Exhibit 10.1
Xcorporeal, Inc.
(formerly CT Holdings Enterprises, Inc.)
 
2007 Incentive Compensation Plan

 

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Xcorporeal, Inc.
2007 Incentive Compensation Plan
     1. Purpose. The purpose of this Plan is to assist the Company and its
Related Entities in attracting, motivating, retaining and rewarding high-quality
Employees, officers, Directors and Consultants by enabling such persons to
acquire or increase a proprietary interest in the Company in order to strengthen
the mutuality of interests between such persons and the Company’s shareholders,
and providing such persons with annual and long-term performance incentives to
expend their maximum efforts in the creation of shareholder value. The Plan is
intended to qualify certain compensation awarded under the Plan for tax
deductibility under Section 162(m) of the Code (as hereafter defined) to the
extent deemed appropriate by the Plan Administrator.
     2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below.
          (a) “Applicable Laws” means the requirements relating to the
administration of equity compensation plans under U.S. state corporate laws,
U.S. federal and state securities laws, the Code, the rules and regulations of
any stock exchange upon which the Common Stock is listed and the applicable laws
of any foreign country or jurisdiction where Awards are granted under the Plan.
          (b) “Award” means any award granted pursuant to the terms of this
Plan, including an Option, Stock Appreciation Right, Restricted Stock, Stock
Unit, Stock granted as a bonus or in lieu of another award, Dividend Equivalent,
Other Stock-Based Award or Performance Award, together with any other right or
interest, granted to a Participant under the Plan.
          (c) “Award Agreement” means the written agreement evidencing an Award
granted under the Plan.
          (d) “Beneficiary” means the person, persons, trust or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Plan Administrator to receive the
benefits specified under the Plan upon such Participant’s death or to which
Awards or other rights are transferred if and to the extent permitted under
Section 10(b) hereof. If, upon a Participant’s death, there is no designated
Beneficiary or surviving designated Beneficiary, then the term Beneficiary means
the person, persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
          (e) “Board” means the Company’s Board of Directors.
          (f) “Cause” shall, with respect to any Participant, have the meaning
specified in the Award Agreement. In the absence of any definition in the Award
Agreement, “Cause” shall have the equivalent meaning or the same meaning as
“cause” or “for cause” set forth in any employment, consulting, change in
control or other agreement for the performance of services between the
Participant and the Company or a Related Entity or, in the absence of any such
definition in such agreement, such term shall mean (i) the failure by the
Participant to perform his or her duties as assigned by the Company (or a
Related Entity) in a reasonable manner, (ii) any

 

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violation or breach by the Participant of his or her employment, consulting or
other similar agreement with the Company (or a Related Entity), if any,
(iii) any violation or breach by the Participant of his or her confidential
information and invention assignment, non-competition, non-solicitation,
non-disclosure and/or other similar agreement with the Company or a Related
Entity, if any, (iv) any act by the Participant of dishonesty or bad faith with
respect to the Company (or a Related Entity), (v) any material violation or
breach by the Participant of the Company’s or a Related Entity’s policy for
employee conduct, if any, (vi) use of alcohol, drugs or other similar substances
in a manner that adversely affects the Participant’s work performance, or
(vii) the commission by the Participant of any act, misdemeanor, or crime
reflecting unfavorably upon the Participant or the Company or any Related
Entity. The good faith determination by the Plan Administrator of whether the
Participant’s Continuous Service was terminated by the Company for “Cause” shall
be final and binding for all purposes hereunder.
          (g) “Change in Control” means and shall be deemed to have occurred on
the earliest of the following dates:
               (i) the date on which any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) obtains “beneficial ownership” (as
defined in Rule 13d-3 of the Exchange Act) or a pecuniary interest in fifty
percent (50%) or more of the Voting Stock;
               (ii) the consummation of a merger, consolidation, reorganization
or similar transaction other than a transaction: (1) (a) in which substantially
all of the holders of Company’s Voting Stock hold or receive directly or
indirectly fifty percent (50%) or more of the voting stock of the resulting
entity or a parent company thereof, in substantially the same proportions as
their ownership of the Company immediately prior to the transaction; or (2) in
which the holders of Company’s capital stock immediately before such transaction
will, immediately after such transaction, hold as a group on a fully diluted
basis the ability to elect at least a majority of the directors of the surviving
corporation (or a parent company);
               (iii) there is consummated a sale, lease, exclusive license or
other disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries, other than a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries to an entity, fifty percent (50%) or more of the
combined voting power of the voting securities of which are owned by
shareholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale, lease, license or other
disposition; or
               (iv) individuals who, on the date this Plan is adopted by the
Board, are Directors (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Directors; provided, however, that if the appointment
or election (or nomination for election) of any new Director was approved or
recommended by a majority vote of the members of the Incumbent Board then still
in office, such new member shall, for purposes of this Plan, be considered as a
member of the Incumbent Board.
     For purposes of determining whether a Change in Control has occurred, a
transaction includes all transactions in a series of related transactions, and
terms used in this definition but not

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defined are used as defined in the Plan. The term Change in Control shall not
include a sale of assets, merger or other transaction effected exclusively for
the purpose of changing the domicile of the Company.
     Notwithstanding the foregoing or any other provision of this Plan, the
definition of Change in Control (or any analogous term) in an individual written
agreement between the Company and the Participant shall supersede the foregoing
definition with respect to Awards subject to such agreement (it being
understood, however, that if no definition of Change in Control or any analogous
term is set forth in such an individual written agreement, the foregoing
definition shall apply).
          (h) “Code” means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.
          (i) “Committee” means a committee designated by the Board to
administer the Plan with respect to at least a group of Employees, Directors or
Consultants.
          (j) “Company” means Xcorporeal, Inc., a Delaware corporation, formerly
CT Holdings Enterprises, Inc.
          (k) “Consultant” means any person (other than an Employee or a
Director, solely with respect to rendering services in such person’s capacity as
a director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.
          (l) “Continuous Service” means uninterrupted provision of services to
the Company or any Related Entity in the capacity as either an officer,
Employee, Director or Consultant. Continuous Service shall not be considered to
be interrupted in the case of (i) any approved leave of absence, (ii) transfers
among the Company, any Related Entities, or any successor entities, in the
capacity as either an officer, Employee, Director or Consultant or (iii) any
change in status as long as the individual remains in the service of the Company
or a Related Entity in the capacity as either an officer, Employee, Director,
Consultant (except as otherwise provided in the Award Agreement). An approved
leave of absence shall include sick leave, military leave, or any other
authorized personal leave.
          (m) “Corporate Transaction” means the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the
following events:
               (i) a sale, lease, exclusive license or other disposition of a
substantial portion of the consolidated assets of the Company and its
Subsidiaries, as determined by the Plan Administrator, in its discretion;
               (ii) a sale or other disposition of more than twenty percent
(20%) of the outstanding securities of the Company; or
               (iii) a merger, consolidation, reorganization or similar
transaction, whether or not the Company is the surviving corporation.

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          (n) “Covered Employee” means an Eligible Person who is a Covered
Employee as specified in Section 7(d) of the Plan.
          (o) “Director” means a member of the Board or the board of directors
of any Related Entity.
          (p) “Disability” means a permanent and total disability (within the
meaning of Section 22(e) of the Code), as determined by a medical doctor
satisfactory to the Plan Administrator.
          (q) “Dividend Equivalent” means a right, granted to a Participant
under Section 6(g) hereof, to receive cash, Shares, other Awards or other
property equal in value to dividends paid with respect to a specified number of
Shares or other periodic payments.
          (r) “Effective Date” means the effective date of this Plan, which
shall be the date this Plan is adopted by the Board, subject to the approval of
the shareholders of the Company.
          (s) “Eligible Person” means each officer, Director, Employee or
Consultant. The foregoing notwithstanding, only employees of the Company, any
Parent or any Subsidiary shall be Eligible Persons for purposes of receiving a
grant of Incentive Stock Options. An Employee on leave of absence may be
considered as still in the employ of the Company or a Related Entity for
purposes of eligibility for participation in the Plan.
          (t) “Employee” means any person, including an officer or Director, who
is an employee of the Company or any Related Entity. The payment of a director’s
fee by the Company or a Related Entity shall not be sufficient to constitute
“employment” by the Company.
          (u) “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.
          (v) “Fair Market Value” means the fair market value of Shares, Awards
or other property as determined by the Plan Administrator, or under procedures
established by the Plan Administrator. Unless otherwise determined by the Plan
Administrator, the Fair Market Value of Shares as of any given date, after which
the Shares are publicly traded on a stock exchange or market, shall be the
closing sale price per Share reported on a consolidated basis for stock listed
on the principal stock exchange or market on which Shares is traded on the date
as of which such value is being determined or, if there is no sale on that date,
then on the last previous day on which a sale was reported.
          (w) “Good Reason” shall, with respect to any Participant, have the
meaning specified in the Award Agreement. In the absence of any definition in
the Award Agreement, “Good Reason” shall have the equivalent meaning (or the
same meaning as “good reason” or “for good reason”) set forth in any employment,
consulting, change in control or other agreement for the performance of services
between the Participant and the Company or a Related Entity or, in the absence
of any such definition in such agreement(s), such term shall mean (i) the
assignment to the Participant of any duties inconsistent in any material respect
with the Participant’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as assigned by the Company
(or a Related Entity) or any other action by the Company (or a Related

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Entity) which results in a material diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company (or a Related Entity) promptly after receipt of notice
thereof given by the Participant; (ii) any failure by the Company (or a Related
Entity) to comply with its obligations to the Participant as agreed upon, other
than an isolated, insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company (or a Related Entity) promptly after
receipt of notice thereof given by the Participant; (iii) the Company’s (or
Related Entity’s) requiring the Participant to be based at any office or
location more than fifty (50) miles from the location of employment as of the
date of Award, except for travel reasonably required in the performance of the
Participant’s responsibilities; (iv) any purported termination by the Company
(or a Related Entity) of the Participant’s Continuous Service otherwise than for
Cause, as defined in Section 2(f), death, or by reason of the Participant’s
Disability as defined in Section 2(o); or (v) any reduction in the Participant’s
base salary (unless such reduction is part of Company-wide reduction that
affects a majority of the persons of comparable level to the Participant).
          (x) “Incentive Stock Option” means any Option intended to be
designated as an incentive stock option within the meaning of Section 422 of the
Code or any successor provision thereto.
          (y) “Non-Employee Director” means a Director of the Company who is not
an Employee.
          (z) “Non-Qualified Stock Option” means any Option that is not intended
to be designated as an incentive stock option within the meaning of Section 422
of the Code or any successor provision thereto.
          (aa) “Option” means a right, granted to a Participant under Section
6(b) hereof, to purchase Shares or other Awards at a specified price during
specified time periods.
          (bb) “Other Stock-Based Awards” means Awards granted to a Participant
pursuant to Section 6(h) hereof.
          (cc) “Parent” means any corporation (other than the Company), whether
now or hereafter existing, in an unbroken chain of corporations ending with the
Company, if each of the corporations in the chain (other than the Company) owns
stock possessing fifty percent (50%) or more of the combined voting power of all
classes of stock in one of the other corporations in the chain.
          (dd) “Participant” means a person who has been granted an Award under
the Plan which remains outstanding, including a person who is no longer an
Eligible Person.
          (ee) “Performance Award” means a right, granted to an Eligible Person
under Sections 6(h) or 7 hereof, to receive Awards based upon performance
criteria specified by the Plan Administrator.
          (ff) “Performance Period” means that period established by the Plan
Administrator at the time any Performance Award is granted or at any time
thereafter during which

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any performance goals specified by the Plan Administrator with respect to such
Award are to be measured.
          (gg) “Plan” means this Xcorporeal, Inc. 2006 Incentive Compensation
Plan.
          (hh) “Plan Administrator” means the Board, its Compensation Committee,
or any Committee delegated by the Board to administer the Plan. There may be
different Plan Administrators with respect to different groups of Eligible
Persons.
          (ii) “Related Entity” means any Parent, Subsidiary and any business,
corporation, partnership, limited liability company or other entity designated
by the Plan Administrator in which the Company, a Parent or a Subsidiary,
directly or indirectly, holds a substantial ownership interest.
          (jj) “Restricted Stock” means Stock granted to a Participant under
Section 6(d) hereof, that is subject to certain restrictions, including a risk
of forfeiture.
          (kk) “Rule 16b-3” and “Rule 16a-1(c)(3)” means Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.
          (ll) “Share” means a share of the Company’s Common Stock, and the
share(s) of such other securities as may be substituted (or resubstituted) for
Stock pursuant to Section 10(c) hereof.
          (mm) “Stock” means the Company’s Common Stock, and such other
securities as may be substituted (or resubstituted) for the Company’s Common
Stock pursuant to Section 10(c) hereof.
          (nn) “Stock Appreciation Right” means a right granted to a Participant
pursuant to Section 6(c) hereof.
          (oo) “Stock Unit” means a right, granted to a Participant pursuant to
Section 6(e) hereof, to receive Shares, cash or a combination thereof at the end
of a specified period of time.
          (pp) “Subsidiary” means any corporation (other than the Company),
whether now or hereafter existing, in an unbroken chain of corporations
beginning with the Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
          (qq) “Voting Stock” means the stock of the Company with a right to
vote for the election of Directors of the Company.

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     3. Administration.
          (a) Administration by Board. The Board shall administer the Plan
unless and until the Board delegates administration to a Committee, as provided
in Section 3(c). The Board and/or Committee(s) administering the Plan shall be
the “Plan Administrator.”
          (b) Powers of the Plan Administrator. The Plan Administrator shall
have the power, subject to, and within the limitations of, the express
provisions of the Plan:
               (i) To determine from time to time which of the persons eligible
under the Plan shall be granted Awards; when and how each Award shall be
granted; what type or combination of types of Award shall be granted; the
provisions of each Award granted (which need not be identical), including the
time or times when a person shall be permitted to receive Shares or cash
pursuant to an Award; and the number of Shares or amount of cash with respect to
which an Award shall be granted to each such person.
               (ii) To construe and interpret the Plan and Awards granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Plan Administrator, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan or in any Award
Agreement, in a manner and to the extent it shall deem necessary or expedient to
make the Plan fully effective.
               (iii) To amend the Plan or an Award as provided in Section 10(e).
               (iv) To terminate or suspend the Plan as provided in
Section 10(e).
               (v) To adopt such modifications, procedures, and subplans as may
be necessary or desirable to comply with provisions of the laws of foreign
countries in which the Company or Related Entities may operate to assure the
viability of the benefits from Awards granted to Participants performing
services in such countries and to meet the objectives of the Plan.
               (vi) To effect, at any time and from time to time, with the
consent of any adversely affected Participant, (1) the reduction of the exercise
price of any outstanding Award under the Plan, if any, (2) the cancellation of
any outstanding Award and the grant in substitution therefor of (A) a new Award
under the Plan or another equity plan of the Company covering the same or a
different number of Shares, (B) cash and/or (C) other valuable consideration (as
determined by the Plan Administrator, in its sole discretion) or (3) any other
action that is treated as a repricing under generally accepted accounting
principles.
               (vii) Generally, to exercise such powers and to perform such acts
as the Plan Administrator deems necessary or appropriate to promote the best
interests of the Company and that are not in conflict with the provisions of the
Plan.
          (c) Delegation to Committee.
               (i) General. The Board may delegate administration of the Plan to
a Committee or Committees of more members of the Board, and the term “Committee”
shall apply

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to any person or persons to whom such authority has been delegated. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, to the extent delegated by the Board, including the power to
delegate to a subcommittee any of the administrative powers the Committee is
authorized to exercise, subject, however, to such resolutions, not inconsistent
with the provisions of the Plan, as may be adopted from time to time by the
Board. The Board may abolish the Committee at any time and revest in the Board
the administration of the Plan.
               (ii) Section 162(m) and Rule 16b-3 Compliance. In the discretion
of the Board, the Committee may consist solely of two or more “Outside
Directors”, in accordance with Section 162(m) of the Code, and/or solely of two
or more “Non-Employee Directors”, in accordance with Rule 16b-3. In addition,
the Plan Administrator may delegate to a committee of two or more members of the
Board the authority to grant Awards to Eligible Persons who are either (a) not
then Covered Employees and are not expected to be Covered Employees at the time
of recognition of income resulting from such Award, (b) not persons with respect
to whom the Company wishes to comply with Section 162(m) of the Code or (c) not
then subject to Section 16 of the Exchange Act.
          (d) Effect of Plan Administrator’s Decision. All determinations,
interpretations and constructions made by the Plan Administrator shall be made
in good faith and shall not be subject to review by any person and shall be
final, binding and conclusive on all persons.
          (e) Arbitration. Any dispute or claim concerning any Award granted (or
not granted) pursuant to the Plan or any disputes or claims relating to or
arising out of the Plan shall be fully, finally and exclusively resolved by
binding and confidential arbitration conducted before a retired judge pursuant
to the rules of JAMS in the nearest city in which JAMS conducts business to the
city in which the Participant is employed by the Company. The Company shall pay
all arbitration fees. In addition to any other relief, the arbitrator may award
to the prevailing party recovery of its attorneys’ fees and costs. By accepting
an Award, the Participant and the Company waive their respective rights to have
any such disputes or claims tried by a judge or jury.
          (f) Limitation of Liability. The Board and any Committee(s), and each
member thereof, who act as the Plan Administrator, shall be entitled to, in good
faith, rely or act upon any report or other information furnished to him or her
by any officer or Employee, the Company’s independent auditors, Consultants or
any other agents assisting in the administration of the Plan. Members of the
Board and any Committee(s), and any officer or Employee acting at the direction
or on behalf of the Board and any Committee(s), shall not be personally liable
for any action or determination taken or made in good faith with respect to the
Plan, and shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action or determination.
     4. Shares Issuable Under the Plan.
          (a) Number of Shares Available for Issuance Under Plan. Subject to
adjustment as provided in Section 10(c) hereof, the total number of Shares
reserved and available

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for issuance in connection with Awards shall be 4,000,000 Shares. Any Shares
issued under the Plan may consist, in whole or in part, of authorized and
unissued Shares or treasury Shares.
          (b) Availability of Shares Not Issued pursuant to Awards.
               (i) If any Shares subject to an Award are forfeited, expire or
otherwise terminate without issuance of such Shares or any Award is settled for
cash or otherwise does not result in the issuance of all or a portion of the
Shares subject to such Award, the Shares shall, to the extent of such
forfeiture, expiration, termination, cash settlement or non-issuance, be
available for Awards under the Plan, subject to Section 4(b)(iv) below.
               (ii) If any Shares issued pursuant to an Award are forfeited back
to or repurchased by the Company, including, but not limited to, any repurchase
or forfeiture caused by the failure to meet a contingency or condition required
for the vesting of such Shares, then the Shares forfeited or repurchased shall
revert to and become available for issuance under the Plan, subject to Section
4(b)(iv) below.
               (iii) In the event that any Option or other Award granted
hereunder is exercised through the withholding of Shares from the Award by the
Company or withholding tax liabilities arising from such Option or other Award
are satisfied by the withholding of Shares from the Award by the Company, then
only the number of Shares issued net of the Shares withheld shall be counted as
issued for purposes of determining the maximum number of Shares available for
grant under the Plan, subject to Section 4(b)(iv) below.
               (iv) Notwithstanding anything in this Section 4(b) to the
contrary, solely for purposes of determining whether Shares are available for
the grant of Incentive Stock Options, the maximum aggregate number of Shares
that may be granted under this Plan through Incentive Stock Options shall be
determined without regard to any Shares restored pursuant to this Section 4(b)
that, if taken into account, would cause the Plan, for purposes of the grant of
Incentive Stock Options, to fail the requirement under Code Section 422 that the
Plan designate a maximum aggregate number of Shares that may be issued.
          (c) Application of Limitations. The limitation contained in this
Section 4 shall apply not only to Awards that are settled by the delivery of
Shares but also to Awards relating to Shares but settled only in cash (such as
cash-only Stock Appreciation Rights). The Plan Administrator may adopt
reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and may
make adjustments if the number of Shares actually delivered differs from the
number of Shares previously counted in connection with an Award.
     5. Eligibility; Per-Person Award Limitations.
          (a) Eligibility. Awards may be granted under the Plan only to Eligible
Persons.
          (b) Per-Person Award Limitations. In any one calendar year, an
Eligible Person may not be granted Options or Stock Appreciation Rights under
which more than 2,000,000 Shares could be received by the Participant, subject
to adjustment as provided in Section 10(c). In any one calendar year, an
Eligible Person may not be granted Awards (other than

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an Option or Stock Appreciation Right) under which more than 2,000,000 Shares
could be received by the Participant, subject to adjustment as provided in
Section 10(c). In addition, in any one calendar year, an Eligible Person may not
be granted Performance Awards (other than Options or Stock Appreciation Rights)
under which more than $10,000,000 could be received by the Participant.
     6. Terms of Awards.
          (a) General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Plan Administrator may impose on any
Award or the exercise thereof, at the date of grant or thereafter (subject to
Section 10(e)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Plan Administrator shall determine, including
terms requiring forfeiture of Awards in the event of termination of the
Participant’s Continuous Service and terms permitting a Participant to make
elections relating to his or her Award. The Plan Administrator shall retain full
power and discretion to accelerate, waive or modify, at any time, any term or
condition of an Award that is not mandatory under the Plan.
          (b) Options. The Plan Administrator is authorized to grant Options to
any Eligible Person on the following terms and conditions:
               (i) Stock Option Agreement. Each grant of an Option shall be
evidenced by an Award Agreement. Such Award Agreement shall be subject to all
applicable terms and conditions of the Plan and may be subject to any other
terms and conditions which are not inconsistent with the Plan and which the Plan
Administrator deems appropriate for inclusion in the Award Agreement. The
provisions of the various Award Agreements entered into under the Plan need not
be identical.
               (ii) Number of Shares. Each Award Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 10(c) hereof. The Award
Agreement shall also specify whether the Stock Option is an Incentive Stock
Option or a Non-Qualified Stock Option.
               (iii) Exercise Price.
                    (A) In General. Each Award Agreement shall state the price
at which Shares subject to the Option may be purchased (the “Exercise Price”),
which shall be, with respect to Incentive Stock Options, not less than 100% of
the Fair Market Value of the Stock on the date of grant. In the case of
Non-Qualified Stock Options, the Exercise Price shall be determined in the sole
discretion of the Plan Administrator; provided, however, that notwithstanding
any other provision of the Plan, any Non-Qualified Stock Option granted with a
per Share exercise price less than the per Share Fair Market Value on the date
of grant shall be structured to avoid the imposition of any excise tax under
Code Section 409A, unless otherwise specifically determined by the Plan
Administrator.
                    (B) Ten Percent Shareholder. If a Participant owns or is
deemed to own (by reason of the attribution rules applicable under Section
424(d) of the Code) more than 10% of the combined voting power of all classes of
stock of the Company or any Parent or

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Subsidiary, any Incentive Stock Option granted to such Employee must have an
exercise price per Share of at least 110% of the Fair Market Value of a Share on
the date of grant.
               (iv) Time and Method of Exercise. The Plan Administrator shall
determine the time or times at which or the circumstances under which an Option
may be exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the time or times at
which Options shall cease to be or become exercisable following termination of
Continuous Service or upon other conditions, the methods by which the exercise
price may be paid or deemed to be paid (including, in the discretion of the Plan
Administrator, a cashless exercise procedure), the form of such payment,
including, without limitation, cash, Stock, net exercise, other Awards or awards
granted under other plans of the Company or a Related Entity, other property
(including notes or other contractual obligations of Participants to make
payment on a deferred basis) or any other form of consideration legally
permissible, and the methods by or forms in which Stock will be delivered or
deemed to be delivered to Participants.
               (v) Termination of Service. Subject to earlier termination of the
Option as otherwise provided in the Plan and unless otherwise provided by the
Plan Administrator with respect to an Option and set forth in the Award
Agreement, an Option shall be exercisable after a Participant’s termination of
Continuous Service only during the applicable time period determined in
accordance with this Section and thereafter shall terminate and no longer be
exercisable:
                    (A) Death or Disability. If the Participant’s Continuous
Service terminates because of the death or Disability of the Participant, the
Option, to the extent unexercised and exercisable on the date on which the
Participant’s Continuous Service terminated, may be exercised by the Participant
(or the Participant’s legal representative or estate) at any time prior to the
expiration of twelve (12) months (or such other period of time as determined by
the Plan Administrator, in its discretion) after the date on which the
Participant’s Continuous Service terminated, but in any event only with respect
to the vested portion of the Option and no later than the date of expiration of
the Option’s term as set forth in the Award Agreement evidencing such Option
(the “Option Expiration Date”).
                    (B) Termination for Cause. Notwithstanding any other
provision of the Plan to the contrary, if the Participant’s Continuous Service
is terminated for Cause, the Option shall terminate and cease to be exercisable
immediately upon such termination of Continuous Service.
                    (C) Other Termination of Service. If the Participant’s
Continuous Service terminates for any reason, except Disability, death or Cause,
the Option, to the extent unexercised and exercisable by the Participant on the
date on which the Participant’s Continuous Service terminated, may be exercised
by the Participant at any time prior to the expiration of three (3) months (or
such longer period of time as determined by the Plan Administrator, in its
discretion) after the date on which the Participant’s Continuous Service
terminated, but in any event only with respect to the vested portion of the
Option and no later than the Option Expiration Date.

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               (vi) Incentive Stock Options. The terms of any Incentive Stock
Option granted under the Plan shall comply in all respects with the provisions
of Section 422 of the Code. If and to the extent required to comply with
Section 422 of the Code, Options granted as Incentive Stock Options shall be
subject to the following special terms and conditions:
                    (1) The Option shall not be exercisable more than ten years
after the date such Incentive Stock Option is granted; provided, however, that
if a Participant owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Company or any Parent or Subsidiary and the Incentive
Stock Option is granted to such Participant, the Incentive Stock Option shall
not be exercisable (to the extent required by the Code at the time of the grant)
for no more than five years from the date of grant; and
                    (2) If the aggregate Fair Market Value (determined as of the
date the Incentive Stock Option is granted) of the Shares with respect to which
Incentive Stock Options granted under the Plan and all other option plans of the
Company, its Parent or any Subsidiary are exercisable for the first time by a
Participant during any calendar year in excess of $100,000, then such
Participant’s Incentive Stock Option(s) or portions thereof that exceed such
$100,000 limit shall be treated as Non-Qualified Stock Options (in the reverse
order in which they were granted, so that the last Incentive Stock Option will
be the first treated as a Non-Qualified Stock Option). This paragraph shall only
apply to the extent such limitation is applicable under the Code at the time of
the grant.
          (c) Stock Appreciation Rights. The Plan Administrator is authorized to
grant Stock Appreciation Rights to Participants on the following terms and
conditions:
               (i) Agreement. Each grant of a Stock Appreciation Right shall be
evidenced by an Award Agreement. Such Award Agreement shall be subject to all
applicable terms and conditions of the Plan and may be subject to any other
terms and conditions which are not inconsistent with the Plan and which the Plan
Administrator deems appropriate for inclusion in the Award Agreement. The
provisions of the various Award Agreements entered into under the Plan need not
be identical.
               (ii) Right to Payment. A Stock Appreciation Right shall confer on
the Participant to whom it is granted a right to receive, upon exercise thereof,
the excess of (A) the Fair Market Value of one Share on the date of exercise
over (B) the grant price of the Stock Appreciation Right as determined by the
Plan Administrator.
               (iii) Other Terms. The Plan Administrator shall determine at the
date of grant or thereafter, the time or times at which and the circumstances
under which a Stock Appreciation Right may be exercised in whole or in part
(including based on achievement of performance goals and/or future service
requirements), the time or times at which Stock Appreciation Rights shall cease
to be or become exercisable following termination of Continuous Service or upon
other conditions, the form of payment upon exercise of Shares, cash or other
property, the method of exercise, method of settlement, form of consideration
payable in settlement (either cash, Shares or other property), method by or
forms in which Stock will be delivered or deemed to be delivered to
Participants, whether or not a Stock Appreciation Right

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shall be in tandem or in combination with any other Award, and any other terms
and conditions of any Stock Appreciation Right. Stock Appreciation Rights may be
either freestanding or in tandem with other Awards. Notwithstanding any other
provision of the Plan, unless otherwise exempt from Section 409A of the Code or
otherwise specifically determined by the Plan Administrator, each Stock
Appreciation Right shall be structured to avoid the imposition of any excise tax
under Section 409A of the Code.
          (d) Restricted Stock. The Plan Administrator is authorized to grant
Restricted Stock to any Eligible Person on the following terms and conditions:
               (i) Grant and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability, risk of forfeiture and other restrictions,
if any, as the Plan Administrator may impose, or as otherwise provided in this
Plan. The terms of any Restricted Stock granted under the Plan shall be set
forth in a written Award Agreement which shall contain provisions determined by
the Plan Administrator and not inconsistent with the Plan. The restrictions may
lapse separately or in combination at such times, under such circumstances
(including based on achievement of performance goals and/or future service
requirements), in such installments or otherwise, as the Plan Administrator may
determine at the date of grant or thereafter. Except to the extent restricted
under the terms of the Plan and any Award Agreement relating to the Restricted
Stock, a Participant granted Restricted Stock shall have all of the rights of a
shareholder, including the right to vote the Restricted Stock and the right to
receive dividends thereon (subject to any mandatory reinvestment or other
requirement imposed by the Plan Administrator). During the restricted period
applicable to the Restricted Stock, subject to Section 10(b) below, the
Restricted Stock may not be sold, transferred, pledged, hypothecated, margined
or otherwise encumbered by the Participant.
               (ii) Forfeiture. Except as otherwise determined by the Plan
Administrator, upon termination of a Participant’s Continuous Service during the
applicable restriction period, the Participant’s Restricted Stock that is at
that time subject to a risk of forfeiture that has not lapsed or otherwise been
satisfied shall be forfeited to or reacquired by the Company; provided that the
Plan Administrator may provide, by rule or regulation or in any Award Agreement
or may determine in any individual case, that restrictions or forfeiture
conditions relating to Restricted Stock shall be waived in whole or in part in
the event of terminations resulting from specified causes, and the Plan
Administrator may in other cases waive in whole or in part the forfeiture of
Restricted Stock.
               (iii) Certificates for Shares. Restricted Stock granted under the
Plan may be evidenced in such manner as the Plan Administrator shall determine.
If certificates representing Restricted Stock are registered in the name of the
Participant, the Plan Administrator may require that such certificates bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain physical possession
of the certificates, that the certificates be kept with an escrow agent and that
the Participant deliver a stock power to the Company, endorsed in blank,
relating to the Restricted Stock.
               (iv) Dividends and Splits. As a condition to the grant of an
Award of Restricted Stock, the Plan Administrator may require that any cash
dividends paid on a Share of Restricted Stock be automatically reinvested in
additional Shares of Restricted Stock or applied to

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the purchase of additional Awards under the Plan. Unless otherwise determined by
the Plan Administrator, Shares distributed in connection with a stock split or
stock dividend, and other property distributed as a dividend, shall be subject
to restrictions and a risk of forfeiture to the same extent as the Restricted
Stock with respect to which such Shares or other property has been distributed.
          (e) Stock Units. The Plan Administrator is authorized to grant Stock
Units to Participants, which are rights to receive Shares, cash or other
property, or a combination thereof at the end of a specified time period,
subject to the following terms and conditions:
               (i) Award and Restrictions. Satisfaction of an Award of Stock
Units shall occur upon expiration of the time period specified for such Stock
Units by the Plan Administrator (or, if permitted by the Plan Administrator, as
elected by the Participant). In addition, Stock Units shall be subject to such
restrictions (which may include a risk of forfeiture) as the Plan Administrator
may impose, if any, which restrictions may lapse at the expiration of the time
period or at earlier specified times (including based on achievement of
performance goals and/or future service requirements), separately or in
combination, in installments or otherwise, as the Plan Administrator may
determine. The terms of an Award of Stock Units shall be set forth in a written
Award Agreement which shall contain provisions determined by the Plan
Administrator and not inconsistent with the Plan. Stock Units may be satisfied
by delivery of Stock, cash equal to the Fair Market Value of the specified
number of Shares covered by the Stock Units, or a combination thereof, as
determined by the Plan Administrator at the date of grant or thereafter. Prior
to satisfaction of an Award of Stock Units, an Award of Stock Units carries no
voting or dividend or other rights associated with Share ownership.
Notwithstanding any other provision of the Plan, unless otherwise exempt from
Section 409A of the Code or otherwise specifically determined by the Plan
Administrator, each Stock Unit shall be structured to avoid the imposition of
any excise tax under Section 409A of the Code.
               (ii) Forfeiture. Except as otherwise determined by the Plan
Administrator, upon termination of a Participant’s Continuous Service during the
applicable time period thereof to which forfeiture conditions apply (as provided
in the Award Agreement evidencing the Stock Units), the Participant’s Stock
Units (other than those Stock Units subject to deferral at the election of the
Participant) shall be forfeited; provided that the Plan Administrator may
provide, by rule or regulation or in any Award Agreement or may determine in any
individual case, that restrictions or forfeiture conditions relating to Stock
Units shall be waived in whole or in part in the event of terminations resulting
from specified causes, and the Plan Administrator may in other cases waive in
whole or in part the forfeiture of Stock Units.
               (iii) Dividend Equivalents. Unless otherwise determined by the
Plan Administrator at date of grant, any Dividend Equivalents that are granted
with respect to any Award of Stock Units shall be either (A) paid with respect
to such Stock Units at the dividend payment date in cash or in Shares of
unrestricted Stock having a Fair Market Value equal to the amount of such
dividends or (B) deferred with respect to such Stock Units and the amount or
value thereof automatically deemed reinvested in additional Stock Units, other
Awards or other investment vehicles, as the Plan Administrator shall determine
or permit the Participant to elect.

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          (f) Bonus Stock and Awards in Lieu of Obligations. The Plan
Administrator is authorized to grant Shares as a bonus or to grant Shares or
other Awards in lieu of Company obligations to pay cash or deliver other
property under the Plan or under other plans or compensatory arrangements,
provided that, in the case of Participants subject to Section 16 of the Exchange
Act, the amount of such grants remains within the discretion of the Plan
Administrator to the extent necessary to ensure that acquisitions of Shares or
other Awards are exempt from liability under Section 16(b) of the Exchange Act.
Shares or Awards granted hereunder shall be subject to such other terms as shall
be determined by the Plan Administrator.
          (g) Dividend Equivalents. The Plan Administrator is authorized to
grant Dividend Equivalents to any Eligible Person entitling the Eligible Person
to receive cash, Shares, other Awards, or other property equal in value to
dividends paid with respect to a specified number of Shares, or other periodic
payments. Dividend Equivalents may be awarded on a free-standing basis or in
connection with another Award. The terms of an Award of Dividend Equivalents
shall be set forth in a written Award Agreement which shall contain provisions
determined by the Plan Administrator and not inconsistent with the Plan. The
Plan Administrator may provide that Dividend Equivalents shall be paid or
distributed when accrued or shall be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Plan
Administrator may specify. Notwithstanding any other provision of the Plan,
unless otherwise exempt from Section 409A of the Code or otherwise specifically
determined by the Plan Administrator, each Dividend Equivalent shall be
structured to avoid the imposition of any excise tax under Section 409A of the
Code.
          (h) Performance Awards. The Plan Administrator is authorized to grant
Performance Awards to any Eligible Person payable in cash, Shares, other
property, or other Awards, on terms and conditions established by the Plan
Administrator, subject to the provisions of Section 7 if and to the extent that
the Plan Administrator shall, in its sole discretion, determine that an Award
shall be subject to those provisions. The performance criteria to be achieved
during any Performance Period and the length of the Performance Period shall be
determined by the Plan Administrator upon the grant of each Performance Award.
Except as provided in this Plan or as may be provided in an Award Agreement,
Performance Awards will be distributed only after the end of the relevant
Performance Period. The performance goals to be achieved for each Performance
Period shall be conclusively determined by the Plan Administrator and may be
based upon the criteria set forth in Section 7(b), or in the case of an Award
that the Plan Administrator determines shall not be subject to Section 7 hereof,
any other criteria that the Plan Administrator, in its sole discretion, shall
determine should be used for that purpose. The amount of the Award to be
distributed shall be conclusively determined by the Plan Administrator.
Performance Awards may be paid in a lump sum or in installments following the
close of the Performance Period or, in accordance with procedures established by
the Plan Administrator, on a deferred basis.
          (i) Other Stock-Based Awards. The Plan Administrator is authorized,
subject to limitations under applicable law, to grant to any Eligible Person
such other Awards that may be denominated or payable in, valued in whole or in
part by reference to, or otherwise based on, or related to, Shares, as deemed by
the Plan Administrator to be consistent with the purposes of the Plan,
including, without limitation, convertible or exchangeable debt securities,
other rights convertible or exchangeable into Stock, purchase rights for Stock,
Awards with value and payment

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contingent upon performance of the Company or any other factors designated by
the Plan Administrator, and Awards valued by reference to the book value of
Stock or the value of securities of or the performance of specified Related
Entities or business units. The Plan Administrator shall determine the terms and
conditions of such Awards. The terms of any Award pursuant to this Section shall
be set forth in a written Award Agreement which shall contain provisions
determined by the Plan Administrator and not inconsistent with the Plan. Stock
delivered pursuant to an Award in the nature of a purchase right granted under
this Section 6(h) shall be purchased for such consideration (including without
limitation loans from the Company or a Related Entity), paid for at such times,
by such methods, and in such forms, including, without limitation, cash, Stock,
other Awards or other property, as the Plan Administrator shall determine. Cash
awards, as an element of or supplement to any other Award under the Plan, may
also be granted pursuant to this Section 6(h). Notwithstanding any other
provision of the Plan, unless otherwise exempt from Section 409A of the Code or
otherwise specifically determined by the Plan Administrator, each such Award
shall be structured to avoid the imposition of any excise tax under Section 409A
of the Code.
     7. Tax Qualified Performance Awards.
          (a) Covered Employees. A Committee, composed in compliance with the
requirements of Section 162(m) of the Code, in its discretion, may determine at
the time an Award is granted to an Eligible Person who is, or is likely to be,
as of the end of the tax year in which the Company would claim a tax deduction
in connection with such Award, a Covered Employee, that the provisions of this
Section 7 shall be applicable to such Award.
          (b) Performance Criteria. If an Award is subject to this Section 7,
then the lapsing of restrictions thereon and the distribution of cash, Shares or
other property pursuant thereto, as applicable, shall be contingent upon
achievement of one or more objective performance goals. Performance goals shall
be objective and shall otherwise meet the requirements of Section 162(m) of the
Code and regulations thereunder including the requirement that the level or
levels of performance targeted by the Committee result in the achievement of
performance goals being “substantially uncertain.” One or more of the following
business criteria for the Company, on a consolidated basis, and/or for Related
Entities, or for business or geographical units of the Company and/or a Related
Entity (except with respect to the total stockholder return and earnings per
share criteria), shall be used by the Committee in establishing performance
goals for such Awards: (1) earnings per Share; (2) revenues or gross margins;
(3) cash flow; (4) operating margin; (5) return on net assets, investment,
capital, or equity; (6) economic value added; (7) direct contribution; (8) net
income; pretax earnings; earnings before interest and taxes; earnings before
interest, taxes, depreciation and amortization; earnings after interest expense
and before extraordinary or special items; operating income; income before
interest income or expense, unusual items and income taxes, local, state or
federal and excluding budgeted and actual bonuses which might be paid under any
ongoing bonus plans of the Company; (9) working capital; (10) management of
fixed costs or variable costs; (11) identification or consummation of investment
opportunities or completion of specified projects in accordance with corporate
business plans, including strategic mergers, acquisitions or divestitures;
(12) total stockholder return; and (13) debt reduction. Any of the above goals
may be determined on an absolute or relative basis or as compared to the
performance of a published or special index deemed applicable by the Committee
including, but not limited to, the Standard & Poor’s 500 Stock Index or a group
of companies that

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are comparable to the Company. The Committee shall exclude the impact of an
event or occurrence which the Committee determines should appropriately be
excluded, including without limitation (i) restructurings, discontinued
operations, extraordinary items, and other unusual or non-recurring charges,
(ii) an event either not directly related to the operations of the Company or
not within the reasonable control of the Company’s management, or (iii) a change
in accounting standards required by generally accepted accounting principles.
          (c) Performance Period; Timing For Establishing Performance Goals.
Achievement of performance goals in respect of such Performance Awards shall be
measured over a Performance Period, as specified by the Committee. Performance
goals shall be established not later than ninety (90) days after the beginning
of any Performance Period applicable to such Performance Awards, or at such
other date as may be required or permitted for “performance-based compensation”
under Section 162(m) of the Code.
          (d) Adjustments. The Committee may, in its discretion, reduce the
amount of a settlement otherwise to be made in connection with Awards subject to
this Section 7, but may not exercise discretion to increase any such amount
payable to a Covered Employee in respect of an Award subject to this Section 7.
The Committee shall specify the circumstances in which such Awards shall be paid
or forfeited in the event of termination of Continuous Service by the
Participant prior to the end of a Performance Period or settlement of Awards.
          (e) Committee Certification. Within a reasonable period of time after
the performance criteria have been satisfied (but no later than three (3) months
after the satisfaction of the performance criteria), to the extent necessary to
qualify the payments as “performance based compensation” under Section 162(m) of
the Code, the Committee shall certify, by resolution or other appropriate action
in writing, that the performance criteria and any other material terms
previously established by the Committee or set forth in the Plan, have been
satisfied. To the extent that the performance criteria have been satisfied, but
the Committee has not certified such result within three (3) months after such
satisfaction, then the Participant shall receive the payment provided for under
the Participant’s Award.
     8. Certain Provisions Applicable to Awards or Sales.
          (a) Stand-Alone, Additional, Tandem and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Plan Administrator, be
granted either alone or in addition to, in tandem with or in substitution or
exchange for, any other Award or any award granted under another plan of the
Company, any Related Entity or any business entity to be acquired by the Company
or a Related Entity or any other right of a Participant to receive payment from
the Company or any Related Entity. Such additional, tandem, and substitute or
exchange Awards may be granted at any time. If an Award is granted in
substitution or exchange for another Award or award, the Plan Administrator
shall require the surrender of such other Award or award in consideration for
the grant of the new Award. In addition, Awards may be granted in lieu of cash
compensation, including in lieu of cash amounts payable under other plans of the
Company or any Related Entity.
          (b) Form and Timing of Payment Under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Award Agreement, payments to be made by the
Company or

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a Related Entity upon the exercise of an Option or other Award or settlement of
an Award may be made in such forms as the Plan Administrator shall determine,
including, without limitation, cash, other Awards or other property, and may be
made in a single payment or transfer, in installments or on a deferred basis.
The settlement of any Award may be accelerated, and cash paid in lieu of Shares
in connection with such settlement, in the discretion of the Plan Administrator
or upon occurrence of one or more specified events (in addition to a Change in
Control). Installment or deferred payments may be required by the Plan
Administrator (subject to Section 10(g) of the Plan) or permitted at the
election of the Participant on terms and conditions established by the Plan
Administrator. Payments may include, without limitation, provisions for the
payment or crediting of a reasonable interest rate on installment or deferred
payments or the grant or crediting of Dividend Equivalents or other amounts in
respect of installment or deferred payments denominated in Shares.
          (c) Exemptions from Section 16(b) Liability. It is the intent of the
Company that this Plan comply in all respects with applicable provisions of
Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that neither
the grant of any Awards to nor other transaction by a Participant who is subject
to Section 16 of the Exchange Act is subject to liability under Section 16(b)
thereof (except for transactions acknowledged in writing to be non-exempt by
such Participant). Accordingly, if any provision of this Plan or any Award
Agreement does not comply with the requirements of Rule 16b-3 or
Rule 16a-1(c)(3) as then applicable to any such transaction, such provision will
be construed or deemed amended to the extent necessary to conform to the
applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such
Participant shall avoid liability under Section 16(b).
          (d) Code Section 409A. If and to the extent that the Plan
Administrator believes that any Awards may constitute “deferred compensation”
under Section 409A of the Code, the terms and conditions set forth in the Award
Agreement for that Award shall be drafted in a manner that is intended to comply
with, and shall be interpreted in a manner consistent with, the applicable
requirements of Section 409A of the Code, unless otherwise agreed to in writing
by the Participant and the Company.
     9. Change in Control; Corporate Transaction.
          (a) Change in Control.
               (i) The Plan Administrator may, in its discretion, accelerate the
vesting, exercisability, lapsing of restrictions or expiration of deferral of
any Award, including upon a Change in Control. In addition, the Plan
Administrator may provide in an Award Agreement that the performance goals
relating to any Award will be deemed to have been met upon the occurrence of any
Change in Control.
               (ii) In addition to the terms of Sections 9(a)(i) above, the
effect of a “change in control,” may be provided (1) in an employment,
compensation or severance agreement, if any, between the Company or any Related
Entity and the Participant, relating to the Participant’s employment,
compensation or severance with or from the Company or such Related Entity or
(2) in the Award Agreement.

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          (b) Corporate Transactions. In the event of a Corporate Transaction,
any surviving corporation or acquiring corporation (together, the “Successor
Corporation”) may either (i) assume any or all Awards outstanding under the
Plan; (ii) continue any or all Awards outstanding under the Plan; or
(iii) substitute similar stock awards for outstanding Awards (it being
understood that similar awards include, but are not limited to, awards to
acquire the same consideration paid to the shareholders or the Company, as the
case may be, pursuant to the Corporate Transaction). In the event that the
Successor Corporation does not assume or continue any or all such outstanding
Awards or substitute similar stock awards for such outstanding Awards, then with
respect to Awards that have been not assumed, continued or substituted, such
Awards shall terminate if not exercised (if applicable) at or prior to such
effective time (contingent upon the effectiveness of the Corporate Transaction).
               The Administrator, in its sole discretion, shall determine
whether each Award is assumed, continued, substituted or terminated.
Notwithstanding the foregoing, to the extent that substantially all of the
holders of the Company’s Voting Stock hold or receive directly or indirectly
ninety percent (90%) or more of the Voting Stock of the resulting entity or a
parent company thereof, in substantially the same proportions as their ownership
of the Company immediately prior to the transaction, the Awards shall be either
assumed or substituted by the successor corporation or its parent or continued
by the Company.
          The Plan Administrator, in its discretion and without the consent of
any Participant, may (but is not obligated to) either (i) accelerate the vesting
of any Awards (determined on an Award by Award basis), including permitting the
lapse of any repurchase rights held by the Company (and, if applicable, the time
at which such Awards may be exercised), in full or as to some percentage of the
Award, to a date prior to the effective time of such Corporate Transaction as
the Plan Administrator shall determine (contingent upon the effectiveness of the
Corporate Transaction) or (ii) provide for a cash payment in exchange for the
termination of an Award or any portion thereof (determined on an Award by Award
basis) where such cash payment is equal to the Fair Market Value of the Shares
that the Participant would receive if the Award were fully vested and exercised
(if applicable) as of such date (less any applicable exercise price).
          Notwithstanding any other provision in this Plan to the contrary, with
respect to Restricted Stock and any other Award granted under the Plan with
respect to which the Company has any reacquisition or repurchase rights, the
reacquisition or repurchase rights for such Awards may be assigned by the
Company to the successor of the Company (or the successor’s parent company) in
connection with such Corporate Transaction. In the event any such rights are not
continued with the Company or assigned to the Successor Corporation, then such
rights shall lapse and the Award shall be fully vested as of the effective time
of the Corporate Transaction. In addition, the Plan Administrator, in its
discretion, may (but is not obligated to) provide that any reacquisition or
repurchase rights held by the Company with respect to any such Awards
(determined on an Award by Award basis) shall lapse in whole or in part
(contingent upon the effectiveness of the Corporate Transaction).
          (c) Dissolution or Liquidation. In the event of a dissolution or
liquidation of the Company, then all outstanding Awards shall terminate
immediately prior to the completion of such dissolution or liquidation, and
Shares subject to the Company’s repurchase option may be

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repurchased by the Company notwithstanding the fact that the holder of such
stock is still in Continuous Service.
     10. General Provisions.
          (a) Compliance With Legal and Other Requirements. The Company may, to
the extent deemed necessary or advisable by the Plan Administrator, postpone the
issuance or delivery of Shares or payment of other benefits under any Award
until completion of such registration or qualification of such Shares or other
required action under any federal or state law, rule or regulation, listing or
other required action with respect to any stock exchange or automated quotation
system upon which the Shares or other Company securities are listed or quoted or
compliance with any other obligation of the Company, as the Plan Administrator
may consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject to such
other conditions as it may consider appropriate in connection with the issuance
or delivery of Shares or payment of other benefits in compliance with applicable
laws, rules, and regulations, listing requirements or other obligations. The
foregoing notwithstanding, in connection with a Change in Control, the Company
shall take or cause to be taken no action, and shall undertake or permit to
arise no legal or contractual obligation, that results or would result in any
postponement of the issuance or delivery of Shares or payment of benefits under
any Award or the imposition of any other conditions on such issuance, delivery
or payment, to the extent that such postponement or other condition would
represent a greater burden on a Participant than existed on the ninetieth (90th)
day preceding the Change in Control.
          (b) Limits on Transferability; Beneficiaries.
               (i) General. Except as provided in the Award Agreement, a
Participant may not assign, sell, transfer or otherwise encumber or subject to
any lien any Award or other right or interest granted under this Plan, in whole
or in part, other than by will or by operation of the laws of descent and
distribution, and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the Participant or his
or her guardian or legal representative.
               (ii) Permitted Transfer of Option. The Plan Administrator, in its
sole discretion, may permit the transfer of an Option (but not an Incentive
Stock Option or any other right to purchase Shares other than an Option) as
follows: (A) by gift to a member of the Participant’s Immediate Family or (B) by
transfer by instrument to a trust providing that the Option is to be passed to
beneficiaries upon death of the Participant. For purposes of this
Section 10(b)(ii), “Immediate Family” shall mean the Participant’s spouse
(including a former spouse subject to terms of a domestic relations order);
child, stepchild, grandchild, child-in-law; parent, stepparent, grandparent,
parent-in-law; sibling and sibling-in-law, and shall include adoptive
relationships. If a determination is made by counsel for the Company that the
restrictions contained in this Section 10(b)(ii) are not required by applicable
federal or state securities laws under the circumstances, then the Plan
Administrator, in its sole discretion, may permit the transfer of Awards (other
than Incentive Stock Options and Stock Appreciation Rights in tandem therewith)
to one or more Beneficiaries or other transferees during the lifetime of the
Participant, which may be exercised by such transferees in accordance with the
terms of such Award, but only if and to the extent permitted by the Plan
Administrator pursuant to the express terms of an Award

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Agreement (subject to any terms and conditions which the Plan Administrator may
impose thereon, and further subject to any prohibitions and restrictions on such
transfers pursuant to Rule 16b-3). A Beneficiary, transferee or other person
claiming any rights under the Plan from or through any Participant shall be
subject to all terms and conditions of the Plan and any Award Agreement
applicable to such Participant, except as otherwise determined by the Plan
Administrator, and to any additional terms and conditions deemed necessary or
appropriate by the Plan Administrator.
          (c) Adjustments.
               (i) Adjustments to Awards. In the event that any dividend or
other distribution (whether in the form of cash, Shares or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Shares
and/or such other securities of the Company or any other issuer such that a
substitution, exchange or adjustment is determined by the Plan Administrator to
be appropriate, then the Plan Administrator shall, in such manner as it may deem
equitable, substitute, exchange or adjust any or all of (A) the number and kind
of Shares which may be delivered in connection with Awards granted thereafter,
(B) the number and kind of Shares by which annual per-person Award limitations
are measured under Section 5 hereof, (C) the number and kind of Shares subject
to or deliverable in respect of outstanding Awards, (D) the exercise price,
grant price or purchase price relating to any Award and/or make provision for
payment of cash or other property in respect of any outstanding Award, and
(E) any other aspect of any Award that the Plan Administrator determines to be
appropriate.
               (ii) Other Adjustments. The Plan Administrator (which shall be a
Committee to the extent such authority is required to be exercised by a
Committee to comply with Code Section 162(m)) is authorized to make adjustments
in the terms and conditions of, and the criteria included in, Awards (including
Awards subject to performance goals) in recognition of unusual or nonrecurring
events (including, without limitation, acquisitions and dispositions of
businesses and assets) affecting the Company, any Related Entity or any business
unit, or the financial statements of the Company or any Related Entity, or in
response to changes in applicable laws, regulations, accounting principles, tax
rates and regulations or business conditions or in view of the Plan
Administrator’s assessment of the business strategy of the Company, any Related
Entity or business unit thereof, performance of comparable organizations,
economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, Stock Appreciation Rights or Performance
Awards granted to Participants designated by the Plan Administrator as Covered
Employees and intended to qualify as “performance-based compensation” under Code
Section 162(m) and the regulations thereunder to otherwise fail to qualify as
“performance-based compensation” under Code Section 162(m) and regulations
thereunder.
          (d) Taxes. The Company and any Related Entity are authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Shares or any payroll or other payment to
a Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Plan Administrator may deem advisable to enable the Company

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and Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Shares or other property and to make cash
payments in respect thereof in satisfaction of a Participant’s tax obligations,
either on a mandatory or elective basis in the discretion of the Plan
Administrator.
          (e) Changes to the Plan and Awards. The Board may amend, alter,
suspend, discontinue or terminate the Plan or the Committee’s authority to grant
Awards under the Plan, without the consent of shareholders or Participants. Any
amendment or alteration to the Plan shall be subject to the approval of the
Company’s shareholders if such shareholder approval is deemed necessary and
advisable by the Board. However, without the consent of an affected Participant,
no such amendment, alteration, suspension, discontinuance or termination of the
Plan may materially and adversely affect the rights of such Participant under
any previously granted and outstanding Award. The Plan Administrator may waive
any conditions or rights under or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award Agreement relating
thereto, except as otherwise provided in the Plan; provided that, without the
consent of an affected Participant, no such action may materially and adversely
affect the rights of such Participant under such Award.
          (f) Limitation on Rights Conferred Under Plan. Neither the Plan nor
any action taken hereunder shall be construed as (i) giving any Eligible Person
or Participant the right to continue as an Eligible Person or Participant or in
the employ of the Company or a Related Entity; (ii) interfering in any way with
the right of the Company or a Related Entity to terminate any Eligible Person’s
or Participant’s Continuous Service at any time, (iii) giving an Eligible Person
or Participant any claim to be granted any Award under the Plan or to be treated
uniformly with other Participants and Employees or (iv) conferring on a
Participant any of the rights of a shareholder of the Company unless and until
the Participant is duly issued or transferred Shares in accordance with the
terms of an Award.
          (g) Unfunded Status of Awards; Creation of Trusts. The Plan is
intended to constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
obligations to deliver Shares pursuant to an Award, nothing contained in the
Plan or any Award shall give any such Participant any rights that are greater
than those of a general creditor of the Company; provided that the Plan
Administrator may authorize the creation of trusts and deposit therein cash,
Shares, other Awards or other property or make other arrangements to meet the
Company’s obligations under the Plan. Such trusts or other arrangements shall be
consistent with the “unfunded” status of the Plan unless the Plan Administrator
otherwise determines with the consent of each affected Participant. The trustee
of such trusts may be authorized to dispose of trust assets and reinvest the
proceeds in alternative investments, subject to such terms and conditions as the
Plan Administrator may specify and in accordance with applicable law.
          (h) Nonexclusivity of the Plan. Neither the adoption of the Plan by
the Board nor its submission to the shareholders of the Company for approval
shall be construed as creating any limitations on the power of the Plan
Administrator to adopt such other incentive arrangements as it may deem
desirable including incentive arrangements and awards which do not qualify under
Code Section 162(m).

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          (i) Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award. The Plan Administrator shall
determine whether cash, other Awards or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
          (j) Governing Law. The validity, construction and effect of the Plan,
any rules and regulations under the Plan, and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware without giving
effect to principles of conflicts of laws, and applicable federal law.
          (k) Plan Effective Date and Shareholder Approval; Termination of Plan.
The Plan shall become effective on the Effective Date, subject to approval of
its adoption by the Board by shareholders of the Company eligible to vote in the
election of directors, by a vote sufficient to meet the requirements of Code
Sections 162(m) (if applicable) and 422, Rule 16b-3 under the Exchange Act (if
applicable), applicable and other laws, regulations, and obligations of the
Company applicable to the Plan. Awards may be granted subject to shareholder
approval, but may not be exercised or otherwise settled in the event shareholder
approval is not obtained. The Plan shall terminate no later than ten (10) years
from the date of the later of (x) the Effective Date and (y) the date an
increase in the number of Shares reserved for issuance under the Plan is
approved by the Board (subject such increase is also approved by the
shareholders).

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