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Exhibit 10.1
 
 
PRIMO WATER CORPORATION
AMENDED AND RESTATED
2010 OMNIBUS LONG-TERM INCENTIVE PLAN
 
Primo Water Corporation, a Delaware corporation (the “Company”), sets forth
herein the terms of its Amended and Restated Omnibus Long-Term Incentive Plan
(the “Plan”), as follows:
 
1.
PURPOSE

 
The Plan is intended to enhance the Company’s and its Affiliates’ (as defined
herein) ability to attract and retain highly qualified officers, non-employee
members of the Board, key employees, consultants and advisors, and to motivate
such officers, non-employee members of the Board, key employees, consultants and
advisors to serve the Company and its Affiliates and to expend maximum effort to
improve the business results and earnings of the Company, by providing to such
persons an opportunity to acquire or increase a direct proprietary interest in
the operations and future success of the Company.  To this end, the Plan
provides for the grant of stock options, stock appreciation rights, restricted
stock, restricted stock units, unrestricted stock, other stock-based awards and
cash awards. Any of these awards may, but need not, be made as performance
incentives to reward attainment of performance goals in accordance with the
terms hereof. Stock options granted under the Plan may be non-qualified stock
options or incentive stock options, as provided herein.
 
2.
DEFINITIONS

 
For purposes of interpreting the Plan and related documents (including Award
Agreements), the following definitions shall apply:
 
2.1.           “Affiliate” means any company or other trade or business that
“controls,” is “controlled by” or is “under common control” with the Company
within the meaning of Rule 405 of Regulation C under the Securities Act,
including, without limitation, any Subsidiary.
 
2.2.           “Award” means a grant of an Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, other Stock-based Award or cash award
under the Plan.
 
2.3.           “Award Agreement” means a written agreement between the Company
and a Grantee, or notice from the Company or an Affiliate to a Grantee that
evidences and sets out the terms and conditions of an Award.
 
2.4.           “Board” means the Board of Directors of the Company.
 
2.5.           “Cause” shall be defined as that term is defined in a Grantee’s
offer letter or other applicable employment agreement; or, if there is no such
definition “Cause” means, as determined by the Company and unless otherwise
provided in an applicable Award Agreement with the Company or an Affiliate: (i)
engaging in any act, or failing to act, or misconduct that in any such case is
injurious to the Company or its Affiliates; (ii) gross negligence or willful
misconduct in connection with the performance of duties; (iii) conviction of (or
entering a plea of guilty or nolo contendere to) a criminal offense (other than
a minor traffic offense); (iv) fraud, embezzlement or misappropriation of funds
or property of the Company or an Affiliate; (v) material breach of any term of
any employment, consulting or other services, confidentiality, intellectual
property or non-competition agreement, if any, between the Service Provider and
the Company or an Affiliate; (vi) the entry of an order duly issued by any
regulatory agency (including federal, state and local regulatory agencies and
self-regulatory bodies) having jurisdiction over the Company or an Affiliate
requiring the removal from any office held by the Service Provider with the
Company or prohibiting or materially limiting a Service Provider from
participating in the business or affairs of the Company or any Affiliate; or
(vii) the revocation or threatened revocation of any of the Company’s or any
Affiliate’s government licenses, permits or approvals, which is primarily due to
the Service Provider’s action or inaction and such revocation or threatened
revocation would be alleviated or mitigated in any material respect by the
termination of the Service Provider’s Services.
 
 
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2.6.           “Change in Control” shall have the meaning set forth in Section
15.2.
 
2.7.           “Code” means the Internal Revenue Code of 1986, as now in effect
or as hereafter amended.
 
2.8.           “Committee” means the Compensation Committee of the Board, or
such other committee as determined by the Board.  The Compensation Committee of
the Board may, in its discretion, designate a subcommittee of its members to
serve as the Committee (to the extent the Board has not designated another
person, committee or entity as the Committee).  The Board will cause the
Committee to satisfy the applicable requirements of any stock exchange on which
the Common Stock may then be listed.  For purposes of Awards to Covered
Employees intended to constitute Performance Awards, to the extent required by
Code Section 162(m), Committee means all of the members of the Compensation
Committee who are “outside directors” within the meaning of Section 162(m) of
the Code.  For purposes of Awards to Grantees who are subject to Section 16 of
the Exchange Act, Committee means all of the members of the Compensation
Committee who are “non-employee directors” within the meaning of Rule 16b-3
adopted under the Exchange Act.
 
2.9.           “Company” means Primo Water Corporation, a Delaware corporation,
or any successor corporation.
 
2.10.         “Common Stock” or “Stock” means a share of common stock of the
Company, par value $.001 per share.
 
2.11.         “Covered Employee” means a Grantee who is a “covered employee”
within the meaning of Section 162(m)(3) of the Code as qualified by Section 12.4
herein.
 
2.12.         “Disability” means as determined by the Company and unless
otherwise provided in an applicable Award Agreement with the Company or an
Affiliate, the Grantee is unable to perform each of the essential duties of such
Grantee’s position by reason of a medically determinable physical or mental
impairment which is potentially permanent in character or which can be expected
to last for a continuous period of not less than 12 months; provided, however,
that, with respect to rules regarding expiration of an Incentive Stock Option
following termination of the Grantee’s Service, “Disability” means “permanent
and total disability” as set forth in Section 22(e)(3) of the Code.
 
 
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2.13.         “Exchange Act” means the Securities Exchange Act of 1934, as now
in effect or as hereafter amended.
 
2.14.         “Fair Market Value” of a share of Common Stock as of a particular
date shall mean (1) if the Common Stock is listed on a national securities
exchange, the closing or last price of the Common Stock on the composite tape or
other comparable reporting system for the applicable date, or if the applicable
date is not a trading day, the trading day immediately preceding the applicable
date, or (2) if the shares of Common Stock are not then listed on a national
securities exchange, or the value of such shares is not otherwise determinable,
such value as determined by the Board in good faith in its sole discretion (but
in any event not less than fair market value within the meaning of Section
409A).
 
2.15.         “Family Member” means a person who is a spouse, former spouse,
child, stepchild, grandchild, parent, stepparent, grandparent, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister,
brother-in-law, or sister-in-law, including adoptive relationships, of the
applicable individual, any person sharing the applicable individual’s household
(other than a tenant or employee), a trust in which any one or more of these
persons have more than fifty percent of the beneficial interest, a foundation in
which any one or more of these persons (or the applicable individual) control
the management of assets, and any other entity in which one or more of these
persons (or the applicable individual) own more than fifty percent of the voting
interests.
 
2.16.         “Grant Date” means, as determined by the Board, the latest to
occur of (i) the date as of which the Board approves an Award, (ii) the date on
which the recipient of an Award first becomes eligible to receive an Award under
Section 6 hereof, or (iii) such other date as may be specified by the Board in
the Award Agreement.
 
2.17.         “Grantee” means a person who receives or holds an Award under the
Plan.
 
2.18.         “Incentive Stock Option” means an “incentive stock option” within
the meaning of Section 422 of the Code, or the corresponding provision of any
subsequently enacted tax statute, as amended from time to time.
 
2.19.         “Non-qualified Stock Option” means an Option that is not an
Incentive Stock Option.
 
2.20.         “Option” means an option to purchase one or more shares of Stock
pursuant to the Plan.
 
 
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2.21.         “Option Price” means the exercise price for each share of Stock
subject to an Option.
 
2.22.         “Original Effective Date” means April 22, 2010.
 
2.23.         “Outside Director” means a member of the Board who is not an
officer or employee of the Company or an Affiliate, determined in accordance
with the requirements of Section 162(m) of the Code.
 
2.24.         “Performance Award” means an Award made subject to the attainment
of performance goals (as described in Section 12) over a performance period of
from one (1) to five (5) years.
 
2.25.         “Plan” means this Primo Water Corporation Amended and Restated
2010 Omnibus Long-Term Incentive Plan.
 
2.26.         “Purchase Price” means the purchase price for each share of Stock
pursuant to a grant of Restricted Stock.
 
2.27.         “Reporting Person” means a person who is required to file reports
under Section 16(a) of the Exchange Act.
 
2.28.         “Restatement Effective Date” means May 16, 2012, the date this
amendment and restatement of the Plan was approved by the Company’s
stockholders.
 
2.29.         “Restricted Stock” means shares of Stock, awarded to a Grantee
pursuant to Section 10 hereof.
 
2.30.         “Restricted Stock Unit” means a bookkeeping entry representing the
equivalent of shares of Stock, awarded to a Grantee pursuant to Section 10
hereof.
 
2.31.         “SAR Exercise Price” means the per share exercise price of a SAR
granted to a Grantee under Section 9 hereof.
 
2.32.         “SEC” means the United States Securities and Exchange Commission.
 
2.33.         “Section 409A” shall mean Section 409A of the Code and all formal
guidance and regulations promulgated thereunder.
 
 
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2.34.         “Securities Act” means the Securities Act of 1933, as now in
effect or as hereafter amended.
 
2.35.         “Separation from Service” means a termination of Service by a
Service Provider, as determined by the Board, which determination shall be
final, binding and conclusive; provided if any Award governed by Section 409A is
to be distributed on a Separation from Service, then the definition of
Separation from Service for such purposes shall comply with the definition
provided in Section 409A.
 
2.36.         “Service” means service as a Service Provider to the Company or an
Affiliate. Unless otherwise stated in the applicable Award Agreement, a
Grantee’s change in position or duties shall not result in interrupted or
terminated Service, so long as such Grantee continues to be a Service Provider
to the Company or an Affiliate.
 
2.37.         “Service Provider” means an employee, officer, non-employee member
of the Board, consultant or advisor of the Company or an Affiliate.
 
2.38.         “Stock Appreciation Right” or “SAR” means a right granted to a
Grantee under Section 9 hereof.
 
2.39.         “Subsidiary” means any “subsidiary corporation” of the Company
within the meaning of Section 424(f) of the Code.
 
2.40.         “Substitute Award” means any Award granted in assumption of or in
substitution for an award of a company or business acquired by the Company or a
Subsidiary or with which the Company or an Affiliate combines, shares issued or
issuable.
 
2.41.         “Ten Percent Stockholder” means an individual who owns more than
ten percent (10%) of the total combined voting power of all classes of
outstanding stock of the Company, its parent or any of its Subsidiaries. In
determining stock ownership, the attribution rules of Section 424(d) of the Code
shall be applied.
 
2.42.         “Termination Date” means the date that is ten (10) years after the
Original Effective Date, unless the Plan is earlier terminated by the Board
under Section 5.2 hereof.
 
2.43.         “Transaction” shall have the meaning set forth in Section 15.2.
 
 
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3.
ADMINISTRATION OF THE PLAN

 
3.1.           General.
 
The Board shall have such powers and authorities related to the administration
of the Plan as are consistent with the Company’s certificate of incorporation
and bylaws and applicable law. The Board shall have the power and authority to
delegate its responsibilities hereunder to the Committee, which shall have full
authority to act in accordance with its charter, and with respect to the
authority of the Board to act hereunder, all references to the Board shall be
deemed to include a reference to the Committee, to the extent such power or
responsibilities have been delegated.  Except as specifically provided in
Section 14 or as otherwise may be required by applicable law, regulatory
requirement or the certificate of incorporation or the bylaws of the Company,
the Board shall have full power and authority to take all actions and to make
all determinations required or provided for under the Plan, any Award or any
Award Agreement, and shall have full power and authority to take all such other
actions and make all such other determinations not inconsistent with the
specific terms and provisions of the Plan that the Board deems to be necessary
or appropriate to the administration of the Plan.  The Committee shall
administer the Plan; provided that, the Board shall retain the right to exercise
the authority of the Committee to the extent consistent with applicable law and
the applicable requirements of any securities exchange on which the Common Stock
may then be listed.  The interpretation and construction by the Board of any
provision of the Plan, any Award or any Award Agreement shall be final, binding
and conclusive. Without limitation, the Board shall have full and final
authority, subject to the other terms and conditions of the Plan, to:
 
(i) designate Grantees;
 
(ii) determine the type or types of Awards to be made to a Grantee;
 
(iii) determine the number of shares of Stock to be subject to an Award;
 
(iv) establish the terms and conditions of each Award (including, but not
limited to, the Option Price of any Option, the nature and duration of any
restriction or condition (or provision for lapse thereof) relating to the
vesting, exercise, transfer, or forfeiture of an Award or the shares of Stock
subject thereto, and any terms or conditions that may be necessary to qualify
Options as Incentive Stock Options);
 
(v) prescribe the form of each Award Agreement; and
 
(vi) amend, modify, or supplement the terms of any outstanding Award including
the authority, in order to effectuate the purposes of the Plan, to modify Awards
to foreign nationals or individuals who are employed outside the United States
to recognize differences in local law, tax policy, or custom.
 
To the extent permitted by applicable law, the Board may delegate its authority
as identified herein to any individual or committee of individuals (who need not
be directors), including without limitation the authority to make Awards to
Grantees who are not subject to Section 16 of the Exchange Act or who are not
Covered Employees.  To the extent that the Board delegates its authority to make
Awards as provided by this Section 3.1, all references in the Plan to the
Board’s authority to make Awards and determinations with respect thereto shall
be deemed to include the Board’s delegate.  Any such delegate shall serve at the
pleasure of, and may be removed at any time by the Board.
 
3.2.           Restrictions; No Repricing.
 
Notwithstanding the foregoing, no amendment or modification may be made to an
outstanding Option or SAR that causes the Option or SAR to become subject to
Section 409A, without the Grantee’s written prior approval.  Notwithstanding any
provision herein to the contrary, the repricing of Options or SARs is prohibited
without prior approval of the Company’s stockholders.  For this purpose, a
“repricing” means any of the following (or any other action that has the same
effect as any of the following): (A) changing the terms of an Option or SAR to
lower its Option Price or SAR Exercise Price; (B) any other action that is
treated as a “repricing” under generally accepted accounting principles; and (C)
repurchasing for cash or canceling an Option or SAR at a time when its Option
Price or SAR Exercise Price is greater than the Fair Market Value of the
underlying shares in exchange for another Award, unless the cancellation and
exchange occurs in connection with a change in capitalization or similar change
under Section 15.  A cancellation and exchange under clause (C) would be
considered a “repricing” regardless of whether it is treated as a “repricing”
under generally accepted accounting principles and regardless of whether it is
voluntary on the part of the Grantee.
 
 
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3.3.           Award Agreements.
 
The grant of any Award may be contingent upon the Grantee executing the
appropriate Award Agreement.  The Company may retain the right in an Award
Agreement to cause a forfeiture of the gain realized by a Grantee on account of
actions taken by the Grantee in violation or breach of or in conflict with any
employment agreement, non-competition agreement, any agreement prohibiting
solicitation of employees or clients of the Company or any Affiliate thereof or
any confidentiality obligation with respect to the Company or any Affiliate
thereof or otherwise in competition with the Company or any Affiliate thereof,
to the extent specified in such Award Agreement applicable to the
Grantee.  Furthermore, the Company may annul an Award if the Grantee is
terminated for Cause as defined in the applicable Award Agreement or the Plan,
as applicable.
 
If any of the Company's financial statements are required to be restated, the
Company may recover all or a portion of any Award made to any Grantee with
respect to any fiscal year of the Company the financial results of which are
negatively affected by such restatement. The amount to be recovered shall be the
amount, as determined by the Committee, by which the affected Award exceeds the
amount that would have been payable had the financial statements been initially
filed as restated.  In no event shall the amount to be recovered by the Company
be less than the amount required to be repaid or recovered as a matter of law.
 
3.4.           Deferral Arrangement.
 
The Board may permit or require the deferral of any Award payment into a
deferred compensation arrangement, subject to such rules and procedures as it
may establish and in accordance with Section 409A, which may include provisions
for the payment or crediting of interest or dividend equivalents, including
converting such credits into deferred Stock units.
 
3.5.           No Liability.
 
No member of the Board or of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan, any Award or Award
Agreement.
 
3.6.           Book Entry.
 
Notwithstanding any other provision of this Plan to the contrary, the Company
may elect to satisfy any requirement under this Plan for the delivery of stock
certificates through the use of book-entry.
 
 
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4.
STOCK SUBJECT TO THE PLAN

 
Subject to adjustment as provided in Section 15 hereof, the maximum number of
shares of Stock available for issuance under the Plan shall be 2,288,675,
comprised of (A) 788,675 shares of Stock authorized upon the Original Effective
Date (as adjusted pursuant to this Section 4 and Section 15) plus (B) 1,500,000
shares of Stock authorized upon the Restatement Effective Date.  In addition,
there shall be added the number of shares subject to stock options granted under
the Company’s 2004 Stock Plan that are canceled, expired, forfeited, settled in
cash, settled by issuance of fewer shares than the number of shares underlying
stock option or otherwise terminated without delivery of shares to the Grantees.
 
2,218,735 of such shares of Stock available for issuance under the Plan shall be
available for issuance pursuant to Incentive Stock Options.  Stock issued or to
be issued under the Plan shall be authorized but unissued shares; or, to the
extent permitted by applicable law, issued shares that have been reacquired by
the Company.  Subject to adjustments in accordance with Section 15, the maximum
number of each type of Award (other than cash-based Performance Awards) intended
to constitute “performance-based compensation” under Code Section 162(m) granted
to any Grantee in any thirty-six (36) month period shall not exceed the
following: Options:  800,000; SARs: 800,000; Restricted Stock: 800,000;
Restricted Stock Units: 800,000; and other Stock-based Performance Awards:
800,000.
 
The Board may adopt reasonable counting procedures to ensure appropriate
counting, avoid double counting (as, for example, in the case of tandem or
Substitute Awards) and make adjustments in accordance with Section 15. If the
Option Price of any Option granted under the Plan, or if pursuant to Section
17.3 the withholding obligation of any Grantee with respect to an Option or
other Award, is satisfied by tendering shares of Stock to the Company (by either
actual delivery or by attestation) or by withholding shares of Stock, the number
of shares of Stock issued net of the shares of Stock tendered or withheld shall
be deemed delivered for purposes of determining the maximum number of shares of
Stock available for delivery under the Plan. To the extent that an Award under
the Plan or a stock option granted under the Company’s 2004 Stock Plan is
canceled, expired, forfeited, settled in cash, settled by issuance of fewer
shares than the number underlying the Award or stock option, or otherwise
terminated without delivery of shares to the Grantee, the shares retained by or
returned to the Company will be available under the Plan; and shares that are
withheld from such an Award or stock option granted under the Company’s 2004
Stock Plan, or separately surrendered by the Grantee in payment of any exercise
price or taxes relating to such an Award or stock option shall be deemed to
constitute shares not delivered to the Grantee and will be available under the
Plan. In addition, in the case of any Substitute Award, such Substitute Award
shall not be counted against the number of shares reserved under the Plan.
 
5.
EFFECTIVE DATE, DURATION AND AMENDMENTS

 
5.1.           Term.
 
The Plan became effective as of the Original Effective Date, and this amendment
and restatement of the Plan became effective as of the Restatement Effective
Date.  The Plan shall terminate automatically on the ten (10) year anniversary
of the Original Effective Date and may be terminated on any earlier date as
provided in Section 5.2.
 
5.2.           Amendment and Termination of the Plan.
 
The Board may, at any time and from time to time, amend, suspend, or terminate
the Plan as to any Awards which have not been made. An amendment shall be
contingent on approval of the Company’s stockholders to the extent stated by the
Board, required by applicable law or required by applicable stock exchange
listing requirements.  Notwithstanding the foregoing, any amendment to Section
3.2 shall be contingent upon the approval of the Company’s stockholders.  No
Awards shall be made after the Termination Date. The applicable terms of the
Plan, and any terms and conditions applicable to Awards granted prior to the
Termination Date shall survive the termination of the Plan and continue to apply
to such Awards.  No amendment, suspension, or termination of the Plan shall,
without the consent of the Grantee, materially impair rights or obligations
under any Award theretofore awarded.
 
 
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6.
AWARD ELIGIBILITY AND LIMITATIONS

 
6.1.           Service Providers.
 
Subject to this Section 6, Awards may be made to any Service Provider, including
any Service Provider who is an officer, Non-employee member of the Board,
consultant or advisor of the Company or of any Affiliate, as the Board shall
determine and designate from time to time in its discretion.
 
6.2.           Successive Awards.
 
An eligible person may receive more than one Award, subject to such restrictions
as are provided herein.
 
6.3.           Stand-Alone, Additional, Tandem, and Substitute Awards.
 
Awards may, in the discretion of the Board, 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 Affiliate, or any
business entity to be acquired by the Company or an Affiliate, or any other
right of a Grantee to receive payment from the Company or any Affiliate. 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, the
Board shall have the right to require the surrender of such other Award in
consideration for the grant of the new Award. The Board shall have the right, in
its discretion, to make Awards in substitution or exchange for any other award
under another plan of the Company, any Affiliate, or any business entity to be
acquired by the Company or an Affiliate. 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 Affiliate, in which the value of Stock subject to
the Award is equivalent in value to the cash compensation (for example,
Restricted Stock Units or Restricted Stock).
 
7.
AWARD AGREEMENT

 
Each Award shall be evidenced by an Award Agreement, in such form or forms as
the Board shall from time to time determine.  Without limiting the foregoing, an
Award Agreement may be provided in the form of a notice which provides that
acceptance of the Award constitutes acceptance of all terms of the Plan and the
notice.  Award Agreements granted from time to time or at the same time need not
contain similar provisions but shall be consistent with the terms of the
Plan.  Each Award Agreement evidencing an Award of Options shall specify whether
such Options are intended to be Non-qualified Stock Options or Incentive Stock
Options, and in the absence of such specification such options shall be deemed
Non-qualified Stock Options.
 
 
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8.
TERMS AND CONDITIONS OF OPTIONS

 
8.1.           Option Price.
 
The Option Price of each Option shall be fixed by the Board and stated in the
related Award Agreement. The Option Price of each Option (except those that
constitute Substitute Awards) shall be at least the Fair Market Value on the
Grant Date of a share of Stock; provided, however, that in the event that a
Grantee is a Ten Percent Stockholder as of the Grant Date, the Option Price of
an Option granted to such Grantee that is intended to be an Incentive Stock
Option shall be not less than 110 percent of the Fair Market Value of a share of
Stock on the Grant Date.  In no case shall the Option Price of any Option be
less than the par value of a share of Stock.
 
8.2.           Vesting.
 
Subject to Section 8.3 hereof, each Option shall become exercisable at such
times and under such conditions (including, without limitation, performance
requirements) as shall be determined by the Board and stated in the Award
Agreement.
 
8.3.           Term.
 
Each Option shall terminate, and all rights to purchase shares of Stock
thereunder shall cease, upon the expiration of ten (10) years from the Grant
Date, or under such circumstances and on such date prior thereto as is set forth
in the Plan or as may be fixed by the Board and stated in the related Award
Agreement; provided, however, that in the event that the Grantee is a Ten
Percent Stockholder, an Option granted to such Grantee that is intended to be an
Incentive Stock Option at the Grant Date shall not be exercisable after the
expiration of five (5) years from its Grant Date.
 
8.4.           Limitations on Exercise of Option.
 
Notwithstanding any other provision of the Plan, in no event may any Option be
exercised, in whole or in part, (i) prior to the date the Plan is approved by
the stockholders of the Company as provided herein or (ii) after the occurrence
of an event which results in termination of the Option.
 
8.5.           Method of Exercise.
 
An Option that is exercisable may be exercised by the Grantee’s delivery of a
notice of exercise to the Company, setting forth the number of shares of Stock
with respect to which the Option is to be exercised, accompanied by full payment
for the shares.  To be effective, notice of exercise must be made in accordance
with procedures established by the Company from time to time.  
 
8.6.           Rights of Holders of Options.
 
Unless otherwise stated in the related Award Agreement, an individual holding or
exercising an Option shall have none of the rights of a stockholder (for
example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock ) until the shares of Stock covered thereby are fully
paid and issued to him. Except as provided in Section 15 hereof or the related
Award Agreement, no adjustment shall be made for dividends, distributions or
other rights for which the record date is prior to the date of such issuance.
 
 
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8.7.           Delivery of Stock Certificates.
 
Promptly after the exercise of an Option by a Grantee and the payment in full of
the Option Price, such Grantee shall be entitled to the issuance of a stock
certificate or certificates evidencing his or her ownership of the shares of
Stock subject to the Option.
 
8.8.           Limitations on Incentive Stock Options.
 
An Option shall constitute an Incentive Stock Option only (i) if the Grantee of
such Option is an employee of the Company or any Subsidiary of the Company; (ii)
to the extent specifically provided in the related Award Agreement; and (iii) to
the extent that the aggregate Fair Market Value (determined at the time the
Option is granted) of the shares of Stock with respect to which all Incentive
Stock Options held by such Grantee become exercisable for the first time during
any calendar year (under the Plan and all other plans of the Grantee’s employer
and its Affiliates) does not exceed $100,000. This limitation shall be applied
by taking Options into account in the order in which they were granted.
 
9.
TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

 
9.1.           Right to Payment.
 
A SAR shall confer on the Grantee a right to receive, upon exercise thereof, the
excess of (i) the Fair Market Value of one share of Stock on the date of
exercise over (ii) the SAR Exercise Price, as determined by the Board. The Award
Agreement for an SAR shall specify the SAR Exercise Price, which shall be fixed
at the Fair Market Value of a share of Stock on the Grant Date.  SARs may be
granted alone or in conjunction with all or part of an Option or at any
subsequent time during the term of such Option or in conjunction with all or
part of any other Award. A SAR granted in tandem with an outstanding Option
following the Grant Date of such Option shall have a grant price that is equal
to the Option Price; provided, however, that the SAR’s grant price may not be
less than the Fair Market Value of a share of Stock on the Grant Date of the
SAR.
 
9.2.           Other Terms.
 
The Board shall determine at the Grant Date or thereafter, the time or times at
which and the circumstances under which an SAR 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 SARs shall cease to be or become
exercisable following Separation from Service or upon other conditions, the
method of exercise, whether or not a SAR shall be in tandem or in combination
with any other Award, and any other terms and conditions of any SAR.
 
9.3.           Term of SARs.
 
The term of a SAR granted under the Plan shall be determined by the Board, in
its sole discretion; provided, however, that such term shall not exceed ten (10)
years.
 
 
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9.4.           Payment of SAR Amount.
 
 
Upon exercise of a SAR, a Grantee shall be entitled to receive payment from the
Company (in cash or Stock, as determined by the Board) in an amount determined
by multiplying:
 
(i)   the difference between the Fair Market Value of a share of Stock on the
date of exercise over the SAR Exercise Price; by

(ii)   the number of shares of Stock with respect to which the SAR is exercised.
 
10.
TERMS AND CONDITIONS OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS

 
10.1.         Restrictions.
 
At the time of grant, the Board may, in its sole discretion, establish a period
of time (a “restricted period”) and any additional restrictions including the
satisfaction of corporate or individual performance objectives applicable to an
Award of Restricted Stock or Restricted Stock Units in accordance with Section
12.1 and 12.2. Each Award of Restricted Stock or Restricted Stock Units may be
subject to a different restricted period and additional restrictions. Neither
Restricted Stock nor Restricted Stock Units may be sold, transferred, assigned,
pledged or otherwise encumbered or disposed of during the restricted period or
prior to the satisfaction of any other applicable restrictions.
 
10.2.         Restricted Stock Certificates.
 
The Company shall issue stock, in the name of each Grantee to whom Restricted
Stock has been granted, stock certificates or other evidence of ownership
representing the total number of shares of Restricted Stock granted to the
Grantee, as soon as reasonably practicable after the Grant Date. The Board may
provide in an Award Agreement that either (i) the Secretary of the Company shall
hold such certificates for the Grantee’s benefit until such time as the
Restricted Stock is forfeited to the Company or the restrictions lapse, or (ii)
such certificates shall be delivered to the Grantee; provided, however, that
such certificates shall bear a legend or legends that comply with the applicable
securities laws and regulations and makes appropriate reference to the
restrictions imposed under the Plan and the Award Agreement.
 
10.3.         Rights of Holders of Restricted Stock.
 
Unless the Board otherwise provides in an Award Agreement, holders of Restricted
Stock shall have rights as stockholders of the Company, including voting and
dividend rights.
 
10.4.         Rights of Holders of Restricted Stock Units.
 
10.4.1.     Settlement of Restricted Stock Units.
 
Restricted Stock Units may be settled in cash or Stock, as determined by the
Board and set forth in the Award Agreement. The Award Agreement shall also set
forth whether the Restricted Stock Units shall be settled (i) within the time
period specified in Section 17.9.1 for short term deferrals or (ii) otherwise
within the requirements of Section 409A, in which case the Award Agreement shall
specify upon which events such Restricted Stock Units shall be settled.
 
 
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10.4.2.      Voting and Dividend Rights.
 
Unless otherwise stated in the applicable Award Agreement, holders of Restricted
Stock Units shall not have rights as stockholders of the Company, including no
voting or dividend or dividend equivalents rights.
 
10.4.3.      Creditor’s Rights.
 
A holder of Restricted Stock Units shall have no rights other than those of a
general creditor of the Company. Restricted Stock Units represent an unfunded
and unsecured obligation of the Company, subject to the terms and conditions of
the applicable Award Agreement.
 
10.5.         Purchase of Restricted Stock.
 
The Grantee shall be required, to the extent required by applicable law, to
purchase the Restricted Stock from the Company at a Purchase Price equal to the
greater of (i) the aggregate par value of the shares of Stock represented by
such Restricted Stock or (ii) the Purchase Price, if any, specified in the
related Award Agreement. If specified in the Award Agreement, the Purchase Price
may be deemed paid by Services already rendered. The Purchase Price shall be
payable in a form described in Section 11 or, in the discretion of the Board, in
consideration for past Services rendered.
 
10.6.         Delivery of Stock.
 
Upon the expiration or termination of any restricted period and the satisfaction
of any other conditions prescribed by the Board, the restrictions applicable to
shares of Restricted Stock or Restricted Stock Units settled in Stock shall
lapse, and, unless otherwise provided in the Award Agreement, a stock
certificate for such shares shall be delivered, free of all such restrictions,
to the Grantee or the Grantee’s beneficiary or estate, as the case may be.
 
11.
FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK

 
11.1.         General Rule.
 
Payment of the Option Price for the shares purchased pursuant to the exercise of
an Option or the Purchase Price for Restricted Stock shall be made in cash or in
cash equivalents acceptable to the Company, except as provided in this Section
11.
 
11.2.         Surrender of Stock.
 
To the extent the Award Agreement so provides, payment of the Option Price for
shares purchased pursuant to the exercise of an Option or the Purchase Price for
Restricted Stock may be made all or in part through the tender to the Company of
shares of Stock, which shares shall be valued, for purposes of determining the
extent to which the Option Price or Purchase Price for Restricted Stock has been
paid thereby, at their Fair Market Value on the date of exercise or
surrender.  Notwithstanding the foregoing, in the case of an Incentive Stock
Option, the right to make payment in the form of already owned shares of Stock
may be authorized only at the time of grant.
 
 
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11.3.         Cashless Exercise.
 
With respect to an Option only (and not with respect to Restricted Stock), to
the extent permitted by law and to the extent the Award Agreement so provides,
payment of the Option Price may be made all or in part by delivery (on a form
acceptable to the Board) of an irrevocable direction to a licensed securities
broker acceptable to the Company to sell shares of Stock and to deliver all or
part of the sales proceeds to the Company in payment of the Option Price and any
withholding taxes described in Section 17.3.
 
11.4.         Other Forms of Payment.
 
To the extent the Award Agreement so provides, payment of the Option Price or
the Purchase Price for Restricted Stock may be made in any other form that is
consistent with applicable laws, regulations and rules, including, but not
limited to, the Company’s withholding of shares of Stock otherwise due to the
exercising Grantee.
 
12.
TERMS AND CONDITIONS OF PERFORMANCE AWARDS

 
12.1.         Performance Conditions.
 
The right of a Grantee to exercise or receive a grant or settlement of any
Award, and the timing thereof, may be subject to such performance conditions as
may be specified by the Committee. The Committee may use such business criteria
and other measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to performance conditions, except as limited
under Sections 12.2 hereof in the case of a Performance Award intended to
qualify under Code Section 162(m).
 
12.2.         Performance Awards Granted to Designated Covered Employees.
 
If and to the extent that the Committee determines that a Performance Award to
be granted to a Grantee who is designated by the Committee as likely to be a
Covered Employee should qualify as “performance-based compensation” for purposes
of Code Section 162(m), the grant, exercise and/or settlement of such
Performance Award shall be contingent upon achievement of pre-established
performance goals and other terms set forth in this Section 12.2.
 
12.2.1.      Performance Goals Generally.
 
The performance goals for such Performance Awards shall consist of one or more
business criteria and a targeted level or levels of performance with respect to
each of such criteria, as specified by the Committee consistent with this
Section 12.2.  Performance goals shall be objective and shall otherwise meet the
requirements of Code Section 162(m) 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.”
The Committee may determine that such Performance Awards shall be granted,
exercised and/or settled upon achievement of any one performance goal or that
two or more of the performance goals must be achieved as a condition to grant,
exercise and/or settlement of such Performance Awards.  Performance goals may,
in the discretion of the Committee, be established on a Company-wide basis, or
with respect to one or more business units, divisions, subsidiaries or business
segments, as applicable.  Performance goals may be absolute or relative (to the
performance of one or more comparable companies or indices).  To the extent
consistent with Code Section 162(m), measurement of performance goals may
exclude (in the discretion of the Committee) the impact of charges for
restructuring, discontinued operations, extraordinary items, and other unusual
non-recurring items, and the cumulative effects of tax or accounting changes
(each as defined by generally accepted accounting principles and as identified
in the Company’s financial statements or other SEC filings).  Performance goals
may differ for Performance Awards granted to any one Grantee or to different
Grantees.
 
 
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12.2.2.      Business Criteria.
 
One or more of the following business criteria for the Company, on a
consolidated basis, and/or specified subsidiaries or business units of the
Company (except with respect to the total stockholder return and earnings per
share criteria), shall be used exclusively by the Committee in establishing
performance goals for such Performance Awards: net sales; revenue; revenue
growth or product revenue growth; operating income (before or after taxes);
pre-or after-tax income (before or after allocation of corporate overhead and
bonuses; net earnings; earnings per share; net income (before or after taxes);
return on equity; total shareholder return; return on assets or net assets;
appreciation in and/or maintenance of share price; market share; market
capitalization; gross profits; earnings (including earnings before taxes,
earnings before interest and taxes or earnings before interest, taxes
depreciation and amortization); economic value-added models or equivalent
metrics; comparisons with various stock market indices; reduction in costs; cash
flow or cash flow per share (before or after dividends); return on capital
(including return on total capital or return on invested capital; cash flow
return on investment; improvement in or attainment of expense levels or working
capital levels; operating margins; gross margins or cash margin; year-end cash;
debt reductions; shareholder equity; regulatory performance; and implementation,
completion or attainment of measurable objectives with respect to research,
development, products or projects and recruiting and maintaining personnel.
 
12.2.3.     Timing for Establishing Performance Goals.
 
Performance goals shall be established not later than 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 Code Section 162(m).
 
12.2.4.      Settlement of Performance Awards; Other Terms.
 
Settlement of Performance Awards shall be in cash, Stock, other Awards or other
property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in connection
with such Performance Awards.  The maximum amount of each cash-based Performance
Award intended to constitute “performance-based compensation” under Code Section
162(m) granted to any Grantee in any twelve (12) month period shall not exceed
$2,000,000.
 
12.3.         Written Determinations.
 
All determinations by the Committee as to the establishment of performance
goals, the amount of any Performance Award pool or potential individual
Performance Awards and as to the achievement of performance goals relating to
Performance Awards, shall be made in writing in the case of any Award intended
to qualify under Code Section 162(m) to the extent required by Code Section
162(m). To the extent permitted by Code Section 162(m), the Committee may
delegate any responsibility relating to such Performance Awards.
 
 
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12.4.         Status of Section 12.2 Awards under Code Section 162(m).
 
It is the intent of the Company that Performance Awards under Section 12.2
hereof granted to persons who are designated by the Committee as likely to be
Covered Employees within the meaning of Code Section 162(m) and regulations
thereunder shall, if so designated by the Committee, constitute “qualified
performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder. Accordingly, the terms of Section 12.2, including the
definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Grantee will be a Covered Employee with
respect to a fiscal year that has not yet been completed, the term Covered
Employee as used herein shall mean only a person designated by the Committee, at
the time of grant of Performance Awards, as likely to be a Covered Employee with
respect to that fiscal year. If any provision of the Plan or any agreement
relating to such Performance Awards does not comply or is inconsistent with the
requirements of Code Section 162(m) or regulations thereunder, such provision
shall be construed or deemed amended to the extent necessary to conform to such
requirements.
 
13.
OTHER STOCK-BASED AWARDS

 
13.1.         Grant of Other Stock-based Awards.
 
Other Stock-based Awards, consisting of Stock units, or other Awards, valued in
whole or in part by reference to, or otherwise based on, Common Stock, may be
granted either alone or in addition to or in conjunction with other Awards under
the Plan.  Other Stock-based Awards may be granted in lieu of other cash or
other compensation to which a Service Provider is entitled from the Company or
may be used in the settlement of amounts payable in shares of Common Stock under
any other compensation plan or arrangement of the Company, including without
limitation, the Company’s Incentive Compensation Plan.  Subject to the
provisions of the Plan, the Committee shall have the sole and complete authority
to determine the persons to whom and the time or times at which such Awards
shall be made, the number of shares of Common Stock to be granted pursuant to
such Awards, and all other conditions of such Awards.  Unless the Committee
determines otherwise, any such Award shall be confirmed by an Award Agreement,
which shall contain such provisions as the Committee determines to be necessary
or appropriate to carry out the intent of this Plan with respect to such Award.
 
13.2.         Terms of Other Stock-based Awards.
 
Any Common Stock subject to Awards made under this Section 13 may not be sold,
assigned, transferred, pledged or otherwise encumbered prior to the date on
which the shares are issued, or, if later, the date on which any applicable
restriction, performance or deferral period lapses.
 
14.
REQUIREMENTS OF LAW

 
14.1.         General.
 
The Company shall not be required to sell or issue any shares of Stock under any
Award if the sale or issuance of such shares would constitute a violation by the
Grantee, any other individual exercising an Option, or the Company of any
provision of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations. If at
any time the Company shall determine, in its discretion, that the listing,
registration or qualification of any shares subject to an Award upon any
securities exchange or under any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the issuance or purchase of
shares hereunder, no shares of Stock may be issued or sold to the Grantee or any
other individual exercising an Option pursuant to such Award unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company, and
any delay caused thereby shall in no way affect the date of termination of the
Award. Specifically, in connection with the Securities Act, upon the exercise of
any Option or the delivery of any shares of Stock underlying an Award, unless a
registration statement under such Act is in effect with respect to the shares of
Stock covered by such Award, the Company shall not be required to sell or issue
such shares unless the Board has received evidence satisfactory to it that the
Grantee or any other individual exercising an Option may acquire such shares
pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Board shall be final, binding, and
conclusive. The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act. The Company shall not
be obligated to take any affirmative action in order to cause the exercise of an
Option or the issuance of shares of Stock pursuant to the Plan to comply with
any law or regulation of any governmental authority. As to any jurisdiction that
expressly imposes the requirement that an Option shall not be exercisable until
the shares of Stock covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances in which the laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.
 
 
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14.2.         Rule 16b-3.
 
During any time when the Company has a class of equity security registered under
Section 12 of the Exchange Act, it is the intent of the Company that Awards and
the exercise of Options granted to officers and directors hereunder will qualify
for the exemption provided by Rule 16b-3 under the Exchange Act. To the extent
that any provision of the Plan or action by the Board or Committee does not
comply with the requirements of Rule 16b-3, it shall be deemed inoperative to
the extent permitted by law and deemed advisable by the Board, and shall not
affect the validity of the Plan. In the event that Rule 16b-3 is revised or
replaced, the Board may exercise its discretion to modify this Plan in any
respect necessary to satisfy the requirements of, or to take advantage of any
features of, the revised exemption or its replacement.
 
15.
EFFECT OF CHANGES IN CAPITALIZATION

 
15.1.1.      Changes in Stock.
 
If (i) the number of outstanding shares of Stock is increased or decreased or
the shares of Stock are changed into or exchanged for a different number or kind
of shares or other securities of the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange of
shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration by
the Company occurring after the Original Effective Date or (ii) there occurs any
spin-off, split-up, extraordinary cash dividend or other distribution of assets
by the Company, the number and kinds of shares for which grants of Options and
other Stock-based Awards may be made under the Plan (including the per-Grantee
maximums set forth in Section 4) shall be equitably adjusted by the Company;
provided that any such adjustment shall comply with Section 409A. In addition,
in the event of any such increase or decease in the number of outstanding shares
or other transaction described in clause (ii) above, the number and kind of
shares for which Awards are outstanding and the Option Price per share of
outstanding options and SAR Exercise Price per share of outstanding SARs shall
be equitably adjusted; provided that any such adjustment shall comply with
Section 409A.
 
 
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15.1.2.      Effect of Certain Transactions.
 
Except as otherwise provided in an Award Agreement, in the event of (a) the
liquidation or dissolution of the Company or (b) a reorganization, merger,
exchange or consolidation of the Company or involving the shares of Common Stock
(a “Transaction”), the Plan and the Awards issued hereunder shall continue in
effect in accordance with their respective terms, except that following a
Transaction either (i) each outstanding Award shall be treated as provided for
in the agreement entered into in connection with the Transaction or (ii) if not
so provided in such agreement, each Grantee shall be entitled to receive in
respect of each share of Common Stock subject to any outstanding Awards, upon
exercise or payment or transfer in respect of any Award, the same number and
kind of stock, securities, cash, property or other consideration that each
holder of a share of Common Stock was entitled to receive in the Transaction in
respect of a share of Common stock; provided, however, that, unless otherwise
determined by the Committee, such stock, securities, cash, property or other
consideration shall remain subject to all of the conditions, restrictions and
performance criteria which were applicable to the Awards prior to such
Transaction.  Without limiting the generality of the foregoing, the treatment of
outstanding Options and Stock Appreciation Rights pursuant to this Section
15.1.2 in connection with a Transaction in which the consideration paid or
distributed to the Company’s stockholders is not entirely shares of common stock
of the acquiring or resulting corporation may include the cancellation of
outstanding Options and Stock Appreciation Rights upon consummation of the
Transaction as long as, at the election of the Committee, (x) the holders of
affected Options and SARs have been given a period of at least fifteen days
prior to the date of the consummation of the Transaction to exercise the Options
or SARs (whether or not they were otherwise exercisable) or (y) the holders of
the affected Options and SARs are paid (in cash or cash equivalents) in respect
of each Share covered by the Option or SAR being canceled an amount equal to the
excess, if any, of the per share price paid or distributed to stockholders in
the transaction (the value of any non-cash consideration to be determined by the
Committee in its sole discretion) over the Price Option or SAR Exercise Price,
as applicable.  For avoidance of doubt, (1) the cancellation of Options and SARs
pursuant to clause (y) of the preceding sentence may be effected notwithstanding
anything to the contrary contained in this Plan or any Award Agreement and (2)
if the amount determined pursuant to clause (y) of the preceding sentence is
zero or less, the affected Option or SAR may be cancelled without any payment
therefore.  The treatment of any Award as provided in this Section 15.1.2 shall
be conclusively presumed to be appropriate for purposes of Section 15.1.1.
 
15.2.         Definition of Change in Control.
 
“Change in Control” means:
 
 
(1)
Any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 50% or more of either (A) the
then-outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (B) the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however,
that, for purposes of this Section 15.2, the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
Affiliated Company, or (iv) any acquisition pursuant to a transaction that
complies with Sections 1(d)(3)(A), 1(d)(3)(B) and 1(d)(3)(C).

 
 
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(2)
Individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board;

 
 
(3)
Consummation of a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving the Company or any of its
subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets or stock of another entity
by the Company or any of its subsidiaries (each, a “Business Combination”), in
each case unless, following such Business Combination, (A) all or substantially
all of the individuals and entities that were the beneficial owners of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then-outstanding shares of common stock (or,
for a non-corporate entity, equivalent securities) and the combined voting power
of the then-outstanding voting securities entitled to vote generally in the
election of directors (or, for a non-corporate entity, equivalent governing
body), as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that, as a result of such
transaction, owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then-outstanding voting securities of such corporation, except to the extent
that such ownership existed prior to the Business Combination, and (C) at least
a majority of the members of the board of directors (or, for a non-corporate
entity, equivalent governing body) of the entity resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Business
Combination; or

 
 
(4)
Approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

 
Notwithstanding the foregoing, if it is determined that an Award hereunder is
subject to the requirements of Section 409A and is intended to be payable upon a
Change in Control, the Company will not be deemed to have undergone a Change in
Control for purposes of payment of such Award unless the Company is deemed to
have undergone a “change in control event” pursuant to the definition of such
term in Section 409A.
 
 
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15.3.         Effect of Change in Control
 
The Board shall determine the effect of a Change in Control upon Awards, and
such effect may be set forth in the appropriate Award Agreement.  Without
limiting the foregoing, the Board may provide in the Award Agreements at the
time of grant, or any time thereafter with the consent of the Grantee, the
actions that will be taken upon the occurrence of a Change in Control,
including, but not limited to, accelerated vesting, termination or assumption.
The Board may also provide in the Award Agreements at the time of grant, or any
time thereafter with the consent of the Grantee, for different provisions to
apply to an Award in place of those described in Sections 15.1 and 15.2.
 
15.4.         Reorganization Which Does Not Constitute a Change in Control.
 
If the Company undergoes any reorganization, merger, or consolidation of the
Company with one or more other entities which does not constitute a Change in
Control, any Option or SAR theretofore granted pursuant to the Plan shall
pertain to and apply to the securities to which a holder of the number of shares
of Stock subject to such Option or SAR would have been entitled immediately
following such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Option Price or SAR Exercise Price per share so
that the aggregate Option Price or SAR Exercise Price thereafter shall be the
same as the aggregate Option Price or SAR Exercise Price of the shares remaining
subject to the Option or SAR immediately prior to such reorganization, merger,
or consolidation. Subject to any contrary language in an Award Agreement, any
restrictions applicable to such Award shall apply as well to any replacement
shares received by the Grantee as a result of the reorganization, merger or
consolidation.
 
15.5.         Adjustments.
 
Adjustments under this Section 15 related to shares of Stock or securities of
the Company shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. No fractional shares or other securities
shall be issued pursuant to any such adjustment, and any fractions resulting
from any such adjustment shall be eliminated in each case by rounding downward
to the nearest whole share.
 
16.
NO LIMITATIONS ON COMPANY

 
The making of Awards pursuant to the Plan shall not affect or limit in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part of
its business or assets.
 
17.
TERMS APPLICABLE GENERALLY TO AWARDS GRANTED UNDER THE PLAN

 
17.1.         Disclaimer of Rights.
 
No provision in the Plan or in any Award Agreement shall be construed to confer
upon any individual the right to remain in the employ or service of the Company
or any Affiliate, or to interfere in any way with any contractual or other right
or authority of the Company either to increase or decrease the compensation or
other payments to any individual at any time, or to terminate any employment or
other relationship between any individual and the Company. In addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement, no Award granted under the Plan shall
be affected by any change of duties or position of the Grantee, so long as such
Grantee continues to be a Service Provider. The obligation of the Company to pay
any benefits pursuant to this Plan shall be interpreted as a contractual
obligation to pay only those amounts described herein, in the manner and under
the conditions prescribed herein. The Plan shall in no way be interpreted to
require the Company to transfer any amounts to a third party trustee or
otherwise hold any amounts in trust or escrow for payment to any Grantee or
beneficiary under the terms of the Plan.
 
 
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17.2.         Nonexclusivity of the Plan.
 
Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or particular individuals), including, without limitation, the
granting of stock options as the Board in its discretion determines desirable.
 
17.3.         Withholding Taxes.
 
The Company or an Affiliate, as the case may be, shall have the right to deduct
from payments of any kind otherwise due to a Grantee any federal, state, or
local taxes of any kind required by law to be withheld (i) with respect to the
vesting of or other lapse of restrictions applicable to an Award, (ii) upon the
issuance of any shares of Stock upon the exercise of an Option or SAR, or (iii)
otherwise due in connection with an Award.  At the time of such vesting, lapse,
or exercise, the Grantee shall pay to the Company or the Affiliate, as the case
may be, any amount that the Company or the Affiliate may reasonably determine to
be necessary to satisfy such withholding obligation. Subject to the prior
approval of the Company or the Affiliate, which may be withheld by the Company
or the Affiliate, as the case may be, in its sole discretion, the Grantee may
elect to satisfy such obligations, in whole or in part, (i) by causing the
Company or the Affiliate to withhold the minimum required number of shares of
Stock otherwise issuable to the Grantee as may be necessary to satisfy such
withholding obligation or (ii) by delivering to the Company or the Affiliate
shares of Stock already owned by the Grantee. The shares of Stock so delivered
or withheld shall have an aggregate Fair Market Value equal to such withholding
obligations. The Fair Market Value of the shares of Stock used to satisfy such
withholding obligation shall be determined by the Company or the Affiliate as of
the date that the amount of tax to be withheld is to be determined. A Grantee
who has made an election pursuant to this Section 17.3 may satisfy his or her
withholding obligation only with shares of Stock that are not subject to any
repurchase, forfeiture, unfulfilled vesting, or other similar requirements.
 
17.4.                   Captions.
 
The use of captions in this Plan or any Award Agreement is for the convenience
of reference only and shall not affect the meaning of any provision of the Plan
or any Award Agreement.
 
17.5.         Other Provisions.
 
Each Award Agreement may contain such other terms and conditions not
inconsistent with the Plan as may be determined by the Board, in its sole
discretion.
 
 
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17.6.          Number and Gender.
 
With respect to words used in this Plan, the singular form shall include the
plural form, the masculine gender shall include the feminine gender, etc., as
the context requires.
 
17.7.         Severability.
 
If any provision of the Plan or any Award Agreement shall be determined to be
illegal or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction.
 
17.8.         Governing Law.
 
The Plan shall be governed by and construed in accordance with the laws of the
Sate of North Carolina without giving effect to the principles of conflicts of
law, provided that the provisions set forth herein that are required to be
governed by the Delaware General Corporation Law shall be governed by such law.
 
17.9.         Section 409A.
 
17.9.1.      Short-Term Deferrals.
 
For each Award intended to comply with the short-term deferral exception
provided for under Section 409A, the related Award Agreement shall provide that
such Award shall be paid out by the later of (i) the 15th day of the third month
following the Grantee’s first taxable year in which the Award is no longer
subject to a substantial risk of forfeiture or (ii) the 15th day of the third
month following the end of the Company’s first taxable year in which the Award
is no longer subject to a substantial risk of forfeiture.
 
17.9.2.      Adjustments.
 
To the extent that the Board determines that a Grantee would be subject to the
additional 20% tax imposed on certain deferred compensation arrangements
pursuant to Section 409A as a result of any provision of any Award, to the
extent permitted by Section 409A, such provision shall be deemed amended to the
minimum extent necessary to avoid application of such additional tax. The Board
shall determine the nature and scope of such amendment.
 
17.10.      Separation from Service.
 
The Board shall determine the effect of a Separation from Service upon Awards,
and such effect shall be set forth in the appropriate Award Agreement.  Without
limiting the foregoing, the Board may provide in the Award Agreements at the
time of grant, or any time thereafter with the consent of the Grantee, the
actions that will be taken upon the occurrence of a Separation from Service,
including, but not limited to, accelerated vesting or termination, depending
upon the circumstances surrounding the Separation from Service.
 
 
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17.11.      Transferability of Awards.
 
17.11.1.   Transfers in General.
 
Except as provided in Section 17.11.2, no Award shall be assignable or
transferable by the Grantee to whom it is granted, other than by will or the
laws of descent and distribution, and, during the lifetime of the Grantee, only
the Grantee personally (or the Grantee’s personal representative) may exercise
rights under the Plan.
 
17.11.2.   Family Transfers.
 
If authorized in the applicable Award Agreement, a Grantee may transfer, not for
value, all or part of an Award (other than Incentive Stock Options) to any
Family Member. For the purpose of this Section 17.11.2, a “not for value”
transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic
relations order in settlement of marital property rights; or (iii) a transfer to
an entity in which more than fifty percent of the voting interests are owned by
Family Members (or the Grantee) in exchange for an interest in that entity.
Following a transfer under this Section 17.11.2, any such Award shall continue
to be subject to the same terms and conditions as were applicable immediately
prior to transfer. Subsequent transfers of transferred Awards are prohibited
except to Family Members of the original Grantee in accordance with this Section
17.11.2 or by will or the laws of descent and distribution.
 
17.12.       Dividends and Dividend Equivalent Rights.
 
If specified in the Award Agreement, the recipient of an Award under this Plan
may be entitled to receive, currently or on a deferred basis, dividends or
dividend equivalents with respect to the Common Stock or other securities
covered by an Award.  The terms and conditions of a dividend equivalent right
may be set forth in the Award Agreement.  Dividend equivalents credited to a
Grantee may be paid currently or may be deemed to be reinvested in additional
shares of Stock or other securities of the Company at a price per unit equal to
the Fair Market Value of a share of Stock on the date that such dividend was
paid to shareholders, as determined in the sole discretion of the Committee.
 

 
PRIMO WATER CORPORATION
       
By:
/s/ Billy D. Prim
 
Title: 
CEO
  Date: May 16, 2012

 
 
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