Exhibit 10.37
FX REAL ESTATE AND ENTERTAINMENT INC.
2007 EXECUTIVE EQUITY INCENTIVE PLAN

 

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2007 EXECUTIVE EQUITY INCENTIVE PLAN

         
1. Purpose
    1  
 
       
2. Definitions
    1  
 
       
3. Administration
    5  
 
       
4. Shares Subject to Plan
    6  
 
       
5. Eligibility; Per-Person Limitations
    6  
 
       
6. Specific Terms of Options
    7  
 
       
7. Certain Provisions Applicable to Options
    8  
 
       
8. Change in Control
    10  
 
       
9. General Provisions
    12  

 

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2007 EXECUTIVE EQUITY INCENTIVE PLAN
     1. Purpose. The purpose of this 2007 EXECUTIVE EQUITY INCENTIVE PLAN (the
“Plan”) is to assist FX Real Estate and Entertainment Inc., a Delaware
corporation (the “Company”) and its Related Entities (as hereinafter defined) in
attracting, motivating, retaining and rewarding high-quality executives and
other employees, officers, directors, consultants and other persons who provide
services to the Company or its Related Entities 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 long term performance incentives to expend their
maximum efforts in the creation of shareholder value.
     2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof and elsewhere herein.
          (a) “Beneficiary” and “Beneficial Ownership” means the person,
persons, trust or trusts that have been designated by an Optionee in his or her
most recent written beneficiary designation filed with the Committee to receive
the benefits specified under the Plan upon such Optionee’s death or to which
Options or other rights are transferred if and to the extent permitted under
Section 9(b) hereof. If, upon an Optionee’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.
          (b) “Beneficial Owner” shall have the meaning ascribed to such term in
Rule 13d-3 under the Exchange Act and any successor to such Rule.
          (c) “Board” means the Company’s Board of Directors.
          (d) “Cause” shall, with respect to any Optionee, have the meaning
specified in the Option Agreement. In the absence of any definition in the
Option Agreement, “Cause” shall have the equivalent meaning or the same meaning
as “cause” or “for cause” set forth in any employment, consulting, or other
agreement for the performance of services between the Optionee and the Company
or a Related Entity or, in the absence of any such agreement or any such
definition in such agreement, such term shall mean (i) the failure by the
Optionee to perform, in a reasonable manner, his or her duties as assigned by
the Company or a Related Entity, (ii) any violation or breach by the Optionee 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 Optionee of any
non-competition, non-solicitation, non-disclosure and/or other similar agreement
with the Company or a Related Entity, (iv) any act by the Optionee of dishonesty
or bad faith with respect to the Company or a Related Entity, (v) use of
alcohol, drugs or other similar substances in a manner that adversely affects
the Optionee’s work performance, or (vi) the commission by the Optionee of any
act, misdemeanor, or crime reflecting unfavorably upon the Optionee or the
Company or any Related Entity. The good faith determination by the

 

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Committee of whether the Optionee’s Continuous Service was terminated by the
Company for “Cause” shall be final and binding for all purposes hereunder.
          (e) “Change in Control” means a Change in Control as defined in
Section 8(b) of the Plan.
          (f) “Code” means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.
          (g) “Committee” means the Compensation Committee of the Board;
provided, however, that if at any time, there shall fail to be a sitting
Compensation Committee or if there are no longer any members on the Compensation
Committee, then the Board shall serve as the Committee. The Committee shall
consist of at least two directors, and each member of the Committee shall be
(i) a “non-employee director” within the meaning of Rule 16b-3 (or any successor
rule) under the Exchange Act, unless administration of the Plan by “non-employee
directors” is not then required in order for exemptions under Rule 16b-3 to
apply to transactions under the Plan, (ii) an “outside director” within the
meaning of Section 162(m) of the Code, and (iii) “Independent”.
          (h) “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.
          (i) “Continuous Service” means the uninterrupted provision of services
to the Company or any Related Entity in any capacity of Employee, Director,
Consultant or other service provider. 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 any capacity of Employee, Director, Consultant or other service
provider, or (iii) any change in status as long as the individual remains in the
service of the Company or a Related Entity in any capacity of Employee,
Director, Consultant or other service provider (except as otherwise provided in
the Option Agreement). An approved leave of absence shall include sick leave,
military leave, or any other authorized personal leave.
          (j) “Covered Employee” means the Person who, as of the end of the
taxable year, either is the principal executive officer of the Company or is
serving as the acting principal executive officer of the Company, and each other
Person whose compensation is required to be disclosed in the Company’s filings
with the Securities and Exchange Commission by reason of that person being among
the three highest compensated officers of the Company as of the end of a taxable
year, or such other person as shall be considered a “covered employee” for
purposes of Section 162(m) of the Code.
          (k) “Director” means a member of the Board or the board of directors
of any Related Entity.
          (l) “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 Committee.

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          (m) “Effective Date” means the effective date of the Plan, which shall
be December 17, 2007, subject to approval within twelve (12) months by the
stockholders of the shares entitled to vote thereon.
          (n) “Eligible Person” means each officer, Director, Employee,
Consultant and other person who provides services to the Company or any Related
Entity. The foregoing notwithstanding, only employees of the Company, or any
parent corporation or subsidiary corporation of the Company (as those terms are
defined in Sections 424(e) and (f) of the Code, respectively), shall be Eligible
Persons for purposes of receiving any 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.
          (o) “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.
          (p) “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.
          (q) “Fair Market Value” means the fair market value of Shares, Options
or other property as determined by the Committee, or under procedures
established by the Committee. Unless otherwise determined by the Committee, the
Fair Market Value of a Share as of any given date 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 are traded on the date
immediately preceding 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.
          (r) “Good Reason” shall, with respect to any Optionee, have the
meaning specified in the Option Agreement. In the absence of any definition in
the Option 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 or other agreement for the performance of services between the
Optionee and the Company or a Related Entity or, in the absence of any such
agreement or any such definition in such agreement, such term shall mean (i) the
assignment to the Optionee of any duties inconsistent in any material respect
with the Optionee’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 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
Optionee; or (ii) any material failure by the Company or a Related Entity to
comply with its obligations to the Optionee 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 Optionee.

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          (s) “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.
          (t) “Independent”, when referring to either the Board or members of
the Committee, shall have the same meaning as used in the rules of the NASDAQ
Global Market or any national securities exchange on which any securities of the
Company are listed for trading, and if not listed for trading, by the rules of
the Nasdaq National Market.
          (u) “Incumbent Board” means the Incumbent Board as defined in
Section 8(b)(ii) of the Plan.
          (v) “Option” means a right granted to an Optionee under Section 6(b)
hereof, to purchase Shares at a specified price during specified time periods.
          (w) “Option Agreement” means any written agreement, contract or other
instrument or document evidencing any Option granted by the Committee hereunder.
          (x) “Optionee” means a person to whom an Option is granted under this
Plan or any person who succeeds to the rights of such person under this Plan.
          (y) “Person” shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, and shall include a “group” as defined in Section 13(d) thereof.
          (z) “Related Entity” means any Subsidiary, and any business,
corporation, partnership, limited liability company or other entity designated
by the Board, in which the Company or a Subsidiary holds a substantial ownership
interest, directly or indirectly.
          (aa) “Rule 16b-3” means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Optionees, promulgated by the Securities and Exchange
Commission under Section 16 of the Exchange Act.
          (bb) “Shares” means the shares of common stock of the Company, par
value $.01 per share, and such other securities as may be substituted (or
resubstituted) for Shares pursuant to Section 9(c) hereof.
          (cc) “Subsidiary” means any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the total
combined voting power of the then outstanding securities or interests of such
corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or
dissolution.
          (dd) “Substitute Options” means options or other awards granted by the
Company in assumption of, or in substitution or exchange for, Options previously
granted, or the right or obligation to make future grants or awards, by a
company acquired by the Company or any Related Entity or with which the Company
or any Related Entity combines.

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     3. Administration.
          (a) Authority of the Committee. The Plan shall be administered by the
Committee except to the extent the Board elects to administer the Plan, in which
case the Plan shall be administered by only those directors who are Independent
Directors, in which case references herein to the “Committee” shall be deemed to
include references to the Independent members of the Board. The Committee shall
have full and final authority, subject to and consistent with the provisions of
the Plan, to select Eligible Persons to become Optionees, grant Options,
determine the type, number and other terms and conditions of, and all other
matters relating to, Options, prescribe Option Agreements (which need not be
identical for each Optionee) and rules and regulations for the administration of
the Plan, construe and interpret the Plan and Option Agreements and correct
defects, supply omissions or reconcile inconsistencies therein, and to make all
other decisions and determinations as the Committee may deem necessary or
advisable for the administration of the Plan. In exercising any discretion
granted to the Committee under the Plan or pursuant to any Option Agreement, the
Committee shall not be required to follow past practices, act in a manner
consistent with past practices, or treat any Eligible Person or Optionee in a
manner consistent with the treatment of other Eligible Persons or Optionees.
          (b) Manner of Exercise of Committee Authority.: The Committee, and not
the Board, shall exercise sole and exclusive discretion on any matter relating
to an Optionee then subject to Section 16 of the Exchange Act with respect to
the Company to the extent necessary in order that transactions by such Optionee
shall be exempt under Rule 16b-3 under the Exchange Act. Any action of the
Committee shall be final, conclusive and binding on all persons, including the
Company, its Related Entities, Eligible Persons, Optionees, Beneficiaries,
transferees under Section 9(b) hereof or other persons claiming rights from or
through an Optionee, and shareholders. The express grant of any specific power
to the Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. The Committee may
delegate to officers or managers of the Company or any Related Entity, or
committees thereof, the authority, subject to such terms as the Committee shall
determine, to perform such functions, including administrative functions as the
Committee may determine to the extent that such delegation will not result in
the loss of an exemption under Rule 16b-3(d)(1) for Options granted to Optionees
subject to Section 16 of the Exchange Act in respect of the Company and will not
cause Options intended to qualify as “performance-based compensation” under Code
Section 162(m) to fail to so qualify. The Committee may appoint agents to assist
it in administering the Plan.
          (c) Limitation of Liability. The Committee and the Board, and each
member thereof, 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 Committee and the Board, and any
officer or Employee acting at the direction or on behalf of the Committee or the
Board, 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.

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     4. Shares Subject to Plan.
          (a) Limitation on Overall Number of Shares Available for Delivery
Under Plan. Subject to adjustment as provided in Section 9(c) hereof, the total
number of Shares reserved and available for delivery under the Plan shall be
twelve million five-hundred thousand (12,500,000) Shares. Any Shares delivered
under the Plan may consist, in whole or in part, of authorized and unissued
shares or treasury shares.
          (b) Application of Limitation to Grants of Option.. No Option may be
granted if the number of Shares to be delivered in connection with such an
Option exceeds the number of Shares remaining available for delivery under the
Plan, minus the number of Shares deliverable in settlement of or relating to
then outstanding Options. The Committee may adopt reasonable counting procedures
to ensure appropriate counting, avoid double counting (as, for example, in the
case Substitute Options) and make adjustments if the number of Shares actually
delivered differs from the number of Shares previously counted in connection
with an Option.
          (c) Availability of Shares Not Delivered under Options and Adjustments
to Limits.
          (i) If any Shares subject to an Option are forfeited, expire or
otherwise terminate without issuance of such Shares or otherwise does not result
in the issuance of all or a portion of the Shares subject to such Option, the
Shares shall, to the extent of such forfeiture, expiration, termination, cash
settlement or non-issuance, again be available for Options under the Plan.
          (ii) Substitute Options shall not reduce the Shares authorized for
grant under the Plan or authorized for grant to an Optionee in any period.
Additionally, in the event that a company acquired by the Company or any Related
Entity or with which the Company or any Related Entity combines has shares
available under a pre-existing plan approved by shareholders and not adopted in
contemplation of such acquisition or combination, the shares available for
delivery pursuant to the terms of such pre-existing plan (as adjusted, to the
extent appropriate, using the exchange ratio or other adjustment or valuation
ratio or formula used in such acquisition or combination to determine the
consideration payable to the holders of common stock of the entities party to
such acquisition or combination) may be used for Options under the Plan and
shall not reduce the Shares authorized for delivery under the Plan; provided
that Options using such available shares shall not be made after the date
Options or grants could have been made under the terms of the pre-existing plan,
absent the acquisition or combination, and shall only be made to individuals who
were not Employees or Directors prior to such acquisition or combination.
          (iii) Notwithstanding anything in this Section 4(c) to the contrary
but subject to adjustment as provided in Section 9(c) hereof, the maximum
aggregate number of Shares that may be issued under the Plan as a result of the
exercise of the Incentive Stock Options shall be twelve million five-hundred
thousand (12,500,000) Shares shares.
     5. Eligibility; Per-Person Limitations. Options may be granted under the
Plan only to Eligible Persons. Subject to adjustment as provided in
Section 9(c), in any fiscal year of the

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Company during any part of which the Plan is in effect, no Optionee may be
granted Options with respect to more than twelve million five-hundred thousand
(12,500,000) Shares. The maximum number of Shares that may be granted to any one
Optionee over the life of the Plan is twelve million five-hundred thousand
(12,500,000) Shares.
     6. Specific Terms of Options.
          (a) General. Options may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any Option or
the exercise thereof, at the date of grant or thereafter (subject to
Section 9(e)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Options in the event of termination of the Optionee’s
Continuous Service and terms permitting an Optionee to make elections relating
to his or her Option. The Committee shall retain full power and discretion to
accelerate, waive or modify, at any time, any term or condition of an Option
that is not mandatory under the Plan. Except in cases in which the Committee is
authorized to require other forms of consideration under the Plan, or to the
extent other forms of consideration must be paid to satisfy the requirements of
Delaware law, no consideration other than services may be required for the grant
(as opposed to the exercise) of any Option.
          (b) Grant of Options. The Committee is authorized to grant Options to
any Eligible Person on the following terms and conditions:
               (i) Exercise Price. Other than in connection with Substitute
Options, the exercise price per Share purchasable under an Option shall be
determined by the Committee, provided that such exercise price shall not be less
than one hundred percent (100%) of the Fair Market Value of a Share on the date
of grant of the Option and shall not, in any event, be less than the par value
of a Share on the date of grant of the Option. If an Employee 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 corporation or subsidiary corporation of the Company,
as those terms are defined in Sections 424(e) and (f) of the Code, respectively)
and an Incentive Stock Option is granted to such employee, the exercise price of
such Incentive Stock Option (to the extent required by the Code at the time of
grant) shall be no less than 110% of the Fair Market Value of a Share on the
date such Incentive Stock Option is granted. Other than pursuant to
Section 9(c), the Committee shall not be permitted to (A) lower the exercise
price per Share of an Option after it is granted, (B) cancel an Option when the
exercise price per Share exceeds the Fair Market Value of the underlying Shares
in exchange for another Option (other than in connection with Substitute
Options), or (C) take any other action with respect to an Option that may be
treated as a repricing, without approval of the Company’s shareholders.
               (ii) Time and Method of Exercise. The Committee 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 Committee a

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cashless exercise procedure), the form of such payment, including, without
limitation, cash, Shares (including without limitation the withholding of Shares
otherwise deliverable pursuant to the grant), other options or other awards
granted under other plans of the Company or a Related Entity, or other property
(including notes or other contractual obligations of Optionees to make payment
on a deferred basis provided that such deferred payments are not in violation of
the Sarbanes-Oxley Act of 2002, or any rule or regulation adopted thereunder or
any other applicable law), and the methods by or forms in which Shares will be
delivered or deemed to be delivered to Optionees.
               (iii) 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. Anything in the Plan to the contrary
notwithstanding, no term of the Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify either the Plan or any
Incentive Stock Option under Section 422 of the Code, unless the Optionee has
first requested, or consents to, the change that will result in such
disqualification. Thus, 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:
                    (A) the Option shall not be exercisable for more than ten
years after the date such Incentive Stock Option is granted; provided, however,
that if an Optionee 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 corporation or subsidiary
corporation of the Company, as those terms are defined in Sections 424(e) and
(f) of the Code, respectively) and the Incentive Stock Option is granted to such
Optionee, the term of the Incentive Stock Option shall be (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
                    (B) 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 (and any parent corporation or subsidiary corporation of the Company, as
those terms are defined in Sections 424(e) and (f) of the Code, respectively)
that become exercisable for the first time by the Optionee during any calendar
year shall not (to the extent required by the Code at the time of the grant)
exceed $100,000.
     7. Certain Provisions Applicable to Options.
         (a) Stand-Alone, Additional, and Substitute Options Options granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to or in substitution or exchange for, any other Option 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 an Optionee to receive payment from the Company or any Related Entity.
Such additional, substitute or exchange Options may be granted at any time. If
an Option is granted in substitution or exchange for another Option or award
granted under another plan, the Committee shall require the surrender of such
other Option or other award in consideration for the grant of the new Option. In
addition, Options may be granted in lieu of

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cash compensation, including in lieu of cash amounts payable under other plans
of the Company or any Related Entity, in which the value of Stock subject to the
Option is equivalent in value to the cash compensation, or in which the exercise
price, grant price or purchase price of the Option in the nature of a right that
may be exercised is equal to the Fair Market Value of the underlying Stock minus
the value of the cash compensation surrendered (for example, Options granted
with an exercise price or grant price “discounted” by the amount of the cash
compensation surrendered).
     (b) Term of Options. The term of each Option shall be for such period as
may be determined by the Committee; provided that in no event shall the term of
any Option exceed a period of ten years (or in the case of an Incentive Stock
Option such shorter term as may be required under Section 422 of the Code).
     (c) Form and Timing of Payment. Subject to the terms of the Plan and any
applicable Option Agreement, payments to be made by the Company or a Related
Entity upon the exercise of an Option or settlement of an Option may be made in
such forms as the Committee shall determine, including, without limitation,
cash, Shares, other Options or other property, and may be made in a single
payment or transfer, in installments, or on a deferred basis. Any installment or
deferral provided for in the preceding sentence shall, however, be subject to
the Company’s compliance with the provisions of the Sarbanes-Oxley Act of 2002,
the rules and regulations adopted by the Securities and Exchange Commission
thereunder, and all applicable rules of the NASDAQ Global Market or any national
securities exchange on which the Company’s securities are listed or quoted for
trading and, if not listed or quoted for trading on either the NASDAQ Global
Market or a national securities exchange, then the rules of the NASDAQ Global
Market. The settlement of any Option may be accelerated, and cash paid in lieu
of Shares in connection with such settlement, in the discretion of the Committee
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 Committee
(subject to Section 9(e) of the Plan, including the consent provisions thereof
in the case of any deferral of an outstanding Option not provided for in the
original Option Agreement) or permitted at the election of the Optionee on terms
and conditions established by the Committee. The Committee may, without
limitation, make provision for the payment or crediting of a reasonable interest
rate on installment or deferred payments or the grant or other amounts in
respect of installment or deferred payments denominated in Shares.
     (d) Exemptions from Section 16(b) Liability.: It is the intent of the
Company that the grant of any Options to or other transaction by an Optionee who
is subject to Section 16 of the Exchange Act shall be exempt from Section 16
pursuant to an applicable exemption (except for transactions acknowledged in
writing to be non-exempt by such Optionee). Accordingly, if any provision of
this Plan or any Option Agreement does not comply with the requirements of
Rule 16b-3 then applicable to any such transaction, such provision shall be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 so that such Optionee shall avoid liability under
Section 16(b).

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     (e) Code Section 409A.
               (i) If any Option constitutes a “nonqualified deferred
compensation plan” under Section 409A of the Code (a “Section 409A Plan”), then
the Option shall be subject to the following additional requirements, if and to
the extent required to comply with Section 409A of the Code:
                    (A) Payments under the Section 409A Plan may not be made
earlier than (u) the Optionee’s separation from service, (v) the date the
Optionee becomes disabled, (w) the Optionee’s death, (x) a specified time (or
pursuant to a fixed schedule) specified in the Option Agreement at the date of
the deferral of such compensation, (y) a change in the ownership or effective
control of the corporation, or in the ownership of a substantial portion of the
assets of the corporation, or (z) the occurrence of an unforeseeble emergency;
                    (B) The time or schedule for any payment of the deferred
compensation may not be accelerated, except to the extent provided in applicable
Treasury Regulations or other applicable guidance issued by the Internal Revenue
Service;
                    (C) Any elections with respect to the deferral of such
compensation or the time and form of distribution of such deferred compensation
shall comply with the requirements of Section 409A(a)(4) of the Code; and
                    (D) In the case of any Optionee who is specified employee, a
distribution on account of a separation from service may not be made before the
date which is six months after the date of the Optionee’s separation from
service (or, if earlier, the date of the Optionee’s death).
For purposes of the foregoing, the terms “separation from service”, “disabled”,
and “specified employee”, all shall be defined in the same manner as those terms
are defined for purposes of Section 409A of the Code, and the limitations set
forth herein shall be applied in such manner (and only to the extent) as shall
be necessary to comply with any requirements of Section 409A of the Code that
are applicable to the Option.
               (ii) The Option Agreement for any Option that the Committee
reasonably determines to constitute a Section 409A Plan, and the provisions of
the Plan applicable to that Option, shall be construed in a manner consistent
with the applicable requirements of Section 409A of the Code, and the Committee,
in its sole discretion and without the consent of any Optionee, may amend any
Option Agreement (and the provisions of the Plan applicable thereto) if and to
the extent that the Committee determines that such amendment is necessary or
appropriate to comply with the requirements of Section 409A of the Code. No
Option Agreements shall be adjusted, modified or substituted for without the
consent of the Optionee if any such adjustments, modifications or substitutions
would cause the Option Agreement to violate the requirements of Section 409A of
the Code.
     8. Change in Control.
          (a) Effect of “Change in Control.” Subject to Section 8(a)(iii), and
if and only to the extent provided in the Option Agreement, or to the extent
otherwise determined by the Committee, upon the occurrence of a “Change in
Control,” as defined in Section 8(b):

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               (i) Any Option that was not previously vested and exercisable as
of the time of the Change in Control, shall become immediately vested and
exercisable, subject to applicable restrictions set forth in Section 9(a)
hereof.
               (ii) With respect to any outstanding Option subject to
achievement of performance goals and conditions under the Plan, the Committee
may, in its discretion, deem such performance goals and conditions as having
been met as of the date of the Change in Control.
               (iii) Notwithstanding the foregoing or any provision in any
Option Agreement to the contrary, if in the event of a Change in Control the
successor company assumes or substitutes for an Option, then each such
outstanding Option shall not be accelerated as described in Sections 8(a)(i) and
(ii). For the purposes of this Section 8(a)(iii), an Option shall be considered
assumed or substituted for if following the Change in Control the Option confers
the right to purchase or receive, for each Share subject to the Option
immediately prior to the Change in Control, the consideration (whether stock,
cash or other securities or property) received in the transaction constituting a
Change in Control by holders of Shares for each Share held on the effective date
of such transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
shares); provided, however, that if such consideration received in the
transaction constituting a Change in Control is not solely common stock of the
successor company or its parent or subsidiary, the Committee may, with the
consent of the successor company or its parent or subsidiary, provide that the
consideration to be received upon the exercise of an Option for each Share
subject thereto, will be solely common stock of the successor company or its
parent or subsidiary substantially equal in fair market value to the per share
consideration received by holders of Shares in the transaction constituting a
Change in Control. The determination of such substantial equality of value of
consideration shall be made by the Committee in its sole discretion and its
determination shall be conclusive and binding.
          (b) Definition of “Change in Control". Unless otherwise specified in
an Option Agreement, a “Change in Control” shall mean the occurrence of any of
the following:
               (i) The acquisition by any Person of Beneficial Ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty
percent (50%) 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) (the foregoing Beneficial Ownership hereinafter being referred to as
a “Controlling Interest”); provided, however, that for purposes of this
Section 8(b), the following acquisitions shall not constitute or result in a
Change in Control: (v) any acquisition directly from the Company; (w) any
acquisition by the Company; (x) any acquisition by any Person that as of the
Effective Date owns Beneficial Ownership of a Controlling Interest; (y) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Related Entity; or (z) any acquisition by any
entity pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii) below; or

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               (ii) During any period of two (2) consecutive years (not
including any period prior to the Effective Date) individuals who constitute the
Board on the Effective Date (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 Effective Date whose election,
or nomination for election by the Company’s shareholders, 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 were 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; or
               (iii) Consummation of a reorganization, merger, statutory share
exchange or consolidation or similar transaction involving the Company or any of
its Related Entities, a sale or other disposition of all or substantially all of
the assets of the Company, or the acquisition of assets or equity of another
entity by the Company or any of its Related Entities (each a “Business
Combination”), in each case, unless, following such Business Combination,
(A) all or substantially all of the individuals and entities who were the
Beneficial Owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than fifty percent
(50%) of the value of the then outstanding equity securities and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of members of the board of directors (or comparable
governing body of an entity that does not have such a board), as the case may
be, of the entity resulting from such Business Combination (including, without
limitation, an entity which 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 Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding any employee benefit plan (or related trust) of the Company or
such entity resulting from such Business Combination or any Person that as of
the Effective Date owns Beneficial Ownership of a Controlling Interest)
beneficially owns, directly or indirectly, fifty percent (50%) or more of the
value of the then outstanding equity securities of the entity resulting from
such Business Combination or the combined voting power of the then outstanding
voting securities of such entity 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 other 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
               (iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
     9. General Provisions.
          (a) Compliance With Legal and Other Requirements. The Company may, to
the extent deemed necessary or advisable by the Committee, postpone the issuance
or delivery of

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Shares or payment of other benefits under any Option 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 Committee, may consider appropriate, and
may require any Optionee 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.
          (b) Limits on Transferability; Beneficiaries. No Option granted under
the Plan shall be pledged, hypothecated or otherwise encumbered or subject to
any lien, obligation or liability of such Optionee to any party, or assigned or
transferred by such Optionee otherwise than by will or the laws of descent and
distribution or to a Beneficiary upon the death of an Optionee, and such Options
that may be exercisable shall be exercised during the lifetime of the Optionee
only by the Optionee or his or her guardian or legal representative, except that
Options (other than Incentive Stock Options) may be transferred to one or more
Beneficiaries or other transferees during the lifetime of the Optionee, and may
be exercised by such transferees in accordance with the terms of such Option,
but only if and to the extent such transfers are permitted by the Committee
pursuant to the express terms of an Option Agreement (subject to any terms and
conditions which the Committee may impose thereon). A Beneficiary, transferee,
or other person claiming any rights under the Plan from or through any Optionee
shall be subject to all terms and conditions of the Plan and any Option
Agreement applicable to such Optionee, except as otherwise determined by the
Committee, and to any additional terms and conditions deemed necessary or
appropriate by the Committee.
          (c) Adjustments.
               (i) Adjustments to Options. In the event that any extraordinary
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 Committee to be
appropriate, then the Committee 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 Options granted thereafter, (B) the
number and kind of Shares by which annual per-person Option limitations are
measured under Section 5 hereof, (C) the number and kind of Shares subject to or
deliverable in respect of outstanding Options, (D) the exercise price, grant
price or purchase price relating to any Option and/or make provision for payment
of cash or other property in respect of any outstanding Option, and (E) any
other aspect of any Option that the Committee determines to be appropriate.
               (ii) Adjustments in Case of Certain Transactions. In the event of
any merger, consolidation or other reorganization in which the Company does not
survive, or in the event of any Change in Control, any outstanding Options may
be dealt with in accordance with

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any of the following approaches, as determined by the agreement effectuating the
transaction or, if and to the extent not so determined, as determined by the
Committee: (a) the continuation of the outstanding Options by the Company, if
the Company is a surviving entity, (b) the assumption or substitution for, as
those terms are defined in Section 8(b)(iii) hereof, the outstanding Options by
the surviving entity or its parent or subsidiary, (c) full exercisability or
vesting and accelerated expiration of the outstanding Options, or (d) settlement
of the value of the outstanding Options in cash or cash equivalents or other
property followed by cancellation of such Options (which value shall be measured
by the amount, if any, by which the Fair Market Value of a Share exceeds the
exercise or grant price of the Option as of the effective date of the
transaction). The Committee shall give written notice of any proposed
transaction referred to in this Section 9(c)(ii) a reasonable period of time
prior to the closing date for such transaction (which notice may be given either
before or after the approval of such transaction), in order that Optionees may
have a reasonable period of time prior to the closing date of such transaction
within which to exercise any Options that are then exercisable (including any
Options that may become exercisable upon the closing date of such transaction).
An optionee may condition his exercise of any Options upon the consummation of
the transaction.
               (iii) Other Adjustments. The Committee (and the Board if and only
to the extent such authority is not required to be exercised by the Committee to
comply with Section 162(m) of the Code) is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Options (including
performance goals relating thereto) 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 Committee’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 an Optionee, 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 to Optionees designated by the Committee 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 Option granted, any payment relating to an Option under the
Plan, including from a distribution of Shares, or any payroll or other payment
to an Optionee, amounts of withholding and other taxes due or potentially
payable in connection with any transaction involving an Option, and to take such
other action as the Committee may deem advisable to enable the Company or any
Related Entity and Optionees to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Option. This
authority shall include authority to withhold or receive Shares or other
property and to make cash payments in respect thereof in satisfaction of an
Optionee’s tax obligations, either on a mandatory or elective basis in the
discretion of the Committee.

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          (e) Changes to the Plan and Options. The Board may amend, alter,
suspend, discontinue or terminate the Plan, or the Committee’s authority to
grant Options under the Plan, without the consent of shareholders or Optionees,
except that any amendment or alteration to the Plan shall be subject to the
approval of the Company’s shareholders not later than the annual meeting next
following such Board action if such shareholder approval is required by any
federal or state law or regulation (including, without limitation, Rule 16b-3 or
Code Section 162(m)) or the rules of any stock exchange or automated quotation
system on which the Shares may then be listed or quoted, and the Board may
otherwise, in its discretion, determine to submit other such changes to the Plan
to shareholders for approval; provided that, without the consent of an affected
Optionee, no such Board action may materially and adversely affect the rights of
such Optionee under any previously granted and outstanding Option. The Committee
may waive any conditions or rights under, or amend, alter, suspend, discontinue
or terminate any Option theretofore granted and any Option Agreement relating
thereto, except as otherwise provided in the Plan; provided that, without the
consent of an affected Optionee, no such Committee or the Board action may
materially and adversely affect the rights of such Optionee under such Option.
          (f) Limitation on Rights Conferred Under Plan. Neither the Plan nor
any action taken hereunder or under any Option shall be construed as (i) giving
any Eligible Person or Optionee the right to continue as an Eligible Person or
Optionee or in the employ or service 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 Optionee’s Continuous Service at any time,
(iii) giving an Eligible Person or Optionee any claim to be granted any Option
under the Plan or to be treated uniformly with other Optionees and Employees, or
(iv) conferring on an Optionee any of the rights of a shareholder of the Company
including, without limitation, any right to receive dividends or distributions,
any right to vote or act by written consent, any right to attend meetings of
shareholders or any right to receive any information concerning the Company’s
business, financial condition, results of operation or prospects, unless and
until such time as the Optionee is duly issued Shares on the stock books of the
Company in accordance with the terms of an Option. None of the Company, its
officers or its directors shall have any fiduciary obligation to the Optionee
with respect to any Options unless and until the Optionee is duly issued Shares
pursuant to the Option on the stock books of the Company in accordance with the
terms of an Option. Neither the Company nor any of the Company’s officers,
directors, representatives or agents are granting any rights under the Plan to
the Optionee whatsoever, oral or written, express or implied, other than those
rights expressly set forth in this Plan or the Option Agreement.
          (g) Status of Options. The Plan is intended to constitute an
“unfunded” plan for incentive compensation. With respect to any payments not yet
made to an Optionee or obligation to deliver Shares pursuant to an Option,
nothing contained in the Plan or any Option shall give any such Optionee any
rights that are greater than those of a general creditor of the Company.
          (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 Board or a
committee thereof to adopt such other incentive arrangements as it may deem
desirable including incentive arrangements and Options which do not qualify
under Section 162(m) of the Code.

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          (i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of an Option
with respect to which an Optionee paid cash or other consideration, the Optionee
shall be repaid the amount of such cash or other consideration. No fractional
Shares shall be issued or delivered pursuant to the Plan or any Option. The
Committee shall determine whether cash, other Options 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 Option Agreement shall be
determined in accordance with the laws of the State of Delaware without giving
effect to principles of conflict of laws, and applicable federal law.
          (k) Non-U.S. Laws. The Committee shall have the authority 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
its Related Entities may operate to assure the viability of the benefits from
Options granted to Optionees performing services in such countries and to meet
the objectives of the Plan.
          (l) Plan Effective Date and Shareholder Approval; Termination of Plan.
The Plan shall become effective on the Effective Date, subject to subsequent
approval, within 12 months 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 requirements under
the rules of any stock exchange or automated quotation system on which the
Shares may be listed or quoted, and other laws, regulations, and obligations of
the Company applicable to the Plan. Options may be granted subject to
shareholder approval, but may not be exercised or otherwise settled in the event
the shareholder approval is not obtained. The Plan shall terminate at the
earliest of (a) such time as no Shares remain available for issuance under the
Plan, (b) termination of this Plan by the Board, or (c) the tenth anniversary of
the Effective Date. Options outstanding upon expiration of the Plan shall remain
in effect until they have been exercised or terminated, or have expired.

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