciation Right may be exercised by a Participant in
accordance with procedures established by the Committee. The Committee may also
provide that a SAR will be automatically exercised on one or more specified
dates or upon the satisfaction of one or more specified conditions. In the case
of SARs granted to Reporting Persons, exercise of the SARs will be limited by
the Committee to the extent required to comply with the applicable requirements
of Rule 16b-3 under the Exchange Act.

 

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8.4 Form of Payment. Payment upon exercise of a Stock Appreciation Right must be
made in Shares, provided that the Committee may provide in an Award Agreement
that a Stock Appreciation Right may be settled using cash or installments (a
“Cash Settled SAR”) if the Committee determines that under the terms of such
Award Agreement the Cash Settled SAR will comply with the requirements of
Section 409A.

8.5 Limitation on Number of Stock Appreciation Rights. In no event may more than
300,000 Stock Appreciation Rights be granted to any individual under the Plan
during any fiscal year.

 

9. RESTRICTED AWARDS

9.1 Types of Restricted Awards. Restricted Awards granted under the Plan may be
in the form of either Restricted Shares or Restricted Stock Units.

(a) Restricted Shares. A Restricted Share is an Award of Shares transferred to a
Participant subject to such terms and conditions as the Committee deems
appropriate, including, without limitation, restrictions on the sale,
assignment, transfer, or other disposition of such Restricted Shares and may
include a requirement that the Participant forfeit such Restricted Shares back
to Corporation upon termination of Participant’s employment (or service as a
Non-Employee Board Director, Non-Employee Subsidiary Director, or Consultant)
for specified reasons within a specified period of time or upon other
conditions, as set forth in the Award Agreement for such Restricted Shares. Each
Participant receiving a Restricted Share will be issued a stock certificate in
respect of such Shares, registered in the name of such Participant, and will
execute a stock power in blank with respect to the Shares evidenced by such
certificate. The certificate evidencing such Restricted Shares and the stock
power will be held in custody by Corporation until the Restrictions have lapsed.

(b) Restricted Stock Units. A Restricted Stock Unit is an Award of units (with
each unit having a value equivalent to one Share) granted to a Participant
subject to such terms and conditions as the Committee deems appropriate, and may
include a requirement that the Participant forfeit such Restricted Stock Units
upon termination of Participant’s employment (or service as a Non-Employee Board
Director, Non-Employee Subsidiary Director, or Consultant) for specified reasons
within a specified period of time or upon other conditions, as set forth in the
Award Agreement for such Restricted Stock Units. Under Section 409A, Restricted
Stock Unit Awards may be treated, for income tax purposes, as deferred
compensation arrangements. In each Award Agreement for each Restricted Stock
Unit Award, the Committee will (a) specify the Settlement Period and (b) set the
other terms and conditions of the Award Agreement so that the Restricted Stock
Unit Award will comply with all applicable requirements of Section 409A.

9.2 General. Restricted Awards are subject to the terms and conditions of
Section 6 and this Section 9 and Award Agreements governing Restricted Awards
may contain such additional terms and conditions, not inconsistent with the
express provisions of the Plan, as the Committee deems desirable.

 

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9.3 Restriction Period. Award Agreements for Restricted Awards will provide that
Restricted Awards, and the Shares subject to Restricted Awards, may not be
transferred, and may provide that, in order for a Participant to Vest in such
Restricted Awards, the Participant must remain in the employment (or remain as a
Non-Employee Board Director, Non-Employee Subsidiary Director, or Consultant) of
Corporation or its Subsidiaries, subject to relief for reasons specified in the
Award Agreement, for a period commencing on the grant date of the Award and
ending on such later date or dates as the Committee may designate at the time of
the Award (the “Restriction Period”). During the Restriction Period, a
Participant may not sell, assign, transfer, pledge, encumber, or otherwise
dispose of Shares received under or governed by a Restricted Award grant. The
Committee, in its sole discretion, may provide for the lapse of restrictions in
installments during the Restriction Period. Upon expiration of the applicable
Restriction Period (or lapse of Restrictions during the Restriction Period where
the Restrictions lapse in installments) the Participant will be entitled to
settlement of the Restricted Award or portion thereof, as the case may be.
Although Restricted Awards will usually Vest based on continued employment (or
service as a Non-Employee Board Director, Non-Employee Subsidiary Director, or
Consultant) and Performance Awards under Section 10 will usually Vest based on
attainment of Performance Goals, the Committee, in its discretion, may condition
Vesting of Restricted Awards on attainment of Performance Goals as well as
continued employment (or service as a Non-Employee Board Director, Non-Employee
Subsidiary Director, or Consultant). In such case, the Restriction Period for
such a Restricted Award will include the period prior to satisfaction of the
Performance Goals.

9.4 Forfeiture. If a Participant ceases to be an employee (or Consultant,
Non-Employee Board Director, or Non-Employee Subsidiary Director) of Corporation
or a Subsidiary during the Restriction Period for any reason other than reasons
which may be specified in an Award Agreement (such as death, Disability, or
Retirement) the Award Agreement may require that all non-Vested Restricted
Awards previously granted to the Participant be forfeited and returned to
Corporation.

9.5 Settlement of Restricted Awards.

(a) Restricted Shares. Upon Vesting of a Restricted Share Award, the legend on
such Shares will be removed, the Participant’s stock power will be returned and
the Shares will no longer be Restricted Shares.

(b) Restricted Stock Units. Within the Settlement Period after Vesting of a
Restricted Stock Unit Award, a Participant will be entitled to receive payment
for Restricted Stock Units in an amount equal to the aggregate Fair Market Value
of the Shares covered by such Restricted Stock Units at the expiration of the
applicable Restriction Period. Payment in settlement of a Restricted Stock Unit
will be made during the Settlement Period following the conclusion of the
applicable Restriction Period in cash, in installments, or in Shares equal to
the number of Restricted Stock Units or in any other manner or combination of
such methods as the Committee, in its sole discretion, determines.

 

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9.6 Rights as a Shareholder. A Participant has, with respect to unforfeited
Shares received under a grant of Restricted Shares, all the rights of a
shareholder of Corporation, including the right to vote the shares, and the
right to receive any cash dividends. Stock dividends issued with respect to
Restricted Shares will be treated as additional Shares covered by the grant of
Restricted Shares and will be subject to the same Restrictions. A Participant
will have no rights as a shareholder with respect to a Restricted Stock Unit
Award until Shares are issued to the Participant in settlement of the Award.

9.7 Limitation in Number of Restricted Awards. The aggregate number of shares
subject to Restricted Share Awards and Restricted Stock Unit Awards that may be
granted under the Plan may not exceed 750,000 Shares, and in no event may
Restricted Awards representing more than 300,000 Shares be granted to any
individual under the Plan during any fiscal year.

 

10. PERFORMANCE AWARDS

10.1 General. Performance Awards are subject to the terms and conditions set
forth in Section 6 and this Section 10 and Award Agreements governing
Performance Awards may contain such other terms and conditions not inconsistent
with the express provisions of the Plan, as the Committee deems desirable.

10.2 Nature of Performance Awards. A Performance Award is an Award of units
(with each unit having a value equivalent to one Share) granted to a Participant
subject to such terms and conditions as the Committee deems appropriate,
including, without limitation, the requirement that the Participant forfeit all
or a portion of such Performance Award in the event specified performance
criteria are not met within a designated period of time. Under Section 409A,
Performance Awards may be treated, for income tax purposes, as deferred
compensation arrangements. In the Award Agreement for each Performance Award,
the Committee will (a) specify the Settlement Period, and (b) set the other
terms and conditions of the Award Agreement so that the Performance Award will
comply with all applicable requirements of Section 409A.

10.3 Performance Cycles. For each Performance Award, the Committee will
designate a performance period (the “Performance Cycle”) with a duration to be
determined by the Committee in its discretion within which specified Performance
Goals are to be attained. There may be several Performance Cycles in existence
at any one time and the duration of Performance Cycles may differ from each
other.

10.4 Performance Goals. The Committee will establish Performance Goals for each
Performance Cycle on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time select. Performance Goals may
be based on (i) performance criteria for Corporation, a Subsidiary, or an
operating group, (ii) a Participant’s individual performance, or (iii) a
combination of both. Performance Goals may include objective and subjective
criteria. During any Performance Cycle, the Committee may adjust the Performance
Goals for such Performance Cycle as it deems equitable in recognition of unusual
or nonrecurring events affecting Corporation, changes in applicable tax laws or
accounting principles, or such other factors as the Committee may determine.

 

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10.5 Performance Goals for Executive Officers. The Performance Goals for
Performance Awards granted to executive officers of Corporation may relate to
corporate performance, business unit performance, or a combination of both.

(a) Corporate Performance Goals will be based on financial performance goals
related to the performance of Corporation as a whole and may include one or more
measures related to earnings, profitability, cash flow (including measures based
on Earnings Before Interest, Taxes, Depreciation, and Amortization [EBITDA]),
efficiency, or return to shareholders such as earnings per share, operating
income, stock price, costs of production, revenue growth, return on equity,
return on assets or return on invested capital.

(b) Business unit Performance Goals will be based on a combination of financial
goals and strategic goals related to the performance of an identified business
unit for which a Participant has responsibility. Strategic goals for a business
unit may include one or a combination of objective factors relating to success
in implementing strategic plans or initiatives, introducing products,
constructing facilities, developing software, or other identifiable objectives.
Financial goals for a business unit may include the degree to which the business
unit achieves one or more objective measures related to its revenues, earnings,
profitability, efficiency, operating income, costs of production, cash flow,
return on equity, return on assets, or return on invested capital.

(c) Any corporate or business unit Performance Goals may be expressed as
absolute amounts or as ratios or percentages. Success may be measured against
various standards, including budget targets, improvement over prior periods, and
performance relative to other companies, business units, or industry groups.

10.6 Determination of Awards. As soon as practicable after the end of a
Performance Cycle, the Committee will determine the extent to which Performance
Awards have been earned on the basis of performance in relation to the
established Performance Goals.

10.7 Timing and Form of Payment. Settlement of earned Performance Awards will be
made to the Participant within the Settlement Period after the expiration of the
Performance Cycle and the Committee’s determination under Section 10.6, in the
form of cash, installments, Shares, or any combination of the foregoing or in
any other form as the Committee determines.

10.8 Limitation on Number of Performance Awards. In no event may Performance
Awards representing more than 300,000 Shares be granted to any individual under
the Plan during any fiscal year.

 

11. OTHER STOCK-BASED AND COMBINATION AWARDS

11.1 Other Stock-Based Awards. The Committee may grant other Awards under the
Plan pursuant to which Shares are or may in the future be acquired, or Awards
denominated in or measured by Share equivalent units, including Awards valued
using measures other than the market value of Shares. Other Stock-Based Awards
are not restricted to any specific form or structure and may include, without
limitation, Share purchase warrants, other rights to acquire Shares, and
securities convertible into or redeemable for Shares. Other Stock-Based Awards
may be granted either alone, in addition to, or in tandem with, any other type
of Award granted under the Plan.

 

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11.2 Combination Awards. The Committee may also grant Awards under the Plan in
tandem or combination with other Awards or in exchange of Awards, or in tandem
or combination with, or as alternatives to, grants or rights under any other
employee plan of Corporation, including the plan of any acquired entity. No
action authorized by this section will reduce the amount of any existing
benefits or change the terms and conditions thereof without the Participant’s
consent.

 

12. DIVIDEND EQUIVALENTS

Any Award may, to the extent provided in its Award Agreement, at the discretion
of the Committee, earn dividend equivalents. In respect of any such Award that
is outstanding on a dividend record date for Common Stock, the Participant may
be credited with an amount equal to the amount of cash or stock dividends that
would have been paid on the Shares covered by such Award, had such covered
Shares been issued and outstanding on such dividend record date. The Committee
will establish such rules and procedures governing the crediting of dividend
equivalents, including the timing, form of payment, and payment contingencies of
such dividend equivalents, as it deems appropriate or necessary.

 

13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.

13.1 Plan Does Not Restrict Corporation. The existence of the Plan and the
Awards granted under the Plan will not affect or restrict in any way the right
or power of the Board or the shareholders of Corporation to make or authorize
any adjustment, recapitalization, reorganization, or other change in
Corporation’s capital structure or its business, any merger or consolidation of
Corporation, any issue of bonds, debentures, preferred or prior preference
stocks ahead of or affecting Corporation’s capital stock or the rights thereof,
the dissolution or liquidation of Corporation or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding.

13.2 Adjustments to Shares Subject to the Plan and Outstanding Awards. In the
event of a stock split (including a reverse stock split), a dividend or
distribution paid in Common Stock, or a recapitalization of or affecting Common
Stock, the aggregate number and kind of shares reserved for issuance under the
Plan, the maximum limitations on the number of shares that may be issued as
Awards granted to a single Participant in any fiscal year under the Plan, the
number, kind, and price per share subject to each outstanding Option and SAR and
the number and kind of shares subject to other Awards granted under the Plan,
will automatically be adjusted proportionately, or substituted, to reflect the
effect of such stock split, distribution paid in Common Stock, or
recapitalization. In the event of any merger or consolidation, separation
(including a spin off), a reorganization (whether or not such reorganization
comes within the definition of such term in Section 368 of the Code), any
partial or complete liquidation, or any other change in corporate capitalization
not specifically addressed in the preceding sentence, the Committee shall make
such adjustments or substitution in the aggregate number and kind of shares
reserved for issuance under the Plan, the maximum limitations on the number of
shares that may be issued as Awards granted to a single Participant under the
Plan, the number, kind,

 

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and price per share subject to each outstanding Option and SAR, the number and
kind of shares subject to other outstanding Awards under the Plan and/or such
other equitable adjustments or substitutions as it may determine to be
appropriate in its sole discretion.

 

14. AMENDMENT AND TERMINATION

The Board may amend, suspend, or terminate the Plan or any portion of the Plan
at any time, provided that no amendment may be made without shareholder approval
if such approval is required by applicable law or the requirements of an
applicable stock exchange or registered securities association.

 

15. MISCELLANEOUS

15.1 Tax Withholding. Corporation has the right to deduct from any settlement of
any Award under the Plan, including the delivery or Vesting of Shares or Awards,
any federal, state, or local taxes of any kind required by law to be withheld
with respect to such payments or to take such other action as may be necessary
in the opinion of Corporation to satisfy all obligations for the payment of such
taxes. The recipient of any payment or distribution under the Plan has the
obligation to make arrangements satisfactory to Corporation for the satisfaction
of any such tax withholding obligations. Corporation will not be required to
make any such payment or distribution under the Plan until such obligations are
satisfied.

15.2 Unfunded Plan. The Plan will be unfunded and Corporation will not be
required to segregate any assets that may at any time be represented by Awards
under the Plan. Any liability of Corporation to any person with respect to any
Award under the Plan will be based solely upon any contractual obligations that
may be effected pursuant to the Plan. No such obligation of Corporation will be
deemed to be secured by any pledge of, or other encumbrance on, any property of
Corporation.

15.3 Annulment of Awards. Any Award Agreement may provide, in the discretion of
the Committee, that the grant of an Award payable in cash is revocable until
cash is paid in settlement of the Award or that grant of an Award payable in
Shares is revocable until the Participant becomes entitled to the certificate in
settlement of the Award. In the event the employment (or service as a
Non-Employee Board Director, Non-Employee Subsidiary Director, or Consultant) of
a Participant is terminated for cause (as defined below), any Award that is
revocable will be annulled as of the date of such termination for cause. For the
purpose of this Section 15.3, the term “for cause” has the meaning set forth in
the Participant’s employment agreement, if any, or otherwise means any discharge
(or removal) for material or flagrant violation of the policies and procedures
of Corporation or for other performance or conduct which is materially
detrimental to the best interests of Corporation, as determined by the
Committee.

15.4 Engaging in Competition With Corporation. Any Award Agreement may provide,
in the discretion of the Committee, that, if a Participant terminates employment
(or service as a Non-Employee Board Director, Non-Employee Subsidiary Director,
or Consultant) with Corporation or a Subsidiary for any reason whatsoever, and
within a period of time (as specified in the Award Agreement) after the date of
such termination accepts employment with

 

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any competitor of (or otherwise engages in competition with) Corporation, the
Committee, in its sole discretion, may require such Participant to return to
Corporation the economic value of any Award that is realized or obtained
(measured at the date of exercise, Vesting, or payment) by such Participant at
any time during the period beginning on the date that is six months prior to the
date of such Participant’s termination of employment (or service as a
Non-Employee Board Director, Non-Employee Subsidiary Director, or Consultant)
with Corporation.

15.5 Other Corporation Benefit and Compensation Programs. Payments and other
benefits received by a Participant under an Award made pursuant to the Plan are
not to be deemed a part of a Participant’s regular, recurring compensation for
purposes of the termination indemnity or severance pay law of any state or
country and will not be included in, or have any effect on, the determination of
benefits under any other employee benefit plan or similar arrangement provided
by Corporation or a Subsidiary unless expressly so provided by such other plan
or arrangements, or except where the Committee expressly determines that an
Award or portion of an Award should be included to accurately reflect
competitive compensation practices or to recognize that an Award has been made
in lieu of a portion of cash compensation. Awards under the Plan may be made in
combination with or in tandem with, or as alternatives to, grants, awards, or
payments under any other Corporation or Subsidiary plans, arrangements, or
programs. The Plan notwithstanding, Corporation or any Subsidiary may adopt such
other compensation programs and additional compensation arrangements as it deems
necessary to attract, retain, and reward employees and directors for their
service with Corporation and its Subsidiaries.

15.6 Securities Law Restrictions. No Shares may be issued under the Plan unless
counsel for Corporation is satisfied that such issuance will be in compliance
with applicable federal and state securities laws. Certificates for Shares
delivered under the Plan may be subject to such stop-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Securities and Exchange Commission, any stock
exchange or registered securities association upon which the Common Stock is
then listed or quoted, and any applicable federal or state securities laws. The
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.

15.7 Governing Law. Except with respect to references to the Code or federal
securities laws, the Plan and all actions taken thereunder will be governed by
and construed in accordance with the laws of the state of Oregon.

 

16. SHAREHOLDER APPROVAL

The amendment and restatement of the Plan is expressly subject to the approval
of the Plan, as amended and restated, by a majority of the total votes cast at a
meeting of Corporation’s shareholders duly held in accordance with the
requirements of the Oregon Business Corporation Act and Corporation’s Bylaws. If
such approval is not obtained on or before September 30, 2009, the Plan will
continue in effect without the amendments reflected herein.

 

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